Local Bodies Cannot Tax Central Government's Enemy Property; Refunds Ordered for Unlawful Levies.

The HC ruled that local bodies cannot levy taxes on Central Government property under Article 285 of the Indian Constitution. The property, classified as enemy property under the Enemy Property Act, 1968, is exempt from such taxes. The court quashed the disputed tax bills and directed the petitioner to seek a refund of the paid amounts. The Lucknow Nagar Nigam may only charge service fees for services rendered, not taxes. The petitioner must apply for the refund within two weeks, and any tax paid will be refunded within two months, with service charges addressed separately. The petition was allowed.

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Issues:
1. Jurisdiction of local bodies to levy tax on Central Government property.
2. Applicability of Article 285 of the Constitution of India.
3. Interpretation of Enemy Property Act, 1968.
4. Refund of tax amount paid by petitioner.

Analysis:

Issue 1: Jurisdiction of local bodies to levy tax on Central Government property
The property in question, managed by the Custodian, Enemy Property, is confirmed to be enemy property vested in the Central Government. The dispute arose regarding the demand for Water Tax and House Tax by the Nagar Nigam, Lucknow, and Water Works Department. The petitioner argued that under Article 285 of the Constitution of India, local bodies have no authority to levy tax on Central Government property. The court referred to previous judgments, including Cantonment Board, Varanasi Vs. Union Of India, emphasizing that local bodies can charge service fees but not tax on Central Government property.

Issue 2: Applicability of Article 285 of the Constitution of India
The petitioner's counsel relied on various legal authorities to support the contention that local bodies cannot levy tax on Central Government property. The court concurred with this argument, stating that the property being Central Government's, no tax is chargeable by local bodies. Lucknow Nagar Nigam acknowledged this position and agreed not to charge tax but may demand service fees for services rendered.

Issue 3: Interpretation of Enemy Property Act, 1968
The property in question falls under the Enemy Property Act, 1968, as amended by the Enemy Property (Amendment and Validation) Act, 2016. The respondent, Custodian, Enemy Property, confirmed the property's status as enemy property vested in the Central Government. This legal framework further supported the court's decision that no tax is leviable on the petitioner in respect to the Central Government property.

Issue 4: Refund of tax amount paid by petitioner
The court quashed the impugned bills for House Tax and Water Tax, ruling that these taxes are not applicable to Central Government property. The petitioner was directed to make a representation for the refund of the amount deposited within two weeks. If the amount was paid towards tax, it would be refunded within two months. Any amount due for service charges would be separately addressed by Lucknow Nagar Nigam, ensuring that no tax amount is adjusted against future service fee demands.

In conclusion, the court allowed the petition, emphasizing that no tax is leviable on Central Government property, and provided clear directions for the refund process and future service fee considerations.

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