1990 (11) TMI 407 - SC - Indian Laws

Petroleum storage tanks qualify as taxable structures under property tax laws despite not being permanently fixed

The Municipal Corporation of Greater Bombay Versus The Indian Oil Corporation

The Municipal Corporation of Greater Bombay Versus The Indian Oil Corporation - AIR 1991 SC 686, (1991) 91 CTR 0135, (1991) 93 BOMLR 11, JT 1990 (4) SC ... 1. ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment was whether the petroleum storage tanks installed by the respondent on leased land were classified as 'land' or 'buildings' under Sections 3(r) and 3(s) of the Bombay Municipal Corporation Act, 1888, and thereby subject to property tax. The determination of whether these tanks qualified as structures or buildings for the purposes of taxation was central to the case.2. ISSUE-WISE DETAILED ANALYSISThe primary issue was whether the storage tanks constituted 'land' or 'buildings' under the Act and were thus subject to property tax. The analysis involved several components:- Relevant Legal Framework and Precedents: The legal framework included Sections 3(r) and 3(s) of the Bombay Municipal Corporation Act, 1888, which define 'land' and 'building' respectively. Section 3(r) includes land built upon or covered with water, benefits arising out of land, things attached to the earth, or permanently fastened to anything attached to the earth. Section 3(s) defines 'building' to include a house, out-house, stable, shed, hut, and every other such structure made of various materials.- Court's Interpretation and Reasoning: The Court interpreted the definitions in the context of the Act's purpose of fixing rateable value for property taxation. It referred to various dictionary definitions and judicial precedents to elucidate the meaning of 'building' and 'structure.' The Court emphasized the need for a pragmatic interpretation that aligns with the Act's purpose and accommodates modern technological advancements.- Key Evidence and Findings: The Court considered the physical characteristics of the tanks, including their construction, installation, and intended permanence. The tanks were constructed of steel plates, rested on sand and asphalt foundations, and were not bolted to the ground. Despite this, their substantial size and weight indicated a degree of permanence.- Application of Law to Facts: The Court applied the legal definitions to the facts, considering whether the tanks were analogous to buildings or structures. It concluded that the tanks were not buildings in the traditional sense but could be considered structures due to their permanence and the manner in which they were installed.- Treatment of Competing Arguments: The respondent argued that the tanks did not meet the statutory definitions of 'building' or 'structure' due to their construction and lack of conformity with building regulations. The Court rejected this argument, noting that not all structures need to conform to such regulations and emphasizing the inclusive nature of the statutory definitions.- Conclusions: The Court concluded that the petroleum storage tanks were structures within the meaning of the Act, as they were permanently erected and contributed to the rateable value of the land. Consequently, they were subject to property tax.3. SIGNIFICANT HOLDINGS- Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court stated, 'The word 'includes' is generally used to enlarge the meaning of words or phrases used in the statute so that, words and phrases may be construed as comprehending not only such things as they signify according to their nature and import, but also these things which the interpretation clause declares that they shall include.'- Core Principles Established: The judgment established that the definitions of 'land' and 'building' in the Bombay Municipal Corporation Act are inclusive and should be interpreted broadly to fulfill the legislative intent of taxation. The Court highlighted the importance of considering the purpose of the law and the need for its interpretation to evolve with technological and societal changes.- Final Determinations on Each Issue: The Court determined that the storage tanks were structures attached to the land within the definitions of Sections 3(r) and 3(s) of the Act. As a result, they were subject to property tax. The appeal was allowed, reversing the High Court's decision and affirming the judgment of the Court of Small Causes.