2026 INSC 570 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7318 OF 2010

SMALL SCALE ENTERPRENEURS

ASSOCIATION & ORS. …APPELLANT(S)

VERSUS

THE STATE OF MAHARASHTRA & ORS. …RESPONDENT(S)

with

CIVIL APPEAL NO. 7319 OF 2010

CIVIL APPEAL NO.________ OF 202 6 @ S.L.P. (C) NO.24366 OF 2025

CIVIL APPEAL NO.11024 OF 2013

and

CIVIL APPEAL NOs.10133-10137 OF 2016

J U D G M E N T

PANKAJ MITHAL, J.

1. Heard Shri Arvind Datar, Shri Gopal Sankaranarayanan,

learned senior counsel and Shri Amol Chitale, learned counsel

for the appellants and Shri C.U. Singh and Shri Vinay Navare,

learned senior counsel for the respondents.

2

2. These are a batch of eight Civil Appeals and one Special Leave

Petition arising out of two judgments of the Bombay High Court

dated 08.07.2010 and 29.07.2016 and one judgment of City

Civil Judge dated 25.09.2012.

3. Civil Appeal No. 7318/2010, Civil Appeal No. 7319/2010 and

Special Leave Petition (C) No. 24366/2025 arise out of a

common judgment and order dated 08.07.2010; whereas Civil

Appeal No.11024/2013 arises out of judgment dated

25.09.2012 passed by Civil Judge and Civil Appeal Nos. 10133-

10137/2016 arise out of judgment and order dated 29.07.2016

passed by the High Court.

4. All the civil appeals and the special leave petition are based

upon similar facts and circumstances and involve identical

questions of law and as such were clubbed and were taken up

together for consideration.

5. Since in eight matters, leave was granted and they were

converted into civil appeals, therefore, we consider it

appropriate to grant leave in Special Leave Petition (C) No.

24366/2025 and to treat it as a civil appeal.

3

6. We take Civil Appeal No. 7318/2010

1 as the leading case and

proceed to decide all these appeals based upon the facts, as

stated therein. The said leading appeal arises out of Writ

Petition No. 2787/2001

2 decided by the High Court vide

judgment and order dated 08.07.2010. All other orders

impugned herein are based upon the aforesaid order.

7. Before we narrate the facts and circumstances which gave rise

to the above writ petition and other connected petitions leading

to the passing of the impugned orders, we would first like to

give a brief history about the enactment of the Maharashtra

Industrial Development Act, 1961

3, the Maharashtra Regional

Town Planning Act, 1966

4, followed by the establishment of the

Navi Mumbai Municipal Corporation

5 and the constitution of

City and Industrial Development Corporation

6.

8. The State of Maharashtra in the year 1961 enacted MID Act

with the purpose to create a corporation that would acquire

land and develop industrial areas in the State. Under the

1

Small Scale Entrepreneurs Association and Ors. v. State of Maharashtra and Ors.

2

Small Scale Entrepreneurs Association and Ors. v. State of Maharashtra and Ors.

3

In short ‘MID Act’

4

In short ‘MRTP Act’

5

In short ‘NMMC’

6

In short ‘CIDCO’

4

aforesaid MID Act, Maharashtra Industrial Development

Corporation

7 was established in 1962. The State Government

acquired land from 19 villages in district Thane and vested the

said land with the MIDC, thus creating Trans Thane Creek

8

Industrial Area.

9. In 1966, the MRTP Act was enacted as a special legislation to

provide legal framework for planned city development and

regulated land use across the State with respect to “notified

area”. The TTC Industrial Area and the MIDC were declared to

be the “notified areas” under the aforesaid Act.

10. Later in the year 1971, the Urban Development Public Health

& Housing Department of the State Government proposed to

create a new town with the name Navi Mumbai (New Bombay).

The Government for that purpose, vide notification dated

20.03.1971, designated an area of 28 villages.

11. A fully State Government company was incorporated and

registered under the Indian Companies Act, 1956, with the

name CIDCO for the purposes of planning and development of

New Bombay. It was entrusted with the responsibility to

7

In short ‘MIDC’

8

In short ‘TTC’

5

provide civic amenities in the city till a municipality is

constituted.

12. The State Government on 17.12.1991 issued a notification

constituting NMMC under the provisions of the Bombay

Provincial Municipal Corporation Act, 1949

9 (now commonly

referred as Maharashtra Municipal Corporation Act, 1949)

10 for

the new city of Navi Mumbai. The said notification creating the

NMMC specifically stated that the local areas of 44 villages

would comprise and form part of the NMMC.

13. The dispute giving rise to the present litigation started some

time in the year 2001 when NMMC assert ed rights to claim

property tax from the industrial units allegedly falling within

the industrial area of MIDC including TTC Industrial Area.

14. Aggrieved by the aforesaid action of the NMMC, the appellant

invoked the writ jurisdiction of the High Court under Article

226 of the Constitution of India inter alia alleging that its

members or other industrial units are all part of the MIDC that

has developed the area and is continuously providing all

necessary amenities and infrastructure facilities such as road,

9

In short ‘BPMC Act’

10

In short ‘MMC Act’

6

electricity, sewage, water etc. Therefore, it is only the MIDC

which is entitled to realize fee, charges or tax in respect thereof

and that NMMC has no jurisdiction to levy or collect property

tax, rates, cess and other such levies from the appellant. In

fact, the TTC MIDC Industrial Area is not within the municipal

limits of NMMC and, therefore, also it has no jurisdiction to

levy and collect any property tax from the appellant and other

industrial units situated within MIDC.

15. On the basis of the aforesaid assertions, the appellant in the

writ petition prayed that levy and collection of property tax,

rates and cess by NMMC from the appellant is without the

authority of law; that the TTC Industrial Area which is within

the jurisdiction of MIDC be declared as not falling within the

jurisdiction of NMMC as per the notification dated 17.12.1991

and that NMMC has no jurisdiction to levy and collect property

tax etc., from the appellant; the levy and collection of taxes

including property tax from the appellants is illegal otherwise

also as under Clause 7 (1) of the First Schedule of the MRTP

Act, there is a complete prohibition to pay such taxes to NMMC

with regard to properties within the MIDC area; and to direct

7

the State Government to constitute TTC Industrial Area into an

industrial township by issuing appropriate notification in the

official gazette in terms of Section 341-F of the Maharashtra

Municipal Corporations and Municipal Councils (Amendment

Act) 1994.

16. During the pendency of the above writ petition in order to

realize property tax, distress warrants for attachment of bank

accounts were issued against the members of the appellant.

They were also threatened with the auction of their property so

as to realize the property tax. Even criminal complaints were

filed against some of the members of the appellant.

17. Simultaneously on 01.12.2005, an MoU is said to have been

arrived at, between MIDC and NMMC whereunder for certain

parts of MIDC, the maintenance of basic infrastructure such

as roads, street lights, drain etc., was handed over by the MIDC

to the NMMC.

