Case: N.D.M.C Vs. State Of Punjab Etc. Etc

an Act from the attack of unconstitutionality, that interpretation should always be accepted in preference to an alternative interpretation that might also be possible, under which the statute would be void. However, this Court has consistently followed a policy of not putting an unnatural and forced meaning on the words that have been used by the Legislature in the search for an interpretation which would save the statutory provisions. We are not free to stretch or pervert the language of the enactment in the interests of any legal or constitutional theory In Re the Central Provinces and Berar Act No. XIV of 1938, (1939) FCR 18 at p. 37 : (AIR 1939 FC 1 at p. 4); also see : Diamond Sugar Mills Ltd. v. State of U.P., 1961(3) SCR 242. 122. The Act and the Delhi Municipal Corporation Act are ordinary Municipal Legislations. They do not, and cannot, purport to be laws made by Parliament under Art. 289(2). There is no reason why such a strained reasoning should be employed to save some of the taxes that may be capable of being imposed on certain properties of State Governments. There seems to be no pressing reason for invoking the doctrine. Reddy, J. has, in the earlier part of his opinion, held that a large number of properties of State Governments would be exempt from taxes leviable under these Acts due to the operation of Art. 289(1). To employ such reasoning to construe Art. 289(2) in a bid to save what would only be a reduced amount, does not seem justified. 123. The practical effect of the directions recommended by Reddy, J. is also worth noticing. It is abundantly clear that the task of determining which of the activities of Governments are governmental and which are commercial, is an extremely difficult one. Reddy, J. entrusts this assignment to the assessing authorities under the Acts who can only be Municipal authorities. This is an issue which has confounded Courts in the U.S. and in Australia for several years. This issue was considered to be so troublesome by the Framers that they entrusted it to Parliament in the hope that it would fully deliberate the matter before enacting a comprehensive legislation. 124. In the In Re : The Delhi Laws Act case, AIR 1951 SC 332 this Court authoritatively held that the legislature cannot delegate its essential policy-making function. Over the years, this Court has elaborated this proposition to hold that the legislature can delegate some of its legislative functions provided it lays down the policy in clear terms. The legislature is required to declare the policy of law in unambiguous terms, lay down elaborate legal principles and provide illuminating standards for the guidance of the delegate. Even though this Court has, on occasions, sanctioned very broad delegations of taxing power to Municipal Bodies, to delegate the task of carving out the distinction between governmental and business functions of State Governments to Municipal authorities would clearly be against the interdiction in the Delhi Laws Act case as the assignment requires not only the making of policy, but indeed, the making of very difficult and challenging policy choices. Reddy, J. has noted that the Delhi Municipal Corporation Act provides exemptions in favour of activities that are capable of being classified as charitable purpose, public worship etc. and states that to ascertain the ambit of these categories is an equally difficult task which is already being discharged by the assessing authorities. However, the point that needs to be emphasised, is that S. 115 of the Delhi Municipal Corporation Act defines these terms and provides guidelines in respect thereof. However, there is no provision in the Delhi Municipal Corporation Act which states that the trading and business operations of State Governments would be subject to property taxes. The Act is equally silent on this aspect. Consequently, no guidelines in this behalf are to be found within the parameters of these legislations. Under these circumstances, in the complete absence of any statutory policy or any guidelines for the delegation of such a policy, we believe that it would be impermissible and hazardous to directly assign such a function, nay power, to executive Municipal authorities. 125. The decision whether the properties of State Governments occupied for commercial purposes should be subject to the levy of Union Taxes is one that is required by Art. 289(2) to be made by a legislation which specifies the activities which would be liable to tax. This decision cannot be entrusted to Municipal functionaries. For these reasons, we find ourselves unable to agree with Reddy, J. in his finding that the properties of State Governments occupied by them for trade or business purposes are subject to the levy of taxes under the Act and the Delhi Municipal Corporation Act. We may now summarise our conclusions : i) The central issue in the present matter, namely, whether the properties owned by the States which are situated within Union Territories are exempt from paying property taxes, was specifically answered in the affirmative in the Sea Customs case (AIR 1963 SC 1760 ); the observations in this regard are part of the ratio decidendi of the case and having been reaffirmed by a Constitution Bench which was hearing a litigation inter partes in the APSRTC case (AIR 1964 SC 1486 ), they constitute good law; ii) The definition of State provided in S. 3(58) of the General Clauses Act, which declares that the word `State would include `Union Territory, is inapplicable to Art. 246(4); iii) The term Union Taxation used in Art. 289(1) will ordinarily mean all taxes leviable by the Union and it includes within its ambit taxes on property levied within Union Territories; therefore, the States can avail of the exemption provided in Art. 289(1) in respect of their properties situated within Union Territories; iv) Property taxes levied by Municipalities within Union Territories are properly within the ambit of the exemption provided in Art. 289(1) and the States can avail of the exemption.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Analysis of the decisions rendered in the Sea Customs case and the APSRTC case44. The decision in the Sea Customs case, (1964 (3) SCR 787 : AIR 1963 SC 1760 ), was occasioned by the emanation of a proposal to introduce in Parliament a Bill to amend Section 20 of the Sea Customs Act, 1878, and Section 3 of the Central Excises and Salt Act, 1944. These amendments would have led to the imposition of indirect taxes, namely, excise and customs duties upon the properties of various States which were being used for purposes other than those specified in Article 289(2), i.e., for purposes not relating to trade or business. A number of State Governments objected that such a law would fall foul of the interdiction in Article 289(1) and, in view of the resulting controversy, the President referred, under Article 143, the issue of the constitutionality of the proposed amendments to this Court. The issue was decided by a majority of 5 : 4. It was held that the immunity granted to States in respect of Union Taxation under Article 289 extends only to those taxes that are directly leviable upon the property and income of the States; since excise and customs duties are indirect taxes, they would not fall within the ambit of the exemption in Article 289 and Parliament could impose such duties upon the property and income of the States. There were two opinions outlining the majority view and an equal number for the minority. Sinha, C.J. delivered the first of the majority judgments on behalf of himself, Gajendragadkar, Wanchoo and Shah, JJ. while Rajagopala Ayyangar, J. delivered a separate, concurring opinion. S.K. Das, J. delivered the first of the minority opinions on behalf of himself, Sarkar and Das Gupta, JJ. while Hidayatullah, J. rendered a separate minority opinion.46. In his opinion for the majority, Sinha, C.J. has referred to the essential contentions urged before the Court. The Union urged that the exemption in Clause (1) of Article 289 be interpreted restrictively, limiting its applicability to direct taxes on the property and the income of States; the States, on the other hand, canvassed for an expansive interpretation which would exempt them from taxes having any relation whatsoever to their property and income. The learned Chief Justice noted that it was not disputed that the exemption in Article 289(1) was, as far as taxes on income are concerned, restricted to Taxes other than on agricultural income, which is the only entry (Entry 82) in List I of the Seventh Schedule which enables Parliament to legislate on taxes relating to income. The learned Chief Justice considered this to be a significant fact as it meant