NEW DELHI MUNICIPAL COUNCIL versus STATE OF PUNJAB ETC. ETC.

Citation: [1996] SUPP. 10 S.C.R. 472 · Decided: 19-12-1996 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Disposed off
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Judgment (excerpt)

A 
B 
·c 
NEW DELHI MUNICIPAL COUNCIL 
v. 
STATE OF PUNJAB ETC. ETC. 
DECEMBER 19, 1996 
[AM. AHMADI, CJ., J.S. VERMA, S.C. AGRAWAL, B.P. JEEVAN 
REDDY, DR. AS. ANAND, B.L. HANSARIA, S.C. SEN, K.S. 
PARIPOORNAN AND B.N. KIRPAL, JJ.) 
Constitution of India, 1950 : 
Articles 285 and 289-Exemption of property of Union from State 
taxation and exemption of property and income of State Government.; from 
Union taxation-Held, the immunity created under Article 285(1) in favour 
of the Union is absolute, but the immunity created under Article 289( 1) in 
D favour of the States is qualified by clause (2) and it can be denied by way of 
a law made by parliament authorising imposition of any tax in respect of a 
trade or business carried on by or on behalf of the Government of a State or 
any property used or occupied for the purpose of such trade or business--Pun-
jab Municipal Act, 1911, Delhi Municipal Corporation Act, 1957 and New 
Delhi Municipal Council Act, 1994 are enactments with reference to Article 
E 289(2) and tax levied thereunder on properties owned by the State Govern-
ments and used or occupied for the purpose of trade or business is valid-It 
ca1111ot be said that unless the law made under and with reference to Article 
289(2) specifies the particular trading or business operations to be taxed, it 
would not be a law within the meaning of clause (2)-Punjab Municipal Act, 
F 
1911, Delhi Municipal Corporation Act, 1957 and New Delhi Municipal 
Council Ac~ 1994---Govemment of India Ac~ 1935-Ss. 154 and 155. 
Mieles 246 and 289-Union taxation-Held, any tax levied within a 
Union Territory is "Union Taxation"---Parliament is law making body for 
G Union Territories-Legislatures for Union Territories under Government of 
India Territories Act, 1963 are created by parliament. 
Articles 1(2), 239-A, 239-AA, 239-B, 245(1), 246, 285 and 
289-"State''-Held, Union Territory of Delhi is not "State''within the meaning 
of Articles 246, 285 and 289-Definition of State providing in s. 3(58) of 
H · General Clauses Ac~ 1897 is inapplicable to Article 246. 
472 
N.D.M.C. v. STAIB 
473 
Article 142----Exercise of power by Supreme Cowt-Judgment to be A: 
operative prospectively. 
Centre State, Relation~Taxation-Inter-govemmental immunity--
Maintaining balance between Union and State~~suggestion to Union of 
India. 
Punjab Municipal Act, 1911/Delhi Municipal C01poration Act, 
1957/New Delhi Municipal Council Act, 1994: 
B 
S.61/s. 115(4)/s.62-Properties of State Govemme11ts situated withi11 
U11io11 Territory of Delhi-Levy of tax on--Held, the provisions purport to levy C 
tax 011 properties of States as well-But prope1ties used for purposes of 
Govemme11t a11d 11ot for purposes of trade or busi11ess are exempt under 
clause ( 1) of Article 289 of the Constitutio11. 
Doctri11e of i11ter-govemmental immu11ity : bnmu11ity from inter-
govemmel!tal taxation-Applicability of with refere11ce to Co11stitution of D 
India. 
/11terpretation of Statutes : 
Co11stitutio11ality of Statutes-Presumption-There is al'ways a 
presumptio11 of constitutionality of a statute-What is 11ot covered by the E 
constitutio11al ba11 should be held to be applicable and effective--Doctrine of 
Presumption of constitutio11ality of Legislations. 
Word!' and phrases : 
''Property''-Occurri11g in Article 289(1) of the Constitution-Meaning F 
of 
The appellant, New Delhi Municipal Committee, which continued to 
be governed at the relevant time by the Punjab Municipal Act, 1911, levied 
property tax on the immovable properties of the respondent-States 
situated within the Union Territory of Delhi. The respondents filed writ G 
petitions before the High Court challenging the levy and ·the demand on 
the ground that the properties of the State Governments were, by virtue of 
Article 289(1) of the Constitution, 'exempt from property taxes levied under 
the municipal enactments in force in the Union Territory of Delhi. The 
High Court, allowed the writ petitions. Aggrieved, the N.D.M.C. filed H 
474 
SUPREME COURT REPORTS[l996) SUPP.10 S.C.R. 
A , appeals before this Court The appeals along with some other petitions were 
listed before a Division Bench of this Court, which felt that in view of the 
' 
previous decisions of the Court, the matter should be heard by a larger Bench; 
and ultimately the matter was referred to a Bench of nine Judges. 
It was contended for the N.D.M.C. that the property taxes levied 
B either under the Punjab Municipal Act, 1911 or under th
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