As per case facts, M/s National Fertilizers Limited's Ammonia Gas Storage Tank was assessed for house tax by the Municipal Council. The Company argued it was machinery, not a taxable ...
No Acts & Articles mentioned in this case
CWP-17189 of 1995
CWP-17601 of 1995
IN THE HIGH COURT OF PUNJAB AND HARYANA
CWP-17189 of 1995
MUNICIPAL COUNCIL, NANGAL
STATE OF PUNJAB
CWP-17601 of 1995
M/S NATIONAL FERTILIZERS LIMITED
STATE OF PUNJAB
1 The date when the judgment is reserved
2 The date when the
3 The date when the judgment is uploaded
4 Whether only operative part of the judgment is
pronounced or whether the full judgment is pronounced
5 The delay, if any of the pronouncement of full judgment,
and reasons thereof
CORAM: HON’BLE MR. JUSTICE DEEPAK SIBAL
HON’BLE MS. JUSTICE RUPINDERJIT CHAHAL
Present:
RUPINDERJIT CHAHAL, J.
1.
30.05.1995
17189 of 1995 and
17601 of 1995
-1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
17189 of 1995
MUNICIPAL COUNCIL, NANGAL
Versus
STATE OF PUNJAB & OTHERS
17601 of 1995
M/S NATIONAL FERTILIZERS LIMITED
Versus
OF PUNJAB & OTHERS
The date when the judgment is reserved
The date when the judgment is pronounced
The date when the judgment is uploaded
Whether only operative part of the judgment is
pronounced or whether the full judgment is pronounced
The delay, if any of the pronouncement of full judgment,
reasons thereof
CORAM: HON’BLE MR. JUSTICE DEEPAK SIBAL
HON’BLE MS. JUSTICE RUPINDERJIT CHAHAL
Mr. Vishal Aggarwal, Advocate
for the petitioner in CWP-17601 of 1995
and Respondent No.3 in CWP-17189 of 1995.
Mr. Kamaldeep Singh Sidhu, Advocate
for petitioner in CWP-17189 of 1995
and Respondent No.3 in CWP-17601 of 1995
******
RUPINDERJIT CHAHAL, J.
The two petitions are directed against the order dated
30.05.1995 passed by the Secretary to Government of Punjab, Department
17601 of 1995
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
....Petitioner
....Respondents
....Petitioner
....Respondents
04.08.2026.
18.09.2026
18.09.2026
Whether only operative part of the judgment is
pronounced or whether the full judgment is pronounced
Full
The delay, if any of the pronouncement of full judgment, Not applicable
CORAM: HON’BLE MR. JUSTICE DEEPAK SIBAL
HON’BLE MS. JUSTICE RUPINDERJIT CHAHAL
17601 of 1995
17189 of 1995.
Kamaldeep Singh Sidhu, Advocate
of 1995
17601 of 1995
The two petitions are directed against the order dated
passed by the Secretary to Government of Punjab, Department
The two petitions are directed against the order dated
passed by the Secretary to Government of Punjab, Department
CWP-17189 of 1995
CWP-17601 of 1995
of Local Government, Chandigarh.
Municipal Council
Council') whereas CWP
Fertilizers Ltd, Nangal U
referred to as '
order, hence these are decided by this common order.
2.
company incorporated under the Companies Act, had set up its factory at
Naya Nangal, in the district of Ropar, and was engaged in the production
of fertilisers. On 17.04.1984, the Municipal Council issued a
supplementary ass
Tank, which was stated to be under construction, and directed the
Company to intimate the total cost of the
information regarding the month and year of its completion. In response to
the aforesaid communication, the Company, vide letter dated 23.05.1984,
informed the Municipal Council that the total capital cost of the
Gas Storage T
completed on 02.02.1982.
informed the Company that, under Section 3(c) of the Punjab Municipal
Act, 1911 (hereinafter referred to as “the Act”), the rental value, calculated
at the rate of 5% of the capital cost, was assessed at
purpose of levy of tax on land and buildings. After allowing a rebate of
10% towards the cost of repairs and maintenance of the building, the net
annual rental value was assessed at
17189 of 1995 and
17601 of 1995
-2-
of Local Government, Chandigarh. CWP-1
Municipal Council, Nangal (hereinafter referred to as '
Council') whereas CWP-17601 of 1995 has been filed by M/s
Fertilizers Ltd, Nangal Unit through its Executive Director
referred to as 'the Company'). Since both the petitions are against the same
order, hence these are decided by this common order.
The facts, in brief, are that M/s Nati
company incorporated under the Companies Act, had set up its factory at
Naya Nangal, in the district of Ropar, and was engaged in the production
of fertilisers. On 17.04.1984, the Municipal Council issued a
supplementary assessment order in respect of an Ammonia G
ank, which was stated to be under construction, and directed the
Company to intimate the total cost of the
information regarding the month and year of its completion. In response to
foresaid communication, the Company, vide letter dated 23.05.1984,
informed the Municipal Council that the total capital cost of the
Storage Tank was ₹1,51,88,006/-
completed on 02.02.1982. On 04.05.1984, the Municipal Council
informed the Company that, under Section 3(c) of the Punjab Municipal
Act, 1911 (hereinafter referred to as “the Act”), the rental value, calculated
at the rate of 5% of the capital cost, was assessed at
purpose of levy of tax on land and buildings. After allowing a rebate of
10% towards the cost of repairs and maintenance of the building, the net
annual rental value was assessed at ₹6,83,460/
17601 of 1995
17189 of 1995 has been filed by
Nangal (hereinafter referred to as 'the Municipal
17601 of 1995 has been filed by M/s National
nit through its Executive Director (hereinafter
'). Since both the petitions are against the same
order, hence these are decided by this common order.
M/s National Fertilizer Limited, a
company incorporated under the Companies Act, had set up its factory at
Naya Nangal, in the district of Ropar, and was engaged in the production
of fertilisers. On 17.04.1984, the Municipal Council issued a
nt order in respect of an Ammonia Gas Storage
ank, which was stated to be under construction, and directed the
Company to intimate the total cost of the same and also furnish
information regarding the month and year of its completion. In response to
foresaid communication, the Company, vide letter dated 23.05.1984,
informed the Municipal Council that the total capital cost of the Ammonia
and that the same had been
04.05.1984, the Municipal Council had
informed the Company that, under Section 3(c) of the Punjab Municipal
Act, 1911 (hereinafter referred to as “the Act”), the rental value, calculated
at the rate of 5% of the capital cost, was assessed at ₹7,59,400/- for the
purpose of levy of tax on land and buildings. After allowing a rebate of
10% towards the cost of repairs and maintenance of the building, the net
₹6,83,460/-. Applying the house tax at
7189 of 1995 has been filed by
Municipal
tional
(hereinafter
'). Since both the petitions are against the same
a
company incorporated under the Companies Act, had set up its factory at
Naya Nangal, in the district of Ropar, and was engaged in the production
of fertilisers. On 17.04.1984, the Municipal Council issued a
Storage
ank, which was stated to be under construction, and directed the
and also furnish
information regarding the month and year of its completion. In response to
foresaid communication, the Company, vide letter dated 23.05.1984,
Ammonia
and that the same had been
had
informed the Company that, under Section 3(c) of the Punjab Municipal
Act, 1911 (hereinafter referred to as “the Act”), the rental value, calculated
or the
purpose of levy of tax on land and buildings. After allowing a rebate of
10% towards the cost of repairs and maintenance of the building, the net
. Applying the house tax at
CWP-17189 of 1995
CWP-17601 of 1995
the rate of 15% of the renta
₹1,02,519/-
Storage Tank had been completed on 02.02.1982, the same was assessable
to house tax for the years 1982
notices under Sections 65 and 67 of the Act were issued and objections to
the aforesaid valuation and assessment were invited within a period of
thirty days. The Company filed its objections on 28/29.05.1984,
challenging the levy of tax on the ground that
Tank was, in fact, an A
and formed an integral part of the Plant and M
not liable to be assessed for the purpose of levy of house tax.