18. The State Government on 08.06.2007 issued a notification

excluding 14 villages from the municipal limits of the NMMC.

Thus, reducing the area of the NMMC to only 30 villages. The

NMMC on 08.07.2008 filed an affidavit in the pending writ

8

petition disclosing that its total area of jurisdiction now stands

reduced from 132.863 sq. kms. to 108.638 sq. kms. This

difference of approximately 24.23 sq. kms. allegedly matched

with the total area of the MIDC. Thus, it was contended that

the area within the jurisdiction of the MIDC was excluded from

the jurisdiction of the NMMC.

19. The High Court initially dismissed the writ petition on

24.01.2006 and relegated the appellant to avail its alternate

remedy of appeal as provided under Section 406 of the MMC

Act. This order of the High Court was challenged by the

appellant through an SLP before the Supreme Court. The order

of the High Court was set aside on 08.05.2006 and the matter

was remanded to the High Court for fresh consideration on

merits. It is, thereafter, that one of the impugned orders dated

08.07.2010 came to be passed by the High Court whereunder

the Division Bench dismissed the writ petition holding that

MIDC area falls within the jurisdiction of the NMMC; NMMC is

legally empowered to impose tax upon the areas falling within

its limits; and the appellants are not exempt from paying tax in

any manner.

9

20. One of the submissions from the side of the appellants is that

in the draft notification which culminated into notification

dated 17.12.1991 constituting NMMC, the expression “entire

area” was used whereas in the final notification it was confined

to “local area”. The two expressions used as above carry

different meanings and the High Court erroneously held that

there is no distinction between the “entire area” and the “local

area”. The legislature in its wisdom has rightly used the words

“entire area” and the “local area” in different context and

attributing different meanings.

21. The other submission is that area of 19 villages that were

vested with the TTC MIDC Industrial Area constituted a self-

contained industrial area and as such this area ceased to be a

part of the aforesaid 19 villages. The notification dated

17.12.1991 constituting Navi Mumbai refers to the “local area”

of 44 villages and does not specifically include therein the TTC

MIDC area. Therefore, the area of the TTC MIDC was separate

and was not within the area comprising NMMC.

22. Thirdly, under the notification dated 16.12.1994 issued under

Section 154 of the MRTP Act, the State Government simply

10

handed over the area under control of the CIDCO to the NMMC

to avoid “dual authority”. However, the said notification

specifically stated that the TTC MIDC Industrial Area will not

be handed over to the NMMC, meaning thereby that the TTC

MIDC area remained separate and was never the part of the

NMMC. Even in the MoU dated 01.12.2005 between NMMC and

MIDC, it was categorically mentioned that MIDC is not handing

over any land within its authority to NMMC. Therefore, the

conclusion of the High Court that NMMC has jurisdiction over

TTC MIDC area merely for the reason that it falls within the

overall geographical area of the NMMC, is without substance

and is incorrect.

23. The submission proceeds that in the policy document

published by the MIDC in or around 1997, it was categorically

mentioned that the MIDC areas will not be included within the

limit of any Municipal Council or Corporation for at least 25

years. It is, therefore, clear that till 1997, TTC MIDC area was

not within the municipal area or the limits of the NMMC and

that it will not be brought under it for the next 25 years. The

said public document (brochure) carries legal sanctity and

11

would prevail over the circular or notifications of the

department, more so, as its contents are in no manner contrary

to the notification dated 17.12.1991.

24. In the above context, a further submission was advanced that

“municipal area” as defined under Article 243-P (d) of the

Constitution refers to the territorial area of the municipality as

notified by the Governor. In the absence of the notification

issued by the Governor notifying the municipal area of NMMC,

it cannot be claimed that the area of the TTC MIDC falls within

the municipal area of NMMC. It is pointed that the Governor

has not issued any notification notifying the municipal area of

the NMMC.

25. Additionally it is contended that it is not obligatory upon the

Governor to constitute municipalities in all urban areas

especially where municipal services are being provided by an

industrial corporation, rather may specify such area as an

“industrial township”. Since MIDC had been providing

essential municipal services to the TTC MIDC area for the last

over 30 years in accordance with Section 17 of the MID Act,

there was no necessity to constitute a municipality with regard

12

to the area within the jurisdiction of TTC MIDC and in fact the

municipality so created excludes the above area.

26. Apart from the submissions that the TTC MIDC area is not part

of NMMC, it has been contended that even if the said area falls

within the local area of NMMC, it does not have the power to

levy taxes or impost on the appellant or its members as MIDC

alone is the sole authority to levy tax/impost in its area. Both

MIDC and NMMC cannot levy taxes or impos t on industrial

units located within the TTC MIDC area and if such an exercise

is permitted, it would amount to double taxation which is not

permissible in law, unless the governing statute explicitly

allows.

27. In line with the above argument, it is submitted that Section

67 of the MID Act provides for the overriding effect of the

provisions of the said Act over the other enactments and the

non-obstante clause in Section 17 of the MID Act ensures that

MIDC has independent powers of taxation despite existence of

the NMMC.

28. A further argument was raised that the distinction between tax

and fee has been lately blurred and, therefore, the imposition

13

of the service charge under Section 17 of the MID Act would

amount to taxation under Article 366 (28) of the Constitution

of India, thereby depriving the NMMC to impose any further

taxation or impost in that regard.

29. Lastly, it has been contended that MIDC was designated as a

“Special Planning Authority” which is also a “relevant

authority” for the purposes of First Schedule of MRTP Act.

Thus, according to Clause 7 (1) of the First Schedule of MRTP

Act, when MIDC is providing amenities within the area that

vests in MIDC including buildings therein, the same shall not

be the subject matter of taxation by any local authority such

as NMMC.

30. The High Court manifestly erred in law in interpreting Clause

7 (1) of the First Schedule of MRTP Act to mean that it exempts

only the MIDC from payment of tax but not the industrial units

situated within its limits. Such an interpretation renders the

exemption otiose and leads to an absurd situation. This

interpretation is against the rationale behind granting

exemption under the aforesaid clause.

14

31. Moreover, wherever there is a slightest ambiguity in relation to

fiscal statute, the benefit of such an ambiguity always accrues

in favour of the assessee and that the beneficial exemption

wherever provided ought to be construed in a liberal manner.

32. Per contra, the respondents submit that the final notification

dated 17.12.1991 constituting NMMC, not only merely listed

44 revenue villages within its jurisdiction but also described

the precise boundaries on the north, east, south and west of

the area included in NMMC. The said boundaries cover the area

of TTC MIDC and, therefore, it is incorrect to submit that the

said area stands excluded and does not fall within the limits of

NMMC. The TTC MIDC area falls within the municipal area of

NMMC as defined under Article 243-P (d) of the Constitution of

India.

