Statutory corporation not treated as Union property; Article 285 immunity from State taxation was unavailable.

A statutory corporation constituted as a body corporate with power to acquire, hold and dispose of property, contract, sue and be sued remains a distinct legal entity from the Union of India, even if it is controlled, financed or directed by the Central Government. On that basis, its property is not "property of the Union" for Article 285 and cannot claim constitutional immunity from State taxation. The challenge to assessment based on annual value also failed because the valuation was found to rest on agreed fair rent. The property tax assessment was therefore upheld.

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Issues: Whether the Food Corporation of India was exempt from property tax under Article 285 of the Constitution on the footing that its property was property of the Union of India.

Analysis: The Corporation was constituted as a body corporate under the Food Corporation Act, 1964 with power to acquire, hold and dispose of property, contract, sue and be sued, and it was treated in the statute as a distinct entity from the Union of India. The Court relied on the principle that a statutory corporation, even if controlled, financed, or directed by the Central Government, does not become the Government itself merely because it may be an agency or instrumentality of the State. Since Article 285 exempts only the property of the Union from State taxation, the Corporation's property could not claim that constitutional protection. The challenge to assessment on the basis of annual value also failed on the facts found, as the valuation was based on agreed fair rent.

Conclusion: The Corporation was not exempt from taxation under Article 285, and the assessment of property tax was upheld.

Final Conclusion: The statutory corporation remained a separate taxable entity distinct from the Union, so constitutional immunity from State taxation was unavailable.

Ratio Decidendi: A statutory corporation that is a body corporate with an identity distinct from the Union of India is not property of the Union for the purpose of Article 285 and therefore cannot claim exemption from State taxation.

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