that if the income of State was exempt only from taxes on income, the juxtaposition of the words property and income in Article 289(1) would lead to the inference that property is also exempt only from direct taxes on property. However, it was pointed out by the States that List I does not contain any specific tax on property which would enable Parliament to pass a law relating to taxes on property and, that being so, the intention of the framers of the Constitution must have been to exempt the property of States from all taxes, be they direct or indirect. To meet this argument, the learned Solicitor General, appearing for the Union, put forth several arguments, one of which came to be accepted by the learned Chief Justice as the main plank upon which he based his rejection of the contention of the States. Since these observations are directly relevant to the present case, they may be extracted here at p. 812 (of SCR) (at Pp. 1772-73 of AIR).It is true that List-I contains no tax directly on property like List-II, but it does not follow from that that the Union has no power to impose a tax directly on property under any circumstances. Article 246(4) gives power to Parliament to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State. List. This means that so far as Union territories are concerned Parliament has power to legislate not only with respect to items in List I but also with respect to items in List II. Therefore so far as Union territories are concerned, Parliament has power to impose a tax directly on property as such. It cannot therefore be said that the exemption of States property under Article 289(1) would be meaningless as Parliament has no power to impose any tax directly on property. If a State has any property in any Union territory that property would be exempt from Union taxation on property under Article 289(1). The argument therefore that Article 289(1) cannot be confined to tax directly on property because there is no such tax provided in List I cannot be accepted.Thereafter, having referred to the language of Article 285 and the intention of the framers as perceived by him, the learned Chief Justice came to the conclusion that the immunity granted by Articles 285 and 289 was of similar ambit and extended only to direct taxes without exempting indirect taxes such as excise and customs duties.Thereafter, having referred to the language of Article 285 and the intention of the framers as perceived by him, the learned Chief Justice came to the conclusion that the immunity granted by Articles 285 and 289 was of similar ambit and extended only to direct taxes without exempting indirect taxes such as excise and customs duties.47. Das, J., in his dissenting opinion, noted the objection of the States that List I had no entry which would enable Parliament to levy a tax directly on property. He took note of the counter-arguments advanced by the learned Solicitor General in relation to this aspect but could not bring himself to agree with the correctness of those propositions. While referring to the argument on Article 246(4), he noted (at p. 843) :. . . .It would be a case of much ado about nothing if the Constitution solemnly provided for an exemption against property tax on State property only for such rare cases as are contemplated in Art. 246(4), the situation of State property in territory not included in a State. Such situation would be very rare, and could have hardly necessitated a solemn safeguard at the inception of the Constitution when the States were classed under Part A or Part B of the First Schedule. If the wider interpretation of Clause (1) of Article 289 is accepted, such property would also be exempted from Union taxation except in cases covered by Clause (2) of the Article. We find it difficult to accept the contention that clause (1) of Article 289 was meant only for cases covered by Article 246(4) . . .At this juncture, we may note that both Mr. Rao and Mr. Ganguli were at pains to point out that though Das, J. rejected the overall contention of the learned Solicitor General, he had, by stating that the exemption could not have been provided only for such rare cases as are contemplated in Article 246(4), implicitly accepted that these cases would fall within the exemption in Article 289(1).48. Rajagopala Ayyangar, J., in his separate majority judgment, makes a specific reference to this contention of the learned Solicitor General (at pp. 918-19) but, aside from stating that the submissions of the learned Solicitor General are not without force (at p. 919), he did not make any further reference to the matter. Hidayatuallah, J., in his separate minority opinion, did not advert to this issue.49. The preceding analysis reveals that the issue at hand was specifically answered by this Court in the Sea Customs case, (AIR 1963 SC 1760 ). We find it difficult to accept Mr. Sens contention that the observations of Sinha, C.J. were made by way of obiter dicta. Though the issue of legislations applicable in Union Territories was not specifically before the Court, it did arise for consideration during its analysis of the power of Parliament to levy taxes directly upon property. The latter question was squarely before the Court and the issue relating to Union Territories, though incidental to the main question, necessarily required consideration. The observations of Sinha, C.J. are unequivocally in favour of the position adopted by the States before us, who find themselves in the enviably advantageous position of being able to draw sustenance from even the observations in the dissenting judgment of Das, J.50. The decision in the Sea Customss case, (AIR 1963 SC 1760 ), was reaffirmed by a Constitution Bench of this Court in the APSRTC case, (1964 (7) SCR 17 : AIR 1964 SC 1486 ), which was a matter relating to assessment of income-tax. The facts of that case are not directly relevant for our purpose but, what is of considerable interest to us is the manner in which the scheme of Article 289 and its three clauses were construed. Speaking for the Court, Gajendragadkar, C.J. outlined the scheme of Article 289 (at p. 25) (of SCR) (at p. 1491 of AIR) : which can be stated as follows : The general proposition that flows from Clause (1) is that ordinarily, the income derived by a State both from governmental and non-governmental or commercial activities shall be immune from Income-tax levied by the Union. Clause (2) then provides an exception and empowers Parliament to make a law imposing a tax on the income derived by the Government of a State from trade or business carried on by it, or on its behalf. If Clause (1) had stood by itself, it would not have been possible to include within its purview income derived by a State from commercial activities but since Clause (2) empowers Parliament to enact a law levying taxes on such activities of a State, the inescapable conclusion is that these activities must be deemed to have been included in Clause (1) and that alone can be the justification for the words in which Clause (2) has been couched in the Constitution. Thereafter, Clause (3) empowers Parliament to declare by law that any trade or business would be taken out of the purview of Clause (2) and restore it to the area covered by Clause (1) by declaring that the said trade or business is incidental to the ordinary functions of Government. In other words, Clause (3) is an exception to the exception prescribed by Clause (2). Whatever trade or business is declared to be incidental to the ordinary functions of Government, would cease to be governed by Clause (2) and would then be exempt from Union taxation.51. These observations of Gajendragadkar, C.J. having been made in the context of Income-tax levied in the facts of that case, mention only taxes relating to income. They are equally applicable to the taxes relating to property referred to in Article 289. The essence of this analysis is that Clause (3) of Article 289 is an exception to Clause (2), which in turn is an exception to the first clause of the Article.Analysis of this Courts previous rulings on the Constitutional status of Union Territories.58. These cases are useful for our purpose to the limited extent that they declare that Union Territories are not part of the Central Government and are, to that extent, distinct Constitutional entities.64. This view of the learned Judge does seem to have considerable force and it is also to be remembered that Hidayatullah, J. had doubted the correctness of the proposition laid down in Ram Kishores case (AIR 1966 SC 644 ) on the ground that the proper reference in it should have been to Art. 372A, rather than to Art. 372. However, we must refrain from making any comment because the issue whether or not the General Clauses Act applies to