33. The submission seeking to make distinction between “entire

area” and “local area” is per se misconceived. It is the final

notification which has to be considered, that would prevail and

not the draft notification. The final notification uses the

expression “local area” and, therefore, the use of the words

“entire area” in the draft notification is of no consequence. The

15

“local area” means the area of a local body, i.e., a village

covering the whole of the area of the village(s).

34. It has also been submitted that the power to levy taxes within

the municipal limits is vested exclusively in the municipality as

Article 243-W & Article 243-X of the Constitution of India

empower the State legislature to endow sovereign functions

such as taxation upon the municipalities.

35. Sections 127 to 152-1A of the NMMC Act authorize the

municipal corporation to levy property tax etc., on the

properties within its limits whereas no such powers are vested

in the MID Act. Once a Municipality/Municipal Corporation is

established in exercise of legislative act, it alone has the power

to levy and collect tax. The “Special Planning Authority” under

the MRTP Act is not a “local authority” as defined under Section

326 of the Maharashtra General Clauses Act, 1904 and as

such, has no power to levy any tax.

36. Lastly, the submission is that the appellants or its members

always accepted their liability to pay property tax to NMMC.

Their lease deeds expressly provided that rates and taxes

payable to the local authority would be borne by the lessees.

16

They had previously paid property tax to Gram Panchayats and

many of them even to the NMMC. Therefore, in the overall facts

and circumstances of the case, there is no flaw in the impugned

order of the High Court holding that the NMMC cover the TTC

MIDC Industrial Area and that NMMC is authorized to impose

taxes upon all areas and buildings falling within its jurisdiction

whereas no such power vest with the MIDC. Therefore, the

appellants or its members cannot be exempted from payment

of property tax.

37. On behalf of the MIDC, it is contended that the appellants at

no point of time disputed the competence of the MIDC to levy

service charges rather on the contrary they asserted that MIDC

alone is the Special Planning Authority for the area and is

responsible for providing infrastructure facilities and other

amenities. Thus, in view of the above, when the MIDC is

providing the all facilities and amenities in the area, it is

authorised under Section 17 of the MID Act to levy fee or

charges in respect of such amenities on the land holders within

its area. The MID Act nowhere empowers the MIDC to impose

tax of any kind and to collect the same from the allottees of the

17

land. Each charge levied by MIDC is directly linked to a distinct

amenity or service provided by it such as water charges ,

drainage charges etc. The fee and charges so levied by the

MIDC have the essential characteristics of a tax. The MoU

dated 01.12.2005 between the MIDC and NMMC provides for

transfer of limited functions relating to maintenance of roads,

drains, street lighting and other basic municipal services in the

TTC MIDC area to the NMMC. The functions of the MIDC and

Municipal Corporation can co-exist and merely for the reason

that there is some overlapping of functions, it cannot mean that

the two statutory frameworks are in conflict with each other.

Even if it is held or assumed that NMMC has jurisdiction over

TTC MIDC area, it would not invalidate the separate and

independent existence of MIDC or statutory powers to levy

fee/service charges under Section 17 of the MID Act.

38. In the light of the submissions advanced by all the parties and

keeping in mind the factual background pleaded,

predominantly three basic points arise for our consideration.

First, whether the area within the TTC MIDC falls within the

jurisdiction of the NMMC; secondly, if the said area is within

18

the jurisdiction of NMMC, whether in view of the fact that MIDC

is providing all facilities and amenities in the said area and is

charging fee/service charges from all the unit/plot holders, the

NMMC has any authority to levy any tax much less property

tax upon the unit/plot holders in that area; and thirdly,

whether the unit/plot holders within the industrial area of TTC

MIDC are exempt from payment of property tax to NMMC.

39. It would be profitable, before straightaway embarking upon the

three points raised by either of the parties to first refer to

certain relevant provisions of the various Statutes which are

involved in the present case.

40. First, we take up the MID Act. The aforesaid Act vide Section 2

(a) defines “amenity” to include road, supply of water or

electricity, street lighting, drainage, sewerage, conservancy and

such other convenience as the State Government may, by

notification in the Official Gazette, specify to be an amenity for

the purposes of this Act. In the light of the above definition, the

amenities would include the above referred facilities only as

nothing has been brought on record that the State Government

19

has notified any other thing to be included within the amenities

for the purposes of this Act.

41. Section 15 of the MID Act provides for the general powers of the

Corporations. It inter alia vide clause (c) empowers the

Corporation to provide or to cause to be provided amenities and

common facilities in industrial estate/areas and construct and

maintain or cause to be maintained works and building

therefor. In other words, one of the functions of the MIDC is to

provide amenities and common facilities in industrial

estates/areas which if read in conjunction with the definition

of amenity, would mean that it has to provide for the roads,

supply of water or electricity, street lighting, drainage,

sewerage, conservancy only.

42. The aforesaid MID Act vide Section 17 empowers it to levy fee

or service charges to cover its expenses on maintenance of

roads, drainage, water supply and such other services and

amenities as may be provided by it and that such levy of fee or

service charges may be levied on the plot holders or persons

receiving benefit of those services or amenities. It means that

20

MIDC have the power to levy fee or service charges but not any

tax.

43. The other relevant statute for our purposes is the MMC Act.

The said Act vide Section 63 enumerates the matters to be

provided for by the Corporation. It obliges the Corporation to

make reasonable and adequate provisions inter alia for the

following purposes:

i) Urban forestry, protection of the environment and

promotion of ecological aspects;

ii) The collection, the removal, treatment and disposal of

sewage, offensive matter and rubbish and, if so,

required by the State Government, the preparation of

compost manure from such sewage, offensive matter

and rubbish;

iii) Construction, maintenance and cleansing of drains and

drainage work and of public latrines, water closets,

urinals and similar conveniences;

iv) The lighting of the public streets, municipal markets

and public buildings vested in the corporation;

21

v) Construction, maintenance, alteration and

improvement of public streets, bridges, subways,

culverts, causeways and the like;

vi) Removal of obstructions and projections in or upon

streets, bridges and other public places; and

vii) Management and maintenance of all municipal water

works and the construction or acquisition of new works

necessary for sufficient supply of water for public or

private purposes.

Apart from providing for the above measures, vide Section

66 of MMC Act, the Corporation at its discretion is vested with

the power to provide for certain other matters such as slum

improvement, urban poverty alleviation, cattle ponds,

prevention of cruelty to animals, regulation of tanneries etc.

44. The Corporation under Section 127 of the MMC Act is

authorised to impose taxes inter alia property tax. The property

tax under Section 128A of the MMC Act consist of property tax

leviable on buildings and lands in the city and include water

tax, water benefit tax, sewerage tax, sewerage benefit tax,

general tax, education cess, street tax and betterment charges.

22

Such taxes are leviable on ratable value, as the case may be. In

view of the provisions of Section 127 and 128A of the MMC Act,

the corporation is vested with the power to impose property tax

on buildings which include water tax, sewerage tax, general

tax, education cess etc. In a way property tax leviable by the

corporation covers all the taxes that are enumerated under

Section 128A of the MMC Act.

