uNION Of'. INDIA A v.

PURNA MUNICIPAL COUNCIL AND ORS.

SEPTEMBER 19, 1991

(MADAN MOHAN PUNCHHI° AND K. RAMASWAMY, JJ.] ·

. B

Indian Railways Act, 189()-Section 135 read .with ATticle 285 of the , . Constitution of India, 195unicipal Council claiming tax by way of "Se,..

~---- vice chmgcs" -Leiality of. ·

The Unien f India: the appellant, approached the High Court under , C . Article 226.of the Constitution, challengingnotices of demand issued by the Munidpal Council, respondent No.1, claiming tax to the tune of.

RS.28,400 by way of "Service c_barges" due for the period 1954 to 1960, under Article 285 of the Constitution read with Section 135 of the Indian Railways Act, 1890. , ·

The High Court dismissed the writ petition. negativing the claim, .

"""\ against which, thi~ appea_I by special leave was filed.

Allowing the appeal, this Court, .

HELD 1. Section 135 of he Indian Railways Act, 1890 gets saved E under Article 285~1) of the Constitution itself. The said Article proVides t"-"at property of the Union shall,. save in s~ far as Parliament may by law otherwise provide, be exempt from alttaxes impoSed by the State or by.any . authorlty within a State. (185 AB] ' . .

F • 2. Section 13"5 of the Railways Act permits taxation of Railways by , the 19C&I autllority in e manner gjven therein; the Cntral Govemmen1

being the controlling and the regulating autbol,'ity per.milting liability at-a . gjven pont of time, its extent and manner. 1'h:e Indian Railways Act being

a central.enactment has no role to play in sub-Article (2) of.Article 285, for that is a sphere in Which th_e State legjslation opera~. [186 ~-BJ .

3. The reasoning of the High Court to oust the appllcabUity of on iJS of the. Indian Railnys Act on ihe test of sub-Article (2). of Article 285 was totally misplaced, as also in not venturing to create room for'. it in sub-Artide (1) of cle 285. The interplay of th~ constitutional 183 · H

A and legal provisions being well cut and well defined required no marked elaboration to stress the point. [186 8-C] ')--

CIVIL APPELIATE JURISDICTION: Civil Appeal No.903of1978.

From the Judgment and Order dated 5/6-12-1977 of the Bombay High Court in Special Civil Application No.1937 of 1971.

V.C. Mahajan, B.K. Prasad, Smt. Sangeeta Aggarwal and C.V. Subba Rao (NP) for the Appellant.

K.R. Chowdhary for the Respondent.

The following Order of the Court was delivered C This appeal by special leave is directed against the judgment and order of the Bombay High Court passed in Special Civil Application No. 1937 of 1971 decided on December 5, 1977.

The Union of India, the appellant herein, itpproached the High Court under Article 226 of the Constitution challenging noticesof demand issued by the Municipal Council, Puma, respondent No. 1 herein, claiming D tax to the tune of Rs. 28,400/- by way of "Service charges" due for the

period 1954 to 1960. The claim of the Union of India primarily was based 'runder Article 285 of the Constitution read with Section 135 of the Indian Railways Act, 1890. The High Court interplaying the two provisions negatived the claim of the appellant by holding as follows: ·

"In terms of Article 285(2) these properties will continue to be liable to such taxes 'until Parliament by law ctherwise provides.

Mr. Govilkar has not drawn our attention to any specific law made by the Parliament providing other.wise. He, however, relied on section 135 of the Indian Railways Act, but, as indicated earlier, provisions of section 135 cannot have any overriding effect against the continuance of such laws when authorised by Article 285 (2) of the Constitution. It is not possible for us to hold that Railways Act is an Act made by the Parliament as contemplated under sub-Article (2) of Article 285 of the Constitution"

The High Court further observed that: G "As. Section 135 of the Railways Act is now substituted by the corres1:xmding provisions of the above enactment, it is unnecessary to consider the contention of Mr. Govilkar as to effect of the absence of any Notification. We have already indicated how section 135 or the corresponding section of the new enactment can have no overriding effect as against the . saving of laws con- H templated under Article 285 (2) of the Constitution.''

U.0.1 v.

PURNA MUNICIPAL COUNCIL 185

The view expressed by the High Court is obviously erroneous. Sec- A tion 135 of the Indian Railways Act, 1890 gets saved under Article 285(1) of the Constitution itself. The said Article provides that property of the

Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by the State or by any authority within a State. Section 135 of the Railways Act provides as Un.der:

B "Taxation. of railways by local authorities: - Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways from railways administrations in aid of the funds of local authorities, namely:- C

(1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the (Central Government) has, by notification in the official gazette, declared the railway administration to be liable to pay the tax.

(2) While a notification of the (Central Government), under clause (1) of this Section is in force, the railway adtninistration shall be liable to pay to the local authority either

the tax mentioned in the notification or in lieu thereof such sum, if any as an officer appointed in this behalf by the (Central Government ) may having regard to all the cir- E cumstances of the case, from time to time determine to be fair and reasonable.

(3) The (Central Government) may at any time revoke or vary a notification under clause (1) of this Section:

( 4) Nothing in this Section is to be construed as debarring any railway administration from entering into contract with an-y local authority for the supply of water or light or for the scavenging of railway premises or for any other service which the local authority may be rendering or be prepared to render within any part of the local area under its control.

(5) 'Local Authority' in this section means a local authority as defined in the General Clauses. Act, 1887 and includes any authority legally entitled to or entrusted with the control or management of any fund for the maintenance of watchmen or

for conservancy of a river".

A 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 petting 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 285, for that is a sphere in which the State legislation operates. The B reasoning of the High Court to oust the applicabjJity 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 requires no marked elaboration to stress the point. Accordingly, we allow this appeal, set aside the judgment and C order of the High Court and issue the writ direction asked for in favour of the Union of India restraining t.he respondent council from raising demands on the railway in regard to service charges. We make it clear that. the rights of the local authority as flowing under Section 135 of the Indian Railways Act, 1890 stand preserved in the event of the Central Government moving into the matter, if not already moved. In the circumstances of D the case, however, there will be no order as to costs.

V:P.R Appeal allowed.

'r.