Case: Electronics Corporation Of India Ltd Vs. Secretary,Revenue Deptt.Govt.Of A.P.&amp;Ors

3. The Andhra Pradesh Non Agricultural Lands Assessment Act, 1963 ("the Act") defined "owner" to include "any person for the time being receiving or entitled to receive whether on his own account or as agent, or trustee, guardian, manager, receiver for another person or for any religious, educational or charitable purpose, rent or profits from the non agricultural land or for the structure constructed on such land, in respect of which the word is used". Consequent upon amending Act 28 of 1974, with effect from Ist July, 1974, the definition of "owner" was amended and the following, so far as is relevant here, was added: "and also includes in respect of the land owned by the State Government or the Central Government (i) the lessee, if the land has been leased out by that Government for any commercial, industrial or other non agricultural purpose......" Section 3 is the charging section of the Act and provides for the levy of assessment on non agricultural land, to be paid by "the owner of such land". Section 12 of the Act sets out the categories of land to which the Act does not apply. Prior to amending Act 28 of 1974, the Act did not apply to land owned by the State Government or the Central Government. Thereafter, it did not apply to land owned by the State Government or the Central Government "other than (i) the land leased out for any commercial, industrial or other non agricultural purpose......"4. In 1963 the State of Andhra Pradesh had granted a large area of land to the Department of Atomic Energy of the Central Government. In 1964 the Department of Atomic Energy gave 220.25 acres ("the said land") there out to the appellant company. On Ist October, 1978, the first respondent issued to the appellant company notices of demand for non-agricultural assessment on the said land under the Act. For the period 1970-71 to 1973-74 the sum demanded was Rs. 1,91,189.68. For the period 1974-75 to 1978-79 the sum demanded was Rs. 11,98,826.32.5. The appellant company filed a writ petition in the High Court of Andhra Pradesh impugning the said notices of demand. The contention of the appellant company in the writ petition, as set out in the judgment and order under appeal, was that it was the lessee of the said land which belonged to the Union of India and, since the property of the Union of India could not, by virtue of Article 285 of the Constitution, be taxed by a State legislature, the Act did not apply to the said land and, accordingly, no demand thereunder could be made "upon the petitioner, which is a lessee of the Union of India. It is stated that an area of approximately 1,000 acres was granted by the State Government to the Department of Atomic Energy, Government of India, and that the Department of Atomic Energy, in turn, leased out an extent of 280.25 acres to the petitioner corporation for establishing its plant and machinery. It is further contended that out the extent granted to the petitioner an extent of 29 acres is covered by buildings, an extract of 12 acres roads, and the rest of the area is meant for future expansion. It is also submitted that an extent of 14.25 acres is being used for agricultural purposes."6. The response on behalf of the State Government to the writ petition was contained in an affidavit made by N. Janakiramulu. The tenor of the affidavit was that the Act had been amended by Act 28 of 1974 and that, thereby, the appellant company had become liable to pay non agricultural assessment upon the said land.7. THe High Court, by the principle judgment and order (which is reported in AIR 1983 AP 239 ), held that Article 285 was not attracted and that the State Government was entitled to levy and collect the non agricultural assessment from the appellant company so long as it continued to be a lease of the Central Government in respect of the said land. It clarified that the assessment could be levied only upon land which was actually used for any of the specified purpose, namely, commercial, industrial or any other non-agricultural purpose, including residential purpose. What extent of the said land was so used and what was the appropriate rate applicable was a matter for the assessing authority to decide. The appellant company was permitted to file an appeal to the appellate authority under the Act against the impugned demands, wherein it would be open to the appellant company to establish the actual extent of land used for the aforesaid purposes. The applicable rate could also be ascertained in such appeal.8. It is against the principal judgment and order that all the appeals are really directed.

Court's reasoning:
14. In our view, neither has Article 285 any application to these appeals nor are we concerned with whether or not the appellants are controlled by or under the authority of the Central Government.It is the case of the appellant company in its writ petition that it is the lessee of the Department of Atomic Energy of the Union of India in respect of the said land. The said land, therefore, is of the ownership of the Central Government and, being leased out to the appellant company for an industrial and commercial purpose, is land to which the Act applies. But virtue of the amended definition of "owner" under Section 2(j) of the Act, the appellant company is the owner of the said land and, by virtue of Section 3, is liable to pay non-agricultural assessment thereon.17. A clear distinction must be drawn between a company and its shareholder, even though that shareholder may be only one and that the Central or a State Government. In the eye of the law, a company registered under the Companies Act is a distinct legal entity other than the legal entity or entities that hold its shares.We are, in the premises, left in do doubt that the State Government was entitled to levy non-agricultural assessment upon the said land and recover it from the appellant company.The discussion so far relates to demands for non-agricultural assessment subsequent to 12th July, 1974, when the amendments made by Act 28 of 1974 in the Act came into effect. The defence to the writ petition filed by the appellant company was, as we have already stated, exclusively based upon the amendments made by Act 28 of 1974 in the Act. These amendments have no retrospective effect. No demand for non-agricultural assessment could, therefore, have been made upon the appellant companies for any period prior to 12th July, 1974. To this extent, the demands are quashed.