TaxTMI 
TaxTMI 
1981 (11) TMI 184
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..... Civil Appeals Nos. 1025 and 1026 of 1978 are by Western Coalfields Ltd. The appellant, Bharat Aluminium Company Ltd., is a Government Company incorporated under the Companies Act, 1956, the entire share capital being owned by the Government of India. Respondent 1, the Special Area Development Authority for the Korba Special Area, is constituted under section 65 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam (23 of 1973), referred to hereinafter as 'the Act of 1973'. That Act was passed by the Madhya Pradesh Legislature in order "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....
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....e Madhya Pradesh Municipal Corporation Act, 1956, or the Madhya Pradesh Municipalities Act, 1961, shall apply to the Korba Special Area for the purposes of clauses (v) and (vi) of section 68 and clauses (c) and (d) of section 69. Such a direction was first issued by Notification dated January 28, 1976 published in the Government Gazette, dated February 27, 1976 by which the Development Authority, Korba, was directed to exercise the powers and perform the functions of a Class I Municipality constituted under the Madhya Pradesh Municipality Act, 1961. This Notification became effective from February 27,1976 from which date Ordinance No. 26 of 1975 was made effective. By another Notification, dated March 15, 1977, published in Government Gazette, dated July 15, 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. Section 127(1)(i) of the Madhya Pradesh Municipalities Act, 1961 empowers a municipal council to impose, in the whole or any part of the municipality, "a tax payable by the owners of houses, buildings or lands situa....
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.... both situate in a municipality other than class IV municipality at the rate specified in the table below: (i) where the annual letting 6 per centum value exceeds ₹ 1,800 of the annual but does not exceed letting value ₹ 6,000. (ii) XX X X X X (iii) XX X X X X (iv) XX X X X X (v) where the annual letting 20 per centum value exceeds of the annual ₹ 24,000 letting value (2) The property tax levied under sub-section (1) shall not be leviable in respect of the following properties, namely: (a) building and lands owned by or vesting in (i) the Union Government; (ii) the State Government; (iii)the Council." Similar provisions were inserted in sections 135 and 136 of the Municipal Corporation Act. On June 24, 1976, respondent 1 (the Special Area Development Authority, Korba) entered into an agreement with the appellant Company under which the Company agreed to contribute a sum of Rupees three lakhs annually to the "seed capital" of the Authority in consideration of the Authority agreeing not to exercise its power of taxation or of levying any other charges on the assets and activities of the Company under the Act of 1973 as amended from time to....
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....on by respondent 1 to pay property tax for the years 1976-77 and 1977-78 in the sum of ₹ 3,71,461 for each year. The Writ Petitions (61 and 62 of 1978) filed by it were dismissed by the High Court, following the judgment delivered in the Writ Petition filed by the Bharat Aluminium Company Ltd. Civil Misc. Petitions Nos. 13211 of 1979 and 3767 of 1980 are for intervention by the Jammu and Kashmir State Agro Industries Corporation Ltd. and the Delhi Municipal Corporation respectively. The Delhi High Court has held in L.P.A. 105 of 1979 that the Delhi Municipal Corporation has the power to levy property-tax on the property of the Jammu and Kashmir State Agro Industries Corporation Ltd., whose share capital is owned by the State of Jammu and Kashmir and the Union of India in the proportion of 51% and 49% respectively. In Special Leave Petition No. 10688 of 1979 filed against the judgment, the question raised is whether the property of a public corporation owned wholly by the State Government and the Union Government is exempt from taxes by reason of articles 285 and 289 of the Constitution. We have allowed both the parties to intervene in these appeals. The learned Attorney Gen....
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....to them as a matter of convenience in the mode of drafting. (See Secretary of State for India in Council v. Hindustan Co-operative Insurance Society Limited; Craies on Statute Law, 7th Edition, pages 360-361.) The principle, broadly, is that where a statute is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second (see Clarke v. Bradlaugh). Likewise, logically, where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it. (see Secretary of State for India in Council v. Hindusthan Cooperative Insurance Society Ltd). (supra) But these rules are not absolute and inflexible. In the case last cited, the Privy Council qualified its statement of the law by saying that the principle, that an amendment of the first law which is not expressly made applicable to the subsequent incorporating Act cannot be deemed to be incorporated into the second Act, applies "if it is possible for the subsequent Act to function effectually without the addition" (page 267). Bes....
