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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

SPECIAL CIVIL APPLICATION No 812 of 1998

with

SPECIAL CIVIL APPLICATION No 4859 of 1991

WITH

SPECIAL CIVIL APPLICATIONS NOS.2214/1997,

2161/2000, 1773/2001, 11439/2001,

7537/1998, 2990/1999

AND

SPECIAL CIVIL APPLICATION NO. 12090/2000

 

 

 

For Approval and Signature:

 

Hon'ble MR.JUSTICE R.K.ABICHANDANI

and

Hon'ble MR.JUSTICE KUNDAN SINGH

============================================================

1. Whether Reporters of Local Papers may be allowed : YES

to see the judgements?

2. To be referred to the Reporter or not? : YES

3. Whether Their Lordships wish to see the fair copy : NO

of the judgement?

4. Whether this case involves a substantial question : NO

of law as to the interpretation of the Constitution

of India, 1950 of any Order made thereunder?

5. Whether it is to be circulated to the concerned : NO

Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals?

--------------------------------------------------------------

UNION OF INDIA DY.ACCOUNTANT GENERAL

Versus

RAJKOT MUNICIPAL CORPORATION

--------------------------------------------------------------

Appearance:

1. Special Civil Applications Nos. 812/1998, 2161/2000,

1773/2001, 1773/2001, 11439/2001 & 12090/2000

MS. P.J. DAVAWALA for Petitioner

MR. A.K. CLERK for Respondents

2. Special Civil Application No. 4859 of 1991

MR. BIPIN I MEHTA for Petitioners

MR. P.M. THAKKAR for Respondent No. 1 - 2

MR M.G.NAGARKAR for Respondent No.3

3. Special Civil Application No. 2114 of 1997

MS. P.J.DAVAWALA for Petitioner

MR. A.J. PANDYA for Respondent No.1

TANNA ASSOCIATES for Respondent No.2

4. Special Civil Application No.7537 of 1998

MR. A.H. MEHTA for the Petitioner

MR. J.R.NANAVATI for Respondent No.2

5. Special Civil Application No. 2990 of 1999

MS. VASAVDATTA BHATT WITH MR. A.H.MEHTA for

the petitioner

MR. A.K.CLERK for the Respondents

--------------------------------------------------------------

CORAM : MR.JUSTICE R.K.ABICHANDANI

and

MR.JUSTICE KUNDAN SINGH

Date of decision: 19/09/2002

ORAL JUDGEMENT

(Per : MR.JUSTICE R.K.ABICHANDANI)

1. In this group of matters which are filed by the

Union of India, the demand notices and bills for recovery

of service charges in lieu of taxes issued by the

Municipal Corporations have been challenged. The

question raised before us by the petitioner - Union of

India is whether in view of the immunity from taxes

granted under the provisions of Article 285(1) of the

Constitution of India, these Corporations can issue such

bills and demand notices or take coercive measures

against the property of the Union of India for recovery

of property taxes or service charges in lieu of such

taxes.

2. The aforesaid question is raised, because, in

eight of these matters, Rajkot Municipal Corporation had

issued such demands for recovery of such service charges

in respect of properties of the Union of India housing

the offices of the Accountant General, Rajkot, Post

Offices and the Railway, and, in the remaining matter,

the Jamnagar Municipal Corporation had raised similar

demand for the Railway property.

