1999 JTR(SC) 763
1999 AIR(SC) 2552 ; 1999 AIR(SCW) 2720 ; 1999 5 JT 151 ; 1999 5 JT 152 ; 1999 4 Scale 261 ; 1999 6 SCC 78 ; 1999 2 UJ 1352 ; 1999 KHC 1266 ; 1999 6 Supreme 257
1999(6) Supreme 257
Supreme Court of India
(From Andha Pradesh High Court)
D.P. Wadhwa & M.B. Shah, JJ.
The Board of Trustees for the Visakhapatnam Port Trust etc. -Appellants
versus
The State of Andhra Pradesh & Ors. -Respondents
Civil Appeal No. 1997-98 of 1990
With
Civil Appeal No. 1810 of 1998
Decided on 27-7-1999
Counsel for the Parties :
For the Appellants : Y.P. Rao, Kailash Vasdev, Ms. C.K. Sucharita, C.V. Subba Rao, Sanjay Kapur, Advocates.
For the Respondents : Ms. K. Amareshwari, Sr. Advocate, G. Prabhakar, Ashok Kumar Gupta, Vishnu Mathur, Ranbir Yadav, P.N. Puri, Advocates.
Important Point
Visakhapatnam port trust is not a department of Central Government and is such not entitled to exemption under Article 285 of the constitution of India.
Act
Referred
:CONSTITUTION OF INDIA : Art.285
MAJOR PORT TRUSTS ACT : S.29, S.5, S.110
(A) The Board of Trustees of Visakhapatnam Port Trust, constituted under the Major Port Trusts Act, 1963, was held to be a body corporate capable of acquiring, holding, and disposing of property, with all property of the Union of India vests in it for port purposes. The provisions of the Major Port Trusts Act, 1963, read with Article 285 of the Constitution, govern the immunity of Union property from state taxation, and the status of the Board as a distinct entity from the Central Government was crucial in determining tax liability.
(B) A body corporate distinct from the Central Government cannot claim exemption from state taxation under Article 285 merely because the property is owned by the Union of India and vested for administrative purposes; the property of the Union is exempt from state tax, but the exemption does not extend to entities that are not the Union or its departments.
Facts of the case:
The Board of Trustees of Visakhapatnam Port Trust, constituted under the Major Port Trusts Act, 1963, was exempted from property tax by the Visakhapatnam Municipal Corporation and from non-agricultural land tax by the Visakhapatnam Mandai, leading to disputes over whether the properties, though owned by the Union of India and vested in the Board, were exempt from taxation.
Findings of Court:
The Court held that the Board is a body corporate distinct from the Central Government, and properties vested in it do not remain under the ownership of the Union for tax exemption purposes; therefore, the Board is not exempt from taxation under Article 285.
Issues:
Whether the Board of Trustees of Visakhapatnam Port Trust is exempt from property tax and non-agricultural land tax under Article 285 of the Constitution, given that the properties are owned by the Union of India and vested in the Board.
Ratio Decidendi:
A body corporate constituted under a statute with attributes distinct from the Central Government does not qualify for Article 285 exemption merely on the basis that the properties are owned by the Union and vested in it for management; the Board being a distinct entity, the exemption does not apply.
Result:
Civil Appeal No. 1810 of 1988 allowed; Civil Appeal Nos. 1997-98 of 1990 dismissed with costs.
(A) The Board of Trustees of Visakhapatnam Port Trust, constituted under the Major Port Trusts Act, 1963, was held to be a body corporate capable of acquiring, holding, and disposing of property, with all property of the Union of India vests in it for port purposes. The provisions of the Major Port Trusts Act, 1963, read with Article 285 of the Constitution, govern the immunity of Union property from state taxation, and the status of the Board as a distinct entity from the Central Government was crucial in determining tax liability.
(B) A body corporate distinct from the Central Government cannot claim exemption from state taxation under Article 285 merely because the property is owned by the Union of India and vested for administrative purposes; the property of the Union is exempt from state tax, but the exemption does not extend to entities that are not the Union or its departments.
Facts of the case:
The Board of Trustees of Visakhapatnam Port Trust, constituted under the Major Port Trusts Act, 1963, was exempted from property tax by the Visakhapatnam Municipal Corporation and from non-agricultural land tax by the Visakhapatnam Mandai, leading to disputes over whether the properties, though owned by the Union of India and vested in the Board, were exempt from taxation.
Findings of Court:
The Court held that the Board is a body corporate distinct from the Central Government, and properties vested in it do not remain under the ownership of the Union for tax exemption purposes; therefore, the Board is not exempt from taxation under Article 285.
