BHILAI STEEL PLANT BHILAI Vs. SPECIAL AREA DEVELOPMENT AUTHORITY BHILAI

JUDGEMENT

(1.) The petitioner, Steel Authority of India, Limited has set up a township for the residence of persons employed in the Bhilai Steel Plant as also for other allied amenities and facilities like schools, markets, hospitals, etc. This township is divided into several sectors. The buildings are owned by the petitioner. In the year 1964, the Madhya Pradesh State Legislature passed an Act known as the "Madhya Pradesh Nagariya Sthawar Sampatti Kar Adhiniyam, 1964 (No.14 of 1964)" (hereinafter referred to as "the Sampatti Kar Adhiniyam"), to apply to all 'urban areas' having population of 10,000 and above according to last census and included within the limits of a local authority and to any other area of commercial or industrial importance having population of ten thousand or above according to the last census. By notification dated 30/01/1967 "Bhilai Nagar Industrial Township in Durg District" was declared "urban area" of commercial and industrial importance as defined under S.2(h) of the Sampatti Kar Adhiniyam. The buildings and lands falling within the limits of this township were assessed to property tax in exercise of powers under S.4 of the Sampatti Kar Adhiniyam for the years 1966-67, 1967-68 and 1968-69. For this purpose, the annual letting value of the buildings was assessed at Rs.88,21,867.50 paise per year and the tax assessed was Rs.9,30,865.87 paise. A total demand of Rs.27,92,597.61 paise was raised against the petitioner as proposed tax for the said buildings and lands for the aforesaid three years. A challenge was laid to this levy on the ground that the notification declaring the township as 'urban area' applying the Sampatti Kar Adhiniyam to that area was wrong and that the tax was assessed on higher side. Partial relief was granted to the petitioner by the appeal Court, vide Annexure-N and annual letting value was reduced to Rs.61,22,069.53 paise and the tax was reduced to Rs.5,02,339.53 paise. A revision before the State Government. against the appellate order proved abortive and for the years 1969-70, 1970-71 and 1971-72 property tax was levied at this rate. The challenge was persued before the High Court and this time successfully. The notification was struck down as vague and the levy of tax was struck down prospectively. (Hindustan Steel Limited, Ranchi v. State of M.P., M.P. No.321 of 1972, decided on 4-9-1980 : 1984 MPLJ 92. Counsel told the Court that the matter is now before the Supreme Court and is awaiting decision.

