Full Judgment Text
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CASE NO.:
Appeal (civil) 6532 of 2002
PETITIONER:
Municipal Corporation, Amritsar
RESPONDENT:
The Sr.Supdt. of Post Offices,Amritsar Div.& Anr.
DATE OF JUDGMENT: 21/01/2004
BENCH:
S.N. VARIAVA & H.K. SEMA
JUDGMENT:
J U D G M E N T
SEMA, J.
This appeal, preferred by the Municipal Corporation, Amritsar is
against the judgment of the High Court dated 17th July, 2001, allowing the
writ petition, filed by the respondents herein.
The appeal arises out of the following facts:
The Posts and Telegraphs Department has nine buildings within the
limits of Amritsar Municipal Corporation (hereinafter referred to as ’the
Corporation’). The appellant Corporation had issued notices to the
respondents for payment of service charges for providing various services
like water supply, street lighting, drainage and approach roads to the land
and buildings in the municipal area. However, the respondents did not make
any payment contending that the respondent-Department, being of Central
Government, the properties owned by them are exempt from all taxes.
Several demand notices, without any result, culminated in the notice dated
24.10.2000. Being aggrieved by the aforesaid notice, the respondents had
taken the matter before the High Court, which was allowed and the aforesaid
notice was set aside. The High Court, having noticed the earlier judgment of
the Division Bench dated 19th December, 2000, held inter-alia that the
demand of service charges made by the Municipal Corporation was violative
of Article 285 of the Constitution.
We have heard learned counsel for the parties.
The questions revolve around for determination in this appeal are:
(a) Whether the demand for service charges, so made by the
Corporation against the respondents is by way of ‘service charge’
or by way of ’tax’?
(b) If it is held that the demand so made was by way of ‘tax’, whether
the same is violative of Article 285(1) of the Constitution of
India.
Before we advert further we may, at this stage, peruse the demand
notice dated 24.10.2000. It reads:
"The Joint Commissioner
Municipal Corporation,
AMRITSAR.
To
The Assistant Engineer,Civil
Postal Civil Sub Divisions,
Jalandhar City.
No. J.C/I.S./319 Dated 24.10.2000
Sub: Payment of Service Charges of the properties owned
By P & T Department, Amritsar.
\005\005..
Whereas a notice of demand in respect of service charges
in lieu of tax on land and Buildings with regards to the
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following properties owned by P & T Department Amritsar for
the period mentioned against each property, was served on the
Senior Superintendent of Post Offices Amritsar vide letter Nos.
PT/IS/307 dt. 19.7.95, EO/TS/252 dt. 23.5.97, EO/TS/1274 dt.
19.3.97, AC/TS/254 dt. 9.9.98 & No. AC/TS/627 dt. 6.1.99:
S.No. Name of Deptt. & Location Year Amount
1. General Post Office & Telegraph Office 1.4.67 2,33,296.65
& Quarters New/XIII, Amritsar to
31.3.2K
2. Post Office, Kt. Mohar Singh,Amritsar do 29,173.80
3. Post Office, KT Bhai Sant Singh, do 26,298.00
New/X, Amritsar
4. Post Office, Durgiana Mandi New/XVI, do 18,336.47
Amritsar
5. Post Office, Chhoharta, New XXII, do 17,036.42
Amritsar
6. Post Office,Hide Market New/XV, do 14,492,95
Amritsar
7. Post Office, KT. Sher Singh, New/XII, do 38,114.41
Amritsar
8. Post Office, Kairon Market New/1, do 39,011.36
Amritsar
9. Post Office, Chowk Phagwara do 34,845.50
4,51,105.56
Whereas Service Charges in respect of properties of
Central Government are payable by the respective Deptt. to the
Municipal Corporation of the rates varying from 33.1/25% to
75% as decided by the Government of India, Ministry of
Finance in its letter No. 14(1)P/52-I dated 10.5.54 and No.
4(7)P/65, dated 29.3.67 (copy enclosed). According to para
(ii)(c) of the letter dated 29.3.67, in respect of colonies where
all the services normally are provided by the Municipal
Corporation to the residents of other areas are being availed of,
Service charges will be paid at 25% of the property tax rate
realized from the private individuals. The next ratable
value/annual value for the purpose of these instructions shall be
9% of the capital value of the property concerned both in
respect of residential and non-residential properties.
Whereas the office of P&T Department has failed to
deposit the amount as specified in the notice of demand raised
vide letters mentioned above amounting to Rs. 4,51,105.56.