45. If we were to read the provisions of the MID Act and the MMC

Act together, it would be crystal clear that MIDC is only

empowered to levy fee or service charges for the purposes of

maintenance of road, drainage, water supply and such other

services and amenities as may be provided but it does not have

any power to impose or collect tax. The power to impose tax,

particularly the property tax, vests only and only with the

Municipal Corporation under the provisions of Section 127

read with Section 128A of the MMC Act.

46. Now we take up the MRTP Act. The said Act vide Section 40

empowers the State Government to constitute an authority for

any undeveloped area specified in the notification to be referred

as “the notified area”. The aforesaid provision further provides

23

that where in an area, MID Act is applicable or area comprising

Government land is handed over to the MIDC , it shall be

deemed to be a “notified area”. In such a situation, MIDC shall

be the “Special Planning Authority” in respect of such notified

area and shall be deemed to have been appointed as such for

the purposes of the MRTP Act. In short, Government by a

notification provides for the declaration of a notified area for

any undeveloped area and that any area upon which MID Act

is applicable or any area of the government which has been

handed over to the MIDC shall also be deemed to be a notified

area. Further, that in respect of such an area, MIDC shall be

treated as “Special Planning Authority”.

47. Section 115 of the MRTP Act further provides that the planning

and control of “the notified area” shall be the responsibility of

the “Special Planning Authority” i.e., MIDC, subject to the

approval of the plans in this regard, by the State Government.

48. In addition to the above, Section 159A of the MRTP Act provides

that the provisions of the First Schedule of the Act shall apply

in relation to a New Town Development Authority and a Special

24

Planning Authority referred to in Section 40 of the Act i.e.,

MIDC in the instant case.

49. Clause 7 (1) of the First Schedule of the Act which is most

relevant and important for our purposes, reads as under:

“[FIRST SCHEDULE]

(See section 159A)

Special provisions relating to New Town

Development Authority and Special Planning

Authority.

“….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..

….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..

7. Lump-sum contribution by relevant authority in

lieu of taxes levied by local authorities.— (1) Subject to

rules, if any, that may be made under this Act, and

regard being had to the fact that the relevant authority

itself provides in the area within the jurisdiction of the

local authority all or any of the amenities which the local

authority provides, the relevant authority shall not be

liable to pay the taxes including property tax, if any, but

it shall be lawful to the local authority to arrive at an

agreement with the relevant authority with the prior

sanction of the State Government to receive a lump-sum

contribution from the relevant authority in lieu of all or

any of the taxes levied or services rendered by the local

authority.

(2) Where no such agreement, as is referred to in

sub-section (1) can be reached or there is any dispute

regarding any matter referred to in the aforesaid sub-

section (1), the matter may be referred to the State

Government in such manner as the State Government

may determine, and the State Government may after

giving to the local authority or the relevant authority or

both a reasonable opportunity of being heard, decide

the amount of such contribution. The decision of the

State Government, shall be binding on the local

authority and the relevant authority.

….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..

….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..”

25

50. A simple reading of the aforesaid Clause 7 (1) of the First

Schedule of the MRTP Act reveals that where any authority or

the relevant authority itself provides in the area within the

jurisdiction of the local authority all or any of the amenities

which the local authority provides, the relevant authority shall

not be liable to pay taxes including property tax, if any, to the

local authority. However, it shall be lawful for the local

authority to arrive at an agreement with the relevant authority

with the prior sanction of the State Government to receive a

lump-sum contribution from the relevant authority in lieu of

all or any of the taxes levied or services rendered by the local

authority. In other words, Clause 7 (1) of First Schedule of the

MRTP Act provides that where a relevant authority is providing

all or any of the amenities which the local authority is supposed

to provide, it shall not be liable to pay taxes including property

tax to the local authority and that the relevant authority and

the local authority may with the permission of the Government,

enter into an agreement for contributing a lump-sum amount

in lieu of the taxes.

26

51. Now, we take up the three points which arise for our

consideration, one by one.

Point I: Whether the TTC MIDC area fall within the

territorial jurisdiction of the NMMC?

52. In context with the above point, the appellants contend that

under the draft notification dated 27.08.1991, the expression

“entire area” of the 30 villages has been used whereas in the

final notification dated 17.12.1991, the expression “local areas”

of the 44 revenue villages have been used. There is a distinction

between the two expression “local area” and the “entire area”.

The expression “entire area” refers to the whole of the area of

the villages whereas the expression “local areas” refers to part

of the aforesaid revenue villages. The expression “local area” in

the final notification has been deliberately used so as to

exclude part of the land of the said villages which fall within

the ambit of TTC MIDC.

53. The High Court in context with the above held that the

expression “local area” means an area which is administered

by the local body i.e., a Corporation, Panchayat or a District

Board. The expression local area of the revenue villages does

not refer to part of the revenue villages so as to exclude any

27

area of the village which is being administered by the TTC

MIDC. The High Court, thus, concluded that the expression

entire area and local area convey one and the same meaning

and can be used interchangeably. The final notification apart

from referring to the 44 revenue villages, mentions the

boundaries of the area falling within the limits of the NMMC.

The said boundaries per se disclosed that the entire area of all

the 44 villages have been declared to be within the jurisdiction

of the NMMC. Thus, including the area of the TTC MIDC also

within the fold of NMMC.

54. It is trite to mention here that in the draft notification only 30

villages were proposed to be notified and by the addendum 14

more were proposed to be added. Accordingly, 44 villages were

notified as part of NMMC under the final notification issued

under Section 3 of MMC Act. Subsequently, the land of 14

villages was excluded from the NMMC vide notification dated

08.06.2007. The land of these 14 villages excluded was never

part of the TTC MIDC and therefore, its exclusion has no

impact insofar as the area within the ambit of TTC MIDC is

concerned.

28

55. Article 243-P (e) of the Indian Constitution defines

“municipality” to mean an institution of self-government

constituted under Article 243Q which inter alia refers to Nagar

Panchayat in respect of area in transition from rural area to an

urban area; a Municipal Council for a smaller urban area; and

a Municipal Corporation for a larger urban area.

56. Article 243-P (d) defines “municipal area” to mean the territorial

area of a Municipality (which includes a Municipal Council as

well as a Municipal Corporation) as is notified by the Governor.

Therefore, a “municipal area” of any Municipality i.e., a

Municipal Council or a Municipal Corporation has to be

notified by the Governor concerned.

57. The MMC Act provides for the constitution of Municipal

Corporations for the larger urban areas. It inter alia vide sub-

Section (2) of Section 3 of the Act empowers the State

Government to specify by notification in the official gazette, any

urban area with a population of not less than three lakhs as a

larger urban area for the purposes of constituting a Municipal

Corporation. Sub-Section (3) of Section 3 of the said Act also

authorizes the State Government to alter the limits of any

29

larger urban area constituting a Municipal Corporation from

time to time by publishing a notification in the official gazette.

