Municipal tax powers under a special statute extend to later amendments, and private agreements cannot bar statutory levy.

A special statute referring generally to municipal taxation powers was treated as a reference to the municipal law as amended from time to time, so later taxing provisions remained available to the development authority. Sections 127A and 135 were held to be self-operative charging provisions, making ordinary municipal tax-imposition procedures unnecessary before recovery. A company's assets were not treated as Union Government property merely because the Union held all shares, and the corporate veil was not lifted without statutory basis. A private agreement could not bar exercise of statutory taxing power or invalidate the demand notices, so the property tax levy and recovery were upheld.

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Issues: (i) Whether the reference in section 69 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 to the municipal taxation powers under the municipal laws was an incorporation frozen to the law as it stood on 27 February 1976, or a reference that took in subsequent amendments; (ii) whether the development authority was required to follow the ordinary procedural provisions for imposition of tax under the municipal laws before recovering property tax under sections 127A and 135; (iii) whether the petitioner-company's properties were exempt as properties of the Union Government; and (iv) whether the agreement dated 24 June 1976 barred the development authority from levying property tax.

Issue (i): Whether the reference in section 69 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 to the municipal taxation powers under the municipal laws was an incorporation frozen to the law as it stood on 27 February 1976, or a reference that took in subsequent amendments?

Analysis: The provisions creating special area development authorities were held to be supplemental to the municipal laws. The reference in sections 68 and 69 was to the municipal statutes generally and not to any specific provision as incorporated text. On that footing, the normal rule of incorporation did not apply, and the municipal laws had to be read as amended from time to time. The later insertion of sections 127A and 135, therefore, was available to the development authority.

Conclusion: The reference was treated as a reference by law, not a frozen incorporation, and the development authority could rely on the subsequently inserted taxing provisions.

Issue (ii): Whether the development authority was required to follow the ordinary procedural provisions for imposition of tax under the municipal laws before recovering property tax under sections 127A and 135?

Analysis: Sections 127A and 135 were treated as self-operative charging provisions. They themselves imposed the tax by force of statute and did not require the normal municipal procedure for bringing a tax into existence. The procedural provisions governing ordinary municipal taxation were therefore not a precondition to recovery under those sections.

Conclusion: The ordinary procedural provisions were held inapplicable, and direct recovery of the tax was permissible.

Issue (iii): Whether the petitioner-company's properties were exempt as properties of the Union Government?

Analysis: The petitioner was a company registered under the Companies Act and had a legal personality distinct from its shareholders, even though the entire share capital may have been held by the Union Government. Ownership of shares did not amount to ownership of the company's property. The corporate veil could not be lifted in the absence of a statutory basis for doing so, and the constitutional or statutory exemption for Union property was not attracted.

Conclusion: The petitioner-company's properties were not treated as properties of the Union Government, and the exemption did not apply.

Issue (iv): Whether the agreement dated 24 June 1976 barred the development authority from levying property tax?

Analysis: A public authority cannot contract away or fetter the future exercise of a statutory power unless the contract itself is entered into under statutory authority. No such statutory foundation was shown for the agreement. The agreement also exceeded the authority of the chairman, since it purported to cover taxation beyond the limited octroi-related arrangement that had been contemplated by the authority.

Conclusion: The agreement did not bar the levy of property tax and could not invalidate the demand notices.

Final Conclusion: The challenge to the property tax demands failed on all substantive grounds, and the levy and recovery were upheld.

Ratio Decidendi: Where a special statute refers generally to municipal law powers, the reference operates as one to the law as amended from time to time, and a public authority cannot by private agreement disable itself from exercising a statutory taxing power.

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