Now, I, Gurwaryam Singh, PCS, Joint Commissioner,
Municipal Corporation, Amritsar exercising the delegated
powers of Commissioner, Municipal Corporation, Amritsar
conferred on me vide office order No. C/242 dated 4.8.1999
direct that the Service Charges of the buildings owned by P&T
Department may be paid within 30 days failing which the
moveable property lying in the said properties would be
attached and retained to be sold in order to recover the arrears
of service charges by public auction.
Encl: As above Sd/-
(Gurwaryam Singh)
Joint Commissioner,
Municipal Corporation,Amritsar
Exercising the powers of Commissioner
Municipal Corporation, Amritsar."
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Article 285(1) provides that the property of the Union shall, save in so
far as Parliament may by law otherwise provide, be exempt from all taxes
imposed by a State or by any authority within a State.
As observed from the impugned notice, the whole basis of the demand
notice was in pursuance of the letters/circulars issued by Government of
India, Ministry of Finance being Nos. 14[1]-P/52/1 dated 10.5.54 and 14(7)-
P/65 dated 29.3.67. It is argued by Mr. Mahabir Singh, learned counsel that
the Corporation is justified and entitled for payment of service charges in
view of the circulars issued by the Government of India, as referred to
above. We are unable to countenance with this contention of the learned
counsel. The circulars, aforesaid, issued by the Union of India were
administrative in nature. It is now settled principle of law that
administrative circulars cannot override the constitutional provisions. The
Government of India circular, as referred to above, was issued by one
Deputy Secretary to the Government of India. By no stretch of imagination
such circulars, issued by the Deputy Secretary to the Government of India,
can be said to have any overriding effect over the mandate of Article 285(1)
of the Constitution. We are, therefore, of the view that the circulars so
issued, as noticed above, do not alter the position with regard to the bar
imposed by Article 285(1) of the Constitution. The interplay of the
constitutional and legal provisions being well cut and well defined requires
no marked elaboration to stress the point.
The question, whether the demand so made was by way of ‘service
charge’ or ‘tax’, need not detain us any longer. The demand so made was
with regard to the services rendered to the respondents’ department, like
water supply, street lighting, drainage and approach roads to the land and
buildings. In the counter, the respondents averred that they are paying for
the services rendered by the appellant-Corporation by way of water &
sewerage charges and power charges separately. It is also categorically
averred that no other specific services are being provided to the respondents
for which the tax in the shape of service charges can be levied and realized
from the respondents. There is no provision in the Municipal Corporation
Act for levying service charges. The only provision is by way of tax.
Undisputedly, the appellant-Corporation is collecting the tax from general
public for water supply, street lighting and approach roads etc. Thus, the
"tax" was sought to be imposed in the garb of "service charges". The
interplay of the constitutional and legal provisions being well cut
and well defined, it was clearly not within the competence of
the Corporation to impose tax on the property of the Union of India, the
same being violative of Article 285(1) of the Constitution.
Furthermore, the issues raised herein are no more res-integra. This
Court, in (1992) 1 SCC 100 Union of India v. Purna Municipal
Corporation & Ors. considered an identical question and held that Section
135 of the Railways Act, being an Act of the Central Government and saved
by clause (1) of Article 285 of the Constitution, clause (2) of Article 285 was
not attracted, and the Municipal Corporation was restrained from demanding
tax by way of service charges from railways. This is what this Court has said
in para 5 of that judgment:
"The aforesaid provisions, existing as it is, in terms permits
taxation of railways by the local authority in the manner given
therein; the Central Government being the controlling and the
regulating authority permitting liability at a given point of time,
its extent and manner. The Indian Railways Act being a central
enactment has no role to play in sub-article (2) of Article 285,
for that is a sphere in which the State legislation operates. The
reasoning of the High Court to oust the applicability of Section
135 of the Indian Railways Act on the test of sub-article (2) of
Article 285 was totally misplaced, as also in not venturing to
create room for it in sub-article (1) of Article 285. The
interplay of the constitutional and legal provisions being well
cut and well defined requires no marked elaboration to stress
the point. Accordingly, we allow this appeal, set aside the
judgment and order of the High Court and issue the writ and
direction asked for in favour of the Union of India restraining
the respondent council from raising demands on the railway in
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regard to service charges."
The same view was reiterated in (1996) 7 SCC 542 Union of India
& Anr. v. Ranchi Municipal Corporation & Ors.
For the aforesaid reasons, the appeal is devoid of merits and it is
accordingly dismissed with no order as to costs.