TaxTMI 
TaxTMI 
2011 (4) TMI 1499
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....ion of law involved hereinabove and in order to appreciate the contentions raised by the parties hereto, we may notice few basic fact which has resulted into filing of these appeals. 3. The Appellant herein had been granted under the Government Grant Act separate and distinct licenses by the President of India acting through Superintendent of Northern Railway, Delhi for the purpose of maintaining depot for storage of petroleum products at a yearly license fee of Rs. 20,640/-and Rs. 31,000/- per annum respectively. 4. Under the aforesaid grant, the Appellant had been given the right to erect/construct 'petroleum installation buildings' consisting of petroleum tanks, buildings and other conveniences for receiving and storing therein petroleum in bulk, and consequently possession of land has been given. 5. Consequent to the said agreement the administration granted 'exclusive possession' of the said land to the Appellant who entered the land for the purpose and the terms mentioned therein in the aforesaid agreement/grant. Consequently, the Appellant submitted layout building plans for the construction of the oil depot and the standing committee of the Municipa....
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....o pay property tax qua the petroleum installations including the tanks cannot fall upon the Appellant under Section 120 of the DMC Act because the Appellant is a mere licencee of government land having permission to construct and consequently having constructed thereupon is neither a tenant nor a lessee and the agreement in question does not create any leasehold right or tenancy in the favour of the Appellant. In other words, the submission was that the agreement in question is a licence deed. It was further contended that the petroleum storage tanks/depots are not "buildings" and therefore not subject to property tax. It was also argued that the petroleum storage tanks/depots being plant and machinery are liable to be exempted under the provisions of Section 116(3) of the DMC Act. 9. On the other hand, the learned Counsel appearing for the Respondent MCD submitted that the indentures in question are indeed a lease and not a licence. It was argued that the question as to whether such an oil storage tank would be building or not is no longer res Integra in view of judgment of the Supreme Court in the case of Municipal Corporation of Greater Bombay v. Indian Oil Corporation AIR 19....
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....operty taxes a first charge on premises on which they are assessed.--Property taxes due under this Act in respect of any land or building shall, subject to the prior payment of the land revenue if any, due to the Government thereon be a first charge- (a) in the case of any land or building held immediately from the Government, upon the interest in such land or building of the person liable for such taxes and upon the goods and other movable properties if any found within or upon such land or building and belonging to such person; and (b) in the case of any other land or building upon such land or building and upon the goods and other movable properties/ if any, found within or upon such land or building and belonging to the person liable for such taxes. 11. We may also notice the language of Article 285 of the Constitution of India which reads as follows: 285. Exemption of property of the Union from State taxation (1) The property of the Union shall, save insofar as Parliament may by law otherwise provide, he exempt from all taxes imposed by a State or by any authority within a State. (2) Nothing in Clause (1) ....
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....o make and use a watercourse, the grant was not valid unless under seal, and the license, unless so made, was therefore a mere license and was revocable but since 1873 the Court has been bound to give effect to equitable doctrines and it will restrain the revocation of a license coupled with a grant which should be, but is not, under seal. 14. Lease on the other hand, would amount to transfer of property. In Associated Hotels of India Ltd. v. R.N. Kapoor (1960) 1 SCR 368, the following well established proposition were laid down by a Constitution Bench for ascertaining whether a transaction amounts to a lease or a license: 27. There is a marked distinction between a lease and a license. Section 105 of the Transfer of Property Act defines a lease of immovable property as a transfer of a right to enjoy such property made for a certain time in consideration for a price paid or promised. Under Section 108 of the said Act, the lessee is entitled to be put in possession of the property. A lease is there fore a transfer of an interest in land. The interest transferred is called the leasehold interest. The Lesser parts with his right to enjoy the property during the term of the....
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.... also subject to the contract to the contrary. Even the right of assignment of leasehold property may be curtailed by an agreement. 17. In the present case grant has been made by the President of India in terms of Section 2 of the Government Grants Act, 1895 and the Transfer of Property Act, 1882 may have little bearing in the instant case. The former, i.e. the Government Grants Act, 1895 being a special statute would prevail over the general statute, i.e. the Transfer of Property Act, 1882. Accordingly, the rights and obligations of the parties would be governed by the terms of the provisions of Government Grants Act, 1895 whereunder the Government is entitled to impose limitations and restrictions upon the grants and other transfer made by it or under its authority. 18. In view of the aforesaid legal position with regard to the applicability of the Government Grants Act, we have considered the grant in question after hearing both the parties at length and perused the entire record. 19. A bare perusal of the grant in question reveals that in the grant, the Appellant herein i.e. grantee has been described as licensee. But in our considered view the mere use of the word "li....
