No Service Charges can be levied to the property held by the South Eastern Railway, says Chhattisgarh HC [Read Judgment]

Benami Property Act - Chhatisgarh High Court - Original Act - Taxscan

The Chhattisgarh High Court said that, Property of South Eastern Railway is exempted from payment of Service Charges by virtue of provisions contained in Article 285(1) of the Constitution of India.

The petitioner South Eastern Railway, has filed the writ petition calling in question the order dated 6.9.1998 followed by demand bill issued by the respondent raising demand of ₹ 15,00,000/- per year for five years from 92-93 to 96-97, total ₹ 75,00,000/- as service charges stating inter-alia that the property of Union of India is exempted from tax by virtue of Article 285(1) of the Constitution of India and therefore, no service charges can be levied to the property held by the Union of India.

Return has been filed by the respondent-Municipal Corporation, Raipur stating that services are being provided by the Municipal Corporation, Raipur to the Railway Area, Raipur, therefore, property owned by Railway is liable for payment of service charges to the Municipal Corporation and their recovery of service charges are based on the office memorandum dated 26.4.1994 issued by the Government of India.

The Court noted that, Section 184 of the Railways Act, 1989 debars a local authority to tax a Railway in absence of any notification by the Central Government in this regard, as such, issuance of notification in this regard is sine quo-non for imposition of tax by local authority.

While quashing the demand notice, Justice Sanjay K. Agrawal observed that, “A careful perusal of the said document would show that it is merely a office memorandum/instructions issued by Central Government. Therefore, in the light of provisions contained in Article 285(1) of the Constitution of India and as per judgments rendered by the Supreme Court case, the office memorandum is not helpful to the respondent-Corporation”.

“Since there is no provision for recovery of service charges in the Chhattisgarh Municipal Corporation Act, 1956 and in view of Article 285(1) of the Constitution of India read with Section 184 of the Act of 1989, respondent-Municipal Corporation, Raipur is not entitled to recover service charges from the petitioner-Union of India against the property of the Union of India”, the Judge also added.

Read the full text of the Judgment below.

taxscan-loader