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TMI Blog1994 (3) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... constructed buildings for its purposes within the limits of the Angamaly Municipality. It is not in dispute that the buildings and the land on which they stand, belong to the petitioner. The petitioner had paid the property tax due to the Municipality up to and inclusive of the year 1990-91 without demur, but when demand was raised for the tax for the year 1991-92 as per Ext. P4 series of notices, petitioner objected, and after an appeal to the Municipal Council was rejected for non-compliance with the mandatory condition of payment of the tax due at the rate prevailing in the previous year, for maintaining the appeal, petitioner filed the writ petition challenging the very levy of property tax on its buildings by the Municipality, on the ground that it is violative of Article 285 of the Constitution of India. The petitioner's case is that is a part of the Union Government, its properties are the properties of the Union and therefore beyond the pale of taxation by the State or any authority within the State by virtue of Article 285(1) of the Constitution of India. To adopt the phraseology used by counsel, the petitioner is an affair of the Union and not merely one of its inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subject to such terms and conditions as may be determined by the Government. Section 6 deals with the Management of the Corporation and Sub-section (2) thereof says that the Board of Directors shall act on business principles in discharging its functions, having regard to the interests of the producer and the consumer besides being guided by such instructions on questions of policy as may be given to it by the Central Government. Section 7 deals with the constitution of the Board of Directors, the members of which except one, shall all be appointed by the Central Government. 6. I shall now turn to Section 26 which requires the Food Corporation of India to prepare a statement of programme of its activities for the ensuing year as well as a financial estimate in respect thereof before the commencement of each year, and to submit it to the Central Government for approval within the period specified. 7. Section 33 deals with the application of surplus profits of the Food Corporation and it requires the Food Corporation to establish a reserve fund to which shall be credited every year such portion of its annual net profits as the Corporation may think fit. After making such prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples, which is made liable for even payment of Income Tax under Section 42. It is stated, for these reasons that whatever may be the control exercised by the Central Government, the petitioner is an entity quite different from the Union Government not entitled to the benefits of Article 285(1) in relation to its property. 9. I heard counsel for the petitioner Sri. Jayakumar, as also counsel for the Angamali Municipality and the Thikkodi Panchayat. I had also the benefit of hearing Sri P.O. Chacko and Sri. K.P.G. Menon, counsel appearing for the Corporations of Kochi and Calicut, who appeared in the related writ petitions, which were heard along with these two cases, but in respect of which I am passing separate orders referring them to A Division Bench for hearing because of some other questions arising therein. 10. Section 3(2) provides that the Food Corporation of India (hereinafter referred to as the Corporation) shall be body corporate with perpetual succession and a common seal, with power to acquire, hold and dispose of property. It is quite clear from this provision that the Corporation has a distinct personality of its own, apart from the Central Government, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies Act, they had a distinct corporate personality of their own distinct from the Government of India. Their property was their own and it vested in them. Therefore their property was not immune from Municipal taxation. The Supreme Court observed that the Government of India only owned the share capital while the lands and buildings were vested in and owned by, the Companies. Reliance was placed on the observations in Rustom Cavasjee Cooper v. Union of India, AIR 1970 SC 564 that property of the Company was not the property of the shareholders to hold that the contribution of the share capital in is entirely by the Government of India did not imply that the properties were owned by the Government. The decision in Heavy Engineering Mazdoor Union v. State of Bihar, AIR 1970 SC 82, a case under the Industrial Dispute Act, is to the like effect. 12. The Orissa High Court had earlier held likewise in Western Coal Fields Ltd. v. Notified area Council. The company concerned was the Western Coalfields Ltd. itself, which figured before the Supreme Court in the case already referred to, though that case arose from Madhya Pradesh in similar circumstances. The Orissa High Court dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion are not exempted from taxation under Article 285 of the Constitution. Though not exactly in point a position analogous to this arose for consideration in Andhra Pradesh State Road Transport Corporation v. Income Tax Officer, AIR 1964 SC 1486, a case which arose under Article 289 of the Constitution. The question was whether the income of the Andhra Pradesh State Road Transport Corporation was exempt from tax under Article 289 as income of a State. Negativing the claim Gajendragadkar, C.J. held that the scheme of Article 289 appeared to be that ordinarily the income derived by a State both from governmental and non-governmental or commercial activities shall be immune from Income Tax levied by the Union, but when the commercial activity in question was carried on by a Corporation, the same principle could not be applied. The Corporation though statutory, had a personality of its own which was distinct from that of the State, or the other share-holders. A share-holder does not own the property of the Corporation, nor does he carry on the business with which the Corporation is concerned. The income derived by the Road Transport Corporation from its trading activity is therefore no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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