1999 (1) TMI 535 - SC - Indian Laws

Court Upholds Property Tax Levy on Nationalized Colliery Under Municipalities Act

Western Coalfields Limited Versus Municipal Council, Birsinghpur

The Court upheld the property tax levy on a nationalized colliery under the M.P. Municipalities Act, 1961. The appellant's challenge against the levy was ... - Issues:Property tax levy on nationalized colliery under M.P. Municipalities Act, 1961.Analysis:The appeal concerned the Birsinghpur Colliery nationalized under the Coal Mines (Nationalisation) Act, 1973, and a property tax levy challenge by the first respondent under Section 127-A of the M.P. Municipalities Act, 1961. The appellant's writ petition against the levy was dismissed by the High Court, citing a previous judgment related to Western Coalfields Ltd. The appellant contended that the property vested in the Union and, therefore, exempt from property tax under Section 127-A(2) of the M.P. Municipalities Act. The Court examined Sections 3, 5, and 11 of the Coal Mines (Nationalisation) Act, 1973, which transferred the right, title, and interest of the colliery owner to the Union, and subsequently to the appellant by direction under Section 5. The Court clarified that the property now vested in the appellant as a legal entity, not on behalf of the Union, making it liable for property tax under Section 127-A.The Court referred to a nine-Judge Bench ruling in New Delhi Municipal Committee v. State of Punjab, stating that property taxes on lands/buildings of State Governments are invalid under Article 289 unless used for trade/business. The appellant argued that the colliery property vested in the appellant-Company on behalf of the Union, thus exempt from property tax. However, the Court emphasized that under Sections 5 and 11 of the Coal Mines Act, the property rights vested in the appellant as a legal entity, making it subject to property tax. The Court dismissed the appeal, citing consistency with previous judgments and rejecting the need for reconsideration.The Court rejected the appellant's reliance on the Air India Statutory Corporation case for determining State instrumentality under Article 12, deeming it irrelevant to the present case. Additionally, the Court noted that the issue was substantially addressed in the Municipal Commr. of Dum Dum Municipality v. Indian Tourism Development Corporation judgment, finding no grounds to reconsider. Consequently, the civil appeal was dismissed with costs, along with related Special Leave Petitions and transferred cases dismissed due to similar facts.