3.
13.06.1988, after a lapse of about four years, issued a supplementary
assessment of tax on land and buildings for the year 1988
Section 73 of the Act was also issued, requiring the Company to
reply and furnish the requisite information within a period of 15 days. The
Company filed its reply on 28.06.1988 to the said notice, informing the
Municipal Council that there had been no change and that the information
regarding the capital cost
letter dated 28.06.1988. Thereafter, the Municipal Council again issued
notice under Section 67(1) of the Act
once again filed objections to the said notice in respect of the a
of house tax on the Ammonia Gas Storage Tank. Vide letter dated
09.03.1989, the Company produced the necessary documents in support of
17189 of 1995 and
17601 of 1995
-3-
the rate of 15% of the rental value, the amount of tax was assessed at
- per annum. It was further stated that, since the
ank had been completed on 02.02.1982, the same was assessable
to house tax for the years 1982-83, 1983
notices under Sections 65 and 67 of the Act were issued and objections to
the aforesaid valuation and assessment were invited within a period of
days. The Company filed its objections on 28/29.05.1984,
challenging the levy of tax on the ground that
was, in fact, an Ammonia storage facility installed within the P
formed an integral part of the Plant and M
not liable to be assessed for the purpose of levy of house tax.
The Municipal Council kept silent on the objections and, on
13.06.1988, after a lapse of about four years, issued a supplementary
assessment of tax on land and buildings for the year 1988
Section 73 of the Act was also issued, requiring the Company to
reply and furnish the requisite information within a period of 15 days. The
Company filed its reply on 28.06.1988 to the said notice, informing the
Municipal Council that there had been no change and that the information
regarding the capital cost of the building had already been furnished vide
letter dated 28.06.1988. Thereafter, the Municipal Council again issued
notice under Section 67(1) of the Act and on 25.02.1989,
once again filed objections to the said notice in respect of the a
of house tax on the Ammonia Gas Storage Tank. Vide letter dated
09.03.1989, the Company produced the necessary documents in support of
17601 of 1995
l value, the amount of tax was assessed at
per annum. It was further stated that, since the Ammonia Gas
ank had been completed on 02.02.1982, the same was assessable
83, 1983-84 and 1984-85. Accordingly,
notices under Sections 65 and 67 of the Act were issued and objections to
the aforesaid valuation and assessment were invited within a period of
days. The Company filed its objections on 28/29.05.1984,
challenging the levy of tax on the ground that the Ammonia Gas Storage
facility installed within the Plant
formed an integral part of the Plant and Machinery and, therefore, was
not liable to be assessed for the purpose of levy of house tax.
Council kept silent on the objections and, on
13.06.1988, after a lapse of about four years, issued a supplementary
assessment of tax on land and buildings for the year 1988-89. Notice under
Section 73 of the Act was also issued, requiring the Company to file its
reply and furnish the requisite information within a period of 15 days. The
Company filed its reply on 28.06.1988 to the said notice, informing the
Municipal Council that there had been no change and that the information
of the building had already been furnished vide
letter dated 28.06.1988. Thereafter, the Municipal Council again issued
and on 25.02.1989, the Company
once again filed objections to the said notice in respect of the assessment
of house tax on the Ammonia Gas Storage Tank. Vide letter dated
09.03.1989, the Company produced the necessary documents in support of
l value, the amount of tax was assessed at
as
ank had been completed on 02.02.1982, the same was assessable
85. Accordingly,
notices under Sections 65 and 67 of the Act were issued and objections to
the aforesaid valuation and assessment were invited within a period of
days. The Company filed its objections on 28/29.05.1984,
Storage
lant
achinery and, therefore, was
Council kept silent on the objections and, on
13.06.1988, after a lapse of about four years, issued a supplementary
89. Notice under
file its
reply and furnish the requisite information within a period of 15 days. The
Company filed its reply on 28.06.1988 to the said notice, informing the
Municipal Council that there had been no change and that the information
of the building had already been furnished vide
letter dated 28.06.1988. Thereafter, the Municipal Council again issued
he Company
ssessment
of house tax on the Ammonia Gas Storage Tank. Vide letter dated
09.03.1989, the Company produced the necessary documents in support of
CWP-17189 of 1995
CWP-17601 of 1995
its objections against the levy of house tax on the Ammonia Gas Storage
Tank.
4.
of the President, Notified Area Committee, Nangal, vide order dated
16.07.1990, assessed the annual rental value of the Ammonia Gas Storage
Tank at ₹6,83,460/
along with
₹9,22,671/-
1990-91, was served upon the Company on 23.07.1990. The Municipal
Council again issued a notice under Section 8
the annual rental value of the Ammonia Gas Storage Tank at
for the year 1991
Secretary to Government of Punjab, Local Government Department,
against the demand notice and also moved an a
However, no stay was granted and, consequently, the Company deposited
the demanded amount under protest. Thereafter, another demand notice for
the year 1992
demanded amount under
Secretary to Government of Punjab dismissed the appeals preferred by the
Company and upheld the assessment order dated 16.07.1990 passed by the
Deputy Commissioner, Nangal. Aggrieved by the said order, the Company
challenged the same by way of
and also filed another petition, being
the tax demand dated 31.05.1993. The aforesaid petitions came up for
17189 of 1995 and
17601 of 1995
-4-
its objections against the levy of house tax on the Ammonia Gas Storage
The then Deputy Commissioner
of the President, Notified Area Committee, Nangal, vide order dated
16.07.1990, assessed the annual rental value of the Ammonia Gas Storage
₹6,83,460/- for the purpose of levy of house tax. The said order,
along with the demand notice dated 18.07.1990, demanding a sum of
- towards tax on land and buildings for the years 1982
91, was served upon the Company on 23.07.1990. The Municipal
Council again issued a notice under Section 8
the annual rental value of the Ammonia Gas Storage Tank at
for the year 1991-92. The Company preferred an appeal before the
Secretary to Government of Punjab, Local Government Department,
against the demand notice and also moved an a
However, no stay was granted and, consequently, the Company deposited
the demanded amount under protest. Thereafter, another demand notice for
the year 1992-93 was issued, whereupon the Company again deposited the
demanded amount under protest. Vide order dated 30.09.1992, the
Secretary to Government of Punjab dismissed the appeals preferred by the
Company and upheld the assessment order dated 16.07.1990 passed by the
Deputy Commissioner, Nangal. Aggrieved by the said order, the Company
challenged the same by way of CWP No. 414 of 1993 before this Court
and also filed another petition, being CWP
the tax demand dated 31.05.1993. The aforesaid petitions came up for
17601 of 1995
its objections against the levy of house tax on the Ammonia Gas Storage
Deputy Commissioner, Ropar, exercising the powers
of the President, Notified Area Committee, Nangal, vide order dated
16.07.1990, assessed the annual rental value of the Ammonia Gas Storage
for the purpose of levy of house tax. The said order,
the demand notice dated 18.07.1990, demanding a sum of
towards tax on land and buildings for the years 1982-83 to
91, was served upon the Company on 23.07.1990. The Municipal
Council again issued a notice under Section 80(2) of the Act, determining
the annual rental value of the Ammonia Gas Storage Tank at ₹10,25,190/-
92. The Company preferred an appeal before the
Secretary to Government of Punjab, Local Government Department,
against the demand notice and also moved an application for stay.
