NDLI: Food Corporation of India Vs. Brihanmumbai Mahanagar Palika & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Constitution of India Art.285(1) and (2) Exemption of property of Union from State Taxation
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Government of India Act, 1935 (0 of 1935) Constitution of India, Mumbai Municipal Corporation Act, 1888 (3 of 1888)
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Constitution of India: Art.285(1) and (2) – Exemption of property of Union from State Taxation – The Government of Bombay acquired certain land for Government of India prior to the year 1964 – Upon completion of the acquisition proceedings, the lands vested in the Government of India and it constructed godowns and silos on the acquired land for storage of food grains and when the FCI came into being in 1965, these godowns alongwith other godowns of the Government were transferred to FCI for the purpose of undertaking the purchase, storage, movement, transport, distribution and sale of food grains and other food stuff – Demand by Municipal Corporation for property tax from FCI in respect of these godowns – FCI claimed exemption from payment of property tax as per Art.285, the property being owned by the Central Government – High Court in the impugned judgment primarily relied on s.146 of the Mumbai Municipal Corporation Act, 1888 in rejecting the claim of exemption u/Art.285 – Hence the instant appeal – Held: The law is clear that exemption from payment of taxes on the properties of Central Government as available under clause (1) of Art.285 can be denied only when the property in question was exigible to the Municipal Tax prior to the commencement of the Constitution or any Parliamentary law provides for properties to be exigible to pay tax to the Municipality – For the applicability of clause (2) of Art.285, the property on which tax is sought to be proposed ought to have been subject to property tax before the commencement of the Constitution – In the instant case, the constructions on which the property tax is sought to be imposed by Municipal Corporation came into existence only after 1964 and were not subject to property tax prior to the commencement of the Constitution, hence condition for applicability of Art.285(2) is not satisfied – Resultantly, the Municipal Corporation is not competent to impose property tax denying the exemption u/Art.285(1) of the Constitution – Plea of Municipal Corporation that appellant being occupier is liable to pay property tax in view of s.146 of the 1888 Act is not tenable – The heading of s.146 is “Primary responsibility for property taxes on whom to rest” – When there is a claim of exemption from payment of property tax with regard to property owned by the Government of India, the question of primary responsibility or secondary responsibility loses its importance – The statutory provision, may it be s.146 of 1888 Act, cannot be read in a manner so as to run contrary to a Constitutional provision – In the event the claim of Municipality/Corporation to levy property tax is not covered by sub-clause (2) of Art.285, it cannot be allowed to take recourse to any statutory provision or device to make exemption u/Art.285(1) nugatory – Both the premises and building therein were entitled for exemption from payment of property tax u/Art.285(1) – Mumbai Municipal Corporation Act, 1888 – s.146 – Government of India Act, 1935.Constitution of India: Art.285(2) – Levy of tax on any property of Union – Object of Art.285(2) – Held: Object of Art.285(2) is to continue the levy of the such tax which local authority was enjoying prior to the commencement of the Constitution so as to maintain the status quo regarding the financial resources of Municipal Corporation to avoid the complete exemption from property of Central Government as provided under Art.285(1) – Tax/Taxation.
Judge	Hon'ble Mr. Justice Ashok Bhushan
Neutral Citation	2020 INSC 318
Petitioner	Food Corporation Of India
Respondent	Brihanmumbai Mahanagar Palika & Ors.
SCR	[2020] 4 S.C.R. 1075
Judgement Date	2020-03-19
Case Number	9350-9351

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