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The Union of India, the appellant herein, approached the High Court under Article 226 of the Constitution challenging notices of demand issued by the Municipal Council, Purna, respondent No. 1 herein, claiming tax to the tune of Rs. 28,400/- by way of "Service charges" due for the period 1954 to 1.960. The claim of the Union of India primarily was based under Article 285 of the Constitution read with Sec- tion 135 of the Indian Railways Act, 1890. The High Court interplaying the two provisions negatived the claim of the appellant by holding as follows:

"In terms of Article 285(2) these properties will continue to be liable to such taxes 'until Parliament by law otherwise provides. Mr. Govilkar has not drawn our attention to any specific law made by the Parliament pro- viding otherwise. He, however, relied on section 135 of the Indian Railways Act, but, as indicated earlier, provisions of section 135 cannot have any overriding' effect against the continuance of such laws when authorised by Article 285 (2) of the Constitution. It is not possible for us to hold that Railways Act is an Act made by the Parliament as contem- plated under sub-Article (2) of Article 285 of the Constitution"

The view expressed by the High Court is obviously erro- neous. Section 135 of the Indian Railways Act, 1890 gets saved under Article 285(1) of the Constitution itself. The said Article provides that property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by the State or by any author- ity within a State. Section 135 of the Railways Act provides as under:

"Taxation of railways by local authorities:-

Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways from railways administrations in aid of the funds of local authorities, namely:.- (1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the (Central Gov-

The aforesaid provision, 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 liabili- ty 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 direction asked for in favour of the Union of India restraining the respondent council from raising demands on the railway in regard to service charges. We make it clear that the rights of the local authority as flowing under Section 135 of the Indian Railways Act, 1890 stand preserved in the event of the Central Government moving into the matter, if not already moved. In the circumstances of the case, however, there will be no order as to costs.