58. In connection with the constitution of the NMMC for the larger

urban area of the city of New Mumbai, a draft notification and

an addendum were issued on 27.08.1991 and 02.12.1991

respectively under which “the entire area” of 30 plus 14 i.e., 44

villages were notified to be part of the NMMC. The statute

nowhere envisages for issuance of any such draft notification

but in all fairness, the same was issued so that the public at

large may object or make suggestions for inclusion or exclusion

of certain areas from the municipal limits of the NMMC. The

appellants herein or its members or any of the land holders

within the area of TTC MIDC never raised any objections or

made any suggestions in respect of the aforesaid draft

notification. Accordingly, a final notification under Section 3 of

the MRTP Act was issued notifying in the official gazette

declaring the “local area” of the aforesaid 44 villages as

constituting the Municipal Corporation i.e., NMMC. The said

final notification not only describes the land included within

the NMMC by mentioning the 44 villages but also by describing

30

the land so included by the boundaries. The boundaries

described in the notification comprises of the land which falls

within the jurisdiction of the TTC MIDC Industrial Area as well.

Thus, the industrial area of TTC MIDC is also part of the 44

villages notified. Therefore, geographically the industrial area

comprising of TTC MIDC was very much notified and declared

to be the area forming part of NMMC.

59. The distinction sought to be made between the expression

“entire area” and the “local area” used in the draft notification

and the final notification issued under Section 3 of the MRTP

Act loses all significance once a final notification was issued

covering “local area” of all the 44 villages. The expression “local

area” used in the final notification refers to the whole of the

area within the said revenue villages and it cannot be said that

the “local area” of the said villages refers only to part of the area

of the said villages excluding that which falls within the

jurisdiction of TTC MIDC Industrial Area. No such distinction

is spelled out either from the statute or from the notification

itself. Moreover, the boundaries of the land of the 44 villages

declared to be part of NMMC covers the whole of the land of 44

31

villages leaving no doubt that the whole of the land of 44

villages were put under the jurisdiction of the NMMC.

60. The argument that the area of the 19 villages which were

initially vested with the TTC MIDC Industrial Area had ceased

to be part of all those 44 revenue villages and as such when

those revenue villages were put within jurisdiction of the

NMMC, the area of those villages which had already been

vested with the TTC MIDC Industrial Area stood excluded has

no substance. Despite vesting of area or part of area of 19

villages with the TTC MIDC Industrial Area, the same does not

exclude that area from the revenue jurisdiction of those

villages. Since they continue to be part of the said villages and

the said villages have been notified as the area within the

jurisdiction of NMMC, the industrial area of TTC MIDC

automatically goes to the jurisdiction of the NMMC.

61. The reliance placed upon the notification dated 16.12.1994

issued under Section 154 of the MRTP Act to the effect that TTC

MIDC Industrial Area will not be handed over to the NMMC

appears to be little misconceived. We have gone through the

aforesaid notification and find that it only issued certain

32

directions in exercise of powers under Section 154 of the MRTP

Act. One of the observations made therein is that to ensure that

there is no dual authority over a particular piece of land.

However, it does not contain any direction or stipulation that

the area of the villages entrusted to the TTC MIDC has been

excluded or has not been entrusted to the NMMC. Therefore,

the appellants derive no benefit out of the aforesaid notification

and the conclusion of the High Court that NMMC has

jurisdiction over the TTC MIDC Industrial Area as it falls within

the geographical area of NMMC is correct and suffers from no

illegality.

62. The alleged policy appended to notification dt.15/16.12.1994

gives a list of villages included in developed nodes where NMMC

will exercise powers as a planning authority. This document

nowhere provides that the land of the 44 villages later reduced

to 30 villages as notified to be within the jurisdiction of the

NMMC excludes the industrial area of TTC MIDC. It simply

states that, the industrial areas of MIDC will not be included

within the limits of Municipal Council or Corporation at least

for 25 years. The said document has no statutory enforcement.

33

Moreover, it does not say that the area which has already been

vested with the NMMC shall stand excluded. It is only a policy

document whereunder it was envisaged that the MIDC

Industrial Area would not be included within the municipal

limits for at least 25 years but it nowhere further lays down

that whether such a decision has been implemented or

enforced or that any action in pursuance thereof was taken or

that in fact, the TTC MIDC Industrial Area which had been

vested in the NMMC earlier was taken out of it in any manner

or that in respect thereof any instrument was executed. In the

absence of any such thing on record, the said policy document

would not exclude any area of TTC MIDC Industrial Area from

the ambit of the NMMC, more particularly, when the said area

had already been vested in the NMMC vide notification dated

17.12.1991.

63. This apart, the High Court has considered the entire material

on record in relation to the boundaries and the area to be

included within the NMMC and has come to a definite

conclusion that the area within the jurisdiction of the TTC

MIDC has also been included within the municipal area of

34

NMMC. Therefore, if one court has taken a particular view of

the matter on the basis of the perusal of material on record, it

is not proper for this Court to form a different opinion unless

the view taken by the court below is palpably incorrect or

perverse. On the basis of perusal of material on record, the view

taken by the High Court is one of the plausible views and if

such a view has been taken by the court in exercise of its

discretionary jurisdiction, it is not for this Court to take a

different view. The possible view accepted has to be approved.

64. In view of the aforesaid facts and circumstances, we are of the

opinion that the area of the TTC MIDC is within the municipal

limits of the NMMC and that the High Court has not committed

error or illegality in recording a finding to that effect.

Accordingly, we are also of the opinion that TTC MIDC area is

included within territorial jurisdiction of the NMMC.

Point II: Whether the NMMC alone has jurisdiction to levy

tax including property tax upon the unit/plot holders in

the industrial area of the TTC MIDC when all facilities and

amenities in the area are being provided by the MIDC for

which it is charging the necessary fee?

65. Article 366(28) of the Constitution defines “taxation” as under:

35

“(28) "taxation" includes the imposition of any tax or

impost, whether general or local or special, and "tax" shall

be construed accordingly;”

66. A bare reading of the aforesaid definition would make it clear

that any kind of tax or impost whether general or local or

special shall form part of tax.

67. Article 365 of the Constitution contemplates that no tax shall

be levied or collected except by authority of law. It means that

levy or collection of a tax, must be supported by a statute.

Therefore, until and unless the statute provide s for the

imposition of tax which may include impost, no tax can be

levied or collected from any person.

68. Article 243-X authorizes the legislature to empower the

Municipalities to impose tax. It states that the legislature of the

State, may by law authorize a Municipality to levy, collect and

appropriate such taxes, duties, tolls and fee in accordance with

such procedure and subject to such limits as may be specified

in the law. Therefore, no Municipality is authorized to levy and

collect taxes unless the same are imposed by following the

procedure as may be specified in law.

