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2020 Supreme(SC) 314
SUPREME COURT OF INDIA
ASHOK BHUSHAN, M.R. SHAH, JJ.
Food Corporation of India – Appellant
Versus
Brihanmumbai Mahanagar Palika & Ors – Respondent
Civil Appeal Nos.9350-9351 of 2019 (arising out of SLP (C)Nos.29261-29262 of 2019)
Decided On : 19-03-2020
For the Appellant(s) :Ajit Pudussery, Ajeet Singh Verma, Advocates
For the Respondent(s):Asha Gopalan Nair, Advocate
IMPORTANT POINTS
Property tax can be levied only if the property owned by Central Government had been subject to property tax before commencement of Constitution.
Levying property tax on ‘occupier’ for a property exempted under Article 285(1) will be contrary to Article 285(1).
Statutory provision cannot run contrary to Constitutional provision.
Charges for services rendered by corporation like water charges and sewerage charges are fees and not taxes. Such liability cannot be denied by virtue of Article 285 of the Constitution.
Headnote:
(a) Mumbai Municipal Corporation Act, 1888 - Section 144(2) - Property - Land, after acquisition, vesting in Government of India - Transferred to FCI but no conveyance deed executed - Ownership, held by the High Court to be with Central Government - Decision not challenged - Court proceeding on that premise. (Para 18)
(b) Constitution of India - Article 285 - Exemption from payment of taxes on the properties of Central Government under Article 285(1) - Denial - Only when property in question was exigible to the Municipal Tax prior to commencement of the Constitution or any Parliamentary law provides for properties to be exigible to pay tax to the Municipality. (Para 27)
(c) Constitution of India - Article 285(2) - Property tax - Can be levied only if the property had been subject to property tax before commencement of Constitution - Instantly property coming into existence in 1964 - Not subject to tax prior to commencement of Constitution - Municipal Corporation is not competent to impose property tax denying the exemption under Article 285(1) of the Constitution. (Para 31)
(d) Mumbai Municipal Corporation Act, 1888 - Section 146(1) r/w Article 285(1), Constitution of India - Property exempt from tax under Article 285(1) - Levying property tax on ‘occupier’ - Contrary to Article 285(1) - Recourse cannot be taken to any statutory provision or device to make exemption under Article 285(1) nugatory - Statutory provision cannot run contrary to Constitutional provision. (Para 36, 37)
(e) Constitution of India - Article 226 - High Court not considering all aspects of the matter - Judgment cannot be sustained. (Para 43)
(f) Tax and fee - Service charges - For services rendered by corporation like water charges and sewerage charges - Are fees and not taxes - Such liability cannot be denied by virtue of Article 285 of the Constitution. (Para 46, 47)
Facts of the case:
The Government of India wrote a letter dated 17.02.1992 to FCI, New Delhi stating that the land for godowns was acquired by the erstwhile
Government of Bombay acquired land for Government of India on which godowns were constructed by the Government of India and when the FCI came into being in 1965, these godowns alongwith other godowns of the Government were transferred to FCI during the period from 1966 to 1969. No conveyance deeds for these godowns were executed with the FCI and legal ownership of these godowns still vests in the Government, the Status of FCI, therefore, is that of an occupier.
Letters and demands were issued by Municipal Corporation of Greater Bombay demanding property tax. A demand notice dated 04.09.2001 was issued by the Corporation asking to make payment for the period from 01.03.1969 to 31.03.1997 and taxes from 01.04.1997 onwards. The FCI protested the demand claiming exemption from payment of property tax as per Article 285 of the Constitution of India, the property being owned by the Central Government. The plea of the appellant was not accepted and a further notice dated 24.09.2001 was issued asking for payment of property tax. The properties were also attached.
A Writ Petition was filed by the FCI, in which FCI has prayed to declare the demand for payment of property tax as illegal.
Division Bench of the High Court dismissed the Writ Petition. Special Leave Petition wherein the FCI was directed to approach the High Court by filing a review petition. Review petition too was dismissed by non-speaking order by the Division Bench of the High Court.
