TaxTMI 
TaxTMI 
1978 (4) TMI 197
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....e year 1977-78. The petitioner, by this petition under art. 226 of the Constitution, challenges the legality of the aforesaid two demand notices. Before referring to the contentions raised by the learned counsel for the petitioner, it is necessary to have in mind the relevant statutory provisions. The Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973, which shall for brevity be referred to as the 1973 Adhiniyam, bears a long title which admirably shows its purposes. The long title is: " An Act to make provision for planning and development and use of land; to make better provision for the preparation of development plans and zoning plans with a view to ensuring that town planning schemes are made in a proper manner and their execution is made effective; to constitute town and country planning authority for proper implementation of town and country development plan; to provide for the development and administration of special areas through special area development authority; to make provision for the compulsory acquisition of land required for the purpose of the development plans and for purposes connected with the matters aforesaid". Chapter VIII of the 1973 Adhiniyam, whic....
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....e case may be,- (a)where the municipal corporation or municipal council existed in such area prior to its designation as special area under section 64, according to the municipal law by which such special area was governed; and (b)where no municipal corporation or municipal council existed in such area prior to its designation as special area under section 64, according to such of the aforesaid Acts as the State Government may direct". These clauses in section 68 in the present shape were first inserted by Ordinance No. 26 of 1975 which came into force on 27th February, 1976 [see Notification No. 84-XXXII-76, dated 7th January, 1976, published in M. P. Rajpatra, dated February 27, 1976: [1976] M. P. Law Times, Part II, p. 86]. The Ordinance was later replaced by the Madhya Pradesh Nagar Tatha Gram Nivesh (Sanshodan) Adhiniyam, 1976 (Act No. 6 of 1976). Sub-section (4) of section 64 of the 1973 Adhiniyam provides that the municipal corporation, municipal council, notified area committee or a panchayat shall cease to exercise the power and perform the functions in relation to the special area which the development authority is competent to perform under the Adhiniyam with ef....
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....urposes of clauses (v) and ( vi) of section 68 and clauses (c) and (d ) of section 69. The State Government's power of making this direction is contained in sub-clause (b) of these clauses. This direction was first issued under all these clauses of sections 68 and 69 by notification, dated 28th January, 1976, published in the Govt. Gazette, dated 27th February, 1976, and the development authority, Korba, was directed to exercise the powers and perform the functions of a class I Municipality constituted under the Madhya Pradesh Municipalities Act, 1961. This notification became effective from 27th February, 1976, from which date Ordinance No. 26 of 1975 was made effective. By another notification, dated 15th March, 1977, published in the Govt. Gazette, dated 15th July, 1977, the development authority, Korba, was directed under the aforesaid clauses of sections 68 and 69 to exercise the powers and perform the functions under the Madhya Pradesh Municipal Corporation Act, 1956. We now turn to the relevant provisions of the Municipalities Act and the Municipal Corporation Act. Section 127(1)(i) of the Municipalities Act empowers a municipal council to impose, in the whole or any part....
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.... charged, levied and paid for each financial year a tax on the lands or buildings or both situate in a municipality other than Class IV municipality at the rate specified in the table below :- Table (i) where the annual letting 6 per centum of the annual letting value exceeds Rs. 1,800 but does not exceed Rs. 6,000 6 per centum of the annual letting value. (ii) where the annual letting value exceeds Rs. 6,000 but does not exceed Rs. 12,000 8^1/ 3 per centum of the annual letting value. (iii) where the annual letting value exceeds Rs. 12,000 but does exceed Rs. 18,000 10 per centum of the annual letting value. (iv) where the annual letting value exceeds Rs. 18,000 but does not exceed Rs. 24,000 15 per centum of the annual letting value. (v) where the annual letting value exceeds Rs. 24,000 20 per centum of the annual letting value. (2) The property tax levied under sub-section (1) shall not be leviable in respect of the following properties, namely :- (a) buildings and lands owned by or vesting in- (i)the Union Government; (ii)the State Government; (iii)the Council". Similar to section 127A of the Municipalities Act, sections 135 an....
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....ercise the powers of the Municipality or the Municipal Corporation under section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act. It is true that in case of legislation by incorporation, the incorporated provisions of an earlier Act become part and parcel of the incorporating Act and modifications made in the earlier Act subsequent to incorporation have no effect in the application of the incorporating Act. There are, however, exceptions to this rule which have been pointed out by the Supreme Court in State of M.P. v. M. V. Narasimhan, AIR 1975 SC 1835, 1841. After considering various authorities, the Supreme Court laid down the following propositions : "Where a subsequent Act incorporates provisions of a previous Act, then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act. This principle, however, will not apply in the following cases : (a) where the subsequent Act and the previous Act are supplemental to. each other; (b) where the two Acts are in pari materia; ( c ) where the amendment in the previous Act, if not imported into the subs....