69. Now, we come to the MMC Act under which NMMC was

established. The said Act vide Chapter XI provides for

36

municipal taxation. Section 127 of the Act contained therein

specifically lays down that the corporation shall impose the

following taxes including property tax. Section 128A provides

as to what is included within the property tax. It provides that

property tax leviable on building and land in the city shall

include water tax, water benefit tax, sewerage tax, sewerage

benefit tax, general tax, education cess, street tax and

betterment charges. A combined reading of Section 127 and

128A of the MMC Act reveals that the Municipality has the

power to impose property tax which include water tax, water

benefit tax, sewerage tax, sewerage benefit tax, general tax,

education cess, street tax and betterment charges but no other

tax. It does not authorize the Municipality to collect any tax in

the form of a fee or charges for rendering any services. It does

not even authorize that any other kind of impost in the nature

of a fee or charges would be imposed and collected by the

Municipality other than those mentioned above.

70. The plain reading of the above provisions would make it clear

that the Municipality has the power to impose and collect

property tax which include water tax, water benefit tax,

37

sewerage tax, sewerage benefit tax, general tax, education cess,

street tax and betterment charges, but it does not include any

service charges and as such Municipality is denuded from

realizing any service charges as part of the tax in exercise of

the above power.

71. As already referred to earlier, MMC Act vide Section 63 is

obliged to make reasonable and adequate provisions for the

collection, removal, treatment and disposal of sewage, offensive

matter and rubbish; construction, maintenance and cleansing

of drains and drainage work etc.; to provide for the lighting of

the public streets and the municipal markets; construction and

improvement of public streets, bridges etc.; and management

and maintenance of all municipal water works and

construction or acquisition of new works necessary to ensure

sufficient supply of water for public or private purposes. So,

under the MMC Act, the NMMC is under an obligation to

provide for the above facilities and amenities but the MMC Act

nowhere authorizes NMMC to levy any kind of tax for such

services/amenities and facilities. The fee and charges in

respect of such amenities and facilities are not included in

38

property tax. Therefore, nothing in connection with the above

amenities and facilities can be realized in the form of property

tax.

72. On the other hand, the MID Act defines the “amenities” to

include roads, supply of water, electricity, lighting, drainage,

sewerage etc. and vide Section 15 of the Act empowers the

Corporation to provide such amenities and common facilities

and to maintain the same. Section 17 of the said Act authorizes

the MIDC to levy fee or service charges only to cover its

expenses on construction and maintenance of roads, drainage,

water supply and such other services as may be provided. In

other words, the MIDC has the power to levy fee or service

charges in respect of the above amenities. However, from entire

reading of the MID Act, we are at a loss to find any power to

impose or collect any kind of tax much less the property tax

vested with the MIDC.

73. The combine reading of both the aforesaid statutes i.e., the

MMC Act and the MID Act, it is clear enough that the power to

impose and collect property tax which include certain other

kind of taxes vests with the NMMC whereas the power to levy

39

fee and charges for providing amenities is conferred upon the

MIDC. It is also evident that the fee or service charges in

respect of the amenities does not fall within the ambit of

property tax as defined under Section 127 read with Section

128A of the MMC Act and are independent and separate from

the property tax. They are not even in the nature of tax as the

element of quid pro quo exist with regard to levy of such fee and

service charges vis-a-vis the unit/plot holders and the MIDC.

74. It is important at this juncture to have some discussion with

regard to tax or impost and fee or charges and as to whether

the fee/charges of the nature with which we are concerned

would tantamount to tax or impost for the purposes of Article

265 and Article 366(28) of the Constitution.

75. The word “tax” in ordinary sense or according to the dictionary

meaning simply means a charge imposed by the Government

on persons, entities, transactions or property to yield public

revenue. So, whatever imposts are levied by the Government to

enhance the revenue partakes the nature of the tax. Therefore,

by necessary implication, the fee or charges in quid pro quo for

the services rendered would not be for the enhancement of the

40

public revenue and would not be a tax but for the services

rendered.

76. In common parlance, “tax” is a compulsory extraction by the

Government or the local Government to meet out its revenue

expenditure. It is a money realized from the citizens by the

Government for use of the nation/State and is generally in the

nature of revenue. The “tax” so collected is generally utilized for

public purposes and to meet out the expenses of the

Government.

77. The power of taxation is an essential and an inherent attribute

of the sovereignty/Government and taxation is a method of

collecting revenue to fund public expenditure. It is true

therefore, that no Government can function and achieve its

welfare objectives without levying and collecting taxes but the

taxation cannot be without following the procedure prescribed

for levying the same or without the authority of law.

78. In a way, tax is a compulsory exaction of money by the

Government or the public authority; it is imposed under

statutory power and the consent of the tax payer is not

necessary; the payment/collection of tax is enforceable by law;

41

and it is an imposition made for public purposes to meet the

general expenses of the State without reference to any special

benefit to be conferred upon the tax payer.

79. In the above context, it would be beneficial to quote Latham,

C.J. from Matthews v. Chicory Marketing Board

11 where

“tax” has been defined as a “compulsory exaction of money by

public authority for public purposes, enforceable by law and

not a payment for services rendered”.

80. It is also beneficial in this regard to quote paragraph 44 from

Commr., Hindu Religious Endowments v. Sri Lakshmindra

Thirtha Swamiar of Sri Shirur Mutt

12:

“44. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..

….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. ….. …..

It is said that the essence of taxation is compulsion, that

is to say, it is imposed under statutory power without the

taxpayer's consent and the payment is enforced by law

[Lower Mainland Dairy Products Sales Adjustment

Committee v. Crystal Dairy Ltd., 1933 AC 168 (PC)] . The

second characteristic of tax is that it is an imposition

made for public purpose without reference to any special

benefit to be conferred on the payer of the tax. This is

expressed by saying that the levy of tax is for the

purposes of general revenue, which when collected forms

part of the public revenues of the State. As the object of a

tax is not to confer any special benefit upon any

particular individual, there is, as it is said, no element

of quid pro quo between the taxpayer and the public

11

(1938) 60 CLR 263 (Aust)

12

(1954) 1 SCC 412

42

authority [ Findlay Shirras, Science of Public Finance, Vol.

I, 203] . Another feature of taxation is that as it is a part

of the common burden, the quantum of imposition upon

the taxpayer depends generally upon his capacity to

pay.”

(emphasis added)

81. In the above quote, the second characteristic of the tax is very

important. It is that “tax” is an imposition made for public

purpose without reference to any special benefit to be conferred

on the payer of the tax meaning thereby that in imposing tax

no benefit has to be bestowed upon the tax payer. Therefore,

the element of quid pro quo is missing in the imposition and

realization of tax. In the same very case, it was held that a “fee”

is a money taken by the Government “as a return for the work

done or services rendered”. Therefore, levy of fee is

characterized by an element of quid pro quo between the payer

and the public authority.

