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2020 Supreme(Mad) 418
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
C.V. KARTHIKEYAN, J.
Madurai Multi Functional Complex Private Limited, Represented by its Authorized Signatory, Madurai - Appellant
Versus
The Madurai Corporation, Represented by its Commissioner, Madurai & Others - Respondent
W.P.(MD) No. 18477 of 2018 & W.M.P. (MD) Nos. 16376 to 16378 of 2018
Decided On : 06-05-2020
For the Petitioner:N. Dilipkumar, Advocate. For the Respondents:R1, K. Govindarajan, R. Murali, Standing Counsel, R2 & R3, J. Alaguram Jothi, Advocates.
Headnote:
Writ petition filed by Madurai Multi Functional Complex Private Limited challenging the demand notice issued by the Madurai Corporation for payment of property tax on the ground that the property belongs to the Union of India and is therefore exempt from property tax under Article 285 of the Constitution of India. The court held that the petitioner is a private company and not an arm of the Union Government or the Ministry of Railways. It is not a Government Company. It is a Private Limited Company. They have taken the property on sub-lease with obligation to pay rent to the second respondent and they are also exploiting the building for commercial purposes. It had been stated that even in the agreement with the third respondent they had very specifically undertaken to pay all necessary taxes. The court also held that the petitioner had not impleaded the Union of India as a party / respondent in the writ petition. The court further held that the petitioner is bound by the undertaking given to the 1st respondent to pay all necessary taxes and cannot claim exemption from property tax based on Article 285 of the Constitution of India.
Fact of the Case:
The petitioner, Madurai Multi Functional Complex Private Limited, is a private company that has taken on sub-lease a building constructed by the Indian Railway Station Development Authority (IRSDA) on land owned by the Indian Railways. The petitioner claims that the property is exempt from property tax under Article 285 of the Constitution of India, which exempts the property of the Union of India from state taxation. The Madurai Corporation, the local government body responsible for levying property taxes, has issued a demand notice to the petitioner for payment of property tax.
Finding of the Court:
The court held that the petitioner is not entitled to exemption from property tax under Article 285 of the Constitution of India. The court found that the petitioner is a private company and not an arm of the Union Government or the Ministry of Railways. The court also found that the petitioner had undertaken to pay all necessary taxes in its agreement with the IRSDA. The court further held that the petitioner had not impleaded the Union of India as a party / respondent in the writ petition.
Issues: 1. Whether the petitioner is entitled to exemption from property tax under Article 285 of the Constitution of India? 2. Whether the petitioner is bound by the undertaking given to the 1st respondent to pay all necessary taxes?
Ratio Decidendi: The court held that the petitioner is not entitled to exemption from property tax under Article 285 of the Constitution of India because the petitioner is a private company and not an arm of the Union Government or the Ministry of Railways. The court also held that the petitioner is bound by the undertaking given to the 1st respondent to pay all necessary taxes.
Final Decision: The court dismissed the writ petition filed by the petitioner challenging the demand notice issued by the Madurai Corporation for payment of property tax.
JUDGMENT
(Prayer: Writ Petition is filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus, calling for records relating to the impugned demand notice of the 1st respondent singed on 03.03.2018 and quash the same and consequently direct the Madurai Municipality Corporation to provide water connection and drainage facility to the multifunction complex located in the Madurai railway junction upon payment of fees and charges towards such services.)
1. This Writ Petition has been filed in the nature of Certiorarified Mandamus to call for records relating to the impugned demand notice of the 1st respondent / The Madurai Corporation, represented by its Commissioner, Madurai, dated 03.03.2018 and set aside the same and to direct the 1st respondent to provide water connection and drainage facility to the Multi Functional Complex located in the Madurai railway junction upon payment of fees and charges.
2. The writ petitioner is Madurai Multi Functional Complex Private Limited with registered office at Kolkota and an address at Madurai and represented by C.Maruthurajan, Manager (Operations) / Authorized Signatory. It is a Special Purpose Vehicle - SPV Company incorporated under the Companies Act, 1956, by M/s.Veeraprabhu Marketing Limited-Rajdhani Hotels Private Limited Consortium.
3. In the affidavit filed by C.Maruthurajan, Manager (Operations) / Authorised Signatory, in support of the writ petition, it had been stated that the property in relation to which the 1st respondent / Madurai Corporation had demanded payment of property tax is located at Madurai Railway Station premises. It is land and building and the petitioner claims that it is a Multi Functional Complex owned by the Railways and therefore, it is a property of Union of India. It had been stated that the property is vested with the 2nd respondent / Rail Land Development Authority (RLDA), which is a statutory authority under the Ministry of Railways with registered office at New Delhi.
4. It had been further stated that the Government of India / Ministry of Railways (Railway Board) through its Deputy Director, by letter dated 26.07.2012 had recorded that the Multi Functional Complexes are covered under the provisions of Section 11 of the Railways Act, 1989 and paragraph No.201 of Indian Railway Works Manual, 2000. It had been stated that the Ministry of Railways in the Railway Budget for the financial period of 2009-2010 had announced development of Multi Functional Complexes (MFCs) at identified sites to generate non-tariff revenue. The petitioner claims that MFC buildings developed by the Railways through public sector undertakings or its undertakings like the 2nd and 3rd respondents / RLDA and IRCON Infrastructure and Services Limited (IRCON ISL), which companies under the Ministry of Railways and registered under the Companies Act, 2013, with registered office at New Delhi, are to be considered as operational buildings of the Railways.
5. It had been stated that the 2nd respondent / RLDA had entered into a lease agreement with the 3rd respondent / IRCON ISL on 04.07.2013 and the building in question at Madurai Railway Junction was constructed by IRCON ISL. It had been stated that under the agreement, the ownership is vested with RLDA. It had been stated that the petitioner had entered into a sub lease agreement with the 3rd respondent / IRCON ISL on 03.02.2016 and had taken the property on sub lease for a period of 30 years. It had been further stated that the petitioner had sent a letter to the Madurai Corporation on 13.12.2017, requesting water connection and drainage facility. It had been stated that the 1st respondent / Madurai Corporation circulated a property tax working sheet with proposal to levy property tax.
6. In the affidavit, it had been stated that a letter had been sent on 09.02.2018 to the 1st resp