However, no stay was granted and, consequently, the Company deposited
the demanded amount under protest. Thereafter, another demand notice for
93 was issued, whereupon the Company again deposited the
protest. Vide order dated 30.09.1992, the
Secretary to Government of Punjab dismissed the appeals preferred by the
Company and upheld the assessment order dated 16.07.1990 passed by the
Deputy Commissioner, Nangal. Aggrieved by the said order, the Company
No. 414 of 1993 before this Court
No. 7730 of 1993, in respect of
the tax demand dated 31.05.1993. The aforesaid petitions came up for
its objections against the levy of house tax on the Ammonia Gas Storage
, Ropar, exercising the powers
of the President, Notified Area Committee, Nangal, vide order dated
16.07.1990, assessed the annual rental value of the Ammonia Gas Storage
for the purpose of levy of house tax. The said order,
the demand notice dated 18.07.1990, demanding a sum of
83 to
91, was served upon the Company on 23.07.1990. The Municipal
termining
-
92. The Company preferred an appeal before the
Secretary to Government of Punjab, Local Government Department,
pplication for stay.
However, no stay was granted and, consequently, the Company deposited
the demanded amount under protest. Thereafter, another demand notice for
93 was issued, whereupon the Company again deposited the
protest. Vide order dated 30.09.1992, the
Secretary to Government of Punjab dismissed the appeals preferred by the
Company and upheld the assessment order dated 16.07.1990 passed by the
Deputy Commissioner, Nangal. Aggrieved by the said order, the Company
No. 414 of 1993 before this Court
No. 7730 of 1993, in respect of
the tax demand dated 31.05.1993. The aforesaid petitions came up for
CWP-17189 of 1995
CWP-17601 of 1995
hearing before this Court on 19.09.1994. Af
Court allowed the petitions and directed the appellate authority to decide
the matter afresh, taking into consideration the material available on record
and, if necessary, calling upon the Company to produce a copy of the orde
dated 16.07.1990. The parties, through their respective counsel, were
directed to appear before the appellate authority on
appellate authority heard the parties at length and passed the impugned
order dated
of house tax in respect of the Ammonia Gas Storage Tank of the Company
by the Municipal Council, Nangal, for the period from 1982
90, being retrospective in nature, was not permissible under the provisions
of law. However, the assessment for the period from 1991
was held to be valid. It was further directed that the amount already
deposited by the Company be adjusted towards the tax payable for the
subsequent years instead of refunding the same to the C
the present petitions.
5.
assessment is wholly without jurisdiction, as the Ammonia Gas Storage
Tank is not a building but an integral part of the plant and machinery
forming part o
the tank is specially designed for the storage and controlled withdrawal of
ammonia and is equipped with refrigeration machinery, compressors and
pressure-control systems, which operate continuously
the-clock supervision. It is, therefore, submitted that the Ammonia Gas
17189 of 1995 and
17601 of 1995
-5-
hearing before this Court on 19.09.1994. Af
Court allowed the petitions and directed the appellate authority to decide
the matter afresh, taking into consideration the material available on record
and, if necessary, calling upon the Company to produce a copy of the orde
dated 16.07.1990. The parties, through their respective counsel, were
directed to appear before the appellate authority on
appellate authority heard the parties at length and passed the impugned
order dated 30.05.1995, whereby it was held
of house tax in respect of the Ammonia Gas Storage Tank of the Company
by the Municipal Council, Nangal, for the period from 1982
90, being retrospective in nature, was not permissible under the provisions
owever, the assessment for the period from 1991
was held to be valid. It was further directed that the amount already
deposited by the Company be adjusted towards the tax payable for the
subsequent years instead of refunding the same to the C
the present petitions.
Learned counsel for the Company submits that the impugned
assessment is wholly without jurisdiction, as the Ammonia Gas Storage
Tank is not a building but an integral part of the plant and machinery
forming part of the ammonia manufacturing process. It is contended that
the tank is specially designed for the storage and controlled withdrawal of
ammonia and is equipped with refrigeration machinery, compressors and
control systems, which operate continuously
clock supervision. It is, therefore, submitted that the Ammonia Gas
17601 of 1995
hearing before this Court on 19.09.1994. After hearing the parties, this
Court allowed the petitions and directed the appellate authority to decide
the matter afresh, taking into consideration the material available on record
and, if necessary, calling upon the Company to produce a copy of the order
dated 16.07.1990. The parties, through their respective counsel, were
directed to appear before the appellate authority on 10.10.1994. The
appellate authority heard the parties at length and passed the impugned
.05.1995, whereby it was held that the assessment and levy
of house tax in respect of the Ammonia Gas Storage Tank of the Company
by the Municipal Council, Nangal, for the period from 1982-83 to 1989-
90, being retrospective in nature, was not permissible under the provisions
owever, the assessment for the period from 1991-92 to 1994-95
was held to be valid. It was further directed that the amount already
deposited by the Company be adjusted towards the tax payable for the
subsequent years instead of refunding the same to the Company. Hence,
Learned counsel for the Company submits that the impugned
assessment is wholly without jurisdiction, as the Ammonia Gas Storage
Tank is not a building but an integral part of the plant and machinery
f the ammonia manufacturing process. It is contended that
the tank is specially designed for the storage and controlled withdrawal of
ammonia and is equipped with refrigeration machinery, compressors and
control systems, which operate continuously and require round-
clock supervision. It is, therefore, submitted that the Ammonia Gas
ter hearing the parties, this
Court allowed the petitions and directed the appellate authority to decide
the matter afresh, taking into consideration the material available on record
r
dated 16.07.1990. The parties, through their respective counsel, were
The
appellate authority heard the parties at length and passed the impugned
that the assessment and levy
of house tax in respect of the Ammonia Gas Storage Tank of the Company
-
90, being retrospective in nature, was not permissible under the provisions
95
was held to be valid. It was further directed that the amount already
deposited by the Company be adjusted towards the tax payable for the
ompany. Hence,
Learned counsel for the Company submits that the impugned
assessment is wholly without jurisdiction, as the Ammonia Gas Storage
Tank is not a building but an integral part of the plant and machinery
f the ammonia manufacturing process. It is contended that
the tank is specially designed for the storage and controlled withdrawal of
ammonia and is equipped with refrigeration machinery, compressors and
-
clock supervision. It is, therefore, submitted that the Ammonia Gas
CWP-17189 of 1995
CWP-17601 of 1995
Storage Tank constitutes an active component of the manufacturing system
and is not merely a structure in which machinery is housed. Learned
counsel further contends
permanently erected on the land and involves substantial civil construction
cannot be determinative of its legal character for the purposes of levy of
house tax. According to learned counsel, the authority was r
examine the true nature, function and purpose of the installation. It is
further submitted that the entire capital cost of
have been adopted as the value of the building without excluding the value
attributable to the pl
and other specialised installations.
6.
Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal Corporation of
the City of Ahmedabad, (1967) 2 SCR 679
Court held that Entry 49 of List II of the Seventh Schedule to the
Constitution authorises taxation of lands and buildings and not of plant and
machinery merely because such machinery is situated upon or attached to
the land or building. The said principle was reiterated in
Ltd. v. State of Gujarat, (1975) 2 SCC 175
the Municipal Authority cannot achieve indirectly what could not be done
directly by the State Legislature. Learne
decision of the Hon’ble Supreme Court in
Pradesh v. Hindustan Machine Tools Ltd., (1975) 2 SCC 274
advance the case of the Municipal Council. In that case, the levy was
17189 of 1995 and
17601 of 1995
-6-
Storage Tank constitutes an active component of the manufacturing system
and is not merely a structure in which machinery is housed. Learned
counsel further contends that the mere fact that the storage tank is
permanently erected on the land and involves substantial civil construction
cannot be determinative of its legal character for the purposes of levy of
house tax. According to learned counsel, the authority was r
examine the true nature, function and purpose of the installation. It is
further submitted that the entire capital cost of
have been adopted as the value of the building without excluding the value
attributable to the plant, machinery, refrigeration equipment, compressors
and other specialised installations.
