1991 JTR(SC) 500
1992 AIR(SC) 1597 ; 1992 AIR(SCW) 1737 ; 1992 1 AllCJ 480 ; 1991 3 CurCC(SC) 632 ; 1991 4 JT 3 ; 1991 2 Scale 669 ; 1992 1 SCC 100 ; 1991 Supp1 SCR 183 ; 1991 2 UJ 741 ; 1992 KHC 736
SUPREME COURT OF INDIA
M.M. PUNCHHI AND K. RAMASWAMY, JJ.
Union of India, Appellant
Versus
Purna Municipal Council and others, Respondents
Civil Appeal No. 903 of 1978, D/-19-9-1991.
Act Referred :CONSTITUTION OF INDIA : Art.285
(A) The Union of Indias immunity from state taxation is governed by Article 285 of the Constitution, which preserves such immunity unless Parliament by law otherwise provides. Section 135 of the Indian Railways Act, 1890, a central enactment, operates within this framework and is saved by Article 285(1), permitting taxation of railways by local authorities only when the Central Government issues a notification in the official gazette. The interplay between Article 285(2), which contemplates state legislation subject to parliamentary law, and the Railways Act, which is a central law, defines the scope of state tax impositions on railway administration.
(B) A State tax on railways is invalid unless Parliament has provided otherwise; Section 135 of the Railways Act, being a central enactment, prevails and requires a Central Government notification to impose any tax; the absence of such notification bars state demands; the High Courts reasoning under Article 285(2) was erroneous as it overlooked the saving under Article 285(1).
Facts of the case:
The Union of India, as the appellant, challenged notices of demand issued by the Municipal Council, Purna, for service charges covering the period 1954 to 1960, relying on Article 285 of the Constitution read with Section 135 of the Indian Railways Act, 1890. The Bombay High Court held that the Railways Act did not qualify as a parliamentary law under Article 285(2), thereby negating the Unions claim.
Findings of Court:
The Supreme Court held that Section 135 of the Indian Railways Act, 1890, is preserved by Article 285(1) and cannot be overridden by Article 285(2); the High Courts interpretation was misplaced; the Central Governments notification authority under Section 135 regulates taxation; the appeal is allowed and the High Courts order is set aside.
Issues:
Whether Section 135 of the Indian Railways Act, 1890, qualifies as a parliamentary law under Article 285(2); whether a state can impose service charges on railways in the absence of a Central Government notification under Section 135.
Ratio Decidendi:
Article 285(1) preserves Section 135 of the Indian Railways Act, 1890, as a central enactment; only the Central Government, via notification, can authorize taxation of railways by local authorities; in the absence of such notification, state demands are invalid.
Result:
The appeal is allowed, the Bombay High Courts judgment is set aside, and a writ is issued restraining the Municipal Council from raising demands against the railway for service charges.
(A) The Union of Indias immunity from state taxation is governed by Article 285 of the Constitution, which preserves such immunity unless Parliament by law otherwise provides. Section 135 of the Indian Railways Act, 1890, a central enactment, operates within this framework and is saved by Article 285(1), permitting taxation of railways by local authorities only when the Central Government issues a notification in the official gazette. The interplay between Article 285(2), which contemplates state legislation subject to parliamentary law, and the Railways Act, which is a central law, defines the scope of state tax impositions on railway administration.
(B) A State tax on railways is invalid unless Parliament has provided otherwise; Section 135 of the Railways Act, being a central enactment, prevails and requires a Central Government notification to impose any tax; the absence of such notification bars state demands; the High Courts reasoning under Article 285(2) was erroneous as it overlooked the saving under Article 285(1).
Facts of the case:
The Union of India, as the appellant, challenged notices of demand issued by the Municipal Council, Purna, for service charges covering the period 1954 to 1960, relying on Article 285 of the Constitution read with Section 135 of the Indian Railways Act, 1890. The Bombay High Court held that the Railways Act did not qualify as a parliamentary law under Article 285(2), thereby negating the Unions claim.
Findings of Court:
The Supreme Court held that Section 135 of the Indian Railways Act, 1890, is preserved by Article 285(1) and cannot be overridden by Article 285(2); the High Courts interpretation was misplaced; the Central Governments notification authority under Section 135 regulates taxation; the appeal is allowed and the High Courts order is set aside.
Issues:
Whether Section 135 of the Indian Railways Act, 1890, qualifies as a parliamentary law under Article 285(2); whether a state can impose service charges on railways in the absence of a Central Government notification under Section 135.