3. Special Civil Applications Nos. 812 of 1998,

12090 of 2000 and 11439 of 2001 have been filed by the

Union of India through the Deputy Accountant General,

Rajkot. In Special Civil Application No. 812 of 1998,

the petitioner has challenged the bill dated 20th October

1997, at Annexure "A" to that petition, issued by the tax

Officer of the Municipal Corporation for a total sum of

Rs.14,66,640=00 in respect of the property occupied by

the office of the Accountant General, at Rajkot. The

petitioner also challenges the order dated 29-1-1998, at

Annexure "C" to the petition, restraining the petitioner

from dealing with the property since attachment warrant

was issued in respect thereof for recovery of the

aforesaid dues. The order was made under Rule 45(1) of

Chapter 8 of the Schedule to the Bombay Provincial

Municipal Corporation Act, 1949. The impugned bill at

Annexure "A" recited that it was issued in respect of the

property tax and water tax under Rules 39 and 40 of the

Schedule of Chapter 8 of the said Act. It appears from

the statement attached to that bill that it was prepared

on the basis of the property tax dues calculated from

1955-1956 upto 1997-1998 with general tax on property and

conservancy tax as the components. Special Civil

Application No. 12090 of 2000 also relates to the same

property of the Accountant General's office, Rajkot. The

bill impugned therein at Annexure "A" to the petition

(Bill No. 125101) was for the year 2000 - 2001 and it

was for a total sum of Rs.11,90,152=00 inclusive of the

arrears mentioned therein for service charges. Special

Civil Application No. 11439 of 2001 is filed by the

petitioner in respect of the property occupied by the

office of the Accountant General, Rajkot and bill at

Annexure "A" for the year 2001 - 2002 demanding a total

amount of Rs.13,14,656=00 inclusive of the previous dues

by way of service charges, is challenged in that

petition.

3.1 Special Civil Application No. 2990 of 1999 has

been filed by the Union of India in respect of the

property of the Western Railway rendered for which the

Rajkot Municipal Corporation issued a demand notice at

Annexure "A" to the petition demanding a sum of

Rs.16,26,49,575=00 as service charges from the Divisional

Manager, Western Railway, Rajkot in respect of the

property mentioned therein for which bill No. 18/5682

was received by the petitioners office on 18-2-1999, and

the said amount included arrears from 1-4-1954.

3.2 Special Civil Applications Nos. 2161 of 2000 and

1773 of 2001 have been preferred by the Union of India in

respect of the property occupied by the Post Master

General, Rajkot, challenging the demand notices, issued

by the Rajkot Municipal Corporation for the property in

question, for a sum of Rs.23,84,060=00 and the order

attaching the property and instructing the Senior Post

Master not to deal with the property so attached. The

demand notice and the order restraining the petitioner

from dealing with the property challenged in Special

Civil Application No. 2161 of 2000 are at Annexure "A"

and "B' to the petition, and similar orders for the

subsequent years which included the arrears, for the

recovery of the dues of the Corporation, are challenged

in Special Civil Application No. 1773 of 2001 at

Annexure "A" and "B" thereto.

3.3 Special Civil Application No. 4859 of 1991 is

also filed by the Union of India in respect of the

property occupied by the office of the Post Master

General, at Rajkot challenging the order dated 17-7-1991

at Annexure "A" to that petition, intimating the

petitioner that his property was attached and if the

amount was not paid in five days, it would be sold. The

demand notices dated 28th June 1991 have also been

challenged in that petition, which are at Annexure "G"

collectively. All these notices were issued by the

Rajkot Municipal Corporation.

3.4 Special Civil Application No. 2114 of 1997 has

been preferred against the Rajkot Municipal Corporation

again in respect of the property occupied by the office

of the Post Master General challenging the demand notices

dated 11th September 1996, at Annexure "A" to the

petition and the order dated 23rd February 1997, at

Annexure "B" to the petition, and the order dated 23rd

February 1997 at Annexure "B" to the petition, for

recovery of Rs.21,97,996=00 from the petitioner towards

service charges in respect of the property in question.

4. Special Civil Application NO. 7537 of 1998 has

been filed by the Union of India in respect of the

property occupied by the Railways at Jamnagar challenging

the demand notice issued by the respondent - Jamnagar

Municipal Corporation and received by the petitioner's

office on 24-6-1998, at Annexure "A" and "B" to the

petition, demanding a total amount of Rs.8,61,87,780=00

by way of service charges in lieu of the property taxes

in respect of the property in question. The demand

notice at Annexure "A" to that petition, dated 24-6-1998,

referred to general tax and conservancy tax, as also

education cess and the petitioner was warned that if the

amount of Rs.99,043=00, which included penalty for the

tax due till 31st March 1998, was not paid, attachment

warrant will be issued. The notice at Annexure "B" to

the petition dated 24-6-1998 was for the years 1992-93 to

1997-98 demanding the aforesaid amount of

Rs.8,61,87,780=00 in respect of the properties mentioned

therein. In the communication at Annexure "C" dated 28th

April 1998, the respondent - Municipal Corporation,

Jamnagar required the Divisional Railway Manager, Rajkot

to pay up the said amount of service charges in lieu of

the property tax within 15 days.