Learned counsel for the Company relies upon
Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal Corporation of
the City of Ahmedabad, (1967) 2 SCR 679
Court held that Entry 49 of List II of the Seventh Schedule to the
Constitution authorises taxation of lands and buildings and not of plant and
machinery merely because such machinery is situated upon or attached to
r building. The said principle was reiterated in
Ltd. v. State of Gujarat, (1975) 2 SCC 175
the Municipal Authority cannot achieve indirectly what could not be done
directly by the State Legislature. Learned counsel further submits that the
decision of the Hon’ble Supreme Court in
Pradesh v. Hindustan Machine Tools Ltd., (1975) 2 SCC 274
advance the case of the Municipal Council. In that case, the levy was
17601 of 1995
Storage Tank constitutes an active component of the manufacturing system
and is not merely a structure in which machinery is housed. Learned
that the mere fact that the storage tank is
permanently erected on the land and involves substantial civil construction
cannot be determinative of its legal character for the purposes of levy of
house tax. According to learned counsel, the authority was required to
examine the true nature, function and purpose of the installation. It is
further submitted that the entire capital cost of ₹1,51,88,006/- could not
have been adopted as the value of the building without excluding the value
ant, machinery, refrigeration equipment, compressors
Learned counsel for the Company relies upon New Manek
Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal Corporation of
the City of Ahmedabad, (1967) 2 SCR 679, wherein the Hon’ble Supreme
Court held that Entry 49 of List II of the Seventh Schedule to the
Constitution authorises taxation of lands and buildings and not of plant and
machinery merely because such machinery is situated upon or attached to
r building. The said principle was reiterated in Anant Mills Co.
Ltd. v. State of Gujarat, (1975) 2 SCC 175. It is, therefore, submitted that
the Municipal Authority cannot achieve indirectly what could not be done
d counsel further submits that the
decision of the Hon’ble Supreme Court in Government of Andhra
Pradesh v. Hindustan Machine Tools Ltd., (1975) 2 SCC 274, does not
advance the case of the Municipal Council. In that case, the levy was
Storage Tank constitutes an active component of the manufacturing system
and is not merely a structure in which machinery is housed. Learned
that the mere fact that the storage tank is
permanently erected on the land and involves substantial civil construction
cannot be determinative of its legal character for the purposes of levy of
equired to
examine the true nature, function and purpose of the installation. It is
could not
have been adopted as the value of the building without excluding the value
ant, machinery, refrigeration equipment, compressors
New Manek
Chowk Spinning & Weaving Mills Co. Ltd. v. Municipal Corporation of
, wherein the Hon’ble Supreme
Court held that Entry 49 of List II of the Seventh Schedule to the
Constitution authorises taxation of lands and buildings and not of plant and
machinery merely because such machinery is situated upon or attached to
Anant Mills Co.
. It is, therefore, submitted that
the Municipal Authority cannot achieve indirectly what could not be done
d counsel further submits that the
Government of Andhra
, does not
advance the case of the Municipal Council. In that case, the levy was
CWP-17189 of 1995
CWP-17601 of 1995
upheld as a tax on th
provisions expressly excluded machinery and furniture from the
assessment. The judgment, therefore, recognises the distinction between a
taxable building and non
to learned counsel, the respondents have failed to maintain this distinction
and have treated the entire Ammonia Gas Storage installation as a building
merely by adopting its capital cost for the purpose of assessment.
7.
3(c) of the Act cannot be interpreted in a manner so as to enlarge the
constitutional field of taxation under Entry 49 of List II of the Seventh
Schedule to the Constitution. The method prescribed for determining the
annual rental val
the taxable value of land or buildings. It is submitted that, at the very least,
the value of machinery and specialised equipment was required to be
excluded while determining the ass
structure, if any.
8.
could not have been sustained merely by carrying forward the earlier
assessment, particularly when the foundational assessment
disputed and its legality was under challenge. According to learned
counsel, the liability for each subsequent year was required to be
determined in accordance with the statutory procedure applicable thereto.
The authority, therefore, erred
mere continuation of the earlier determination without examining the
17189 of 1995 and
17601 of 1995
-7-
upheld as a tax on the factory building and the applicable statutory
provisions expressly excluded machinery and furniture from the
assessment. The judgment, therefore, recognises the distinction between a
taxable building and non-taxable machinery. In the present case, accord
to learned counsel, the respondents have failed to maintain this distinction
and have treated the entire Ammonia Gas Storage installation as a building
merely by adopting its capital cost for the purpose of assessment.
Learned counsel for the Company further submits that Section
3(c) of the Act cannot be interpreted in a manner so as to enlarge the
constitutional field of taxation under Entry 49 of List II of the Seventh
Schedule to the Constitution. The method prescribed for determining the
nual rental value cannot be utilised to bring Plant and M
the taxable value of land or buildings. It is submitted that, at the very least,
the value of machinery and specialised equipment was required to be
excluded while determining the assessable value attributable to the civil
structure, if any.
It is also submitted that the assessment for the subsequent years
could not have been sustained merely by carrying forward the earlier
assessment, particularly when the foundational assessment
disputed and its legality was under challenge. According to learned
counsel, the liability for each subsequent year was required to be
determined in accordance with the statutory procedure applicable thereto.
The authority, therefore, erred in treating the subsequent assessments as a
mere continuation of the earlier determination without examining the
17601 of 1995
e factory building and the applicable statutory
provisions expressly excluded machinery and furniture from the
assessment. The judgment, therefore, recognises the distinction between a
taxable machinery. In the present case, according
to learned counsel, the respondents have failed to maintain this distinction
and have treated the entire Ammonia Gas Storage installation as a building
merely by adopting its capital cost for the purpose of assessment.
Company further submits that Section
3(c) of the Act cannot be interpreted in a manner so as to enlarge the
constitutional field of taxation under Entry 49 of List II of the Seventh
Schedule to the Constitution. The method prescribed for determining the
ue cannot be utilised to bring Plant and Machinery within
the taxable value of land or buildings. It is submitted that, at the very least,
the value of machinery and specialised equipment was required to be
essable value attributable to the civil
It is also submitted that the assessment for the subsequent years
could not have been sustained merely by carrying forward the earlier
assessment, particularly when the foundational assessment itself had been
disputed and its legality was under challenge. According to learned
counsel, the liability for each subsequent year was required to be
determined in accordance with the statutory procedure applicable thereto.
in treating the subsequent assessments as a
mere continuation of the earlier determination without examining the
e factory building and the applicable statutory
provisions expressly excluded machinery and furniture from the
assessment. The judgment, therefore, recognises the distinction between a
ing
to learned counsel, the respondents have failed to maintain this distinction
and have treated the entire Ammonia Gas Storage installation as a building
Company further submits that Section
3(c) of the Act cannot be interpreted in a manner so as to enlarge the
constitutional field of taxation under Entry 49 of List II of the Seventh
Schedule to the Constitution. The method prescribed for determining the
achinery within
the taxable value of land or buildings. It is submitted that, at the very least,
the value of machinery and specialised equipment was required to be
essable value attributable to the civil
It is also submitted that the assessment for the subsequent years
could not have been sustained merely by carrying forward the earlier
itself had been
disputed and its legality was under challenge. According to learned
counsel, the liability for each subsequent year was required to be
determined in accordance with the statutory procedure applicable thereto.
in treating the subsequent assessments as a
mere continuation of the earlier determination without examining the
CWP-17189 of 1995
CWP-17601 of 1995
specific objections raised by the Company in respect of the Ammonia Gas
Storage installation.
