IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.07.2010 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NO.13990 of 2002 Union of India rep. By its Development Commissioner Madras Export Processing Zone Ministry of Commerce, National Highway 45 Tambaram, Chennai-45. .. Petitioner Vs. 1.The Commissioner, Tambaram Municipality, Tambaram West, Chennai-34. 2.State of Tamil Nadu, rep. By its Secretary to Government, Municipal and Water Supply Department, Fort St. George, Chennai-9. .. Respondents This is a writ petition under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the proceedings of the first respondent in ROC No.1593/2000/A2 dated 6.3.2002 and to quash the same and consequently, forbear the first respondent from levying, assessing and recovering property tax in respect of the petitioner's Administrative Building situated at NH 45, Tambaram, Chennai-45 in violation of Articles 285 and 265 of the Constitution of India and without a legislative authority in violation of Section 82(2)(ii)(aa) of the Tamilnadu District Municipalities Act, 1920 which is applicable to "Industrial Estates" established or under the Authority of State Government and arbitrarily enhancing the property tax in violation of Article 14 of the Constitution of India. For Petitioner : Mr.K.M.Vijayan, SC for Mr.B.Saravanan For Respondents: Mr.K.R.Tamilmani for R-1 Mr.M.Dhandapani,Spl.G.P. for R-2 https://hcservices.ecourts.gov.in/hcservices/ ORDER This writ petition is filed by the Union of India represented by its Development Commissioner, Madras Export Processing Zone (for short MEPZ). In the writ petition the challenge is to the notice issued by the first respondent Municipality, dated 6.3.2002 demanding property tax in respect of the building in which the Administrative Office of the Development Commissioner, MEPZ is situated. 2.The writ petition was admitted on 24.04.2002. Pending the writ petition, this court granted an interim injunction with a condition that the petitioner pays the tax before revision along with 30% of revised tax. Subsequently, by an order, dated 2.9.2003, the interim injunction granted was made absolute. It was also recorded that the petitioner had complied with the conditional order. 3.It is the claim of the writ petitioner that the property tax was levied in respect of the following buildings as set out in paragraph 5 of the affidavit, which is as follows: Sl.N o Particulars Assessment No. of Tambaram Municipality 1 SDF-1 Building (Standard Design Factory Building) 1461 2 Jewellery, SDF Building 1462 3 Administrative Office Building 1454 4 Transformer rooms in MEPZ 1444 5 Security Rooms in MEPZ 1445 6 Security Rest Room 1453 4.It was claimed that since the Development Commissioner is functioning under the Ministry of Commerce, the entire land where the MEPZ is situated belong to the Union of India. No property tax can be levied in view of Article 285 of the Constitution of India. It was also claimed that the very MEPZ itself came into existence pursuant to the enactment of the Special Economic Zone Act, 2005. Under Section 11 of the said Act, Development Commissioners are appointed. The petitioner is the Development Commissioner and the properties are administered by him. For the purpose of administering the MEPZ and its properties, the Development Commissioner has his administrative building and there are other buildings as set out above. 5.In response to these allegations, a common counter affidavit in the writ petitions filed in respect of the other industrial units located inside the MEPZ was filed. But, insofar https://hcservices.ecourts.gov.in/hcservices/ as the allegation made in this writ petition that the Development Commissioner is a functionary of the Central Government and the buildings in which his administration is carried on to maintain the MEPZ is owned by the Central Government, there is no denial by the first respondent. 6.Mr.K.M.Vijayan, learned Senior Counsel for the petitioner stated that the petitioner is a Central Government Establishment and it is constitutionally protected under Article 285 of the Constitution of India from any State Taxation. Article 285 of the Constitution 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 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." 7.The said provision came to be considered in relation to local bodies claiming taxes/service charges from such Central Government Establishments. The Supreme Court vide its Judgment in UNION OF INDIA AND ANOTHER Vs. RANCHI MUNICIPAL CORPORATION, RANCHI AND OTHERS reported in (1996) 7 SCC 542, after referring to its earlier Judgment in UNION OF INDIA v. PURNA MUNICIPAL COUNCIL reported in (1992) 1 SCC 100, has held as follows: "4. The controversy is no longer res integra. This Court in Union of India v. Purna Municipal Council had held that Section 135 of the Railways Act is subject to the provisions of Article 285 of the Constitution. Therefore, the respondent Municipality was restrained from demanding any payment by way of service charges from the Railways. Shri M.P.Jha, learned counsel appearing for the Municipality, sought to rely on clause (4) of Section 135 of the Railways Act which contemplates a contract between the Central Government and the Municipality and payment thereof on the basis of the said contract. In this case, the contract now sought to be relied upon is only to relieve distress warrant pending disposal of the dispute in the High Court. Therefore, it https://hcservices.ecourts.gov.in/hcservices/ cannot be construed that there is any contract between the Union of India and the Municipality. In view of the fact that the Municipality has no right to demand service charges from the Union of India, the demand made by the Municipality is clearly ultra vires its power. It is true that earlier W.P.No. 2844 of 1992 was filed and was dismissed by the High court and the special leave was refused by this Court on the ground of gross delay." 8.Further, in the Judgment in UNION OF INDIA v. PURNA MUNICIPAL COUNCIL reported in (1992) 1 SCC 100, in paragraph No.5 it has been held as follows: "5.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 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 185, 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 required 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 railways in regard to services charges." (Emphasis added) 9.Thereafter the Supreme Court in MUNICIPAL CORPORATION, AMRITSAR Vs. THE SENIOR SUPERT. OF P.O., AMRISTR DIVL. reported in JT 2004 (1) S.C. 561, after affirming the earlier two decisions, granted the relief to A Central Government Establishment. The facts of that case was set out in paragraph No.2, which is as follows: "2.1. The Posts and Telegraphs Department has nine buildings within the limits of Amristsar Municipal corporation (hereinafter referred to as "the Corporation"). The appellant https://hcservices.ecourts.gov.in/hcservices/ Corporation had issued notices to the respondents for payment of service changes 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 2.10.2000. 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." 10.In response to the demand made made by the local body (i.e. Municipal Corporation of Amristar, the Supreme Court in paras 7 and 8 has held as follows: "7........ 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. 8.......... 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." 11.The very same question also came to be considered by this court in respect of an another Central Government establishment, vide its judgment in Principal Accountant General (Civil Audit), Tamil Nadu and Pondicherry Lekha Pariksha Bhavan, Chennai-600 018 Vs. Commissioner, Corporation of Chennai, Rippon https://hcservices.ecourts.gov.in/hcservices/ Buildings, Chennai-600 002 reported in 2010 (5) MLJ 241. 12.In the light of these legal precedents and in the teeth of Article 285 of the Constitution, the first respondent Corporation cannot demand any property tax from the petitioner. In the light of the above, the writ petition will stand allowed. However, there will be no order as to costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar vvk To 1.The Commissioner, Tambaram Municipality, Tambaram West, Chennai-34. 2.The Secretary to Government, State of Tamil Nadu, Municipal and Water Supply Department, Fort St. George, Chennai-9. AKR(CO) km/6.8. W.P.NO.13990 of 2002 https://hcservices.ecourts.gov.in/hcservices/