5. The case of the Union of India in all these

matters is that the respondents - Municipal Corporations

cannot recover any tax including property tax or service

charges in lieu of the property tax, as is sought to be

done by them in respect of these properties, in view of

the exemption granted by Article 285(1) of the

Constitution of India. According to the petitioner, it

was not challenging the bills as such, but was

challenging the authority of the respondent -

Corporations to issue such demand notices and coercive

orders for recovery of taxes on the property belonging to

the Union of India or service charges in lieu of such

taxes under the provisions of the Bombay Provincial

Municipal Corporation Act. According to the petitioner,

by using the nomenclature "service charges", the nature

of coercive recovery which was tax in respect of the

property did not change. It was submitted that so far as

the property occupied by the railway is concerned, there

was no notification issued under section 184(1) of the

Railways Act, 1989, which corresponded to section 135(1)

of the Act of 1890. According to the petitioner, there

was also no contract as contemplated by sub-section (4)

of section 184 of the Railways Act, 1989. Therefore,

even in respect of the property occupied by the Railway,

the respondent - Corporations could not have effected any

recovery by way of service charges in view of the

provisions of Article 285(1) of the Constitution of

India.

5.1 Reliance was placed on behalf of the petitioner

on the decision of Hon'ble the Supreme Court in case of

Union of India v. Purna Municipal Council, reported in

AIR 1992 SC 1597, in which, the Supreme Court in respect

of similar demand notices issued by Municipal Council,

Purna claiming service charges in lieu of tax for the

period from 1954 to 1960, held that the view expressed by

the High Court that the properties continued to be liable

to taxes under Article 285(2) was erroneous. Allowing

the appeal, the Supreme Court issued a direction in

favour of the Union of India restraining the respondent

Municipal Council from raising demands on the Railway in

regard to service charges.

5.2 Reliance was also placed on the decision of the

Supreme Court in Union of India v. Ranchi Municipal

Corporation, reported in (1996) 7 SCC 542 in which the

Supreme Court, considering the question of validity of

demand by Ranchi Municipal Corporation of service charges

and following the Purna Municipal Council case, held that

section 135 of the Railways Act, 1890, was subject to the

provision of Article 285 of the Constitution. Therefore,

the respondent municipality was restrained from demanding

any payment by way of service charges from the Railway.

It was held that the municipality had no right to demand

service charges from the Union of India, and such demand

made by the municipality was clearly ultra vires its

power. When the Supreme Court was pointed out that, in

earlier Writ Petition No. 2844 of 1992, the Patna High

Court had held that the demand on account of service

charges was not demand of tax on the property of the

Railway and that it was liable to pay the service

charges, against which leave was refused and the Special

Leave Petition was dismissed on the ground of gross

delay, the Supreme Court held that it was settled law

that such summary dismissal of Special Leave Petition did

not constitute res judicata for deciding the controversy.

It would thus be clear that notwithstanding the earlier

summary dismissal of the Special Leave Petition filed

against the judgement and order of the Patna High Court

in Writ Petition No. 2844 of 1992, the Supreme Court

holding that the controversy was no longer res integra,

in terms, held that the municipality had no right to

demand service charges from the Union of India and that

such a demand was ultra vires its power.

5.3 Reliance was also placed on the decision of the

Supreme Court in Union of India v. The City Municipal

Council, reported in AIR 1978 SC 1803 for the proposition

that the property of the Union was exempt from all taxes

imposed by State or by any authority within the State

under Clause (1) of Article 285 unless the claim can be

supported and sustained within the four corners of clause

(2) of Article 285.

