Corporation, Amritsar Vs. The Sr. Supdt. of Post Offices,
Amritsar Div. & Anr  Insc 38 (21 January 2004)
Variava & H.K. Sema Sema, J.
appeal, preferred by the Municipal Corporation, Amritsar is against the judgment of the High Court dated 17th July, 2001, allowing the writ petition, filed
by the respondents herein.
appeal arises out of the following facts:
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.
demand notices, without any result, culminated in the notice dated 24.10.2000.
Being aggrieved by the aforesaid notice, the respondents had taken the matter
before the High Court, which was allowed and the aforesaid notice was set
aside. The High Court, having noticed the earlier judgment of the Division Bench
dated 19th December,
2000, held inter-alia
that the demand of service charges made by the Municipal Corporation was violative
of Article 285 of the Constitution.
have heard learned counsel for the parties.
questions revolve around for determination in this appeal are:
Whether the demand for service charges, so made by the Corporation against the
respondents is by way of `service charge' or by way of 'tax'?
it is held that the demand so made was by way of `tax', whether the same is violative
of Article 285(1) of the Constitution of India.
we advert further we may, at this stage, peruse the demand notice dated
24.10.2000. It reads:
Joint Commissioner Municipal Corporation, AMRITSAR.
Assistant Engineer,Civil Postal Civil Sub Divisions, Jalandhar City.
J.C/I.S./319 Dated 24.10.2000 Sub: Payment of Service Charges of the properties
owned By P & T Department, Amritsar.
a notice of demand in respect of service charges in lieu of tax on land and Buildings
with regards to the following properties owned by P & T Department Amritsar
for the period mentioned against each property, was served on the Senior
Superintendent of Post Offices Amritsar vide letter Nos.
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: S.No. Name of Deptt. & Location Year Amount
General Post Office & Telegraph Office 1.4.67 2,33,296.65 & Quarters
New/XIII, Amritsar to 31.3.2K
Post Office, Kt. Mohar Singh,Amritsar do
Post Office, KT Bhai Sant Singh, do 26,298.00 New/X, Amritsar
Post Office, Durgiana Mandi New/XVI, do 18,336.47 Amritsar
Post Office, Chhoharta, New XXII, do 17,036.42 Amritsar
Post Office,Hide Market New/XV, do 14,492,95 Amritsar
Post Office, KT. Sher Singh, New/XII, do 38,114.41 Amritsar
Post Office, Kairon Market New/1, do 39,011.36 Amritsar
Post Office, Chowk Phagwara do 34,845.50 4,51,105.56
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 at 25% of the property tax rate realized from the private
individuals. The next ratable value/annual value for the purpose of these
instructions shall be 9% of the capital value of the property concerned both in
respect of residential and non-residential properties.
the office of P&T Department has failed to deposit the amount as specified
in the notice of demand raised vide letters mentioned above amounting to Rs. 4,51,105.56.
I, Gurwaryam Singh, PCS, Joint Commissioner, Municipal Corporation, Amritsar exercising the delegated powers of
Commissioner, Municipal Corporation, Amritsar conferred on me vide office order No. C/242 dated 4.8.1999 direct that
the Service Charges of the buildings owned by P&T Department may be paid
within 30 days failing which the moveable property lying in the said properties
would be attached and retained to be sold in order to recover the arrears of
service charges by public auction.
As above Sd/- (Gurwaryam Singh) Joint Commissioner, Municipal Corporation,Amritsar Exercising the powers of
Commissioner Municipal Corporation, Amritsar." Article 285(1) provides that the property of the Union shall, save in so far as Parliament may by law
otherwise provide, be exempt from all taxes imposed by a State or by any
authority within a State.
observed from the impugned notice, the whole basis of the demand notice was in
pursuance of the letters/circulars issued by Government of India, Ministry of
Finance being Nos. 14-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 Government of India. By no
stretch of imagination such circulars, issued by the Deputy Secretary to the
Government of India, can be said to have any overriding effect over the mandate
of Article 285(1) of the Constitution. We are, therefore, of the view that the
circulars so issued, as noticed above, do not alter the position with regard to
the bar imposed by Article 285(1) of the Constitution. The interplay of the
constitutional and legal provisions being well cut and well defined requires no
marked elaboration to stress the point.
question, whether the demand so made was by way of `service charge' or `tax',
need not detain us any longer. The demand so made was with regard to the services
rendered to the respondents' department, like water supply, street lighting,
drainage and approach roads to the land and buildings. In the counter, the
respondents averred that they are paying for the services rendered by the
appellant-Corporation by way of water & sewerage charges and power charges
separately. It is also categorically averred that no other specific services
are being provided to the respondents for which the tax in the shape of service
charges can be levied and realized from the respondents. There is no provision
in the Municipal Corporation Act for levying service charges. The only
provision is by way of tax.
the appellant-Corporation is collecting the tax from general public for water
supply, street lighting and approach roads 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 issues raised herein are no more res-integra. This Court, in (1992) 1 SCC
100 Union of India v. Purna Municipal Corporation & 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
Corporation was restrained from demanding tax by way of service charges from
railways. This is what this Court has said in para 5 of that judgment:
aforesaid provisions, 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-article (2) of Article 285, for
that is a sphere in which the State legislation operates. The reasoning of the
High Court to oust the applicability of Section 135 of the Indian Railways Act
on the test of sub-article (2) of Article 285 was totally misplaced, as also in
not venturing to create room for it in sub-article (1) of Article 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." The same view was reiterated in (1996) 7 SCC 542 Union of India
& Anr. v. Ranchi Municipal Corporation & Ors.
the aforesaid reasons, the appeal is devoid of merits and it is accordingly
dismissed with no order as to costs.