2016 (12) TMI 1092 - SC - Indian Laws

Levy of property tax on mobile towers - Validity of Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949 - Held that - If the definition of land and building contained in the Gujarat Act is to be understood, we do not find any reason as to why, though in common parlance and in everyday life, a mobile tower is certainly not a building, it would also cease to be a building for the purposes of Entry 49 List II so as to deny the State Legislature the power to levy a tax thereon. Such a law can trace its source to the provisions Entry 49 List II of the Seventh Schedule to the Constitution. Though several other decisions of this Court and also of different High Courts have been placed before us we do not consider it necessary to refer to or to enter into any discussion of the propositions laid down in the said decisions as the views expressed in all the aforesaid cases pertain to the meaning of the expressions land and building as appearing in the definition clause of the statutes in question. We, therefore, set aside the judgment passed by the Gujarat High Court and answer the appeals arising from the order of the Bombay High Court; transferred cases and the writ petitions accordingly.

Issues Involved:
1. Constitutionality of Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949.
2. Levy of property tax on mobile towers.
3. Definition and scope of "land" and "building" under Entry 49 of List II of the Seventh Schedule to the Constitution.
4. Legislative competence of State Legislature to impose tax on mobile towers.
5. Retrospective operation and quantum of tax assessment/demand.

Detailed Analysis:

1. Constitutionality of Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949:
The Gujarat High Court declared Section 145A of the Gujarat Act as ultra vires the Constitution, thereby interdicting the levy of property tax on mobile towers. However, the High Court held that the Cabin in a mobile tower housing the BTS system would be considered a building and thus, exigible to tax under the Gujarat Act. This judgment was challenged by both the State Government and the cellular operators.

2. Levy of Property Tax on Mobile Towers:
The Bombay High Court, dealing with a similar challenge, held that writ petitions challenging the levy of property tax on mobile towers should not be entertained, and the petitioners should exhaust alternate remedies provided by the Act. The levy was imposed on the reasoning that mobile towers are buildings as defined in the Act, even though the charging section of the Bombay Provincial Municipal Corporations Act, 1949, did not specifically contemplate such a levy.

3. Definition and Scope of "Land" and "Building" Under Entry 49 of List II of the Seventh Schedule to the Constitution:
The Supreme Court noted that the meaning of any Legislative Entry should not be understood by reference to the definition in a statute traceable to the particular Legislative Entry. The definitions in the statute may be broad and expansive, but the validity of the statute should be tested on the touchstone of the Legislative Entry itself. The Court emphasized the need for a broad, liberal, and expansive interpretation of the Legislative Entry, taking into account the dynamic nature of the Constitution.

4. Legislative Competence of State Legislature to Impose Tax on Mobile Towers:
The Court acknowledged that even if mobile towers are part of the apparatus pertaining to "telegraphs" covered by Entry 31 of List I, the Gujarat Act could still co-exist as a statute levying a tax on lands and buildings under Entry 49 of List II. The Court highlighted the need to trace the true meaning of "land and building" in Entry 49 of List II, applying settled principles of Constitutional interpretation.

5. Retrospective Operation and Quantum of Tax Assessment/Demand:
The Supreme Court left it open for the cellular operators in the Bombay cases to agitate the issue of the retrospective operation of the assessment/demand of tax and the quantum thereof before the appropriate forum, if so advised.

Judgment:
The Supreme Court set aside the judgment passed by the Gujarat High Court and answered the appeals arising from the order of the Bombay High Court, transferred cases, and writ petitions accordingly. The Court concluded that the definition of "land" and "building" under the Gujarat Act could include mobile towers for the purposes of Entry 49 List II, thus allowing the State Legislature to levy a tax thereon. All appeals, writ petitions, and transferred cases were disposed of, with the specific issue of retrospective tax assessment left open for further challenge.

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