Industrial township exclusion requires separate notification; mere industrial development area status does not bar Panchayat taxation.

Exclusion of an industrial development area from Panchayat jurisdiction depends on a separate notification specifying it as an industrial township under the constitutional proviso to Article 243Q. A mere declaration under Section 2(d) of the U.P. Industrial Area Development Act, 1976 does not automatically attract Section 12A or bar Panchayat taxation. In the absence of the required notification, the area remains within the Panchayat framework and the Zila Panchayat may continue tax realisation. The challenge to the tax demand therefore failed.

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Issues: (i) Whether an industrial development area declared under Section 2(d) of the U.P. Industrial Area Development Act, 1976 automatically became an industrial township so as to attract Section 12A and exclude the area from Panchayat taxation; (ii) whether, in the absence of a separate notification under the proviso to Article 243Q of the Constitution of India, the appellants were entitled to restrain realisation of tax by the Zila Panchayat.

Issue (i): Whether an industrial development area declared under Section 2(d) of the U.P. Industrial Area Development Act, 1976 automatically became an industrial township so as to attract Section 12A and exclude the area from Panchayat taxation.

Analysis: Section 12A links exclusion from a Panchayat area to specification of the area as an industrial township under the proviso to Article 243Q. A mere declaration as an industrial development area under Section 2(d) is not enough. The constitutional proviso requires a public notification after consideration of the size of the area, the municipal services provided or proposed, and other relevant factors. The statutory scheme therefore treats the notification as a condition precedent to exclusion from Panchayat jurisdiction.

Conclusion: The declaration of an industrial development area by itself did not entitle the appellants to exclusion under Section 12A.

Issue (ii): Whether, in the absence of a separate notification under the proviso to Article 243Q of the Constitution of India, the appellants were entitled to restrain realisation of tax by the Zila Panchayat.

Analysis: No notification under the proviso to Article 243Q had been issued specifying the area as an industrial township. In that situation, the area continued to remain within the Panchayat framework, and the Zila Panchayat's power to realise tax was not displaced. The appellants' claim for exemption could not succeed merely because the area was an industrial development area or because industrial units were established there.

Conclusion: The appellants were not entitled to any restraint on tax realisation by the Zila Panchayat.

Final Conclusion: The statutory conditions for exclusion from Panchayat area were not satisfied, so the challenge to the tax demand failed and the appeal was dismissed.

Ratio Decidendi: Exclusion of an industrial development area from Panchayat jurisdiction under Section 12A arises only upon a separate notification under the proviso to Article 243Q specifying the area as an industrial township; mere declaration of an industrial development area does not by itself confer exemption from local Panchayat taxation.

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