LUCKNOW NAGAR NIGAM & OTHERS [APPELLANTS] Vs. KOHLI BROTHERS COLOUR LAB. PVT. LTD. & OTHERS [RESPONDENTS]
(CIVIL APPEAL NO. 2878 OF 2024)
(2JB, B.V. NAGARATHNA and UJJAL BHUYAN JJ., delivered by NAGARATHNA, J.)
Facts: The present Civil Appeal has been filed by the Lucknow Nagar Nigam (‘Municipal Corporation’) impugning the judgment of the High Court of Allahabad that has allowed the Writ Petition filed by respondent herein (‘the assessee’), thereby holding that the assessee is exempt from payment of property tax under the provisions of the UP Municipal Corporation Adhiniyam, 1959.
Issue: Whether the High Court was right in holding in favour of the respondent?
Arguments on behalf of counsel for appellants:
Sri Kavin Gulati, learned senior counsel appearing on behalf of the Municipal Corporation, at the outset, submitted that the High Court erroneously held that the House Tax and Water Tax levied herein are not leviable on the assessee respondent herein in respect of property which is admittedly an enemy property and not property of the Union or Central Government. Therefore, it was submitted that the property is merely in the custody of the Custodian as specified under the Act. That the preamble of the Act provides that this is “An Act to provide for the continued vesting of Enemy Property”. That there is no declaration by the Union Government through any legislation declaring the properties to be the property of the Union Government. The only declaration that is contained is to vest the property in the Custodian without a further declaration that the property vests absolutely in the Union Government free from all encumbrances. That whenever the legislature desired that any property vests absolutely in the Central Government, it would be specifically provided so as in the case of Sections 16 and 17 of the Land Acquisition Act, 1984 as well as in the case of Section 269 of the Income Tax Act, 1961.
Arguments on behalf of counsel for respondents:
Per contra, learned senior counsel Sri Guru Krishna Kumar, appearing for the assessee, supported the impugned judgment and submitted that the High Court has proceeded to pass the impugned order on a sound appreciation of the facts of the matter and the applicable law and the same would not call for any interference by this Court. It was further contended that the appellant-Municipal Corporation has approached the court with unclean hands and has deliberately suppressed critical facts. The Municipal Corporation’s reliance on the case of Amir Mohammad Khan is misleading. In this regard, it was submitted that the Municipal Corporation has conspicuously omitted to disclose that the judgment in the aforementioned case has been rendered nugatory due to the promulgation of an Ordinance and the enactment of the Enemy Property (Amendment and Validation) Act, 2017. Further, as a result of the said judgment and various tenants’ claims, respondent No.1 herein approached this Court seeking a clarification.
Held: The court allowed the present appeal and held that, “the High Court was not right in holding that the respondent as occupier of the subject property, is not liable to pay any property tax or other local taxes to the appellant. In the result, the impugned order of the High Court dated 29.03.2017 passed in Misc. Bench No.2317 of 2012 is liable to be set aside and is accordingly set aside. Consequently, any demand for payment of taxes under the Act of 1959 made and thereby paid by the respondent to the appellant-authority shall not be refunded. However, if no demand notices have been issued till date, the same shall not be issued but from the current fiscal year onwards (2024-2025), the appellant shall be entitled to levy and collect the property tax as well as water tax and sewerage charges and any other local taxes in accordance with law.”
