2004 (1) TMI 728

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..... The appeal arises out of the following facts: 3. The Posts and Telegraphs Department has nine buildings within the limits of Amritsar Municipal Corporation (hereinafter referred to as 'the Corporation'). The appellant Corporation had issued notices to the respondents for payment of service charges for providing various services like water supply, street lighting, drainage and approach roads to the land and buildings in the municipal area. However, the respondents did not make any payment contending that the respondent-Department being of Central Government, the properties owned by them are exempt from all taxes. Several demand notices, without any result, culminated in the notice dated 24.10.2000. Being aggrieved by the aforesa....

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.... Superintendent of Post Offices Amritsar vide letter Nos. PT/IS/307 dt. 19.7.95, EO/TS/252 dt. 23.5.97, EO/TS/1274 dt. 19.3.97, AC/TS/254 dt. 9.9.98 & No. AC/TS/627 dt. 6.1.99: Whereas Service Charges in respect of properties of Central Government are payable by the respective Deptt. to the Municipal Corporation of the rates varying from 33.1/25% to 75% as decided by the Government of India, Ministry of Finance in its letter No. 14(1)P/52-I dated 10.5.54 and No. 4(7)P/65, dated 29.3.67 (copy enclosed). According to para (ii)(c) of the letter dated 29.3.67, in respect of colonies where all the services normally are provided by the Municipal Corporation to the residents of other areas are being availed of Service charges will be paid....

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....notice was in pursuance of the letters/circulars issued by Government of India, Ministry of Finance being Nos. 14[1]-P/52/1 dated 10.5.54 and 14(7)-P/65 dated 29.3.67. It is argued by Mr. Mahabir Singh, learned counsel that the Corporation is justified and entitled for payment of service charges in view of the circulars issued by the Government of India, as referred to above. We are unable to countenance with this contention of the learned counsel. The circulars, aforesaid, issued by the Union of India were administrative in nature. It is now settled principle of law that administrative circulars, cannot override the constitutional provisions. The Government of India circular, as referred to above, was issued by one Deputy Secretary to the ....

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....etc. Thus, the "tax" was sought to be imposed in the garb of "service charges". The interplay of the constitutional and legal provisions being well cut and well defined, it was clearly not within the competence of the Corporation to impose tax on the property of the Union of India, the same being violative of Article 285(1) of the Constitution. 10. Furthermore, the issues raised herein are no more res-integra. This Court, in AIR 1992 SC 1597 Union of India v. Purna Municipal Corporation and Ors. considered an identical question and held that Section 135 of the Railways Act, being an Act of the Central Government and saved by Clause (1) of Article 285 of the Constitution, Clause (2) of Article 285 was not attracted, and the Municipal Corp....