6. The respondent - Corporations have taken up a

stand that service charges were payable by the

petitioner. In the affidavit-in-reply of the Jamnagar

Municipal Corporation filed in Special Civil Application

No. 7537 of 1998, it is contended in paragraph 1.2 that

service charges were payable and the impugned action

could be taken under the provisions of the Bombay

Provincial Municipal Corporation Act. In paragraph 2 of

the affidavit-in-reply, it is in terms contended that the

properties of the petitioner which are within the

municipal limits were liable to municipal taxation in

accordance with law. It is stated that the respondent

corporation provides all facilities to the petitioner as

are being provided to the other residents of the

Corporation and therefore, the petitioner was liable to

pay municipal taxes including service charges to the

respondent corporation. According to the respondent

corporation, it was entitled to recover service charges

in lieu of the property taxes in respect of the railway

properties as per the notification of the Government of

India, dated 29th March 1967. It is stated that, under

the development plan, 30 meters wide road is passing

through the petitioner's land and the respondent

corporation had provided that public road in public

interest.

6.1 In the affidavit-in-reply filed by the Rajkot

Municipal Corporation in Special Civil Application No.

812 of 1998, it has been stated in paragraph 4 that the

petitioner was explained the calculation of the rateable

value and the calculation of the service charges over and

over again and that the calculation of rateable value was

based upon the information about the property supplied to

the Corporation by the petitioner. According to the

respondent corporation, the action was in consonance with

the circulars issued by the Ministry of Finance and that

the other properties of the Union of India occupied by

Air India Radio, Doordarshan Kendra, Telecommunications

etc. were subjected to service charges by the

Corporation. It is stated that, ascertaining the amount

of service charges and levying and recovering the same is

an administrative process for which the respondent

Corporation and its authorities are fully empowered under

the provisions of the Act. The service charges were

calculated at the rate of 75% of the general tax (house

tax) and conservancy tax payable by private individuals.

7. The learned Senior Counsel and other counsel

appearing for the respondent - Corporations contended

that the demands raised by the Corporations were in

consonance with the circular letters of the Central

Government issued in 1954 and 1967 which allowed the

Corporations to collect service charges in respect of the

properties of the Union of India. It was submitted that

the Central Government had agreed to pay, by way of

contribution to the local bodies such service charges and

it was now estopped from resiling from its commitment.

It was submitted that the question of applicability of

Article 285 did not arise, because, the Central

Government itself had in its declaration stated that

service charges would be paid notwithstanding the

provisions of Article 285. The character of such

liability arising because of such declaration on the part

of the Central Government was different and it entitled

the Corporations to raise demands for service charges and

recover the same in accordance with the provisions of the

Act. It was also contended that so far as the railway

properties are concerned, the circular letters issued by

the Central Government in 1954 and 1967 constituted a

contract which enabled the municipal corporations to

recover service charges as contemplated by those circular

letters. It was finally contended that the service

charges were recoverable by way of compensation by the

municipal corporations from the petitioner on the basis

of there being a quasi-contract and therefore, the

respondents corporations were justified in issuing the

demand notices and attempting coercive recoveries of

their dues.

7.1 In support of their contentions, the learned

counsel relied upon the following decisions :

[a] The decisions of the Supreme Court in Food

Corporation of India v. The Sub-Collector,

Narsapur, reported in AIR 1999 SC 2521 and in

Food Corporation of India v. Municipal

Committee, Jalalabad, reported in AIR 1999 SC

2573 were cited to point out that the Supreme

Court held that the Food Corporation of India

cannot claim exemption from taxation under

section 285 of the Constitution, because, it was

a distinct entity from the Central Government.

[b] The decision of the Supreme Court in Board of

Trustees for the Visakhapatanam Port Trust v.

State of Andhra Pradesh, reported in AIR 1999 SC

2552 was cited to point out that the Supreme

court, in the context of the property of the

Board of Trustees of Visakhapatanam Port Trust,

held that the Board was not exempt from taxation

under Article 285 on the ground that the property

was that of the Union of India. It was held that

the Board was distinct from the Union Government

and it could not claim exemption from taxation

under Article 285 of the Constitution.

8. Chapter XI of the Bombay Provincial Municipal

Corporation Act, 1949 relates to municipal taxation.

