2016 (9) TMI 1048 - HC - Indian Laws

Exemption from taxation - use of property - control of the premises - titles to the property - Held that - It is clear that the property which is constructed is in the ownership of the Government of India but land and the possession is with the Food Corporation of India and they are enjoying the property no sovereign function is done on the land in question. The land which is allotted to the Food Corporation of India is on creation of the statutory authority and complete department has been handed over to the petitioner-Corporation. From the record it seems that the Corporation is in complete control of the premises and are enjoying the fruits of the property. Taking into consideration the basic object of the tax statute property is taxed on the enjoyment of the rights of the property and Food Corporation of India is enjoying the property. Merely because technically titles are not clear the Food Corporation of India cannot be granted exemption of taxation.The contention raised by the petitioner is misconceived and is liable to be rejected.

Summary

Issues:
1. Challenge to the legality of pay scales for Managers in Food Corporation of India.
2. Non-revision of pay scales for Managers after 1983.
3. Legality of a specific order dated 21.7.1997.
4. Exemption from property tax for Central Government properties.
5. Interpretation of ownership and taxation regarding properties occupied by Food Corporation of India.

Analysis:

1. The Food Corporation of India challenged the legality of pay scales for Managers, seeking a declaration that the provision of Rule 3 of the Rules of 1969, as amended in 1991, providing two pay scales for Managers recruited to different societies, is unconstitutional. The petitioner contended that the respondents' failure to revise pay scales after 1983, despite revisions by the State Government in 1986 and 1989, was illegal. The Court was asked to set aside a specific order dated 21.7.1997.

2. The petitioner, a corporate body under the Food Corporation Act, argued for exemption from property tax based on communication indicating ownership of Central Storage godowns. The Court examined previous orders and cited a Kerala case to establish that properties owned by the Union of India and transferred to FCI are exempt from property tax, while those acquired by FCI post-constitution are taxable. The Court emphasized the distinction between properties owned by the Union and those acquired by FCI.

3. The Court analyzed definitions of 'owner' under different Acts to determine tax liability, highlighting that the lessee or occupant of a building cannot be considered the 'owner' under the Kerala Municipal Corporations Act. It concluded that properties owned by the Union and transferred to FCI are exempt from property tax, while service charges payable under Circulars are deemed compensation under quasi-contract law.

4. The judgment discussed the legislative framework regarding the exemption of Union properties from State taxation and noted the absence of specific legislation by Parliament in this regard. The Court considered Circulars providing for service charges as compensation payable in quasi-contract and found them to be within the constitutional purview.

5. The Court rejected the petitioner's contention for exemption from property tax, emphasizing that the Food Corporation of India, despite technicalities in title ownership, enjoys the property and is liable for taxation based on the principle of property taxation. The petition was deemed meritless and dismissed accordingly.