9.
being, in substance, a tax upon Plant and M
or buildings, is beyond the legislative competence of the respondents and
is, therefore, liable to be quashed. Consequently, the amount recovered
from the Company pu
by the respondents merely by directing its adjustment against the tax
payable for future years.
10.
30.05.1995, insofar as it sustains the
upon the Ammonia Gas Storage installation for the period from 1991
onwards, be set aside and the respondents be directed to grant
consequential relief to the petitioners in accordance with law.
11.
that the learned appellate authority erred in law in treating the assessment
for the period from 1982
basis, holding the same to be impermissible. It is submitted that
assessment did not create any new liability for a past period; rather, it
merely determined the House Tax liability in respect of an existing taxable
property, which had already been completed and had become assessable
with effect from 02.02.1982.
17189 of 1995 and
17601 of 1995
-8-
specific objections raised by the Company in respect of the Ammonia Gas
Storage installation.
Learned counsel accordingly submits that th
eing, in substance, a tax upon Plant and M
or buildings, is beyond the legislative competence of the respondents and
is, therefore, liable to be quashed. Consequently, the amount recovered
from the Company pursuant to such illegal assessment cannot be retained
by the respondents merely by directing its adjustment against the tax
payable for future years.
It is, therefore, prayed that the impugned order dated
30.05.1995, insofar as it sustains the assessment and levy of house tax
upon the Ammonia Gas Storage installation for the period from 1991
onwards, be set aside and the respondents be directed to grant
consequential relief to the petitioners in accordance with law.
Learned counsel appearing for the Municipal Council submits
that the learned appellate authority erred in law in treating the assessment
for the period from 1982-83 to 1989-90 as a retrospective levy and, on that
basis, holding the same to be impermissible. It is submitted that
assessment did not create any new liability for a past period; rather, it
merely determined the House Tax liability in respect of an existing taxable
property, which had already been completed and had become assessable
with effect from 02.02.1982.
17601 of 1995
specific objections raised by the Company in respect of the Ammonia Gas
Learned counsel accordingly submits that the impugned levy,
eing, in substance, a tax upon Plant and Machinery rather than upon land
or buildings, is beyond the legislative competence of the respondents and
is, therefore, liable to be quashed. Consequently, the amount recovered
rsuant to such illegal assessment cannot be retained
by the respondents merely by directing its adjustment against the tax
It is, therefore, prayed that the impugned order dated
assessment and levy of house tax
upon the Ammonia Gas Storage installation for the period from 1991
onwards, be set aside and the respondents be directed to grant
consequential relief to the petitioners in accordance with law.
ng for the Municipal Council submits
that the learned appellate authority erred in law in treating the assessment
90 as a retrospective levy and, on that
basis, holding the same to be impermissible. It is submitted that the
assessment did not create any new liability for a past period; rather, it
merely determined the House Tax liability in respect of an existing taxable
property, which had already been completed and had become assessable
specific objections raised by the Company in respect of the Ammonia Gas
e impugned levy,
achinery rather than upon land
or buildings, is beyond the legislative competence of the respondents and
is, therefore, liable to be quashed. Consequently, the amount recovered
rsuant to such illegal assessment cannot be retained
by the respondents merely by directing its adjustment against the tax
It is, therefore, prayed that the impugned order dated
assessment and levy of house tax
upon the Ammonia Gas Storage installation for the period from 1991
onwards, be set aside and the respondents be directed to grant
ng for the Municipal Council submits
that the learned appellate authority erred in law in treating the assessment
90 as a retrospective levy and, on that
the
assessment did not create any new liability for a past period; rather, it
merely determined the House Tax liability in respect of an existing taxable
property, which had already been completed and had become assessable
CWP-17189 of 1995
CWP-17601 of 1995
12.
admittedly completed on 02.02.1982 and the Company itself furnished its
capital cost and date of completion to the Municipal Council. Thus, the
taxable property existed during the assessment years in
subsequent assessment proceedings were only for the determination and
quantification of the liability which had accrued in respect of the said
property and cannot, merely because the assessment was completed
subsequently, be characterised as
imposition of tax.
been duly served with notices under the relevant provisions of the
was afforded an opportunity to file its objections. The Company, in fact,
submitted detailed objections in May 1984 and again in February/March
1989. The delay in final determination by the Municipal Council could not
extinguish the tax liability attached to the property. At the highest, the
question could be whether the assessment
accordance with the prescribed procedure; the mere lapse of time, by itself,
could not convert an otherwise lawful assessment into a retrospective levy.
13.
16.07.1990 was pass
placed on record by the Company. The demand raised pursuant thereto
related to the tax legally attributable to the period during which the
Ammonia Gas Storage Tank existed and was assessable. The assessm
therefore, cannot be equated with a fresh levy imposed with retrospective
operation. The distinction between retrospective imposition of a tax and a
17189 of 1995 and
17601 of 1995
-9-
It is submitted that the Ammonia Gas Storage Tank was
admittedly completed on 02.02.1982 and the Company itself furnished its
capital cost and date of completion to the Municipal Council. Thus, the
taxable property existed during the assessment years in
subsequent assessment proceedings were only for the determination and
quantification of the liability which had accrued in respect of the said
property and cannot, merely because the assessment was completed
subsequently, be characterised as an impermissible retrospective
imposition of tax. Learned counsel further submits that the Company had
been duly served with notices under the relevant provisions of the
was afforded an opportunity to file its objections. The Company, in fact,
mitted detailed objections in May 1984 and again in February/March
1989. The delay in final determination by the Municipal Council could not
extinguish the tax liability attached to the property. At the highest, the
question could be whether the assessment
accordance with the prescribed procedure; the mere lapse of time, by itself,
could not convert an otherwise lawful assessment into a retrospective levy.
It is further submitted that the assessment order dated
16.07.1990 was passed after considering the objections and the material
placed on record by the Company. The demand raised pursuant thereto
related to the tax legally attributable to the period during which the
Ammonia Gas Storage Tank existed and was assessable. The assessm
therefore, cannot be equated with a fresh levy imposed with retrospective
operation. The distinction between retrospective imposition of a tax and a
17601 of 1995
It is submitted that the Ammonia Gas Storage Tank was
admittedly completed on 02.02.1982 and the Company itself furnished its
capital cost and date of completion to the Municipal Council. Thus, the
taxable property existed during the assessment years in question. The
subsequent assessment proceedings were only for the determination and
quantification of the liability which had accrued in respect of the said
property and cannot, merely because the assessment was completed
an impermissible retrospective
Learned counsel further submits that the Company had
been duly served with notices under the relevant provisions of the Act, and
was afforded an opportunity to file its objections. The Company, in fact,
mitted detailed objections in May 1984 and again in February/March
1989. The delay in final determination by the Municipal Council could not
extinguish the tax liability attached to the property. At the highest, the
question could be whether the assessment had been completed in
accordance with the prescribed procedure; the mere lapse of time, by itself,
could not convert an otherwise lawful assessment into a retrospective levy.