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....(v) and (vi) of section 68 for a special area, the Municipal Corporation, the Municipal Council, Notified Area Committee or the Panchayat, as the case may be, having normally jurisdiction in that area ceases to exercise for the special area the powers and perform the functions and duties which the development authority is competent to exercise and perform [see section 64(4) of the 1973 Adhiniyam] . Having regard to the object of the Adhiniyam and the provisions contained in sections 64, 68, and 69, we are of opinion that the Municipalities Act, the Municipal Corporation Act and the 1973 Adhiniyam are supplemental to each other. Therefore, the case falls within exception (a) formulated by the Supreme Court in Narasimhan's case, AIR 1975 SC 1835. It can also be said that no specific provision of the Municipal Corporation Act or the Municipalities Act is incorporated in sections 68 and 69 of the 1973 Adhiniyan and the reference therein is to these Acts in general. This is, therefore, not a case of incorporation, but a case of mere reference coming within the rule in Nathella Sampathu Chetty's case, AIR 1962 SC 316. For these reasons, we are of opinion that the general rule that applie....
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....oner-company over which the property tax has been imposed are in reality the properties of the Union of India, and, therefore, these properties come within the exception contained in section 127A(2)(a)( i ) of the Municipalities Act and section 136(a )( i) of the Municipal Corporation Act and are not taxable. Section 127A(2)(a)( i) of the Municipalities Act grants an exemption in favour of buildings and lands owned by, or vesting in, the Union Govt. Similar exemption is granted by section 136(a )(i ) of the Municipal Corporation Act. We are, however, unable to accept the contention that the properties belonging to the petitioner-company are owned by, or vested in, the Union Govt. As earlier stated the petitioner is a Government company incorporated under the Companies Act. Even if the entire share capital of the petitioner-company may have been subscribed by the Union Govt., it cannot be said that the Union Govt. owns the petitioner-company or its properties. The petitioner has a legal entity of its own. The petitioner owns its properties, the Union Govt. owns only the shares. This legal position is very well established. As stated in the bank nationalisation case, R. C. Cooper v. ....
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....All ER 881 (CA) it was held that the Central Bank of Nigeria was not a Govt. Dept. and was not entitled to State immunity. Having regard to the authorities, the petitioner, which is not even a statutory corporation, cannot be equated to a Govt. Dept like the Railways and the Post Office and its properties cannot be held to be the properties of the Union Govt. Indeed, the matter is put beyond doubt by the decision of the Supreme Court in A. P. State Road Transport Corporation v. ITO [1964] 34 Comp. Cas. 473; 52 ITR 524; AIR 1964 SC 1486. The Andhra Pradesh Road Transport Corporation claimed exemption from tax under art. 289 of the Constitution which provides that the property and income of a State shall be exempt from Union taxation. In negativing the exemption claimed by the corporation, the Supreme Court held that the corporation, although a State controlled corporation, had a separate entity and the income of the corporation was not the income of the State and that it was not immune from taxation under art 289, The learned counsel for the petitioner submitted that although normally a corporation is to be taken as having a separate legal entity distinct from its shareholders, y....
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....pment authority agreed not to exercise its power of taxation or to levy any charge under the 1973 Adhiniyam or any other Act or notification that may come into force from time to time and, in consideration thereof, the petitioner agreed to contribute an annual sum of Rs. 3,00,000 to the development authority. The agreement was made for a period of 10 years beginning from the calendar year 1976. The argument of the learned counsel for the petitioner is that the development authority waived its power of taxation by this agreement and, therefore, the imposition of property tax and the notices issued were invalid. In our opinion, this contention is also devoid of substance. It is well settled that a public authority cannot fetter the future exercise of its statutory power by a private contract unless the contract itself is entered into in exercise of its statutory power [see Indian Aluminium Co. v. K. S. E. Board, AIR 1975 SC 1967, 1975-76, and Bisra Stone Lime Co. v. Orissa State Electricity Board, AIR 1976 SC 127]. The learned counsel for the petitioner has failed to point out any statutory power in the exercise of which the agreement relied upon may have been entered into by the dev....