Property taxes are referred to in section 127(1)(a) which

the Corporation is empowered to impose. The property

taxes comprise water tax, conservancy tax, general tax

and betterment charges as provided by section 129 of the

said Act and these can be levied on buildings and lands

in the City subject to the exceptions, limitations and

conditions provided in the Act. Section 130 provides for

levy of water tax in respect of premises referred to

therein, while section 131 provides that conservancy tax

shall be levied on the premises indicated therein.

General tax is leviable under section 132 in respect of

all buildings and lands, as stated therein. Under

section 132(1), the general tax is not payable on

buildings enumerated thereunder, which include buildings

and lands vesting in the Government used solely for

public purposes. So far as the State Government is

concerned, section 133(1) provides for payment to be made

to the Corporation in lieu of general tax by the State

Government, for which the buildings and lands vesting in

it are exempt by clause (c) of sub-section (1) of section

132. There is no similar provision for the Central

Government. Under section 135, if, in respect of

premises used solely for public purposes and not used or

intended to be used for purposes of profit or for

residential, charitable or religious purposes, water tax

would be leviable under this Act from the Government, the

Commissioner, in lieu of levy such tax, shall charge for

the water supplied to such premises, by measurement, at

such rate, as shall be prescribed by the Standing

Committee.

8.1 Chapter VIII of the Schedule to the said Act,

which contains Taxation Rules, provides for collection of

taxes, and Rules 40, 41 and 42 lay down the procedure for

recovery of taxes by issuance of bill, the notice of

demand and distress or attachment. The impugned demand

notice and orders clearly show that the Corporations have

exercised their powers of coercive recovery of taxes

under the said Act and the Rules.

9. Article 285 of the Constitution which is invoked

by the Union of India in all these petitions, reads as

follows :

"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 provide,

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."

9.1 It will be noticed that, under Article 285(1),

there is an exemption in respect of the property of the

Union from all taxes imposed by a State or by any

authority within a State. The Municipal Corporation

would be an authority within a State and therefore, even

a Municipal Corporation cannot impose taxes on the

property of the Union which may be within its limits

unless law made by the Parliament otherwise provides.

The words "save in so far as Parliament may by law

otherwise provide" clearly rule out any method short of

enacting such law by the Parliament for taking away the

exemption conferred by Article 285(1) from all taxes

imposed by a State or by such authority within the State.

So far as the premises occupied by the Postal Department

and the Accountant General are concerned, it is not even

urged that there is any law made by the Parliament taking

away the exemption, from taxes by the State or any

authority within the State, which has been granted in

respect of the properties of the Union.

9.2 On the basis of the provisions of section 135(1)

of the Railways Act 1890, it was sought to be contended

that the readiness of the Central Government in the

communications dated 10th May 1054 and 29th March 1967 to

pay service charges equivalent to 75% of the property tax

realised from private individuals, where the services are

availed of by the Central Government, should constitute

sufficient authorization to the respondents corporations

to raise such demands and effect the recovery of service

charges in lieu of taxes. Admittedly, there has been no

notification issued under section 135(1) of the Railways

Act 1890 or under section 184(1) of the Railways Act,

1989, declaring the railway administration to be liable

to pay the taxes. Nothing short of such notification can

create such liability, because, the extent of liability

will be determined by the provisions made by the

Parliament, as contemplated by Article 285(1), and when

the provision of law made by Parliament i.e. section

184(1) of the Railways Act 1989, lays down that it is

only by way of notification in official gazette that the

railway administration can be declared to be liable to

pay the taxes, the exemption could be taken away only

when such notification is issued and published in the

official gazette and not otherwise. Section 184(1) of

the Act of 1989 refers to such notification, which has

been defined by section 2(26) so as to mean a

notification published in the official gazette.

Admittedly, no such notification has been published in

any official gazette in respect of the properties of the

railways declaring the railway administration to be

liable to pay any specified tax. Therefore, the railway

administration cannot be made liable to pay any tax in

aid of the funds of any local authority as laid down by

the first part of section 184(1) of the Railways Act,

1989, as also on the basis of the provisions of Article

285(1) of the Constitution.