It is further submitted that the assessment order dated
ed after considering the objections and the material
placed on record by the Company. The demand raised pursuant thereto
related to the tax legally attributable to the period during which the
Ammonia Gas Storage Tank existed and was assessable. The assessment,
therefore, cannot be equated with a fresh levy imposed with retrospective
operation. The distinction between retrospective imposition of a tax and a
It is submitted that the Ammonia Gas Storage Tank was
admittedly completed on 02.02.1982 and the Company itself furnished its
capital cost and date of completion to the Municipal Council. Thus, the
question. The
subsequent assessment proceedings were only for the determination and
quantification of the liability which had accrued in respect of the said
property and cannot, merely because the assessment was completed
an impermissible retrospective
Learned counsel further submits that the Company had
, and
was afforded an opportunity to file its objections. The Company, in fact,
mitted detailed objections in May 1984 and again in February/March
1989. The delay in final determination by the Municipal Council could not
extinguish the tax liability attached to the property. At the highest, the
had been completed in
accordance with the prescribed procedure; the mere lapse of time, by itself,
It is further submitted that the assessment order dated
ed after considering the objections and the material
placed on record by the Company. The demand raised pursuant thereto
related to the tax legally attributable to the period during which the
ent,
therefore, cannot be equated with a fresh levy imposed with retrospective
operation. The distinction between retrospective imposition of a tax and a
CWP-17189 of 1995
CWP-17601 of 1995
subsequent assessment or quantification of an existing tax liability is
material and, according to lea
appreciated by the appellate authority.
14.
accepted the Company’s liability to pay House Tax for the subsequent
years, could not, without examining the stat
assessment, invalidate the assessment for the earlier period solely on the
ground that the assessment had been made subsequently. The relevant
consideration, according to learned counsel, is whether the property was
taxable during th
possessed the power to assess the tax in respect thereof.
15.
in the alternative, that the levy is a tax upon the taxable land and bui
and not upon the machinery as such. The Ammonia Gas Storage Tank is a
permanent installation forming part of the immovable property of the
Company. The mere fact that compressors, refrigeration equipment and
other machinery are associated with or for
not, by itself, take the entire installation outside the scope of House Tax.
Learned counsel further submits that the Company itself furnished the
capital cost of
Gas Storage Tank. On the basis of the information furnished by the
Company, the annual rental value was determined under Section 3(c) of
the Act after allowing the permissible rebate, and the prescribed rate of
House Tax was thereafter applied. The assessment
17189 of 1995 and
17601 of 1995
-10-
subsequent assessment or quantification of an existing tax liability is
material and, according to learned counsel, has not been properly
appreciated by the appellate authority.
Learned counsel submits that the appellate authority, having
accepted the Company’s liability to pay House Tax for the subsequent
years, could not, without examining the stat
assessment, invalidate the assessment for the earlier period solely on the
ground that the assessment had been made subsequently. The relevant
consideration, according to learned counsel, is whether the property was
taxable during the years in question and whether the statutory authority
possessed the power to assess the tax in respect thereof.
As regards the nature of the property, learned counsel submits,
in the alternative, that the levy is a tax upon the taxable land and bui
and not upon the machinery as such. The Ammonia Gas Storage Tank is a
permanent installation forming part of the immovable property of the
Company. The mere fact that compressors, refrigeration equipment and
other machinery are associated with or for
not, by itself, take the entire installation outside the scope of House Tax.
Learned counsel further submits that the Company itself furnished the
capital cost of ₹1,51,88,006/- and the date of completion of the Ammonia
Storage Tank. On the basis of the information furnished by the
Company, the annual rental value was determined under Section 3(c) of
the Act after allowing the permissible rebate, and the prescribed rate of
House Tax was thereafter applied. The assessment
17601 of 1995
subsequent assessment or quantification of an existing tax liability is
rned counsel, has not been properly
Learned counsel submits that the appellate authority, having
accepted the Company’s liability to pay House Tax for the subsequent
years, could not, without examining the statutory scheme governing
assessment, invalidate the assessment for the earlier period solely on the
ground that the assessment had been made subsequently. The relevant
consideration, according to learned counsel, is whether the property was
e years in question and whether the statutory authority
possessed the power to assess the tax in respect thereof.
As regards the nature of the property, learned counsel submits,
in the alternative, that the levy is a tax upon the taxable land and building
and not upon the machinery as such. The Ammonia Gas Storage Tank is a
permanent installation forming part of the immovable property of the
Company. The mere fact that compressors, refrigeration equipment and
other machinery are associated with or form part of the installation does
not, by itself, take the entire installation outside the scope of House Tax.
Learned counsel further submits that the Company itself furnished the
and the date of completion of the Ammonia
Storage Tank. On the basis of the information furnished by the
Company, the annual rental value was determined under Section 3(c) of
the Act after allowing the permissible rebate, and the prescribed rate of
House Tax was thereafter applied. The assessment was thus made in
subsequent assessment or quantification of an existing tax liability is
rned counsel, has not been properly
Learned counsel submits that the appellate authority, having
accepted the Company’s liability to pay House Tax for the subsequent
utory scheme governing
assessment, invalidate the assessment for the earlier period solely on the
ground that the assessment had been made subsequently. The relevant
consideration, according to learned counsel, is whether the property was
e years in question and whether the statutory authority
As regards the nature of the property, learned counsel submits,
lding
and not upon the machinery as such. The Ammonia Gas Storage Tank is a
permanent installation forming part of the immovable property of the
Company. The mere fact that compressors, refrigeration equipment and
m part of the installation does
not, by itself, take the entire installation outside the scope of House Tax.
Learned counsel further submits that the Company itself furnished the
and the date of completion of the Ammonia
Storage Tank. On the basis of the information furnished by the
Company, the annual rental value was determined under Section 3(c) of
the Act after allowing the permissible rebate, and the prescribed rate of
was thus made in
CWP-17189 of 1995
CWP-17601 of 1995
accordance with the statutory method and did not constitute an
independent levy upon the machinery.
Company upon
Ltd.(supra)
concerned the permissibility of taxing plant and machinery as such under
Entry 49 of List II of the Seventh Schedule to the Constitution. The present
case, however, concerns the assessment of a permanent taxable structure
by determini
complete exemption from House Tax merely because the structure is
utilised as an integral part of its manufacturing process.
submitted that the decision in
recognises that a building does not cease to be a building merely because it
is used for industrial or manufacturing purposes. The Municipal Council is
not seeking to impose a separate tax upon the compressors or refrigeration
machinery. The levy is
provisions of the Act.
16.
subsequent years could validly proceed on the annual rental value already
determined, particularly when there had bee
property. The mere description of the assessment as having been carried
forward from year to year does not render the same illegal. The Company
continued to own and use the same installation, and no fresh circumstance
was shown
17189 of 1995 and
17601 of 1995
-11-
accordance with the statutory method and did not constitute an
independent levy upon the machinery.
Company upon New Manek Chowk Spinning and Weaving Mills Co.
(supra) is according to learned counsel, misplac
concerned the permissibility of taxing plant and machinery as such under
Entry 49 of List II of the Seventh Schedule to the Constitution. The present
case, however, concerns the assessment of a permanent taxable structure
by determining its annual rental value. The Company cannot claim
complete exemption from House Tax merely because the structure is
utilised as an integral part of its manufacturing process.
submitted that the decision in Hindustan Machine Tools Ltd.
recognises that a building does not cease to be a building merely because it
is used for industrial or manufacturing purposes. The Municipal Council is
not seeking to impose a separate tax upon the compressors or refrigeration
machinery. The levy is upon the taxable property in accordance with the
provisions of the Act.
Learned counsel further submits that the assessment for the
subsequent years could validly proceed on the annual rental value already
determined, particularly when there had bee
property. The mere description of the assessment as having been carried
forward from year to year does not render the same illegal. The Company
continued to own and use the same installation, and no fresh circumstance
was shown which required alteration of the existing basis of assessment.
