Madras High Court
The Central Ware Housing Corporation vs The State Of Tamil Nadu on 2 March, 2023
Author: B.Pugalendhi
Bench: B.Pugalendhi
WP(MD)No.7953 of 2010
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 26.04.2022
PRONOUNCED ON : 02.03.2023
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
WP(MD)No.7953 of 2010
and
WMP(MD)No.1 of 2010
The Central Ware Housing Corporation,
Nagercoil Branch,
Represented by the Regional Corporation
(Regional Office),
No.4, North Avenue,
Srinagar Colony,
Saidapet,
Chennai – 600 015. ...Petitioner
Vs.
1.The State of Tamil Nadu,
Represented by the Secretary to Government,
Municipal Administration and
Water Supply Department,
Fort St George,
Chennai.
2.The Chairman and Members
of the Taxation Appeal Committee,
Nagercoil Municipality,
Nagercoil.
3.The Commissioner,
Nagercoil Municipality,
Nagercoil. ...Respondents
1/19
https://www.mhc.tn.gov.in/judis
WP(MD)No.7953 of 2010
PRAYER: Writ Petition filed under Article 226 of the
Constitution of India, for issuance of certiorarified
mandamus to call for the records of the third
respondent in Assessment No.90081 dated 11.12.2008
and the consequential appeal order passed by the 2nd
respondent in AP.No.46/09/A2, dated 28.01.2010 and
quash the same as unconstitutional and illegal and
direct the 3rd respondent to act as per the mandate of
the Constitution of India.
For Petitioner : Mr.M.Azeem
For R1 : Mr.G.Gandhiraj,
Special Government Pleader
For R2 & R3 : Mr.P.Athimoola Pandian
ORDER
The petitioner is the Central Warehousing Corporation, Nagercoil Branch filed this writ petition through its Regional Manager as against the assessment notice issued by the Commissioner of Nagercoil Municipality dated 11.12.2008 and as against the assessment of building tax for the petitioner's building with at Rs.92,406/- per half year with effect from 01.04.2008 and the order of the 2nd respondent/ Taxation Appeal Authority dated 28.01.2010 and for consequential direction to the 3rd 2/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 respondent to assess the property tax as per Article 285 of the Constitution of India and under Section 3 of the Warehousing Corporation Act, 1962.
2.The learned Counsel for the petitioner submits that the building of the petitioner's Corporation being a building of the Union of India shall not be levied with the building tax by the third respondent in view of the specific prohibition under Article 285 of the Constitution of India. The petitioner has also put on notice about this constitution mandate to the 3rd respondent by way of a representation dated 30.05.2010 but without considering it, the 3rd respondent issued the impugned proceedings dated 11.12.2008 fixing the property tax at Rs.92,406/- per half year as building tax for the buildings of the petitioner corporation.
3.The learned Counsel further submits that the 3rd respondent has not provided any amenity to the petitioner corporation and even if such amenities are provided, the service charges ought to be charged at 3/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 33 1/3% of the tax levied to the similarly situated government building, as per the official memorandum issued by the Government of India, Ministry of Urban Development, dated 26.04.1994. These guidelines issued by the Ministry of Urban Development were considered by the Hon'ble Supreme Court in Rajkot Municipal Corporation and Others Vs Union of India, in Civil Appeal No.9458 to 9463 of 2003 dated 19.11.2009 and the Hon'ble Supreme Court has framed certain guidelines for payment of service charges by the Central Government Departments to the Urban Local bodies. The petitioner is stocking the agricultural produce of the agriculturists and such stocked goods are meant for public distribution system of the government and therefore, no building tax can be levied to the petitioner's building.
4.The learned Counsel for the petitioner has relied on the following judgments in support of his contention:
4/19
https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 i. Rajkot Municipal Corporation and Others Vs Union of India [Civil Appeal Nos.9458 to 9463 of 2003];
ii.Municipal Corporation, Amiristar Vs Senior Superintendent of Post Office, Amiristar Division, reported in 2004 SC 2912;
iii.International Airport Authority of India Vs Municipal Corporation of Delhi and ors reported in AIR 1991 Delhi 302;
iv.Magdoom Sheriff Vs Kancheepuram Municipality reported in 1993(2) MLJ 262;
5.The learned Counsel for the respondents submits that the petitioner is claiming exemption from the property tax that the petitioner is the Government of India undertaking and therefore, the petitioner is not liable to pay tax. The issue whether the writ petitioner Central Warehousing Corporation is an undertaking of Government of India was already decided in AS.No.144 of 2000 vide judgment dated 30.10.2000 in the petitioner's own case. In the aforesaid judgment this Court has relied 5/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 on the decision of the Hon'ble Supreme Court in Hotel Corporation of India Vs State and Others, reported in AIR 2001 Jammu and Kashmir Page 36 and in the International Airport Authority of India Vs Municipal Corporation of Delhi AIR 1991 Delhi page 302 and held that the plaintiff (Central Ware Housing Corporation) does not come within the purview of the building of Central Government and therefore, the defendant is empowered to levy taxes upon the plaintiff. The petitioner Corporation has not preferred any appeal against the said judgment and the same has attained finality. Therefore, the plea of the petitioner that they are Government of India undertaking and they are exempted from paying tax is not sustainable in law. The petitioner is only an undertaking and therefore, the building does not belong to the Government of India and therefore, the petitioner is liable to pay the property tax.
