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2010 Supreme(Kar) 768
High Court of Karnataka
THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY
Senior Superintendent of Post Offices
Versus
Bruhat Bangalore Mahanagara Palike & Another
Writ Petition No.9965 of 2007 (LB-BMP) connected with Writ Petition No.10799 of 2006 (LB-BMP)
Date of Judgment : 04-08-2010
For the Petitioner:S. Prakash Shetty, Advocate. For the Respondent:M/s. Ashok Haranahalli Associates, Advocates.
Headnote:CONSTITUTION OF INDIA - Article 285 & Karnataka Municipalities Act, 1964, Section 110: [Anand Byrareddy, J] Levy of Service charges on properties of Union Government - Postal Department - Validity - Held, Though it may be true that the BBMP incurs a huge expenditure in providing and maintaining "civic amenities" and all of which may not even be able to be met out of the entire property tax collected, the demand for even a nominal measure of the tax payable towards such general expenditure, is impermissible by recourse to the amended Section 110 read with the amendment to Schedule III, Part II, Rule 7A thereto insofar as the petitioner and the property of the Union Government is concerned. The nomenclature "service charges" does not make it any less an impost in the nature of tax - as it is not relatable to any special services rendered to the petitioners apart from providing access to the infrastructure that is available to all, whether a tax payer or otherwise. But the day may not be too far off when the BBMP may be in a position to levy a fee for specific services to be provided. However, the present impost impugned herein clearly falls foul of Article 258 (1) of Constitution of India.
KARNATAKA MUNICIPAL CORPORATIONS ACT, 1976 - Section 110 & Article 285 of Constitution of India: [Anand Byrareddy, J] Levy of Service charges on properties of Union Government - Postal Department - Validity - Held, Though it may be true that the BBMP incurs a huge expenditure in providing and maintaining "civic amenities" and all of which may not even be able to be met out of the entire property tax collected, the demand for even a nominal measure of the tax payable towards such general expenditure, is impermissible by recourse to the amended Section 110 read with the amendment to Schedule III, Part II, Rule 7A thereto insofar as the petitioner and the property of the Union Government is concerned. The nomenclature "service charges" does not make it any less an impost in the nature of tax - as it is not relatable to any special services rendered to the petitioners apart from providing access to the infrastructure that is available to all, whether a tax payer or otherwise. But the day may not be too far off when the BBMP may be in a position to levy a fee for specific services to be provided. However, the present impost impugned herein clearly falls foul of Article 258 (1) of Constitution of India.
Anand Byrareddy, J: These petitions are heard together as they are filed by the same authority, involving identical circumstances.
Heard the learned Counsel for the petitioner and the learned Counsel for the respondents.
2. The facts as are relevant are as follows:
The petitioner represents the Post and Telegraph Department, it is stated that Post Offices of the department are established under the Indian Post Office Act. The department is established and controlled by the Union of India. The controversy is in respect of a levy of "service charges" sought to be imposed by the Bruhat Bangalore Mahanagara Palike (hereinafter referred to as 'the BBMP', for brevity) on the premises comprising Post Offices at Bangalore, within the jurisdiction of the competent officer of the BBMP. The BBMP is a statutory Corporation constituted under the Karnataka Municipal Corporations Act, 1976 (hereinafter referred to as 'the KMC Act' for brevity).
3. It is contended that in terms of Article 285(1) of the Constitution of India, the property of the Union is exempt from all taxes imposed by a State or by any authority within a State. It is further contended that Section 110(1)(j) of the KMC Act exempts property of the Central Government within Bangalore City from payment of property tax. However, the respondent - BBMP having questioned the petitioner over non-payment of service charges, by a written notice, the petitioner pointed out that the petitioner is exempted from payment of tax. In response to the same, an order was passed directing the petitioner to pay the service charges due, in terms of a Notification issued by the respondent dated 12.4.2005 wherein, it was notified that those properties failing within the jurisdiction of the BBMP, which are otherwise exempt from payment of property taxes, would however be liable to pay 25% of the said taxes, as service charges, with effect from 1.4.2005. Hence, the petition is filed to primarily contend that under Article 285(1) of the Constitution of India, the property of the Union of India is exempt from any kind of tax or levy by the State Government or any Corporation or other local authority of the State Government and hence it is prayed that the demand for payment of service charges for the period between 2005-06 to 2007-08 be quashed. Whereas in the second of these petitions, a notice issued under Section 147 of the KMC Act indicating to the petitioner that there is no provision to grant exemption in respect of the service charges under the KMC Act, is sought to be questioned.
4. The learned Counsel for the petitioner has placed reliance on the following judgments in support of his contentions, namely,
a) Union of India Vs. Puma Municipal Council and Others, (1992) 1 SCC 100
b) Municipal Corporation, Atnritsar Vs. Senior Superintendent of Post Offices, Amritsar Division and Another, (2004) 3 SCC 92.
5. On the other hand, the learned Counsel for the respondents would admit that the Post Office is a department of the Union of India, but the further contention that what is sought to be imposed on the property is property tax, is disputed. The nature of demand, it is contended, is otherwise. It is pointed out that the BBMP has several civic duties, insofar as maintaining the city which involves wide ranging activity, incidentally, it collects revenue including, property tax and service charges for the services rendered. The levy of property tax by the State Government is in terms of Entry-49 of List-II appended to the VII Schedule to the Constitution. The Entry enumerates the subject on which the State Government could impose tax namely, land and buildings. The charging Section in respect of such impost is to be found under the KMC Act as provided under Section 103(b) of the Act. While Section 110 of the KMC Act deals with general exemptions and that the Commissioner, BBMP is empowered to grant exemptions, in respect of land and buildings enumerated therein from payment of property tax.