17601 of 1995
accordance with the statutory method and did not constitute an
The reliance placed by the
New Manek Chowk Spinning and Weaving Mills Co.
according to learned counsel, misplaced. The said decision
concerned the permissibility of taxing plant and machinery as such under
Entry 49 of List II of the Seventh Schedule to the Constitution. The present
case, however, concerns the assessment of a permanent taxable structure
ng its annual rental value. The Company cannot claim
complete exemption from House Tax merely because the structure is
utilised as an integral part of its manufacturing process. Likewise, it is
Hindustan Machine Tools Ltd.(supra),
recognises that a building does not cease to be a building merely because it
is used for industrial or manufacturing purposes. The Municipal Council is
not seeking to impose a separate tax upon the compressors or refrigeration
upon the taxable property in accordance with the
Learned counsel further submits that the assessment for the
subsequent years could validly proceed on the annual rental value already
determined, particularly when there had been no material change in the
property. The mere description of the assessment as having been carried
forward from year to year does not render the same illegal. The Company
continued to own and use the same installation, and no fresh circumstance
which required alteration of the existing basis of assessment.
accordance with the statutory method and did not constitute an
The reliance placed by the
New Manek Chowk Spinning and Weaving Mills Co.
ed. The said decision
concerned the permissibility of taxing plant and machinery as such under
Entry 49 of List II of the Seventh Schedule to the Constitution. The present
case, however, concerns the assessment of a permanent taxable structure
ng its annual rental value. The Company cannot claim
complete exemption from House Tax merely because the structure is
Likewise, it is
,
recognises that a building does not cease to be a building merely because it
is used for industrial or manufacturing purposes. The Municipal Council is
not seeking to impose a separate tax upon the compressors or refrigeration
upon the taxable property in accordance with the
Learned counsel further submits that the assessment for the
subsequent years could validly proceed on the annual rental value already
n no material change in the
property. The mere description of the assessment as having been carried
forward from year to year does not render the same illegal. The Company
continued to own and use the same installation, and no fresh circumstance
CWP-17189 of 1995
CWP-17601 of 1995
17.
committed by the appellate authority lies in confusing the date of
assessment with the period to which the tax liability relat
the assessment was finalised subsequently does not, by itself, make the
levy retrospective. The liability related to the years during which the
taxable property existed, and the assessment proceedings merely
quantified that liability in a
that the finding of the appellate authority that the assessment for the period
from 1982
impermissible, is unsustainable. The assessment made by the Municipa
Council was in respect of an existing taxable property and an existing
statutory liability. The impugned order, to that extent, deserves to be set
aside and the assessment for the said period
writ petition filed by the Muni
extent it challenges the setting aside of the assessment for the years
1982-83 to 1989
for the subsequent period is liable to be rejected.
18.
the record. The following questions arise for consideration in the present
petitions:
(i) Whether the Ammonia Gas Storage Tank in question constitutes a
building or other taxable structure within the mea
whether, in substance, it forms an integral part of the plant and
17189 of 1995 and
17601 of 1995
-12-
Learned counsel accordingly submits that the principal error
committed by the appellate authority lies in confusing the date of
assessment with the period to which the tax liability relat
the assessment was finalised subsequently does not, by itself, make the
levy retrospective. The liability related to the years during which the
taxable property existed, and the assessment proceedings merely
quantified that liability in accordance with law.
that the finding of the appellate authority that the assessment for the period
from 1982-83 to 1989-90 was retrospective and, consequently,
impermissible, is unsustainable. The assessment made by the Municipa
Council was in respect of an existing taxable property and an existing
statutory liability. The impugned order, to that extent, deserves to be set
aside and the assessment for the said period
writ petition filed by the Municipal Council deserves to be allowed to the
extent it challenges the setting aside of the assessment for the years
83 to 1989-90, whereas the Company’s challenge to the assessment
for the subsequent period is liable to be rejected.
We have heard learned counsel for the parties and have perused
the record. The following questions arise for consideration in the present
(i) Whether the Ammonia Gas Storage Tank in question constitutes a
building or other taxable structure within the mea
whether, in substance, it forms an integral part of the plant and
17601 of 1995
Learned counsel accordingly submits that the principal error
committed by the appellate authority lies in confusing the date of
assessment with the period to which the tax liability relates. The fact that
the assessment was finalised subsequently does not, by itself, make the
levy retrospective. The liability related to the years during which the
taxable property existed, and the assessment proceedings merely
ccordance with law. It is, therefore, submitted
that the finding of the appellate authority that the assessment for the period
90 was retrospective and, consequently,
impermissible, is unsustainable. The assessment made by the Municipal
Council was in respect of an existing taxable property and an existing
statutory liability. The impugned order, to that extent, deserves to be set
aside and the assessment for the said period be restored. Consequently, the
cipal Council deserves to be allowed to the
extent it challenges the setting aside of the assessment for the years
90, whereas the Company’s challenge to the assessment
for the subsequent period is liable to be rejected.
ard learned counsel for the parties and have perused
the record. The following questions arise for consideration in the present
(i) Whether the Ammonia Gas Storage Tank in question constitutes a
building or other taxable structure within the meaning of the Act, or
whether, in substance, it forms an integral part of the plant and machinery
Learned counsel accordingly submits that the principal error
committed by the appellate authority lies in confusing the date of
es. The fact that
the assessment was finalised subsequently does not, by itself, make the
levy retrospective. The liability related to the years during which the
taxable property existed, and the assessment proceedings merely
It is, therefore, submitted
that the finding of the appellate authority that the assessment for the period
90 was retrospective and, consequently,
l
Council was in respect of an existing taxable property and an existing
statutory liability. The impugned order, to that extent, deserves to be set
restored. Consequently, the
cipal Council deserves to be allowed to the
extent it challenges the setting aside of the assessment for the years
90, whereas the Company’s challenge to the assessment
ard learned counsel for the parties and have perused
the record. The following questions arise for consideration in the present
(i) Whether the Ammonia Gas Storage Tank in question constitutes a
ning of the Act, or
machinery
CWP-17189 of 1995
CWP-17601 of 1995
of the petitioners’ A
liable to House Tax?
(ii) In the event the Ammonia Gas Storage Tank is held to constitute
taxable building or structure, whether the Municipal Council was justified
in determining its annual rental value on the basis of its entire capital cost
of ₹1,51,88,006/
machinery, compressors, refrigera
installations?
(iii) Whether the assessment and levy of House Tax for the period from
1982-83 to 1989
amounts to an impermissible retrospective levy, or whether it
subsequent assessment and quantification of an existing statutory liability
in respect of a property which had become assessable with effect from
02.02.1982?
(iv) Whether the Municipal Council could validly assess and recover
House Tax for th
objections in 1984 and the final assessment was made only on 16.07.1990,
and whether the delay in finalising the assessment renders the same
without jurisdiction or otherwise illegal?
(v) Whether the as
period from 1991
forward on the basis of the annual rental value already determined, without
17189 of 1995 and
17601 of 1995
-13-
of the petitioners’ Ammonia manufacturing plant and is, therefore, not
liable to House Tax?
(ii) In the event the Ammonia Gas Storage Tank is held to constitute
taxable building or structure, whether the Municipal Council was justified
in determining its annual rental value on the basis of its entire capital cost
₹1,51,88,006/- without excluding the value attributable to the
machinery, compressors, refrigeration equipment and other specialised
installations?
(iii) Whether the assessment and levy of House Tax for the period from
83 to 1989-90, pursuant to the assessment order dated 16.07.1990,
amounts to an impermissible retrospective levy, or whether it
subsequent assessment and quantification of an existing statutory liability
in respect of a property which had become assessable with effect from
02.02.1982?