Issues:
Whether the Board of Trustees of Visakhapatnam Port Trust is exempt from property tax and non-agricultural land tax under Article 285 of the Constitution, given that the properties are owned by the Union of India and vested in the Board.
Ratio Decidendi:
A body corporate constituted under a statute with attributes distinct from the Central Government does not qualify for Article 285 exemption merely on the basis that the properties are owned by the Union and vested in it for management; the Board being a distinct entity, the exemption does not apply.
Result:
Civil Appeal No. 1810 of 1988 allowed; Civil Appeal Nos. 1997-98 of 1990 dismissed with costs.
Judgment
D.P. Wadhwa, J.-A common question of law in both these appeals is : If the Board, i.e., Board of Trustees of Visakhapatnam Port Trust is exempt from taxation under Article 285 of the Constitution from levy of property tax by the Visakhapatnam Municipal Corporation, constituted under Visakhapatnam Municipal Corporation Act, 1979 (Civil Appeal No. 1810 of 1988) and also from levy of non agricultural land tax by the Visakhapatnam Mandai under the Non-Agricultural Lands Assessment Act, 1968. Contention of Mr. Kailash Vasudev, learned counsel appearing for the Board is that the properties are not owned by the Board and the vesting of the properties in the Port Trust is only for the purpose of administering them and they in fact demained the properties owned by the Union of India and thus exempt from taxataion under Article 285 of the Constitution. Under this Article property of the Union of lndia is exempt from all taxes imposed by the State or by any authority within a State.
2. The Board of Visakhapatnam Port Trust is constituted under the Major Port Trust Act, 1963. Constitution of the Board is described in Section 3 of the Act. Under Section 5 Board shall be a body corporate having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold or dispose of property and may by name by which it is constituted, sue or to be sued. Chapter IV of the Act deals with “Property and Contracts”. Under clause (a) of Section 29 all property, assets and fundsw and all rights to levy rates vested in the Central Government or, as the case may be, any other authority for the purposes of the port immediately before the appointed day, shall vest in the Board. Under Section 32 of the Act when any Immovable property is required for the purposes of the Board, the Central Government may, at the rerquest of the Board, procure the acquisition thereof under the provisions of the Land Acquistion Act, 1894 (1 of 1894), and on payment by the Board of the compensation awarded under that Act and of the charges incurred by the Government in connection with the proceedings, the land shall vest in the Board.
3. Our attention was drawn to Section 110 of the Act, which provides for power of the Central Government to supersede the Board. Under sub-section (2) of this section all the properties vested in the Board shall, untill the Board is reconstituted, vest in the Central Government. On this an argument was raised that the Board is not the absolute owner of the properties and that only the managment of these properties vest with the Board.
4. We do not think that this argument has any basis. This Court in Municipal Commissioner of Dum Dum Manicipality & Ors. v. Indian Tourism Development Corporation & Ors.1 , considered the same argument in the case of International Airport Authority that the vesting of the properties was only for the purpose of managing those properties and ownership of the properties did not vest in the Authority. In that case this Court was deliberating the provisions of the International Airports Authority Act, 1971 under which International Airport Authority of India was constituted. The provisions of that Actd are puri materia with the Major Port Trust Act, 1963 regarding the constitution, property and contracts and supercession. It is not necessary to quote the provisions of the International Airport Authority Act, 1971 to show that how they are similar to the provisions in the Major Port Trust Act, 1963. This Court negatived the argument that the properties vested in the International Airport Authority of India for the purpose of managing those properties and that the ownership of these properties continued to be with the Central Government. The Court held that the properties vest in the International Airport Authority of India and it could not be said that the Central Government owned the properties. Board in the present case is not a department of the Central Government rather it has the attributes of a company. It is distinct from the Central Government. It cannot, therefore, claim exemption from taxation under Article 285 of the Constitution.
5. In a Constitution Bench decision of this Court in Electronics Corporation of India Ltd. etc. etc. v. Secretary, Revenue Department, Government of Andhra Pradesh and Ors. etc. etc.2. It was held that the Electronics Corporation of India Ltd., & Government company, was distinct from the Central Government and Article 285 was not applicable in the case of a Government company. Following the ratio in the aforesaid two decisions it has to be held that Board is not exempt from taxation under Article 285 of the Constitution.
6. Accordingly Civil Appeal No. 1810 of 1988 is allowed and Civil Appeal Nos. 1997-98 of 1990 are dismissed with costs.
(C.R.) Appeals dismissed.
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Parallel Citations of other Journals :
Board of Trustees for the Visakhapatnam Port Trust etc. v. The State of Andhra Pradesh & Ors., 1999(6) Supreme 257 : (1999) 6 SCC 78 : 1999 (2) UJ 1352 (SC) : AIR 1999 SC 2552
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