the interpre-tation of the Constitution is not properly put before us in the facts and circumstances of the present case; what is more, no arguments have been canvassed before us on this issue. For the present, we can draw support from the observations in Kanniyans case (AIR 1968 SC 637 ) as affirmed in the Advance Insurance case (AIR 1970 SC 1126 ) to the effect that the definition in S. 3(58) of the General Clauses Act is repugnant to the subject and context of Art. 246. We can, therefore, proceed on the assumption that for our purposes, a Union Territory is not a State; we must, however, hasten to add that this assumption willl be open to reconsideration subsequent to our analysis of the Constitutional scheme regarding the issues before us.60. T.M. Kanniyan v. Income-tax Officer, Pondicherry, 1968(2) SCR 103, was a case in which the petitioners had challenged the vires of a regulation by which the President had, in exercise of powers under Article 240, repealed the laws in force in relation to Income-tax within the Union Territory of Pondicherry and had made the Income-tax Act, 1961 applicable to it. Explaining that Parliament, and through it the President, had plenary powers to make laws for Union Territories on all matters, Bachawat, J., speaking for the Constitution Bench, stated as follows (at Pp. 108-109) (of SCR) (at p. 641 of AIR) :Parliament has plenary power to legislate for the Union Territories with regard to any subject. With regard to Union Territories distrubution of legislative powers . . . (The) inclusive definition (in Section 3(58) of the General Clauses Act) is repugnant to the subject and context of Article 246. There, the expression State means the States specified in the First Schedule. There is a distribution of legislative power between Parliament and the legislatures of the States. Exclusive power to legislate with respect to the matters enumerated in the State List is assigned to the legislatures of the States established by Part VI. There is no distribution of legislative power with respect to Union Territories. That is why Parliament is given power by Article 246(4) to legislate even with respect to matters enumerated in the State List. If the inclusive definition of State in Section 3(58) of the General Clauses Act were to apply to Article 246(4), Parliament would have no power to legislate for the Union Territories with respect to matters enumerated in the State List and until a legislature empowered to legislate on those matters is created under Article 239A for the Union Territories, there would be no legislature competent to legislate on those matters; moreover, for certain territories such as the Andaman and Nicobar Islands, no legislature can be created under Article 239A, and for such territories there can be no authority competent to legislate with respect to matters enumerated in the State List. Such a construction is repugnant to the subject and context of Article 246. It follows that in view of Article 246(4), Parliament has plenary powers to make laws for Union Territories on all matters.61. The Court, therefore, held that Parliament was empowered to make laws for Union Territories on all matters and the regulation made by the President in exercise of his powers under Article 240 was valid. The ratio of this decision, therefore, is that the definition of State provided by Section 3(58) of the General Clauses Act would not apply for the purposes of Article 246. This ratio is equally applicable at the present moment for, despite several changes having been made in respect of Union Territories since the decision in Kanniyans case, of the seven existing Union Territories, as many as five do not have Legislatures of their own. The controversy was not, however, put to rest by the decision in Kanniyans case.62. In Management of Advance Insurance Co. Ltd. v. Shri Gurudasmal, 1970(3) SCR 881, the main issue before another Constitution Bench was whether the word State used in Entry 80 of List I of the Seventh Schedule could be said to exclude the application of the definition in Section 3(58) of the General Clauses Act. Relying on the decision in, Kanniyans case, (AIR 1968 SC 637 ). Hidayatullah, J. held that, ordinarily, the definition would apply in the interpretation of the Constitution unless it is repugnant to the subject or context. However, he noted, that after the Seventh Amendment Act where Union Territories have been mentioned as separate entities, the distinction between Union Territories and States cannot be lost sight of. He expressly approved the reasoning of Bachawat, J. in holding that in the context of Article 246, the definition provided in Section 3(58) would not apply; however, on the facts and in the circumstances of the case before him, he felt that the subject and context of Entry 80 of the Union List required the application of the definition given in Section 3(58). While referring to the decision in Ram Kishores case, (AIR 1966 SC 644 ). Hidayatullah, J. noted that this decision was per incuriam for the reason that it referred to Article 372 whereas the proper reference ought to have been to article 372A.64. This view of the learned Judge does seem to have considerable force and it is also to be remembered that Hidayatullah, J. had doubted the correctness of the proposition laid down in Ram Kishores case (AIR 1966 SC 644 ) on the ground that the proper reference in it should have been to Art. 372A, rather than to Art. 372. However, we must refrain from making any comment because the issue whether or not the General Clauses Act applies to the interpre-tation of the Constitution is not properly put before us in the facts and circumstances of the present case; what is more, no arguments have been canvassed before us on this issue. For the present, we can draw support from the observations in Kanniyans case (AIR 1968 SC 637 ) as affirmed in the Advance Insurance case (AIR 1970 SC 1126 ) to the effect that the definition in S. 3(58) of the General Clauses Act is repugnant to the subject and context of Art. 246. We can, therefore, proceed on the assumption that for our purposes, a Union Territory is not a State; we must, however, hasten to add that this assumption willl be open to reconsideration subsequent to our analysis of the Constitutional scheme regarding the issues before us.69. Section 154, in material terms, provided that the property of the Federal Government would be exempt from all taxes imposed by Provinces and Federated States and the local authorities within them. The proviso added that, in the absence of any Federal law stipulating otherwise, those properties of the Federal Government which were subject to the levy of taxes before the commencement of Part III of that Act would continue to be liable to pay them. The exemption in S.154, therefore,did not extend to such taxes, including taxes levied under Municipal laws. It is to be noted that S. 154 did not provide for an exemption in respect of the income of the Federal Government primarily because the Provinces lacked the legislative competence to enact laws levying taxes on income.In response to a query from us, Mr. Sen sought to find the reason for the existence of the exemption in S. 155(1); it appears that the purpose was to avoid the liabilities imposed by Ss. 3 and 9 of the Income-tax Act, 1912 (1922) upon the Pro-vinces.71. Comparing the text of Ss. 154 and 155, it becomes clear that even under the scheme of the 1935 Act, the ambit of the reciprocal immunities was not equal in length and breadth; while S. 154 exempted the property of the Federal Government from all taxes, the Provincial Governments and Rulers of Federated States were entitled to an exemption only in respect of lands or buildings situated in British India and income accruing thereof. This feature will gain some importance when we deal with the comparative Constitutional position at a later stage.It therefore becomes clear that, under the scheme of the 1935 Act, Federal Taxation included taxes leviable by the Federal Government in the Chief Commissioners Provinces and that the properties of the Provinces and the Rulers of the Federated States situated within these Chief Commissioners Provinces would be exempt from such Federal Taxation75. The present Art. 289 was clause 207 in the Draft Constitution prepared by the Constitutional Adviser. It provided that the Government of a unit would not be liable to Federal Taxation in respect of lands or buildings situated within the territories of the Federation or income accruing, arising or received within such territories; the two exceptions provided were in favour of (a) any income accruing to a units Government through trade or business and (b) the personal property or the personal income of the Ruler of Indian