(2.) The Madhya Pradesh Legislature enacted yet another Act providing for planning and development and use of land. This Act is styled as the "Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 (Act No.23 of 1973) (hereinafter referred to as 'the Nivesh Adhiniyam'). Sub-section (s) of Section 2 of the Nivesh Adhiniyam describes "special area" to mean a special area designated as such under Section 64, and sub-section (t) of Section 2 defines "Special Area Development Authority" to mean an authority constituted under Section 65. Consequent upon the enforcement of the Nivesh Adhiniyam, the State Government, by a notification dated 7/06/1973, designated Bhilai - Durg area as Special Area to be known by the name "Bhilai-Durg Special Area" and an authority was also constituted to be known as "Special Area Development Authority, Bhilai-Durg" (hereinafter to be referred as SADA). This authority apart from functions enumerated under Section 68 of the Nivesh Adhiniyam is also clothed, for the purpose of Municipal administration, with the same powers which the Municipal Council has under the Madhya Pradesh Municipalities Act, 1961 or under the Municipal Corporation Act, 1956. By notification dated 7/06/1973 (Annexure-A), the limits of Bhilai-Durg Special Area were notified. This was followed by yet another notification dated 23/01/1974 (Annexure-B). Limits of SADA were altered and certain areas were excluded. This was re-revised by notification dated 10/09/1976 (Annexure-C). It appears that the petitioner authority experienced that it was subjected to dual municipal administration including the levy of property tax on the buildings owned by it within the area included in the SADA and made efforts to solve the problem. A meeting of the representatives. of the Government, the petitioner, Commissioner Raipur Division and the Housing Commissioner was held on 11-11-76. The minutes of the meeting. so held are contained in Annexure-D. Consequently an agreement (Annexure-F) was executed on 12-10-1977 between the Managing Director, Bhilai Steel Plant Limited and the Chairman, Special Area Development Authority. The relevant terms of the Agreement are : 3. It has been agreed that aforesaid land shall be transferred to on the following terms and conditions : (i) The Authority shall pay to the Company the acquisition cost paid by the Company plus 5% Establishment charges over this amount and development charges incurred, if any in five annual instalments. commencing from the 1st April next following the date of this agreement. xxx xxx xxx. (XI) The Company shall maintain the civil services for the Company's quarters and other Company buildings in the area as in Para 2 which is proposed to be transferred to the Authority. Till suitable arrangements are made by the Authority to take over the services, the Authority will not enforce taxation in any form for these residential units and other Company buildings. 4. The Company having further agreed to pay annually for a period of five years to the Authority, the sum of Rs. 3 lakhs by way of grant-in-aid towards the development of the area to be so transferred and the sum of Rs. 5 lakhs in lieu of exemption from levy of property tax over its property to the Authority. The Authority on its part exempts the Company from payment of property tax leviable by it on the properties of the Company under Section 69 (c) and (d) of the M. P. Nagar Tatha Gram Nivesh Adhiniyam, 1973 (23 of 1973) read with Section 135 of the Madhya Pradesh Municipal Corporation Act, 1956 (23 of 1956) as amended from time to time. After the expiry of five years, this clause will be mutually reviewed by the Authority and the Company. 5. The company shall provide and maintain civic services to the whole area lying south of the main G. E. Rly. line comprising the Bhilai Township extending from Sector-1 to X including Indira Place (Civic Centre), Hospital Sector, Talpuri, Amdi Bhata, Bhilai House and the Plant operation area and Khursipara Zone-I, II and III lying north of G.E. Road where separate sectors for the workers of the Company are provided. 6. The Company having agreed to transfer major portion of the land acquired by it to the north of Main S.E. Railway Line (including the land in between C.E. Road and S.E. Railway line) except Khursipara zones-I, II, III and the lands mentioned in Annexure-VIII, the Authority shall make available to the Company land in its area in case any need is felt to rehabilitate the persons from company's Township area which may be recruited for future expansion of the Township and Plant." According to the petitioners, this agreement Annexure-F has been acted upon. Consequently, land in certain area as mentioned in the agreement has been transferred to SADA by the petitioner, vide a deed dated 4-4-1978 Annexure R-3 filed with the return. The petitioner maintained the civic services and made the annual payment as agreed. Prior to this agreement, demand for payment of property tax was raised by SADA against the petitioner for the year 1976-77, vide Annexure-G which was later on revised by Annexure G-1. Objections to this demand were raised by the petitioner, vide Annexure-H. This demand was not pressed in view of the agreement Annexure-F. For the years 1977-78 and 1978-79, the parties are said to have acted upon the agreement and the SADA accepted the amount paid by the petitioner as per the agreement and did not levy or charge any property tax. However, for the subsequent years, the SADA determined the annual letting value and assessed property tax with effect from 1-7-1979 at the rate of 20 per cent of the annual letting value so determined. The allegation is that even in so doing, unit of the assessment has been taken as 'one sector' and not 'building'. To this demand, petitioner filed objections, vide Annexure-J. The demand was attacked as being vague, contrary to clause 4 of the aforesaid agreement and want of the notice of demand on proper person, viz., Steel Authority of India Limited (SAIL). Further, objections were added vide Annexure-J-1. It was asserted that the levy of tax was not in the prescribed manner, no municipal services were rendered and, therefore, the SADA was not entitled to assess and collect property tax and that the petitioner being a Government company was not liable to pay any property tax. The objections were rejected vide order Annexure-K dated 8-2-1980. Against the rejection of these objections, the petitioner filed appeal before the District Judge under section 149 of the M.P. Municipal Corporation Act. The appeal was dismissed vide order Annexure-M dated 10-10-1980. The petitioner seeks to challenge by this petition under Article 226 of the Constitution of India, the assessment of property tax over the buildings and lands comprised in the area and the order Annexure-K dated 8-2-1980 rejecting the objection as also order Annexure-M passed by the District Judge Dismissing the petitioner's appeal against the order Annexure-K.

(3.) We may first dispose of the petitioner's contention that no building or land held by the petitioner, which is a Government company, is liable to be assessed to property tax as the said land and the building should be taken as the property held by the Central Government. Similar contention has been repelled by a Division Bench of this Court in Bharat Aluminium Company Ltd. v. Special Area Development Authority, Korba 1979 MPLJ 344 : (1978 Tax LR NOC 182). The view taken is that the Government Company incorporated under the Companies Act owning property has a legal entity of it's own and, consequently, such property is not exempt from assessment of the property tax. Such a company cannot be equated with Union Government and that it is not a case where trip corporate veil can be lifted. The Division Bench further observed, that there is nothing in the Nivesh Adhiniyam or the Madhya Pradesh Municipalities Act or the Madhya Pradesh Municipal Corporation Act which may enable the Court to hold that the property held by such company is owned by the Union Government contributing entire share capital. This view has been affirmed by the Supreme Court in Western Coal-fields Ltd. v. Special Area Development Authority, Korba, AIR 1982 SC 697, and so far as this Court is concerned, this point thus stands concluded. Shri Chhapekar, learned counsel for the petitioners, informed the Court that the matter has been re-agitated before the Supreme Court and the decision is awaited. Be that as it may, in view of the decision of this Court affirmed by the Supreme Court, as aforesaid, the point has to be decided against the petitioner and the contention is, accordingly, rejected.