82. A Constitution Bench of five Judges in Corporation of

Calcutta and Anr. v. Liberty Cinema

13 while dealing with

the fee as distinguished from tax observed that there is no

dispute that the Constitution draws a distinction between “fee”

and “taxes”. The taxation entries conferring taxation powers

13

1964 SCC OnLine SC 65

43

are separately enumerated whereas the entries in respect of fee

are separate.

83. In three Judges Bench decision in the case of Sreenivasa

General Traders and Ors. v. State of Andhra Pradesh and

Ors.

14 it was held that there is no generic difference between

tax and a fee as the traditional law distinguishing tax from fee

has undergone a sea change. The distinction between a fee and

tax lies primarily between the fact that tax is a part of common

burden while a fee is for payment of a specific benefit or

privilege. In regard to the fee, there is, and must always be,

direct relation between fee collected and the services intended

to be rendered. In determining whether a levy is a fee, the true

test must be whether its primary and essential purpose is to

render specific services. The benefit, if any, derived by the State

out of such fee collected is of no consequences. The power of

any legislature to levy a fee is conditioned by the fact that it

must “by and large” be a quid pro quo for the services rendered

and that there should be a “reasonable relationship” between

the levy of the fee and the services rendered.

14

(1983) 4 SCC 353

44

84. In short, despite the distinction between “tax” and “fee” having

been blurred to some extent but still it has not been completely

done away with and the distinction, though very fine, continues

to remain. The tax is a compulsory extraction for the collection

of revenue whereas fee is in the nature of a charge for the

services rendered. The element of quid pro quo is an essential

characteristic of a fee or a charge. Therefore, so long as the said

element ex facie exists, the levy of fee or charges cannot be

equated with tax.

85. The appellants have cited a large number of decisions including

that of the Constitution Benches of this Court as large as of

nine Judges to bring home the point that distinction between

tax and fee has more or less vanished and that the levy of

fee/charges partakes taxation. However, despite blurring of

the traditional distinction between a fee and taxation, one thing

is very much clear that where there is explicit reasonable

relationship between levy of fee/ service charges and the

services rendered, the distinction would continue to stand and

the fee/charges would not be treated as part of tax.

45

86. Notwithstanding the definition of taxation contained in Article

366(28) of the Constitution that includes impost as part of

taxation and despite giving widest amplitude to it so as to

include all money raised by the Government to be part of tax,

it would not include the money collected and raised by means

of fee or charges for rendering any services. Therefore, not all

imposts would include fee or charges as part of taxation if such

fee or charges are in lieu of some services.

87. Additionally, it is settled in law that any liability arising out of

a contract cannot be termed as an impost or tax. Here in the

present case, the liability to pay the fee or service charges for

the services rendered by the MIDC are in the nature of an

obligation under the allotment/lease deeds executed by the

MIDC in favour of the unit /plot holders. Therefore, the

payment of fee/charges is a liability under the contract of lease

and would not be termed as “tax”.

88. In view of the above, the contention of the appellants that the

fee or service charges realized by the MIDC for providing certain

facilities and amenities such as roads, sewage, water and

electricity would tantamount to imposition of tax and would not

46

essentially be in the nature of fee or charges is unacceptable.

This is so, more particularly for the reason, the MIDC otherwise

has no jurisdiction to levy and collect tax under MID Act. The

moment it is held that the aforesaid levy of fee or service charge

partakes the nature of tax, it will be without jurisdiction as

MIDC has no such authority in law to impose any tax.

Therefore, in a nutshell, in the case at hand the distinction

between tax and fee has to be maintained and what the MIDC

is realizing is not tax but fee/service charge only for the

services rendered by it.

89. In the light of the above discussion, without reference to the

various authorities cited by either side, on the first principles

itself we are of the opinion that NMMC is duly authorized to

levy and collect property tax from the units/ plot holders within

its area including the industrial area of TTC MIDC, even though

the appellants or its members may be paying fee or service

charges to the MIDC for providing necessary infrastructure,

facilities and amenities and the fee or service charges paid by

them to MIDC are not in the nature of any tax.

Point III: Whether TTC MIDC or the unit/ plot holders

within their jurisdiction are exempt from payment of

47

property tax to NMMC in view of Clause 7 (1) of First

Schedule of MRTP Act?

90. The appellants are claiming exemption from payment of

property tax to NMMC in the light of Clause 7 (1) of First

Schedule of the MRTP Act. Therefore, the provisions of MMC

Act, MID Act and the MRTP Act are required to be construed

harmoniously in considering the above aspect of the matter.

91. The interplay for all the above three enactments makes it clear

that under the MID Act, MIDC has no power to levy or recover

taxes but may levy fee or service charges for the services

rendered in the form of providing infrastructure, facilities and

amenities. It is only by virtue of provisions of Sections 127 and

128 (A) of the MMC Act that NMMC is authorized to impose

property tax and collect the same from all those within its

jurisdiction including the industrial area falling under the TTC

MIDC Area. Under the MMC Act, various kinds of municipal

taxes can be levied which may include property tax and even

general tax in respect of buildings and lands in the city. Apart

from the above taxes, it can also impose taxes on vehicles,

boats, animals, theatre etc. The said Act at the same time

postulates exemption from payment of tax of certain kinds

48

namely on vehicles, animals etc. but it does not contemplate of

any kind of exemption in respect of property tax.

92. The exemption in respect of property tax is claimed only by

virtue of Clause 7 (1) of First Schedule of the MRTP Act and not

under MMC Act. It may be noted that MIDC is the Special

Planning Authority as per Section 159A of the MRTP Act which

applies the First Schedule of the Act to MIDC/Special Planning

Authority. Clause 7 (1) of First Schedule under the MRTP Act

in unequivocal terms provides that whenever any relevant

authority (MIDC in the instant case) itself provides in the area

within its jurisdiction all or any of the amenities which the local

authority (NMMC in the present case) is supposed to provide,

the relevant authority shall not be liable to pay taxes including

property tax, if any. It further provides that it shall be lawful

for the local authority to enter into an agreement with the

relevant authority with the prior sanction of the State

Government to receive a lump-sum contribution from the

relevant authority in lieu of all or any of the taxes levied or

services rendered by the local authority.

49

93. Clause 7 (1) of First Schedule under the MRTP Act, as stated

above, is in two parts. The first part exempts the relevant

authority providing all or any of the amenities in the area which

the local authority is supposed to provide from payment of

taxes including property tax to the local authority. The second

part is only in relation to an agreement between the relevant

and the local authority for payment of lump-sum amount in

lieu of all or any of the taxes.

94. The first part of the Clause 7 (1) of First Schedule to the MRTP

Act is crystal clear. It exempts the relevant authority from

paying taxes including property tax to the local authority if the

relevant authority itself is providing all facilities and amenities

in the area which otherwise are supposed to be provided by the

local authority.