State. As we have observed, under S. 155, the Provinces and Federated States were liable to taxation only in respect of trade and business operations carried on by them outside their own territories. To that extent Clause 207 had made a substantial departure.81. As we have already noticed, the Constitutional Adviser relied upon the decisions in McCullochs case (1816-19 (4) Law Ed 579) and The South Carolina case (1905 (199) US 437), for justifying the reduction in the ambit of the immunity of States from Union Taxation rather than for establishing reciprocal immunity between the States and the Union. Furthermore, in the Constituent Assembly, Mr. Alladi Krishnaswami Ayyar had doubted the applicability of the doctrine to the Indian Constitution and had instead commended the present scheme whereby the troublesome issue of determining which of the trading and business operations of State should be subject to Union Taxation has been left to Parliament; while enacting such a law Parliament would be forced to cater to the interests of the States on account of the presence of their representatives in it. The usefulness of any further discussion on the applicability of this doctrine to the Indian Constitution is rendered questionable by virtue of the fact that this Court had, on earlier occasions, rejected it. In State of West Bengal v. Union of India, 1964(1) SCR 371, Sinha, C.J., speaking for the majority in a six-Judge Constitution Bench expressly held (at p. 407) that the doctrine of immunity of instrumentalities had been rejected by the Privy Council as inapplicable to the Canadian and Australian Constitutions and having practically been given a go by in the United States, it was equally inapplicable to the Indian Constitution. In the APSRTC case (1964 (7) SCR 17 ) (supra), (at p. 24) : (AIR 1964 SC 1486 at p. 1491), the Court rejected the contention of the Advocate-General of Andhra Pradesh urging it to adopt the American doctrine, by relying upon these observations of Sinha, C.J.82. It is, therefore, clear that in seeking a solution to the problem faced by us, we must rely primarily on the bare text of Arts. 285 and 289. Comparing these provisions, it becomes evident that the Constitution does envisage some form of inter-governmental immunity. Article 286 (1), while exempting the property of the Union from all taxes, does not attempt to provide an exemption in respect of income as the States do not possess legislative competence to levy taxes on income as such; however, taxes relating to income that have a bearing on property such as the taxes on agricultural income levied by using Entry 46 of the State List will also be exempt in view of the wide-ranging, all-embracing nature of the exemption. Article 285(2) saves, until Parliament by law decides otherwise, all pre-Constitutional taxes applicable to Union property.83. With respect to Article 289, we have already examined the manner in which this provision was analysed by this Court in the APSRTC case (AIR 1964 SC 1486 ). We are in agreement with the proposition that the three clauses of Article 289 are interlinked, in that, Clause (3) is an exception to Clause (2) which in turn is an exception to Clause (1). As we have noticed for ourselves, the framers of the constitution had consciously conferred Parliament with the option of deciding which of the trading and business activities of the States would be subject to the levy of Union taxes. So, while Article 289(1) generally exempts the property and income of the States from Union taxation, Clauses (2) and (3) grant to Parliament the aforementioned prerogatives.84. Having understood the scheme of Arts. 285 and 289, we must sharply focus on the specific wording of Art. 289(1) and, in particular, on the meaning of the phrase union Taxation. It may be noted that the phrase union Taxation appears in only two places in the entire Constitution _ in the marginal heading of Art. 289 and in the main text of Art. 289(1). It is suggested that some guidance may be obtained by analysing the term State Taxation which appears in the marginal heading of Art. 285 and has been described in the text of Art. 285(1) as all taxes imposed by a State. On that reasoning, Union Taxation would mean all taxes imposed by the Union.86. Our attention has been drawn towards the provisions contained in Part XII of the Constitution which has a bearing on the scheme of the Constitution with respect to financial relations between the Union and the States. Since this aspect and its relevance to Art. 289(1) was discussed at length in the Sea Customs case (1964 (3) SCR 787 : AIR 1963 SC 1760 ), We may advert to those observations. Das, J. (at p. 852) (of SCR) : (at p. 1786 of AIR), was of the opinion that the provisions of Part XII of the Constitution would have no bearing on the import of Arts. 285 and 289 which ought to be construed on their own terms. Sinha, C.J., however, analysed these provisions at length and the relevant observations in this behalf may be reproduced (at pp. 809-10) (of SCR) : (at pp. 1771-72 of AIR) :It will thus appear that Part XII of the Constitution has made elaborate provisions as to the revenues of the Union and of the States, and as to how the Union will share the proceeds of duties and taxes imposed by it and collected either by the Union or by the States. Sources of revenue which have been allocated to the Union are not meant entirely for the purposes of the Union but have to be distributed according to the principles laid down by Parliamentary legislation as contemplated by the Articles aforesaid. Thus all the taxes and duties levied by the Union and collected either by the Union or by the States do not form part of the Consolidated Fund of India but many of those taxes and duties are distributed amongst the States and form part of the Consolidated Fund of the States. Even those taxes and duties which constitute the Consolidated Fund of India may be used for the purposes of supplementing the revenues of the States in accordance with their needs.......... The financial arrangement and adjustment suggested in Part XII of the Constitution has been designed by the Constitution-makers in such a way as to ensure an equitable distribution of the revenues between the Union and the States, even though those revenues may be derived from taxes and duties imposed by the Union and collected by it or through the agency of the States.......... It will thus be seen that the powers of taxation assigned to the Union are based mostly on considerations of convenience of imposition and collection and not with a view to allocate them solely to the Union; that is to say, it was not intended that all taxes and duties imposed by the Union Parliament should be expended on the activities of the Centre and not on the activities of the States.......... The resources of the Union Government are not meant exclusively for the benefit of the Union activities; they are also meant for subsidising the activities of the States in accordance with their respective needs, irrespective of the amounts collected by or through them. In other words, the Union and the States together form one organic whole for the purposes of utilisation of the resources of the territories of India as a whole.87. We are of the view that an analysis of some of the provisions in Part XI, Chapter I of the Constitution, which deals with the legislative relations between the Union and the States will be crucial to the determination of the central issue in this case. We may first notice certain provisions in the Constitution which enable Parliament to make laws for subjects contained in the State List, to which our attention was drawn by counsel for the appellants as also the learned Attorney General. We must note that these provisions conceive of extraordinary situations. Article 249 provides for a situation where, if the Council of States declare by a resolution that it is necessary in the national interest to do so, Parliament may make laws in respect of matters enumerated in the State List. Article 250 empowers Parliament to make laws for the whole or any part of India in respect of matters enumerated in the State List while a Proclamation of Emergency is in operation. Article 252 empowers Parliament to make laws with respect to matters enumerated in the State List if two or more States resolve that such a course of action is desirable. Article 253 reserves to Parliament the exclusive power to make laws for the whole or any part of the territory of India for implementing any treaty. Agreement or convention with any other country or any decision made at any international conference, association or any other body. The Emergency Provisions outlined in Part XVIII of the Constitution and comprising Articles 352 to 360 conceive