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.... reason is required to be assigned for determining the lease. 21. Further, Clause 11 of the indenture in question provides that nothing contained herein be construed to create a tenancy in favor of the licensee of the said land but again in our considered view, the mere description of the grant in question is not decisive. Under the grant in question, the Administration has been given power under Clause 12 to reenter upon and retake and absolutely retain the possession of the said land but the same could be permissible in law only upon determination of grant which would require 3 months' prior notice. It is to be noted that Clause 12 further stipulates that the licensee shall at all times keep the Administration indemnified against and shall reimburse it towards all claims, demands, suits, losses, damages, costs etc. which it may sustain or incur by reason of inconsequence of any injury to any person or to any property resulting from any explosion or leakage of any petroleum kept or placed by the licensee upon the said land. 22. Clause 14 of the indenture in question provides that the licensee shall follow all petroleum rules and regulations applicable to the construction....
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....cument is license. Of course, we hasten to add that nomenclature is not always conclusive; (2) the document in question in no unambiguous terms says that the possession and control shall remain with the owner. This is a clear indication of the fact that no interest in immovable property has been conferred on the grantee. If it were to be a case of lease under Section 105 of the Transfer of Property Act, there must be an interest in the immovable property. On the contrary, if it were to be a license under Section 52 of the Easements Act, no such interest in immovable property is created. The case on hand is one of such. (4) No doubt there is a statement in the document that "I shall not sublet it to further anybody else. This is nothing more than an affirmation of the requirement that the licensee must use the property. No doubt under Section 52 of the Easements Act, license is personal but where an affirmation is made that such an affirmation cannot alter the relationship of the parties as Lesser and lessee. In this view factually the case Capt. BVD' Douza v. Antonio Fausto Fernandes, Quoted from the judgment and order dated 3.5.1993 of Andhra Prad....
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....contra. 31. The aforesaid burden is not discharged in the present case rather for the purposes resisting its eviction from the suit land in the proceeding initiated under the Public Premises Unauthorized Occupants Eviction Act, the Appellant has taken the stand pleading non-applicability of the Indian Easement Act and has themselves termed the arrangement as a tenancy by describing the fee as rentals. The said factor is also a vital factor as on the own showing of the Appellant the arrangement was nothing but a lease. The Appellant therefore cannot take up a plea by which they approbate and reprobate at the same time. 32. In Street v. Mountford, 1985 Appeal Cases 809, it was held that when exclusive possession is granted in lieu of only rent payable therefore, the presumption that the instrument is that of a lease becomes stronger. In the present case the Administration has also option to revise the rent. Had it been a case of mere right to use the property, such provision would not have been there. Further, the manner in which the rent is to be paid is also important. It is to be paid annually in a case of a license pure and simple, the indenture would not normally contain a....
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.... be created such a term could not have been inserted. 36. It is well settled legal position that a license can be revoked at any time at the pleasure of the licensor. Even otherwise, unless the parties to the agreement had an intention to enter into a deed of lease the Administration would not have agreed to demise the premises on payment of rent in lieu of grant of exclusive possession of the demised land and further stipulated service of three months' notice calling upon either party to terminate the agreement. In view of the same, the argument advanced by the learned Counsel of the Appellant that a stipulation having been made in the agreement itself that by reasons thereof the grantee shall not be a tenant and thus the deed must be construed to be a license cannot be accepted. In our considered view, such a clause may at best be one of the factors for construction of the document in question but the same by itself certainly be a decisive factor. 37. The next question which needs to be addressed in view of the aforesaid well settled legal position is whether the agreement in question should be interpreted as lease or license having regard to the object sought to be ach....
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....ging to the Government or a statutory body but the occupier of the apartment is liable to pay tax. If a person encroaches upon somebody's lands and constructs buildings thereupon, he would also be liable to pay tax. Once it is held that the grantee were liable to pay tax, the same becomes payable from the date of accrual of the liability. The said position is also fortified from specific stipulation in the agreement that the liability to pay all taxes including municipal taxes is on the grantee. 41. The learned Counsel for the Appellant has placed strong reliance on the decision of this Court in HUDCO v. MCD (2001) 1 SCC 455 to contend that land belonging to the government is immune from the payment of property tax by virtue of Section 119(1) of the DMC Act and Article 285 of the Constitution of India. In the HUDCOs case vacant land of the government, prior to execution of the lease deed in favour of HUDCO, was sought to be taxed and that no building had been constructed by HUDCO. HUDCOs own case was that interest in land could pass only on execution of lease and construction thereon under Section 120(2) of the MCD Act. MCD had invoked Section 120(1) DMC Act to fasten liabil....