Board of Trustees for The Visakhapatnam Port Trust Vs. The State of Andhra Pradesh & Ors  INSC 221 (17 July 1999)
M.B.Shah D.P. Wadhwa, J.
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 Mandal 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 remained the properties owned by the Union of India and thus
exempt from taxation under Article 285 of the Constitution. Under this Article
property of the Union of India is exempt from all taxes imposed by the State or
by any authority within a State.
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 funds
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 request of the Board, procure the acquisition thereof
under the provisions of the Land Acquisition 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.
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, until 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
management of these properties vest with the Board.
not think that this argument has any basis.
Court in Municipal Commissioner of Dum Dum Municipality and others vs. Indian
Tourism Development Corporation and others (1995 (5) SCC 251), 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 Act are pari 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 Airports 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.
Constitution Bench decision of this Court in Electronics Corporation of India
Ltd. etc. etc. vs.Secretary, Revenue Department, Government of Andhra Pradesh
and others etc. etc. (1999 (4) SCC 458 = 1999 (3) SCALE 125), it was held that
the Electronics Corporation of India Ltd., a 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
Civil Appeal No. 1810 of 1988 is allowed and Civil Appeal Nos. 1997-98 of 1990
are dismissed with costs.