of special situations in which Parliament is empowered to enact laws on matters in List II.Having analysed the scheme of Part VIII of the Constitution including the changes wrought into it, we are of the view that despite the fact that, of late, Union territories have been granted greater powers, they continue to be very much under the control and supervision of the Union Government for their governance. Some clue as to the reasons for the recent amendments in Part VIII may be found in the observations of this Court in Ramesh Birchs case (AIR 1990 SC 560 ), which we have extracted earlier. It is possible that since Parliament may not have enough time at its disposal to enact entire volumes of legislations for certain Union Territories, it may decide, at least in respect of those Union Territories whose importance is enhanced on account of the size of their territories and their geographical location, that they should be given more autonomy in legislative matters. However, these changes will not have the effect of making such Union Territories as independent as the States. This point is best illustrated by referring to the case of the National Capital Territory of Delhi which is today a Union Territory and enjoys the maximum autonomy on account of the fact that it has a Legislature created by the Constitution. However, Clauses 3(b) and 3(c) of Art. 239AA make it abundantly clear that the plenary power to legislate upon matters affecting Delhi still vests with Parliament as it retains the power to legislate upon any matter relating to Delhi and, in the event of any repugnancy, it is the Parliamentary law which will prevail. It is, therefore, clear that Union Territories are in fact under the supervision of the Union Government and it cannot be contended that their position is akin to that of the States. Having analysed the relevant Constitutional provisions as also the applicable precedents, we are of the view that under the scheme of the Indian Constitution, the position of the Union Territories cannot be equated with that of the States. Though they do have a separate identity within the Constitutional framework, this will not enable them to avail of the privileges available to the states.89. It has been urged before us that the phrase Union Taxation has to be interpreted in the context of Art. 246, which deals with the subject matter of laws made by Parliament and the State Legislatures, and that the context of Union Taxation should be limited to those matters falling within Arts. 246(1), where Parliament has the legislative competence to levy taxes with respect to matters enumerated in the Union List. We see no reason why such a limiting principle must be read into the definition of the phrase Union Taxation. In our view, the term can and should be given the widest amplitude, allowing it to encompass all taxes that are levied by the authority of Parliamentary laws. Though the amplitude of the term Union Taxation was not expressly before the Court in the Sea Customs Case (AIR 1963 SC 1760 ), it is clear from an analysis of the majority judgments that the learned Judges considered the term Union Taxation to mean all taxes leviable by the Union. As Clause (4) of Art. 246 itself envisages situations where Parliament is to make laws in respect of matters in the State List, it cannot be said that this is a rare or an unusual circumstance. The Constitution does not contain any provision which would indicate that the definition of Union Taxation should be restrictively interpreted so as to be within the confines of Art. 246(1). The specific situations envisaged in Arts. 249, 250, 252, 253 and the Emergency Provisions in Part XVIII of the Constitution do not make for the creation of any anomalous situations. These Articles, which provide for unusual exercises of Parliamentary power involving the matters enumerated in the State List, can be regarded as exceptions to the general rule. We are, therefore, of the view that, unless the context requires otherwise _ as in the case of Arts. 249, 250, 252, 253 and the Emergency Provisions in Part XVIII of the Constitution _ the broad definition of Union Taxation embracing all taxes leviable by Parliament ought to be accepted for the purpose of interpreting Art. 289(1).90. As already noticed by us, under the scheme of the 1935 Act, those lands or buildings of the Provinces and Federated States which were situated within the Chief Commissioners Provinces were, by virtue of S. 155(1), exempted from Federal Taxation. There can be no dispute about such a construction of the provision for, otherwise, the exemption in S. 155(1) would have no meaning. Section 155(1) formed the basis for the present Art. 289(1) and, having closely examined the various stages by which Art. 289(1) replaced S. 155(1), we find that this position was never sought to be deviated from. The presumption, therefore, is that it was the intention of the framers of the Constitution to maintain the status quo with respect to the position regarding the Chief Commissioners Provinces which are now called Union Territories. That presumption is further reinforced by the general scheme of the Constitution which furthers the interpretation that we have sought to give to Art. 289(1) and its applicability in respect of the Union Territories.91. Unlike other Federations, the Union of India has a sizeable territory of its own comprising the Union Territories which have been specified in the First Schedule to the Constitution. Therefore, the limited reciprocal inter-governmental immunity bestowed by the Constitution in Arts. 285 and 289 is given fuller meaning by virtue of the adoption of the wider meaning of Union Taxation; this would mean that, just as the properties of the Union are exempt from taxes on property leviable by the States, the properties of the States will also be exempt from taxes on property leviable by the Union in areas falling within its territorial jurisdiction.94. In our opinion, there is no warrant for an authoritative pronouncement upon this aspect for, even if we assume that Mr. Sens contention is correct and that all these Entries do in fact empower Parliament to levy taxes directly on property, it would not in any way detract from the correctness of our interpretation that the levy of taxes under Art. 246(4) is covered by the phrase Union Taxation in Art. 289(1); these Entries would then provide additional areas in respect of which the States can claim exemption from Union Taxation under Art. 289(1), thus lending greater weight to the solemnity and the actual worth, in real terms, of the phraseology of Art. 289(1).95. However, we find ourselves unable to agree with Mr. Sen when he contends that the entries cited by him were the only instances kept in contemplation by the framers at the time of the drafting of Art. 289(1). If that were so, the ambit of the exemption would traverse an extremely narrow field which would then lend credence to the observation of Das, J. in the Sea Customs case (AIR 1963 SC 1760 ), albeit made in the converse context, that the exemption in Art. 289(1) would amount to much also about nothing.Section 61 of the Act, which is the charging section, at the relevant time, empowered the Municipality to levy a tax payable by the owner on lands and buildings subject to, and to the extent of, the qualifying conditions provided therein. It is clear from an analysis of this provision that it provides for the levy of a consolidated tax, combining within it the tax element and the service element. Section 51 of the Act provides for the constitution of a Municipal Fund and states that all sums received by the Municipal Committee are to be credited to it. Section 52 of the Act provides the manner in which the sums collected in the Municipal Fund are to be applied by the Municipal Committee. Our attention has also been drawn towards analogous provisions in the New Delhi Municipal Committee Act and the Delhi Municipal Committee Act to form the foundation of the argument that, under all these legislations, the Municipalities have been vested with a great deal of financial autonomy; they have the power to fix their own budgets, levy taxes within prescribed limits, collect the proceeds of such imposition which are to be diverted to Municipal Funds which function entirely under the supervision of the Committees. It is argued that such a stance is further reinforced by the introduction of Part IXA into the Constitution which allows for Municipalities to be vested with substantial powers, including the power to tax, thereby providing constitutional support. The argument, therefore, is that now that the Constitution itself recognises Municipal taxes as a separate category of taxes, they should not be construed to fall within the exemption