6.The learned Counsel for the respondents further submits that imposing of property tax is a statutory duty cast on the 3rd respondent and there 6/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 cannot be any injunction against the statutory duty. Section 81 of the Tamil Nadu District Municipalities Act grants power to impose property tax to building and land. The revision of property tax has been carried on based on the State government's notification and guidelines issued periodically. The petitioner has already filed a suit in OS.No.413 of 2001 before the learned Principal District Munsif Court, Nagercoil and the suit was decreed in favour of the petitioner. But this claim of the petitioner that the building belongs to the Central Government was negatived by this Court in AS.No.144 of 2000. Therefore, there will not be any bar in levying the property tax and the subsequent decree in OS.No.413 of 2001 would become nullity.
7.This Court considered the rival submissions and perused the materials placed on record.
8.The origin of this issue goes to the demand notice issued by the 3rd respondent on 15.12.1997 where half yearly tax was increased from Rs.11,772/- 7/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 to Rs.30,802/-. The reason given by the respondent for this hike was in view of the construction of new buildings. On an appeal to 2nd respondent this amount was even reduced to Rs.24,640/- by order dated 04.04.2001. This was challenged by the petitioner in OS.No.413 of 2001 before the Principal District Munsif Court, Nagercoil. The suit was decreed by order dated 18.11.2003 declaring the increase in tax as void and arbitrary. Since the grievance of the petitioner in the suit was that the demand notice was issued without inspecting the property, the 3rd respondent issued a notice dated 13.11.2007 to the petitioner to inspect the property for reassessment. Subsequently the 3rd respondent issued a notice dated 27.11.2007 to the petitioner demanding Rs.8,37,142/- with tax calculated at Rs.61,604/- per half year from 2000-01 to 2007-08. Against this the petitioner sent a reply dated 03.01.2008, citing the decision of the court in OS.No.413 of 2001. However, the 3rd respondent issued a new assessment order dated 11.12.2008 stating the new assessment value as Rs. 92,406/- and the existing assessment value to be Rs. 8/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 61,604/-, which order is impugned in this writ petition. This order of new assessment is issued pursuant to the government order in GO.Ms.150 dated 12.11.2007, issued for increasing the rental value of the property. The revision filed by the petitioner as against the new assessment order was rejected by the 3rd respondent on 23.01.2009 and consequently he issued a demand notice dated 21.08.2009, demanding Rs.10,10,182/- calculated at Rs. 61,604/- per half year from 2002-03 to 2007-08 and at Rs.92,406/- per half year from 2008-09 to 2009-10. The petitioner sent a reply on 31.08.2009 refusing to pay the new assessment order and preferred an appeal in AP.No.46/09/A2 before the second respondent and it was also dismissed by order dated 28.01.2010, which is the consequential impugned order under challenge in this writ petition.
9.The case of the petitioner is that the petitioner Corporation is a Government of India undertaking and it is exempted from the property tax as per Article 285 of the Constitution of India. 9/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 Article 285 of the Constitution of India is extracted hereunder for easy reference.
“285. Exemption of property of the Union from State taxation (1)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 (2)Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.”
10.The petitioner earlier filed a suit in OS.No. 110 of 1997, to declare the enhancement of tax from Rs.78,965/- to Rs.4,75,790/- as void, arbitrary and untenable. This suit was dismissed by the trial court and on appeal by the petitioner, this court in AS.No. 10/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 144 of 2000 after consideration of facts and law held that the petitioner’s building cannot be considered as central government building and it does not fall within the ambit of Article 285. This court came to the decision that the petitioner’s building does not come within the purview of central government by relying on the judgment of the Hon’ble Supreme Court in Hotel Corporation of India v. State & Ors, AIR 2001 J&K 36 and International Airport Authority of India vs. Municipal Corporation of India & Ors., AIR 1991 Delhi 302. However, this court remanded the matter back to the trial court to frame an issue and determine on the aspect whether the taxes were evaluated as per section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. The trial court after remand, decreed the suit holding that no evidence was produced by the respondents to show that the calculation was done as per section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. However, the finding pertinent to applicability of Article 285 of the Constitution of India remains valid and unchallenged by the 11/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 petitioner. Since the issue remains decided by this court, the question of exemption under Article 285 does not arise here.
11. It is relevant to extract the findings of the appellate Court in AS.No.144 of 2000 dated 30.10.2018 as follows:
“15. From the close reading of the decisions referred to earlier, it is made clear to the Court that the plaintiff does not come within the purview of the building of Central Government and therefore, the defendant is empowered to levy taxes upon the plaintiff.
