1995 (8) TMI 321 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the properties vested in the International Airport Authority of India (IAAI) under the International Airports Authority Act, 1971 can be called properties of the Union under Article 285 of the Constitution of India and thus exempt from state taxes.
2. Whether the municipality can levy tax upon buildings where it cannot levy tax upon the land on which the building stands.

Summary:

Issue 1: Exemption of Properties from State Taxation under Article 285
The primary issue was whether properties vested in the International Airport Authority of India (IAAI) under the International Airports Authority Act, 1971 can be considered properties of the Union under Article 285 of the Constitution of India and thus be exempt from state and municipal taxes. The Delhi High Court ruled against the IAAI, while the Calcutta High Court ruled in its favor. The Supreme Court examined the provisions of the International Airports Authority Act, 1971, particularly Section 12, which vests properties in the IAAI, and determined that the properties vested in the IAAI are not properties of the Union of India for the purpose of Article 285. The Court noted that the IAAI is a statutory corporation with its own properties, funds, and employees, capable of borrowing and lending money, entering into contracts, and being liable for income tax under Section 31 of the Act. Therefore, the properties vested in the IAAI do not enjoy the immunity from state taxation under Article 285.

Issue 2: Levy of Tax on Buildings and Land
The second issue was whether municipalities could levy taxes on buildings if they could not levy taxes on the land on which the buildings stand. The Supreme Court found it unnecessary to address this issue directly, given its conclusion on the first issue. However, it noted that the Calcutta High Court's finding that not all land in possession of the Indian Tourism Development Corporation (I.T.D.C.) was within the limits of the Dum Dum Municipality was not based on definite material, leaving this question open for future determination by appropriate authorities.

Conclusion:
The Supreme Court dismissed the appeals by the IAAI and Air India, upholding the Delhi High Court's decision and reversing the Calcutta High Court's decision, thereby allowing the levy of property taxes by the relevant municipal bodies. The Court also dismissed the appeal against the interlocutory order of the Bombay High Court, directing the Bombay Municipal Corporation to bring this judgment to the notice of the High Court for appropriate disposal of the pending writ appeal.