provided by Art. 289(1). Another limb of this submission is that while under Art. 285, taxes imposed by any authority within a State, which would necessarily include Municipal taxes, have been expressly exempted, Art. 289 does not provide for any such facility and, to that extent, taxes levied by Municipalities within the Union Territories are not covered by the exemption in Art. 289(1).98. We have great difficulty in accepting this assertion. Article 265 of the Constitution emphatically mandates that no tax shall be levied or collected except by authority of law. Under the framework of the Constitution there are two principal bodies which have been vested with plenary powers to make laws, these being the Union Legislature, which is described by Art. 79 as Parliament for the Union and the State Legislatures, which are described by Art. 168 in the singular as Legislature of a State. While certain other bodies have been vested with legislative power, including the power of levying taxes, by the Constitution for specific purposes, as in the case of District Committees and Regional Councils constituted under the aegis of the Sixth Schedule to the Constitution, the plenary power to legislate, especially in matters relating to revenue, still vests with the Union and the State Legislatures. Even if the submission that Municipalities now possess, under Part IXA of the Constitution, a higher juridical status is correct, the extension of that logic to the proposition that they have plenary powers to levy taxes is not, as is clear from a perusal of the relevant part of Art. 243X of the Constitution99. Article 243-B provides that this provision will be applicable to Union Territories and the reference to the Legislature of a State would apply, in relation to a Union Territory having a Legislative Assembly, to that Legislative Assembly.100. It is, therefore, clear that even under the new scheme, Municipalities do not have an independent power to levy taxes. Although they can now be granted more substantial powers than even before, they continue to be dependent upon their parent Legislatures for the bestowal of such privileges. In the case of Municipalities within States, they have to be specifically delegated the power to tax by the concerned State Legislature. In Union Territories which do not have Legislative Assemblies of their own, such a power would have to be delegated by Parliament. Of the rest, those which have Legislative Assemblies of their own would have to specifically empower Municipalities within them with the power to levy taxes.101. We have already held that despite the fact that certain Union Territories have Legislative Assemblies of their own, they are very much under the supervision of the Union Government and cannot be said to have an independent status. Under our constitutional scheme, all taxation must fall within either of two categories : State Taxation or Union Taxation. Since it is axiomatic that taxes levied by authorities within a State would amount to State taxation, it would appear that the words or by any authority within a State have been added in Art. 285(1) by way of abundant caution. It could also be that these words owe their presence in the provision to historical reasons; it may be noted that S. 154 of the 1935 Act was similarly worded. The fact that Art. 289(1), which in its phraseology is different from S. 155 of the 1935 Act having been drafted by the Drafting Committee to meet specific objections, does not contain words similar to those in Art. 285(1), will not in any way further the case of the appellant, because the phrase Union Taxation will encompass Municipal taxes levied by Municipalities in Union Territories.102. Before we part, we must refer to Part IV of the judgment of Jeevan Reddy, J. where Cl. (2) of Art. 289 has been invoked to validate the levy of taxes under the Act and the Delhi Municipal Corporation Act upon those properties of State Governments which are being occupied for commercial or trade purposes.103. At the outset, we must express our great reluctance to deal with this proposition, for it is not based on any contention advanced by any of the counsel who appeared before us, either in their written pleadings or in their oral submissions. That is not because we feel constrained to restrict ourselves to the parameters prescribed by the submissions of counsel, but because we feel that the opposite side did not have a fair opportunity to answer the line of reasoning adopted in that behalf. The view taken by Reddy, J. has the effect of imposing considerable tax liabilities upon the properties of the State Governments and, in our view, it would only be proper that their views in this behalf be obtained before visiting them with such liabilities. We have only the rule of caution in mind which warns that ordinarily, Courts should, particularly in constitutional matters, refrain from expressing opinions on points not raised or not fully and effectively argued by counsel on either side.104. Be that as it may, we must, for the record, express ourselves on the view taken by Reddy, J. after closely examining it. Reddy, J. begins his examination of the issue by noting that the Act, the Delhi Municipal Corporation Act and the New Delhi Municipal Committee Act contain specific provisions exempting the properties of the Union from local taxation in accordance with Art. 285. It is then stated that since none of these Acts contain similar exemptions in favour of the properties of States, it is clear that they purport to levy taxes on them. This is followed by the observation that though the States seek an exemption from such levies on the basis of Cl. (1) of Art. 289, as per the ratio of the APSRTC case (AIR 1964 SC 1486 ), Clause (1) has to be read in the context of Cls. (2) and (3) of that Article. This would, it is stated, lead to the consequence that if a Parliamentary law within the meaning of Cl. (2) of Art. 289 is made, the area covered by that law would be removed from the field occupied in Cl. (1); for support, an analogy is drawn from the decision in R.C. Cooper v. Union of India, 1970(1) SCC 248.105. Thereafter, the meaning and scope of Art. 289 as well as its underlying objective are ascertained by contrasting it with S. 155 of the 1935 Act. The use of the words lands and buildings in S. 155(1) is analysed to arrive at the conclusion that these words were included to empower the federal legislature to levy taxes on lands and buildings situated within the Chief Commissioners provinces. It is then noted that Art. 289 uses the wider expression property, but that the same reasoning holds good for the present Union Territories, making the property and income of States situated within Union Territories exempt from Union Taxation. With respect to the proviso to S. 155(1), it is observed that the provision was automatically applicable on its own force. It did not define the trading and business operations of Provincial Governments, nor did it specify which of these operations would be subject to Federal Taxation. It is then stated that the same position continues in Art. 289 with the only difference being the requirement of the enactment of a law by Parliament in this behalf. Thereafter, it is observed that the exemption in Cl. (1) of Art. 289 is subject to Cl. (2) of Art. 289. Clause (2) is analysed and interpreted as clarifying Cl. (1) to the extent that the exemption upon the income of Provincial Government operates only when such income is carried on for the purpose of governmental functions and not for trade and business activities, carried on with the profit motive. It is stated that though trade and business ordinarily has a very wide and ambiguous meaning (certain English and Indian authorities are cited to illustrate this point), but, for the purposes of Cl. (2) of Art. 289, they have to be given a restricted meaning. It is, therefore, stated that under Art. 289(2), the trading and business activities of State Governments, which are carried on with the profit motive, will be liable to tax and cannot avail of the exemptions in Art. 289(1).106. Clause (2) is further analysed and is interpreted as having been included for the purpose of removing the trading and business activities of State Governments from the purview of the exemption in Cl. (1). However, it is stated, such a removal is not automatic and is dependent upon the enactment of a Parliamentary Law which imposes taxes on specified trading and business activities of State Governments.107. Thereafter, the question whether Parliament has, in exercise of powers under Art. 289(2), imposed taxes on the trading and business activities of State Governments, is sought to be addressed. In this respect, the Act, the New Delhi Municipal Committee Act