9.2 In The Union of India v. Bhusawal Municipal

Council, reported in AIR 1982 BOM. 512, a Division Bench

of the Bombay High Court, construing the provision of

section 135 of the Railways Act 1890, held that, under

that section, unless the Railway Administration is

expressly declared as being liable to pay a tax, that tax

cannot be levied on the Railway Administration. Such

declaration has to be by a notification issued by the

Central Government.

9.3 In The Municipal Corporation of Greater Bombay v.

Akbar S. Sarela, reported in AIR 1990 BOM. 141 (decided

on 13th February 1959), a Division Bench of the Bombay

High Court, in context of the provisions of section 135

of the Railways Act 1890, held that, in order to attract

the provisions of sub-section (2) of section 135, not

only must there be a notification of the Central

Government under sub-section (1) of section 135, but

there must be a liability upon the Railway Administration

to pay a tax by virtue of the notification. It is only

when the Railway Administration is made prima facie

liable to pay a tax to a local authority that it can

approach the appropriate authority for determining the

quantum of such liability.

9.4 In Union of India v. Commr. of Sahibganj

Municipality, reported in AIR 1973 SC 1185, the Supreme

Court held that since there was no law providing for

taxation of Railway property and since the 32 blocks of

buildings were not in existence before April 1, 1937

(when Part III of the Government of India Act came into

force) or before commencement of the Constitution, the

buildings were not liable to pay any tax, by virtue of

Article 285. The 32 blocks of buildings vested in the

Union, some of them after April 1, 1937, and some after

the Constitution came into existence. It was held that

these properties could be made liable to pay tax to the

Municipality only if Parliament by law provided to that

effect.

9.5 In Union of India v. City Municipal Council,

reported in AIR 1978 SC 1803, it was held that the

exemption from all taxes given to the property of the

Union under clause (1) of Article 285 was subject to the

exception in clause (2) of Article 285 where such

property was exigible to tax immediately before the

commencement of the Constitution. The advantage of this

exception can be claimed only if (1) it is "that tax"

which continues to be levied and no other, and (2) the

local authority in "that State" claims to continue the

levy of the tax. In other words, the nature and the type

of tax and the property on which the tax was being levied

prior to the commencement of the Constitution must be the

same as also the local authority must be of the same

State to which it belonged before the commencement of the

Constitution. But in both these cases, under clause (1)

and clause (2), Parliament may make a law withdrawing the

exemption from imposition or the exception giving the

right to impose.

9.6 The word "Taxation" as defined in Article 366(28)

of the Constitution includes the imposition of any tax or

impost, whether general or local or special, and "tax"

shall be construed accordingly". Though it is not an

exhaustive definition and only shows what is included in

the word one is struck immediately by the width of its

language. Though it speaks of any tax or impost, it goes

a step further and adds "whether general, or local or

special", indicating thereby that no special or local

considerations are relevant and even a general

non-discriminatory levy must be regarded as taxation.

(See In re SEA CUSTOMS ACT, reported in AIR 1963 SC

1760). "Tax" would include also "rates" and other

"charges" levied by local authorities under statutory

powers. (See D.G.Gouse & Co. (Agents) Pvt. Ltd. v.

State of Kerala, reported in AIR 1980 SC 271). Thus,

unless the Parliament makes law as contemplated by

Article 285, exemption from taxes which include service

charges in lieu of taxes granted under that provision,

cannot be taken away.

