2019 (5) TMI 1085 - HC - Indian Laws

Levy of Property Tax - ground cable laid for the purpose of providing telephone services or other telecommunication facilities - petitioner is a cellular service provider - case of petitioner is on the basis that the petitioner being not the owner of the land in which under ground cables are laid, the demand of property tax from the petitioner falls foul of Section 132 (1) of the Act, 1956, which implies that the property tax is payable by the owners of building or land - HELD THAT - Since the definition of land in the CG Municipal Corporation Act is pari materia with the definition of land in the Gujarat Act, it is incorrect on the part of the petitioner to treat the subject levy of property tax, merely because while collecting the levy, it has used the term for laying of cables. The levy is in fact for use of land for laying of cable. Next argument of learned counsel for the petitioner is that the Corporation has not adopted the procedure provided under Section 133 of the Act, 1956 to impose the subject tax - HELD THAT - Section 133 is for imposition of new tax and it is precisely for this reason, Section 133 (4) provides that nothing contained in this section shall apply to tax mentioned in clause (a) of sub-section (1) of Section 132, which shall be charged and levied in accordance with Section 135. The property tax being charged under Section 132 (1)(a) read with Section 132 (6)(j), the argument resting on non-compliance of Section 133 has no force. The Corporation has followed the procedure prescribed under the Act, 1956 for carrying out assessment before issuing demand notice and there is absolutely no violation of the provisions of the Act, 1956. Petition dismissed.

Summary

Issues:
1. Whether a cellular service provider is liable to pay property tax for underground cables laid for providing telecommunication services.
2. Validity of demand notices issued by Municipal Corporations in two separate cases.

Analysis:

1. The petitioner, a cellular service provider, contested the liability to pay property tax for underground cables laid for telecommunication services. The petitioner argued that as a licensee under the Indian Telegraph Act, it was not subject to property tax by the local authorities. The Central Government notification conferred powers on the petitioner similar to those of a telegraph authority. The petitioner emphasized that the Municipal Corporation Act did not empower the Corporation to levy property tax on underground cables laid by a licensee under the Indian Telegraph Act.

2. The Corporation, on the other hand, relied on the definition of "land" under the Municipal Corporation Act to argue that the petitioner, as the owner of the cables, was liable for property tax. Referring to a Supreme Court precedent, the Corporation contended that the actual occupier of the land, in this case, the cable owner, is primarily responsible for property tax payment. The Corporation had passed a resolution for self-assessment of property tax, inviting objections and finalizing rates, following a prescribed procedure under the Act.

3. The main contention of the petitioner was that being a non-owner of the land where the cables were laid, property tax demand was unjustified. However, the Supreme Court precedent in a similar case involving mobile towers established that the liability to pay property tax lies with the occupier of the land, not necessarily the owner. The Court highlighted that the tax was on the use of land for laying cables, not the cables themselves, as argued by the petitioner.

4. The petitioner also raised procedural objections, alleging non-compliance with Section 133 of the Act for imposing the tax. However, the Court clarified that Section 133 pertains to new tax imposition, whereas the property tax in question fell under Section 132, rendering the procedural argument invalid. The Municipal Corporations had passed resolutions and conducted assessments in accordance with the Act before issuing demand notices.

5. Ultimately, the Court dismissed both Writ Petitions, finding no merit in the petitioner's arguments. The judgment upheld the Corporation's right to levy property tax on the use of land for laying underground cables by telecommunication service providers, in line with legal provisions and precedents.