These appeals have been filed against the Division Bench judgment dismissing the writ petition and order dismissing the review petition.
Finding of the Court:
The appellant is exempted and not liable to pay property tax under 1888 Act. However, the appellant is liable to pay services charges for the services rendered by the Corporation.
Result: Appeal allowed.
JUDGMENT :
ASHOK BHUSHAN, J.
1. This appeal has been filed by the Food Corporation of India challenging the judgment dated 05.05.2016 of Division Bench of Bombay High Court in Writ Petition No. 2672 of 2001 by which judgment the writ petition filed by the Food Corporation of India (hereinafter referred to as “FCI”) challenging the demand made by Municipal Corporation of Greater Mumbai of property tax has been dismissed.
2. The brief facts necessary to be noted for deciding this appeal are: -
2.1 The Government of Bombay acquired land at Village Poisar and at Village Magathane, Borivali for Government of India prior to the year 1964. Upon completion of the acquisition proceedings, the lands vested in the Government of India and the Government of India constructed the godowns and silos on the acquired land for storage of food grains.
2.2 FCI was set up under the Food Corporations Act, 1964 with the purpose of undertaking the purchase, storage, movement, transport, distribution and sale of food grains and other food stuff.
2.3 on 28.10.1988, a notice demanding non-agricultural tax was issued to the FCI and the FCI protested against the levy of non-agricultural tax and filed a writ petition, which was dismissed by learned Single Judge on 10.11.1988. A Letter Patent Appeal No.259 of 1989 was filed by the FCI, which was allowed by the Division Bench vide its judgment dated 03.12.1992 holding that land vested in Central Government on which godowns were constructed, hence, Central Government was not liable to pay taxes for non-agricultural use of land as per Article 285 of the Constitution of India.
2.4 The Government of India wrote a letter dated 17.02.1992 to FCI, New Delhi stating that the land for godowns was acquired by the erstwhile Government of Bombay for Government of India on which godowns were constructed by the Government of India and when the FCI came into being in 1965, these godowns alongwith other godowns of the Government were transferred to FCI during the period from 1966 to 1969. The Government of India, however, has not executed any conveyance deeds for these godowns with the FCI and legal ownership of these godowns still vests in the Government, the Status of FCI, therefore, is that of an occupier.
2.5 Letters and demands were issued by Municipal Corporation of Greater Bombay (hereinafter referred to as “Corporation”) demanding property tax in respect of property situate in Dattapada Road, Borivali owned by FCI. A demand notice dated 04.09.2001 was issued by the Corporation asking to make payment for the period from 01.03.1969 to 31.03.1997 and taxes from 01.04.1997 onwards. The FCI protested the demand claiming exemption from payment of property tax as per Article 285 of the Constitution of India, the property being owned by the Central Government. The plea of the appellant was not accepted and a further notice dated 24.09.2001 was issued asking for payment of property tax. The properties were also attached.
2.6 A Writ Petition No. 2672 of 2001 was filed by the FCI, in which FCI has prayed to declare the demand for payment of property tax as illegal. Prayer was also made to issue a writ of prohibition prohibiting the respondents, their servants and agents in pursuance of letter dated 04.09.2001 and 24.09.2001. The Corporation decided the claim of the FCI. A Division Bench of the Bombay High Court relying on the judgment of this Court in Food Corporation of India Vs. Municipal Committee, Jalalabad and Another, (1999) 6 SCC 74 dismissed the writ petition vide judgment dated 02.02.2002. A review petition was filed by FCI to review the judgment, which too was dismissed on 04.10.2002. The FCI filed a special leave petition against the judgment dated 02.02.2002 as well as against the order dated 04.10.2002 in review petition. It was contended before this Court that High Court erred in relying on the judgment of the Court in Food Corporation of India Vs. Municipal Committee, Jalalabad (supra) without referring to the earlier D