10. The argument that the provision of sub-section

(4) of section 184 of the Railways Act, 1989 should be

invoked for holding that the Corporations were enabled by

the aforesaid communications of 1954 and 1967 to recover

service charges has no basis, for the simple reason that,

admittedly, there has not been entered into any contract

with the local authorities as contemplated by section

184(4) of the Railways Act 1989, and there cannot be any

implied contract spelt out from the unilateral

communications from the Central Government showing

readiness to pay by way of compensation for specified

services which are specifically rendered to the premises

of the Union Government. Under sub-section (4) of

section 184, it is provided that, nothing in this section

shall be construed to prevent any railway administration

from entering into a contract with any local authority

for the supply of water or light, or for the scavenging

of railway premises, or for any other service which the

local authority may be rendering or be prepared to render

to the railway administration. Obviously, this provision

speaks of contract in respect of particular service

specially provided to the railway administration and has

no application to the general taxes leviable under the

Bombay Municipal Corporation Act. None of the impugned

demand notices or recovery orders intimating attachment

of the properties of the Union Government are referable

to any contract and these have obviously been issued by

the Municipal corporation under the purported exercise of

powers to recover service charges in lieu of property

taxes. When the taxes themselves could not be levied

except by removing the exemption by law made by the

Parliament as contemplated by section 285(1), the embargo

cannot be taken away by any implication arising from such

administrative communications. Even if the respondents

were entitled to recover any compensation on the basis of

any alleged assurances of the Central Government, the

nature of their demand would have been entirely different

and not as has been made in all these matters by way of

recovery notices for tax dues and coercive action for

recovery of such dues. The attempt to base the

contention now on quasi-contract theory and entitlement

for compensation for services rendered, cannot cloud the

nature of the demand notices and the orders of recovery

which are issued under the provisions of the said Act and

the Rules having bearing on the aspect of levy and

recovery of municipal taxes. No exemption can be spelt

out from the communications of 1954 and 197 which can

make any inroad in Article 285(1) of the Constitution.

11. We may recall here that, in the Civil Writ

Jurisdiction Case No. 2844 of 1992 decided by the Patna

High Court which has been referred to in the decision of

the Supreme Court in Union of India case (supra), the

High Court had, in terms, relied upon these very circular

letters dated 10th May 1954 and 29th March 1967 and had

on the basis of these communications, upheld the demand

for recovery of service charges made by the Municipal

Corporation of Ranchi. Same question again arose before

the Supreme Court in Union of India v/s Ranchi Municipal

Corporation (supra) from the decision of the of a

Division Bench of the High Court rendered on 15-5-1999 in

Writ Jurisdiction Case No. 3323 of 1994 when the

municipality raised similar demand for service charges

from the Union of India. It was tried to be contended

before the Supreme Court that the Special Leave Petition

against the earlier judgement and order in Civil Writ

Jurisdiction Case No. 2844 of 1992 dated 6th April 1996

was rejected. The Supreme court, holding that such

summary dismissal did not constitute res judicata, held

that the Municipal Corporation had no power to recover

such service charges from the Union of India. Therefore,

the decision in Ranchi Municipal Corporation as well as

in Purna Municipal Council are directly applicable to the

present case and cannot be distinguished on any ground,

as was attempted to be done on behalf of the petitioners

by their learned counsel.

12. It is thus clear to us that, in absence of any

notification under section 184(1) of the Railways Act,

1989 or under the corresponding provision of section

135(1) of the Act of 1890, and in absence of any contract

as contemplated under sub-section (4) of section 189 or

under sub-section (4) of the corresponding provision of

section 135 of the Act of 1890, it was not open to any of

these Corporations to impose any tax or service charges

in lieu of tax under the said Act and effect recovery by

issuing the impugned demand notices and other coercive

orders. Admittedly, there is no law enacted by the

Parliament, withdrawing the exemption from municipal

taxes, as contemplated by Article 285(1) in respect of

the properties occupied by the Postal Department or

Office of the Accountant General. Obviously, therefore,

the recovery of property taxes or service charges in lieu

of such taxes as is sought to be done under the impugned

demand notices and orders issued for the coercive

recovery of the municipal taxes under the said Act, is

ultra vires the powers of the Municipal Corporations.

All the impugned notices, demand notices as well as other

orders issued by these Municipal Corporations for

effecting recovery of service charges in lieu of taxes

are, therefore, hereby set aside. Rule is made absolute

in each of these petitions accordingly, with no order as

to costs. If any amount is deposited pursuant to the

interim orders, that may be refunded to the Union of

India.

[R.K.ABICHANDANI, J.]

[KUNDAN SINGH, J.]

parmar*



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