Case: Municipal Corporation Of Greaterbombay And Anr Vs. Indian Oil Corporation Ltd

1. This appeal by special leave is against the judgment by the Division Bench of the Bombay High Court dated March 27/28, 1974 in First Appeal No. 117 of 1969. The respondent had on lease a piece of land admeasuring 17,279 square yards from the Bombay Port Trust for 30 years from February, 1961 at a rent of Rs. 9,482.34 per month for the first 15 years and Rs. 11,852.92 per month for the remaining period and put up apart from other structures and buildings, six oil tanks for storage of petrol and petroleum products. Each tank rests on a foundation of sand having a height of 2 ft. 6 inches. There is a four inches thick asphalt layer to retain the sand. The steel plates were spread on the asphalt layer and the tank was put on the steel plates which acts as bottom of the tanks which rests freely on the asphalt layer. There are no bolts and nuts for holding the tanks on to the foundation. The tanks remain in the position by its own weight. Each tank is about 30 ft. in height and 50 ft. in diameter weighing about 40 tons. The total weight of the tank filled with petroleum products would be about 7,160 tons. Each tank has a staircase along the side. Each of the tanks is connected with the pump house with the pipes for pumping petroleum products into the tank and sending them back to the pump house having a diameter of 8" x 14". The distance between the pump house and tanks varies between 50 fts. to 300 fts.2. For the year 1964-65 the appellant fixed a sum of Rs. 1,27,380 as the rateable value of the installations on the demised property consisting of the buildings, structures and tanks. The Investigating Officer, on objections raised by the respondent, reduced the rateable value to Rs. 84,660 i.e. Rs. 13,980 being the rateable value of the buildings and structures, and the balance i.e. Rs. 70,680 being the rateable value of the tanks. The rateable value of the tanks was fixed on the basis of the capacity of each of the tanks. On appeal to the Court of Small Causes at Bombay, as against rateable value of the tanks, by judgment dated December 5, 1968, the Additional Chief Judge found that the tanks having been constructed of mild steel plates and structurals fell within the definition of land or building in Section 3(r) and 3(s) of the Bombay Municipal Corporation Act, 1888 (for short the Act) and are liable to property tax under the act. Accordingly the rateable value of the tanks fixed by the corporation was upheld. On further appeal, the High Court allowed the appeal holding that the tanks are neither structure, nor a building nor land under the act.

Court's reasoning:
31. The tanks, though, are resting on earth on their own weight without being fixed with nuts and bolts, they have permanently been erected without being, shifted from place to place. Permanency is the test. The chattel whether is moveable to another place of use in the same position or liable to be dismantled and reelected at the later place? If the answer is yes to the former it must be a movable property and thereby it must be held that it is not attached to the earth. If the answer is yes to the latter it is attached to the earth. For instance a shop for sale of merchandise oris a structure. The same could be sold by keeping in a push cart which has its mobility from place to place. Merely it is stationed at a particular place and business was carried on, it cannot be said that push court is a shop. The fact that no nuts and bolts were used to imbed the tank to the earth by itself is notThough the witness stated that the tank is capable of being shifted, as a fact the tanks were never shifted from the places of erection. By scientific process, the tanks stand on their own weight on the earth at the place of erection as a permanent structure.32. The petroleum products are being stored through pipes and are taken out by mechanical process. The operational mechanisation also though relevant, is not conclusive. The rateable is based on the rent, which the building or land is capable to fetch. Due to erection of the tanks whether the value of the demised property had appreciated or not, is also yet another consideration. Undoubtedly, when the tanks are erected and used for commercial purposes, the value of the demised property would get appreciated. The annual letting value is capable of increase. However, the rate of increase is a question of fact but the fact remains that the value of the land gets increased by virtue of erection of the storage tanks. Considering from this perspective we have no hesitation to hold that the petroleum storage tanks are structures or things attached to the land within the definition of Sections 3(s) and 3(r) of the Act. Thereby they are exigible to property tax.