16.In view of the discussion made earlier, it is very clear that the argument advanced by the learned Counsel appearing for the appellant/ plaintiff does not hold and whereas the argument advanced by the learned Counsel appearing for the respondent/ defendant is really having subsisting force.
17.It has already been pointed out that with regard to second legal aspect raised in the plaint the trial Court has 12/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 not framed any issue and further there is no document on the side of the defendant so as to come to a conclusion that the tax in question has been revised as per fair rent fixed on the basis of Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act (XVIII of 1960). Since no specific issue has not been raised with regard to the second legal point urged on the side of the plaintiff, as stated by the trial Court are liable to be set aside and the suti is liable to be remitted to the file of the trial Court.
18.In fine, this appeal is allowed without costs. The judgment and decree passed by the trial Court in original suit No.110 of 1997 by the Subordinate Court, Thanjavur are set aside and Original Suit No.110 is remitted to the file of the Trial Court. The trial Court is directed to frame suitable issue with regard to the second legal point urged on the side of the plaintiff and the trial Court is also directed to dispose of the suit within three months from the date of the receipt of records and report the same to the Registry without fail. Both parties are entitled to adduce additional evidence.13/19
https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 The Court fee paid on the appeal memorandum is ordered to be returned forthwith.”
12.The petitioner relying on a letter dated 7.01.2010 issued by the Ministry of Consumer Affairs and the Official Memorandum of the Ministry of Urban Development dated 15.12.2009 issued pursuant to the judgment in Rajkot Municipal Corporation v. Union of India, CA.No.9458-9463 of 2003, would contend that no building tax is payable and only service charges at appropriate rate can be levied. The petitioner would further contend that even if service charge is payable, it is payable only at 33 1/3% since no amenities are provided by the respondent. These are applicable only if the petitioner’s building is a central government building. Since the issue regarding Article 285 remains decided against the petitioner, these contentions do not survive.
13.The learned Counsel for the petitioner has also contended that no spot inspection was done as 14/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 claimed by the respondents before the enhancement of tax. The Trial court in OS.No.413 of 2001 allowed the suit mainly on the ground that the respondents have stated newly constructed buildings as the reason for the enhancement of tax but has not substantiated the same with evidence. The spot inspection said to have done by the respondents pursuant to the suit in OS.No.413 of 2001, by notice dated 13.11.2007 remained ambiguous and disputed by the petitioner.
14. Therefore this Court in the earlier occasion based on the submissions made on either side, by order dated 31.03.2022 directed third respondent / the Commissioner, Nagercoil Municipality, Nagercoil to make a spot inspection of the subject property in the presence of the petitioner or any other authorised representative of the petitioner, to assess the property and fix the property tax payable by the petitioner together with arrears and also directed the respondents to file a report in a tabulated form showing the earlier and the present inspection measurements and the tax amount including the arrears.
15/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010
15.The respondent has conducted an inspection on the petitioner’s building and filed a report dated 04.04.2022. While so the petitioner has now come forward with a memo dated 18.04.2022 undertaking to pay the tax demanded in the impugned notice and the undertaking of the respondent is extracted as under:
“The petitioner undertakes to pay the arrears of tax stated by the 3rd respondent in their demand notice dated 27.01.2022 at Rs.30,97,174/- for the period 2003-2004 to 2021 to 2022 subject to the adjustment of all payments by the petitioner as per the pre-revised tax of Rs.11,772/- as on date.
2.The payment will be made on or before 30.04.2022 by way of DD/NEFT and the proof will be submitted before this Court.
3.Since the petitioner has paid the property tax from time to time as per the pre-revised rate and has not defaulted but has only claimed benefit under Article 285 of the Constitution of India and contested the hike in the determination of tax, the Court may take lenient view.” 16/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010
16.Pursuant to the above undertaking, the petitioner has also filed another memo dated 27.04.2022 that the petitioner has complied with his undertaking dated 18.04.2022 by furnishing a demand draft for a sum of Rs.30,97,174/- to the third respondent and the third respondent has also acknowledged the receipt of the above demand draft.
This amount of Rs.30,97,174/- is the amount claimed by the third respondent by Demand Notice dated 27.01.2020 from year 2002-03 to 2021-22.
17.The main objective of this writ petition is seeking relief under Article 285 of the Constitution of India, which is a settled issue as discussed above. In view of the subsequent development and the memo filed, this Writ Petition is closed as no further orders are required. No costs. Consequently connected miscellaneous petition is also closed.
02.03.2023 dsk 17/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 To
1.The Secretary to Government, Municipal Administration and Water Supply Department, Fort St George, Chennai.
2.The Chairman and Members of the Taxation Appeal Committee, Nagercoil Municipality, Nagercoil.
3.The Commissioner, Nagercoil Municipality, Nagercoil.
18/19 https://www.mhc.tn.gov.in/judis WP(MD)No.7953 of 2010 B.PUGALENDHI, J.
dsk ORDER MADE IN W.P(MD)No.7953 of 2010 02.03.2023 19/19 https://www.mhc.tn.gov.in/judis