95. In the case at hand, undoubtedly, all facilities and amenities in

the industrial area of TTC MIDC are being provided by the

MIDC. Since the facilities and the amenities supposed to be

provided by the local authority are being provided by the MIDC

which alone is collecting fee or service charges in respect of the

same, the relevant authority stands exempted from payment of

50

taxes including the property tax to the local authority i.e.,

NMMC.

96. The High Court while considering the above issue in regard to

exemption under Clause 7 (1) of First Schedule to the MRTP

Act took a narrow view of the above provision and held that

such an exemption is permissible only to the relevant authority

(MIDC in the present case) and not to the unit/plot holders

situate within its jurisdiction.

97. The statement and objects behind incorporating the Clause 7

(1) of First Schedule to the MRTP Act, as placed before us by

the appellants, in categorical terms states that it envisages to

provide that buildings or lands belonging to, or vesting in a

relevant authority or buildings constructed on land belonging

to such authority be exempt from taxation by local authorities.

The statement and objects read with Clause 7 (1) further clearly

provides exemption from taxation by local authorities to all

buildings or lands belonging to or vesting in the relevant

authority or constructed on land belonging to such authority.

It must be remembered that TTC MIDC was constituted under

the MID Act and was vested with the entire land of 19 villages

51

for the purposes of development of an industrial area.

Therefore, the entire land within the jurisdiction of the TTC

MIDC vests with the MIDC and does not belong to individual

unit/plot holder. They are only the lessees using the said land

under certain terms and conditions but the ownership

continues to vest with the MIDC. Therefore, the entire land

within the industrial area of TTC MIDC belongs to or vest in the

MIDC and, therefore, any building constructed on such land

stands exempted from taxation, irrespective of the fact that the

constructions have been raised by individual unit/plot holders.

98. The purpose of providing exemption under Clause 7 (1) of First

Schedule of the MRTP Act to the relevant authority (MIDC in

the instant case) refers to entire land and buildings belonging

to or vested in the relevant authority. This cannot be construed

in a manner which may render the provision useless or

meaningless as there would be no purpose in granting

exemption to the relevant authority (MIDC in the present case)

who might hardly be owning/occupying any land and building

of its own. All lands and buildings in the industrial area vest in

the MIDC and, therefore, the exemption permitted under the

52

aforesaid clause refers to the entire land and buildings in the

area including those occupied by each unit/plot holder. Any

other meaning, if given to the aforesaid clause, would render

the exemption otiose and will lead to an absurd situation.

99. In view of the above discussion, we are of the opinion that the

High Court misconstrued Clause 7 (1) of First Schedule of the

MRTP Act and gave it a too narrower meaning which is not

warranted under the fact situation of the present case.

100. It must be kept in mind that in context with fiscal statutes, if

there is any ambiguity in the interpretation of any provision or

clause, the benefit of the same should always be given to the

assessee. In this regard, reference may be had to Government

of Kerala and Another v. Mother Superior Adoration

Convent

15, wherein it has been laid down that in the event of

ambiguity in a beneficial tax exemption provision, the benefit

accrues in favour of the assessee.

101. Therefore, in the overall facts and circumstances of the case,

the benefit of exemption provided under Clause 7(1) of First

Schedule of the MRTP Act goes not only in favour of the MIDC

15

(2021) 5 SCC 602

53

but also to everyone holding land within its jurisdiction.

However, there is a caveat to it. The exemption available under

Clause 7(1) of First Schedule of the MRTP Act would be only so

long till the facilities and amenities supposed to be provided by

the local authority are being provided by the relevant authority

(MIDC). The moment the relevant authority (MIDC) stops

providing those facilities and the responsibilities of the same

are taken by the NMMC the benefit of the aforesaid exemption

would cease to exist.

102. In the present case, ever since the establishment of MIDC in

1962 all such facilities and amenities in the industrial area of

TTC MIDC were being provided by the MIDC. However, with

effect from 16.12.2004, MIDC handed over the management of

the industrial areas under its jurisdiction to NMMC with the

clear understanding that it will not levy any service charge with

effect from January, 2005 onwards.

103. In this connection, an agreement was also entered into between

MIDC and NMMC on 01.12.2005 wherein it was decided to

handover the roads along with street lights, drains and storm

water drains in block wise manner for maintenance,

54

upgradation and for providing all facilities in connection

thereto to the NMMC who in turn agreed to take over the

infrastructure development as provided by the MIDC. The said

agreement vide paragraph 9 clearly stipulates that from the

date of handing over, NMMC will look after the maintenance of

roads along with street lights and storm water system of

open/built up nalla and shall keep all roads neat and clean,

free from weeds, shrubs etc. The NMMC will have full right to

make any development work and nece ssary modifications in

future as roads and lights services stand transferred to it. Even

the land meant for public utility services such as public toilets,

urban health posts stand transferred to the NMMC, provided

the said land is not earmarked for industrial use.

104. Thus, in the light of the aforesaid agreement and the transfer

of infrastructure facilities, their development and maintenance

to the NMMC, the MIDC denuded itself of its power to provide

those facilities and, in the result, to levy fee or service charge

for providing the same. The burden for developing and

maintaining the said facilities fell squarely upon the NMMC

and, therefore, the exemption envisaged under Clause 7(1) of

55

First Schedule to the MRTP Act ceases with effect from handing

over of the said development and maintenance work to the

NMMC. Since now, the said services are being provided by the

local authority i.e., NMMC, there is no question of grant of

exemption in payment of taxes or the property tax.

105. Based upon the above discussion, though the appellants or its

members as also the MIDC stood exempt ed from payment of

property tax to NMMC but only till the execution of the

aforesaid agreement dated 01.12.2005. The benefit of said

exemption would not be available to the MIDC or its unit/plot

holders after the aforesaid date. It will be the jurisdiction of the

NMMC to realise property tax after the aforesaid date in respect

of the areas or the properties handed over or transferred to it.

If, in any event, the areas and the properties are transferred to

the NMMC in a phased manner, the exemption would cease to

operate from the date of such transfer area wise.

106. In view of the aforesaid facts and circumstances and the

discussion, we conclude that the TTC MIDC Industrial Area

falls within the jurisdiction of the NMMC; the MIDC rightly

realise fee/ service charges for providing infrastructure and

56

other amenities in the industrial area; the power to levy and

collect property tax as provided under Sections 127 and 128-A

of the MMC Act is only upon the NMMC; however, as the MIDC

was providing the infrastructure facilities and amenities and

was realizing fee/ service charges, the MIDC including all its

unit/ plot holders were exempt from payment of tax under

Clause 7(1) of First Schedule of MRTP Act, till the time those

facilities were handed over to the NMMC whereupon it is within

the sole domain of the NMMC to realise property tax without

any exemption.

107. The appeals are thus partly allowed, as above, with no orders

as to costs.

...................………………………….. J.

(PANKAJ MITHAL)

.............……………………………….. J.

(PRASANNA B. VARALE)

NEW DELHI;

MAY 27, 2026.