TMI Blog2009 (11) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... orations to properties owned by Union of India and its departments. ( 2. ) THE appellant municipal corporations have been raising bills annually, in regard to the service charges payable by Union of India and its departments. When some of the bills were not paid, the municipal corporations resorted to attachment of the properties of Union of India, by invoking revenue recovery proceedings by treating the dues as arrears of taxes. Such actions of the appellants were challenged by Union of India in a batch of writ petitions before the Gujarat High Court which were disposed of by the impugned common order of the High Court dated 19.9.2002. THE High Court allowed the petitions holding as follows: None of the impugned demand notices or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1890, and in absence of any contract as contemplated under sub-section (4) of the corresponding provision of section 135 of the Act of 1890, it was not open to any of these corporations to impose any tax or service charges in lieu of tax under the said Act and effect recovery by issuing the impugned demand notices and other coercive orders. Admittedly, there is no law enacted by the Parliament, withdrawing the exemption from municipal taxes, as contemplated by Article 285(1) in respect of the properties occupied by the Postal Department or Office of the Accountant General. Obviously, therefore, the recovery of property taxes or service charges in lieu of such taxes as is sought to be done under the impugned demand notices and orders is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide, be exempt from all taxes imposed by a State or by any authority within a State. (2) Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution is liable or treated as liable, so long as that tax continues to be levied in that State. ( 3. ) IN Union of INdia and Ors, vs. State of Uttar Pradesh and Ors., 2007 (11) SCC 324, this Court upheld the decision of the High Court that charges for supply of water or for other services rendered under any statutory obligation, is a fee and not tax. It was held that the Union of INdia was liable to pay such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges to the Municipal Corporations, for the services, as stated in its circulars dated 10.5.1954, 29.3.1967, 25.5.1976 and 26.8.1986, but will not pay any taxes. (iii) Having regard to the fact that only service like supply of water could be metered and other services like drainage, solid waste management/approach roads, street lighting etc., could not be metered, the percentage of property tax will be worked out as service charges, on the basis of instructions issued by the Ministry of Finance. (iv) The concerned Ministry of the Union to which the property belongs will enter into separate contracts with the respective municipal corporation for supply of services and payment of service charges and pay the bills for annual service charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where no services were availed from the municipal corporation, a rate within the ceiling of 33 and 1/3% of the property tax, will be negotiated and settled having regard to the relevant circumstances. In so far as properties of Indian Railways are concerned, it was stated that as it owns properties in virtually every municipal corporation in India and normally all its properties do not utilise the services provided by municipal corporations, Railways propose to pay only a token service charge of 5% or such other rate as may be agreed by mutual negotiations. Learned Counsel for the appellants submitted that the appellant municipal corporations submitted that they were broadly in agreement with what has been stated and agreed by Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government of India, Ministry of Finance, providing for payment of part of the property tax, as services charges for water, scavenging etc. THE learned Solicitor General however stated that she was not sure whether the said circular continues in force or was superseded by other circulars. Be that as it may. ( 6. ) IN view of the above, there is no need to consider the appeals on merits. We dispose of appeals and pending applications by recording the following brood agreement between the parties: (i) The Union of INdia and its departments will pay service charges for the services provided by the appellant municipal corporations. They will not pay any property tax. The service charges will be paid at 75%, 50% and 331/3% respectively of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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