and the Delhi Municipal Corporation Act, which are deemed to be post-constitutional enactments, are examined. It is noted that while these enactments contain specific exemptions in favour of properties of the Union and also exempt properties used for charitable purposes and public worship, they do not exempt properties of State Governments. It is stated that the latter omission must be deemed to be deliberate. Thereafter, it is stated that two views are possible in this regard. The first is to adopt the position that since neither of these enactments are purported to have been made under Art. 289(1), they should not be treated as having been enacted for that purpose and, consequently, should be held to be incapable of levying taxes on any property, whether occupied for governmental or trading purposes, of the State Governments. The second view, which Reddy, J. adopts, is to take the position that the Doctrine of Presumption of Constitutionality of Legislations points in favour of holding that the Act and the Delhi Municipal Corporation Act are laws made by Parliament under Art. 289(2), and taxes imposed by them upon the properties occupied for trading and business activities by State Governments would be valid and effective. A number of decisions of this Court are cited to show the jurisprudential basis of this tool of constitutional interpretation. It is pointed out that though neither of these legislations purport to have been made under Art. 289(2), but, since this is normal practice in that no legislation specifies the provision of the Constitution that it is enacted under, this fact need not be over emphasised. It is, therefore, held that the levy of property taxes by these enactments is valid to the extent that it relates to lands and buildings owned by State Governments and used by them for trade and business purposes. (In an earlier part of the opinion, the difficulty in drawing a distinction between governmental and business functions is noted and an example in respect of guest-houses maintained by State Governments is supplied). Thereafter, it is stated that it is for the appropriate assessing authority to determine which land/building falls within which category in accordance with law and take appropriate further action. It is then stated that since, under these enactments, the assessing authorities are required to decide several difficult questions as to what amounts to charitable purpose etc., the obligation imposed by such directions would not prove to be too onerous to discharge. Reddy, J. sums up the issue by recommending to the Union that it consider granting a total exemption in favour of all properties of State Governments.108. We are of the opinion that of the two possible views expressed by Reddy, J., it is the first which ought to be preferred. We think that the second view is fraught with several difficulties. Such a construction, while being violative of the scheme envisaged by the Framers of the Constitution, may well result in a situation that was sought to be avoided by them. The directions may also lead to grave practical difficulties; moreover, since the effect of the directions would be to vest the executive authorities with substantial policy making powers, their issuance might well be offensive to established principles of delegation of powers.117. It is, therefore, clear that Cl. (2) of Art. 289 was a well considered compromise which was arrived at after balancing the demands of those who sought complete exemption of commercial activities of State Governments from Union Taxation and those who were in favour of levying such Union Taxes. The Framers desired that the issue whether the trading and business activities of State Governments should be subject to Union Taxation, be left to the wisdom of Parliament. As is evident from the reference to New York v. United States (1946 (326) US 572) (supra) in the extracted portion, the Framers were conscious of the difficulty in drawing a line between the governmental and commercial functions of State Governments and they hoped that Parliament would take into account a host of relevant factors before enacting a law which would specify the trading activities of State Governments making them liable to Union Taxation. It is important to note that the Framers did not expressly confer upon the Union the power to tax commercial activities of State Governments. The exercise of such a power is made conditional upon the enactment of a special, duly considered, legislation. It is also important to note that Cl. (2) of Art. 289 has made a departure from the proviso to S. 155(1). Under the present scheme, the power to tax is not automatic and the responsibility of specifying the trading and business activities of State Governments which would be liable to Union Taxation is expressly vested in Parliament.118. Neither the Act, which is a 1911 enactment, nor the Delhi Municipal Corporation Act, can qualify as laws under Art. 289. They do not specify which of the trading activities of State Governments are liable to taxation; indeed, by their very nature, they cannot purport to do so. It must be remembered that the Act and the Delhi Municipal Corporation Act are not Parliamentary laws in the sense envisaged by Art. 289(2). Though the Act is sought to be construed as a post-constitutional, parliamentary enactment, the fact remains that it is a pre-constitutional, colonial legislation. As for the Delhi Municipal Corporation Act, it is, in essence, an ordinary Municipal legislation. What makes it special is the fact, occasioned in its case by geographical and historical factors, that it was enacted by Parliament instead of by a State Legislature. It this regard, we may recall the submissions of the learned Attorney General in respect of how Parliament discharges its obligation towards enacting laws for Union Territories.119. It is, therefore, clear that it would be quite dangerous to assume that when Parliament enacted the Delhi Municipal Corporation Act, it had intended that the enactment should secure the purpose enshrined in Art. 289(2). If any safe assumption is to be drawn, it is this : in all probability, while enacting the Delhi Municipal Corporation Act, Parliament must have transplanted a municipal legislation existing in a certain State, made the necessary changes and completed the procedural formalities. That would explain why the Delhi Municipal Corporation Act (as also the New Delhi Municipal Committee Act) contains an exemption on the lines of the one prescribed by Art. 285 - this is a typical feature of ordinary Municipal legislations, which are enacted by State Legislatures who are conscious of the mandate of Art. 285. Moreover, such legislations do not contain exemptions in favour of properties of State Governments because, within the territory of a State, the properties of other State Governments are liable to taxation. So, when such a legislation is transplanted almost verbatim into a Union Territory, it will obviously not contain an exemption in favour of properties of State Governments. In the face of the actual conditions which govern the enactment of laws for Union Territories by Parliament, (these conditions have been statutorily provided; moreover this Court has already taken notice of them) it is difficult to assume that the omission of an exemption in the Delhi Municipal Corporation Act in favour of State Governments, is deliberate. The Act and the Delhi Municipal Corporation Act cannot, therefore, be said to meet the special requirements which have been expressed by the Framers to be necessary for complying with the spirit of Art. 289(2).120. Reddy, J. has taken the view that the Doctrine of Presumption of Constitutionality of Legislations requires the saving of the taxes which these Acts impose upon the commercial activities of State Governments. The Act is a pre-constitutional enactment. The basis of this doctrine is the assumed intention of the Legislators not to transgress constitutional boundaries. It is difficult to appreciate how that intention can be assumed when, at the time that the law was passed, there was no such barrier and the limitation was brought in by a Constitution long after the enactment of the law. (This Court has in a Constitution Bench decision, Gulabhai v. Union of India, AIR 1967 SC 1110 , raised doubts along similar lines).121. The Doctrine of Presumption of Constitutionality of Legislations is not one of infinite application; it has recognised limitations. It is settled law that if any interpretation is possible which will save an Act from the attack of unconstitutionality, that interpretation should always be accepted in preference to an alternative interpretation that might also be possible, under which the statute would be void. However, this