Ratio Decidendi:
Article 285(1) preserves Section 135 of the Indian Railways Act, 1890, as a central enactment; only the Central Government, via notification, can authorize taxation of railways by local authorities; in the absence of such notification, state demands are invalid.
Result:
The appeal is allowed, the Bombay High Courts judgment is set aside, and a writ is issued restraining the Municipal Council from raising demands against the railway for service charges.
B.K.PRASAD, C.V.SUBBA RAO, K.R.CHOUDHARY, SANGITA AGARWAL, V.C.MAHAJAN
JUDGMENT
This appeal by special leave is directed against the judgment and order of the Bombay High Court passed in Special Civil Application No. 193i of 1971 decided on December 5, 1977.
2. The Union of India, the appellant herein, approached the High Court under Art.226 of the Constitution challenging notices of demand issued by the Municipal Council, Purna, respondent No. 1 herein, claiming tax to the tune of Rs. 28,400/- by way of "Service charges" due for the period 1954 to 1960. The claim of the Union of India primarily was based under Art. 285 of the Constitution read with S. 135 of the Indian Railways Act, 1890. The High Court interplaying the two provisions negatived the claim of the appellant by holding as follows:
"In terms of Art. 285(2) these properties will continue to be liable to such taxes until Parliament by law otherwise provides. Mr. Govilkar has not drawn our attention to any specific law made by the Parliament providing otherwise. He, however, relied on S. 135 of the Indian Railways Act, but, as indicated earlier, provisions of S. 135 cannot have any overriding effect against the continuance of such laws when authorised by Art. 285(2) of the Constitution. It is not possible for us to hold that Railways Act is an Act made by the Parliament as contemplated under sub-art. (2) of Art. 285 of the Constitution."
3. The High Court further observed that :
"As S. 135 of the Railways Act is now substituted by the corresponding provisions of the above enactment, it is unnecessary to consider the contention of Mr. Govilkar as to effect of the absence of any Notification. We have already indicated how S. 135 or the corresponding section of the new enactment can have no overriding effect as against the saving of laws contemplated under Art. 285(2) of the Constitution."
4. The view expressed by the High Court is obviously erroneous. S. 135 of the Indian Railways Act, 1890 gets saved under Art. 285(1) of the Constitution itself. The said Article provides that property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by the State or by any authority within a State. S. 135 of the Railways Act provides as under:
"Taxation of railways by local authorities:- Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes, in respect of railways from railways administrations in aid of the funds of local authorities, namely:
(1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the (Central Government) has, by notification in the official gazette, declared the railway administrate ,on to be liable to pay the tax.
(2) While a notification of the (Central Government), under Cl. (1) of this section is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or in lieu thereof such sum, if any, as an officer appointed in this behalf by the (Central Government) may having regard to all the circumstances of the case, from time to time determine to be fair and reasonable,
(3) The (Central Government) may at any time revoke or vary a notification under Cl. (1) of this section.
(4) Nothing in this section is to be construed as debarring any railway administration from entering into contract with any local authority for. the supply of water or light or for the scavenging of railway premises or for any other service which the local authority m ay be rendering or be prepared to render within any part of the local area under its control.
(5) Local Authority in this section means a local authority as defined in the General Clauses Act, 1897 and includes any authority legally entitled to or entrusted with the control or management of any fund for the maintenance of watchmen or for conservancy of a river."
5. The aforesaid provision, existing as it is, in terms permits taxation of Railways by the local authority in the manner given therein; the Central Government being the controlling and the regulating authority permitting liability at a given point of time, its extent and manner. The Indian Railways Act being a central enactment has no role to play in sub-art. (2) of Art. 285, for that is a sphere in which t e State legislation operates. The reasoning of the High Court to oust the applicability of S. 135 of the Indian Railways Act on the test of sub-art. (2) of Art. 285 was totally misplaced, as also in not venturing to create room for it in sub-art. (1) of Art. 285. The interplay of the constitutional and legal provisions being well cut and well defined requires no marked elaboration to stress the point. Accordingly, we allow this appeal, set aside the judgment and order of the High Court and issue the, writ and direction asked for in favour of the Union of India restraining the- respondent council from raising demands on the railway in regard to service charges. We make it clear that the rights of the local authority as flowing under S. 135 of the Indian Railways Act, 1890 stand preserved in the event of the Central Government moving into the matter, if not already moved. In the circumstances of the case, however, there will be no order as to costs.
Appeal allowed.
For Citation : AIR 1992 SC 1597 = 1991(4) JT 3 = (1992) 1 SCC 100 = 1991(2) UJ (SC) 741 = 1991(2) Scale 669.