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....by pointing its finger to the provisions contained in the two Municipal Acts. The three Acts are therefore supplemental, from which it must follow that amendments made to the earlier Acts after the enactment of section 69(d) shall have to be read into that section. Without recourse to such a construction, the power of taxation conferred by that section will become ineffectual. A reading of the reference to the two earlier Municipal Acts as a reference to those Acts as they stand at the time when the power of taxation is sought to be exercised by respondent 1, will not, possibly, cause repugnancy between the two earlier Acts on one hand and the Act of 1973 on the other, nor indeed will it cause any confusion in the practical application of the earlier Acts, because the Act of 1973 does not contain any independent provision or machinery for exercising the power of taxation. The first contention of the Attorney General must therefore fail. The second contention is that assuming that section 127A of the Municipalities Act or section 135 of the Municipal Corporation Act, which were introduced by an amendment made after the enactment of section 69(d), can be invoked for levying the prop....
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....on lands where there are lands only and they can be taxed, on buildings where buildings alone can be brought to tax and on both lands and buildings where lands are built upon and both can be brought to tax. This is not, as said by the Attorney General rationalising the taxing power. What we have said is the plain meaning of the taxing provision. The third contention of the Attorney General flows from the provisions of article 285(1) of the Constitution which says that the property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, inter alia, on "buildings and lands owned by or vesting in the Union Government". Relying on these provisions, it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India, the lands and buildings owned by the companies cannot be subjected to property tax. The short answer to this contention is that even t....
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....State Government. Gajendragadkar, C. J., while speaking for the Court, referred to the judgment of Lord Denning in Tamlin v. Hansaford in which the learned Judge observed: "In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government". In Pennington's Company Law, 4th Edition, pages 50-51, it is stated that there are only two decided cases where the court has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate the evasion of legal obligations. The learned author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn, J. to the effect that as a general rule, a corporati....
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....a Pradesh Municipal Corporation Act provides that the property tax shall be paid primarily by the owner. By sub-section (2) of section 141, the property tax levied on the owner can also be recovered from the occupier of the land or the building. These provisions shall have to be borne in mind by the appellants before any attempt is made before the assessing authority to transfer or avoid the impost of the property tax. Finally, the learned Attorney General raised a contention of fundamental importance which was not raised in the High Court. The lands and buildings on which respondent 1 has imposed the property tax are used for the purposes of and are covered by coal mines. Basing himself on that consideration the Attorney General argues: (1) By virtue of the declaration contained in section 2 of Mines and Minerals (Development and Regulation) Act, 1957, the legislative field covered by Entry 23, List II passed on the Parliament by virtue of Entry 54, List I. (2) The Parliament enacted the Coal Mines Nationalisation Act, 1973 for acquisition of coal mines with a view to reorganising and reconstructing such coal mines so as to ensure the rational, coordinated and scientific develo....
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.... Section 64 of the Act of 1973, which provides for the constitution of the special areas, lays down by sub-section (4) that: Notwithstanding anything contained in the Madhya Pradesh Municipal Corporation Act, 1956, the Madhya Pradesh Municipalities Act, 1961, or the Madhya Pradesh Panchayats Act, 1962, the Municipal Corporation, Municipal Council, Notified Area Committee or a Panchayat, as the case may be, shall, in relation to the special area and as from the date the Special Area Development Authority undertakes the functions under clause (v) or clause (vi) of section 68 cease to exercise the powers and perform the function and duties which the Special Area Development Authority is competent to exercise and perform under the Act of 1973. Section 68 defines the functions of the Special Area Development Authority, one of which, as prescribed by clause (v), is to provide the municipal services as specified in sections 123 and 124 of the Madhya Pradesh Municipalities Act, 1961. Section 69, which defines the powers of the Authority, shows that those powers are conferred, inter alia, for the purpose of municipal administration. Surely, the functions, powers and duties of Municipalitie....
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....h the development of mines and minerals or their regulation. The proceeds of the land cess were required to be credited to the District fund which had to be used for everything necessary for or conducive to the safety, health, convenience or education of the inhabitants or the amenities of local area concerned. It was further held by the Court that the land cess was not a tax on mineral rights but was in truth and substance a "tax on lands" within the meaning of Entry 49 of the State List. The reasoning adopted in this decision shows that it is not correct to say that the property tax provided for in the Act of 1973 is beyond the legislative competence of the State Legislature; that tax has nothing to do with the development of mines. The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is therefore not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop the Coal mines so as to ensure rational and scientific utilisation of coal resources. The paramount purpose behind the declaration contained in section 2 of the Mines and....