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Issues Involved:
1. Levy of property tax/building tax under the Kerala Municipalities Act, 1960 and the Kerala Panchayats Act, 1960 on buildings belonging to the Food Corporation of India. 2. Applicability of Article 285(1) of the Constitution of India, which exempts Union property from State taxation. Issue-wise Detailed Analysis: 1. Levy of Property Tax/Building Tax: The petitioner, a body corporate under the Food Corporations Act, 1964, challenged the levy of property tax/building tax on its buildings by the Angamaly Municipality and Thikkedi Panchayat. The petitioner had paid property taxes up to the year 1990-91 but objected to the tax demand for 1991-92, arguing that the levy violated Article 285 of the Constitution of India. 2. Applicability of Article 285(1): Article 285(1) of the Constitution reads: "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 any authority within a State." The petitioner argued that it is a part of the Union Government and hence its properties should be exempt from state or municipal taxation. The respondent Municipality contended that the immunity under Article 285(1) is available only to property of the Union, not to its instrumentalities or entities with separate juristic personalities. The court examined the nature of the Food Corporation of India under the Food Corporations Act, 1964, noting that the Corporation is a body corporate with perpetual succession and a common seal, capable of acquiring, holding, and disposing of property independently of the Central Government. The court referred to various sections of the Act, including: - Section 3(2): Establishes the Corporation as a body corporate. - Section 5: Deals with the capital provided by the Central Government. - Section 6: Management on business principles. - Section 7: Constitution of the Board of Directors appointed by the Central Government. - Section 26: Requirement for the Corporation to submit annual activity and financial estimates to the Central Government. - Section 33: Application of surplus profits. - Section 42: Corporation deemed a company for Income Tax purposes. - Section 43: Provisions relating to the winding up of companies or corporations do not apply to the Corporation. The court highlighted that despite the Central Government's control and financing, the Corporation has a distinct legal personality, separate from the Union Government. The Supreme Court in State of Punjab v. Raja Ram and Western Coalfields Ltd. v. Special Area Development Authority had previously held that such corporations are not government departments and do not enjoy immunity under Article 285. The court also referred to similar decisions by the Orissa High Court in Western Coal Fields Ltd. v. Notified Area Council and Paradip Port Trust v. Notified Area Council, and the Delhi High Court in International Airport Authority of India v. Municipal Corporation, which held that properties of statutory corporations are not immune from state taxation. The court concluded that the Food Corporation of India, though a statutory corporation and an instrumentality of the State, is distinct from the Union Government. Its properties are owned and managed by itself, and it is liable for taxes, including Income Tax. Hence, the properties of the Corporation are not immune from tax under Article 285(1). Judgment: The court dismissed the writ petitions, ruling that the refusal to pay property/building tax by the Food Corporation of India was not warranted under Article 285(1) of the Constitution of India. The properties of the Corporation are subject to state taxation, and there will be no order as to costs.
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