Case: M/S Welspun Projects Ltd Vs. Director, State Transport Punjab

2. Factual position in a nutshell is asOn 22.06.2005, a Concession Agreement was entered into between the Government of Punjab (through Director, State Transport, Punjab) and M/s Welspun Projects Ltd. (formerly known as M/s MSK Projects Indiay to design, finance, construct, operate and maintain the Bus Terminal Project at Jalandhar on Build, Operate and Transfer (B.O.T) basis and to determine, levy, demand, collect and retain the fees for a period of 8 years, 5 months and 21A similar Concession Agreement was entered into between the parties mentioned above for the Bus Terminal at Ludhiana on the same basis for a period of 10 years and 3On 16.08.2005 and 25.10.2005, lease deeds were entered into between the parties for the project sites at Jalandhar and Ludhiana respectively. According to the said lease deeds, thewas required to pay only the annual rent of Re. 1 as leaseOn 26.11.2008, the Commissioner, Municipal Corporation,No. 2 herein issued a notice under Section 103 of the Punjab Municipal Corporation Act, 1976 (in short `the Act) stating that the premises in question was assessed for an annual rental value of Rs. 3,98,73,600/for the yearSimilarly, on 08.02.2010, thereceived a notice from the Municipal Corporation, Ludhiana stating the house tax assessmentfor the year10 had been carried out and the said property at Ludhiana was assessed at Rs. 64,59,588.80/for an annual rental value of theny informed Respondent No. 2 herein that it was handling the project on BOT basis and as such the actual owner is the State Transport Authorities. However, when the contents of the notices were brought to the knowledge of the State Transport Authorities, the State Transport Authorities informed that theis the actual user, occupant and beneficiary of the properties of the Bus Terminals and as such is liable to pay all taxes including House Tax as per the terms and conditions of the ConcessionBeing aggrieved by the demand notices, theapproached the High Court. The High Court, vide order dated 09.02.2010 directed theto approach Punjab Infrastructure Regulatory Authority (PIRA). Thepreferred Petition Nos. 1 and 2 of 2010 before the PIRA against the State Transport Authorities of Jalanadhar and LudhianaVide orders dated 08.09.2010 and 15.12.2010, the PIRA allowed the petitions filed by theBeing aggrieved by the above orders, the State Transport Authorities preferred F.A.O. Nos. 3372 and 3488 of 2011 before the HighLearned single Judge of the High Court, vide common judgment and order dated 14.11.2011, allowed the appeals filed by the respondentsAggrieved by the order dated 14.11.2011, thehas preferred these petitions before this Court by way of special leave.

Court's reasoning:
13. It may be mentioned here that both the lease deeds were executed by the Director, State Transport, Punjab for and on behalf of the Governor of the State of Punjab. From a perusal of Clauses 6 and 13(e) of the lease deeds reproduced above, we are of the opinion that thewas required to pay rent of Re. 1 only as lease rental and further the Government has specifically mentioned that except the lease rental, it shall not levy any fees, rent, tax or any other charge on the lessee for the lease of the demised premises. We find that even though under the provisions of Section 2(35) read with 97(2) of the Act, normally the tenant who has been given land on lease for a term exceeding 1 (one) year is primarily liable to pay taxes on lands and buildings yet in view of the provisions of Section 157(1) of the Act, the Government is empowered to exempt in whole or in part from the payment of any such tax any person or class of persons or any property or description of property which in the present case has been done on behalf of the government when the lease deeds were executed. For ready reference, Section 157(1) of the Act is reproducedPowers of Government in regard toThe Government may by order exempt in whole or in part from the payment of any such tax any person or class of persons or any property or description of property.A reading of Concession Agreement dated 22.06.2005, more so, Clause 24.1(a) which deals with the local taxation states that the concession period shall include all charges towards import license, toll, customs, duties, import duties etc. which is to be payable by theIn view of the specific exemption given under the lease deed regarding payment of any taxes on the demised premises, in our considered opinion, theis not at all required to pay any municipal taxes on the demised premises. We may also mention here that the house tax was being paid by the transport department prior to the signing of the Concession Agreement and if it was intended that this burden should be passed on to thea clear clause interpreting this point would have certainly been inserted in the Agreement itself. Not only this, the Department continued to pay the house tax for 3 to 4 years even after the date of the signing of the agreement.