Court has consistently followed a policy of not putting an unnatural and forced meaning on the words that have been used by the Legislature in the search for an interpretation which would save the statutory provisions. We are not free to stretch or pervert the language of the enactment in the interests of any legal or constitutional theory In Re the Central Provinces and Berar Act No. XIV of 1938, (1939) FCR 18 at p. 37 : (AIR 1939 FC 1 at p. 4); also see : Diamond Sugar Mills Ltd. v. State of U.P., 1961(3) SCR 242.122. The Act and the Delhi Municipal Corporation Act are ordinary Municipal Legislations. They do not, and cannot, purport to be laws made by Parliament under Art. 289(2). There is no reason why such a strained reasoning should be employed to save some of the taxes that may be capable of being imposed on certain properties of State Governments. There seems to be no pressing reason for invoking the doctrine. Reddy, J. has, in the earlier part of his opinion, held that a large number of properties of State Governments would be exempt from taxes leviable under these Acts due to the operation of Art. 289(1). To employ such reasoning to construe Art. 289(2) in a bid to save what would only be a reduced amount, does not seem justified.123. The practical effect of the directions recommended by Reddy, J. is also worth noticing. It is abundantly clear that the task of determining which of the activities of Governments are governmental and which are commercial, is an extremely difficult one. Reddy, J. entrusts this assignment to the assessing authorities under the Acts who can only be Municipal authorities. This is an issue which has confounded Courts in the U.S. and in Australia for several years. This issue was considered to be so troublesome by the Framers that they entrusted it to Parliament in the hope that it would fully deliberate the matter before enacting a comprehensive legislation.124. In the In Re : The Delhi Laws Act case, AIR 1951 SC 332 this Court authoritatively held that the legislature cannot delegate its essential policy-making function. Over the years, this Court has elaborated this proposition to hold that the legislature can delegate some of its legislative functions provided it lays down the policy in clear terms. The legislature is required to declare the policy of law in unambiguous terms, lay down elaborate legal principles and provide illuminating standards for the guidance of the delegate. Even though this Court has, on occasions, sanctioned very broad delegations of taxing power to Municipal Bodies, to delegate the task of carving out the distinction between governmental and business functions of State Governments to Municipal authorities would clearly be against the interdiction in the Delhi Laws Act case as the assignment requires not only the making of policy, but indeed, the making of very difficult and challenging policy choices. Reddy, J. has noted that the Delhi Municipal Corporation Act provides exemptions in favour of activities that are capable of being classified as charitable purpose, public worship etc. and states that to ascertain the ambit of these categories is an equally difficult task which is already being discharged by the assessing authorities. However, the point that needs to be emphasised, is that S. 115 of the Delhi Municipal Corporation Act defines these terms and provides guidelines in respect thereof. However, there is no provision in the Delhi Municipal Corporation Act which states that the trading and business operations of State Governments would be subject to property taxes. The Act is equally silent on this aspect. Consequently, no guidelines in this behalf are to be found within the parameters of these legislations. Under these circumstances, in the complete absence of any statutory policy or any guidelines for the delegation of such a policy, we believe that it would be impermissible and hazardous to directly assign such a function, nay power, to executive Municipal authorities.125. The decision whether the properties of State Governments occupied for commercial purposes should be subject to the levy of Union Taxes is one that is required by Art. 289(2) to be made by a legislation which specifies the activities which would be liable to tax. This decision cannot be entrusted to Municipal functionaries. For these reasons, we find ourselves unable to agree with Reddy, J. in his finding that the properties of State Governments occupied by them for trade or business purposes are subject to the levy of taxes under the Act and the Delhi Municipal Corporation Act.63. The same issue was thereafter considered by a Constitution Bench in S.K. Singh v. V.V. Giri, 1971(2) SCR 197, wherein Bhargava, J., while delivering an opinion concurring with the majority, reached the conclusion that the definition in S. 3(58) of the General Clauses Act would not apply to matters involving interpretation of the Constitution. The case, which involved a challenge to the election of Shri V. V. Giri as the President of India, required the Court to consider the issue in the context of Art. 54 which provides that the electoral college for the President consists of the elected members of both Houses of Parliament, and the elected members of the Legislative Assemblies of the States. Relying on the definition of State in S. 3(58) of the General Clauses Act. it was argued that Union Territories are also States and, consequently, the elected members of the Legislative Assemblies of the Union Territories must also be included in the electoral college; their omission was said to be a material irregularity which would vitiate the election. Responding to this contention, the learned Judge held as follows (at pp. 313-314) (of SCR) : (at p. 2138 of AIR) :Article 54, no doubt, lays down that all elected members of the legislative assemblies of the States are to be included in the electoral college; but the word States used in this Article cannot include Union Territories. It is true that, under Art. 367, the General Clauses Act applies for interpretation of the Constitution as it applies for the interpretation of an Act of the legislature of the Dominion of India; but that Act has been applied as it stood on 26th January, 1950, when the Constitution came into force, subject only to any adaptations and modifications that may be made therein under Art. 372. The General Clauses Act, as it was in 1950 and as adapted or modified under Art. 372, did not define State so as to include a Union Territory. The Constitution was amended by the Constitution (Seventh Amendment) Act, 1956, which introduced Art. 372A in the Constitution permitting adaptations and modifications of all laws which may be necessary or expedient for the purpose of bringing the provisions of the law into accord with the Constitution as amended by the Seventh Amendment Act, 1956. It was in exercise of this power under Art. 372A that S. 3(58) of the General Clauses Act was amended, so that, thereafter, State as defined included Union Territories also. The new definition of State in S. 3(58) of the General Clauses Act as a result of modifications and adaptations under Art. 372A would, no doubt, apply to the interpretation of all laws of Parliament, but it cannot apply to the interpretation of the Constitution, because Art. 367 was not amended and it was not laid down that the General Clauses Act, as adapted or modified under any Article other than Art. 372, will also apply to the interpretation of the Constitution. Since, until its amendment in 1956, S. 3(58) of the General Clauses Act did not define State as including Union Territories for purposes of interpretation of Art. 54, the Union Territories cannot be treated as included in the word State.85. The word taxation has been defined in Art. 366(28) which states that unless the context otherwise requires, the word taxation includes the imposition of any tax or impost, whether general or local or special and, tax shall be construed accordingly. This definition was accepted by Das, J. and Hidayatullah, J. in their minority opinions (at pp. 834-35 and 893-94 (of SCR) : (at pp. 1780 and 1799) of AIR) respectively) in the Sea Customs case (1964 (3) SCR 787 : AIR 1963 SC 1760 ) for interpreting Art. 289(1). However, Sinha, C.J., in his majority opinion (at pp. 923-34 (sic)), rejected the application of this definition to Art. 289(1) as, in his opinion, the context of Art. 289(1) precluded the application of the definition. Rajagopala Ayyangar, J., in his separate majority opinion (at pp. 921-93 (sic)), also felt that the definition would not apply. We concur with the majority view in the Sea Customs case that the definition of taxation provided in Art. 366(28) will not apply for the purpose of interpreting Art. 289(1).