(iv) Whether the Municipal Council could validly assess and recover
House Tax for the aforesaid period when the Company had submitted its
objections in 1984 and the final assessment was made only on 16.07.1990,
and whether the delay in finalising the assessment renders the same
without jurisdiction or otherwise illegal?
(v) Whether the assessment for the subsequent years, particularly for the
period from 1991-92 to 1994-95, could validly be continued or carried
forward on the basis of the annual rental value already determined, without
17601 of 1995
mmonia manufacturing plant and is, therefore, not
(ii) In the event the Ammonia Gas Storage Tank is held to constitute a
taxable building or structure, whether the Municipal Council was justified
in determining its annual rental value on the basis of its entire capital cost
without excluding the value attributable to the
tion equipment and other specialised
(iii) Whether the assessment and levy of House Tax for the period from
90, pursuant to the assessment order dated 16.07.1990,
amounts to an impermissible retrospective levy, or whether it constitutes a
subsequent assessment and quantification of an existing statutory liability
in respect of a property which had become assessable with effect from
(iv) Whether the Municipal Council could validly assess and recover
e aforesaid period when the Company had submitted its
objections in 1984 and the final assessment was made only on 16.07.1990,
and whether the delay in finalising the assessment renders the same
sessment for the subsequent years, particularly for the
95, could validly be continued or carried
forward on the basis of the annual rental value already determined, without
mmonia manufacturing plant and is, therefore, not
a
taxable building or structure, whether the Municipal Council was justified
in determining its annual rental value on the basis of its entire capital cost
without excluding the value attributable to the
tion equipment and other specialised
(iii) Whether the assessment and levy of House Tax for the period from
90, pursuant to the assessment order dated 16.07.1990,
constitutes a
subsequent assessment and quantification of an existing statutory liability
in respect of a property which had become assessable with effect from
(iv) Whether the Municipal Council could validly assess and recover
e aforesaid period when the Company had submitted its
objections in 1984 and the final assessment was made only on 16.07.1990,
and whether the delay in finalising the assessment renders the same
sessment for the subsequent years, particularly for the
95, could validly be continued or carried
forward on the basis of the annual rental value already determined, without
CWP-17189 of 1995
CWP-17601 of 1995
undertaking a fresh assessment in accordance with the
procedure?
(vi) Whether the impugned order dated 30.05.1995 passed by the appellate
authority, insofar as it sets aside the assessment for the period from 1982
83 to 1989-
to 1994-95, suffers from any error of law warranting interference by this
Court in exercise of its writ jurisdiction?
(vii) What consequential relief, if any, are the parties entitled to in respect
of the amounts already deposited by the Company towards the
House Tax?
19.
as to the true nature and character of the Ammonia Gas Storage Tank. The
material placed on record shows that the Company had established the
Ammonia Gas Storage Tan
manufacturing process. The installation was not merely a conventional
building or storage shed in which manufactured products were kept. It was
a specialised installation designed for storing ammonia under controlled
conditions and was equipped with refrigeration machinery, compressors
and pressure
round-the-clock supervision. The mere fact that the installation was
permanently erected upon the land or involved sub
construction cannot, by itself, be determinative of its legal character. The
Court is required to examine the substance, function and purpose of the
installation.
17189 of 1995 and
17601 of 1995
-14-
undertaking a fresh assessment in accordance with the
procedure?
(vi) Whether the impugned order dated 30.05.1995 passed by the appellate
authority, insofar as it sets aside the assessment for the period from 1982
-90 while upholding the assessment for the period from 1991
95, suffers from any error of law warranting interference by this
Court in exercise of its writ jurisdiction?
(vii) What consequential relief, if any, are the parties entitled to in respect
of the amounts already deposited by the Company towards the
House Tax?
The first and foremost question that arises for consideration is
as to the true nature and character of the Ammonia Gas Storage Tank. The
material placed on record shows that the Company had established the
Ammonia Gas Storage Tank as an integral part of its A
manufacturing process. The installation was not merely a conventional
building or storage shed in which manufactured products were kept. It was
a specialised installation designed for storing ammonia under controlled
nditions and was equipped with refrigeration machinery, compressors
and pressure-control arrangements, requiring continuous operation and
clock supervision. The mere fact that the installation was
permanently erected upon the land or involved sub
construction cannot, by itself, be determinative of its legal character. The
Court is required to examine the substance, function and purpose of the
installation. In the present case, the Ammonia Gas Storage Tank was
17601 of 1995
undertaking a fresh assessment in accordance with the prescribed statutory
(vi) Whether the impugned order dated 30.05.1995 passed by the appellate
authority, insofar as it sets aside the assessment for the period from 1982-
90 while upholding the assessment for the period from 1991-92
95, suffers from any error of law warranting interference by this
(vii) What consequential relief, if any, are the parties entitled to in respect
of the amounts already deposited by the Company towards the disputed
The first and foremost question that arises for consideration is
as to the true nature and character of the Ammonia Gas Storage Tank. The
material placed on record shows that the Company had established the
as an integral part of its Ammonia
manufacturing process. The installation was not merely a conventional
building or storage shed in which manufactured products were kept. It was
a specialised installation designed for storing ammonia under controlled
nditions and was equipped with refrigeration machinery, compressors
control arrangements, requiring continuous operation and
clock supervision. The mere fact that the installation was
permanently erected upon the land or involved substantial civil
construction cannot, by itself, be determinative of its legal character. The
Court is required to examine the substance, function and purpose of the
In the present case, the Ammonia Gas Storage Tank was
prescribed statutory
(vi) Whether the impugned order dated 30.05.1995 passed by the appellate
-
92
95, suffers from any error of law warranting interference by this
(vii) What consequential relief, if any, are the parties entitled to in respect
disputed
The first and foremost question that arises for consideration is
as to the true nature and character of the Ammonia Gas Storage Tank. The
material placed on record shows that the Company had established the
mmonia
manufacturing process. The installation was not merely a conventional
building or storage shed in which manufactured products were kept. It was
a specialised installation designed for storing ammonia under controlled
nditions and was equipped with refrigeration machinery, compressors
control arrangements, requiring continuous operation and
clock supervision. The mere fact that the installation was
stantial civil
construction cannot, by itself, be determinative of its legal character. The
Court is required to examine the substance, function and purpose of the
In the present case, the Ammonia Gas Storage Tank was
CWP-17189 of 1995
CWP-17601 of 1995
functionally integrated
necessary for the storage and controlled withdrawal of excess ammonia for
its subsequent use in the urea plant and other units. Its utility and function
were, therefore, intrinsically connected with the manufact
20.
hut, outhouse, shed or stable, whether used for the purposes of human
habitation or otherwise, and whether of masonry, bricks, wood, mud,
thatch, metal or any other materi
well”.
21.
Machinery and an installation which itself forms part of the manufacturing
apparatus is mate
together with its associated refrigeration and compression systems,
performed an active industrial function and constituted an integral
component of the manufacturing process. It cannot, therefore, be treated
merely as an ordinary building or warehouse f
House Tax.
Chowk Spinning and Weaving Mills Co. Ltd.
significance in this context. The constitutional power under Entry 49 of
List II of the Seventh Sched
and does not authorise taxation of plant and machinery merely because the
same is situated upon or attached to land or a building. The said principle
was reiterated by the Hon’ble Supreme Court in
Ltd.(supra)
17189 of 1995 and
17601 of 1995
-15-
nctionally integrated with the Ammonia manufacturing plant and was
necessary for the storage and controlled withdrawal of excess ammonia for
its subsequent use in the urea plant and other units. Its utility and function
were, therefore, intrinsically connected with the manufact
Section 3(2) of the Act defines “building” as “
hut, outhouse, shed or stable, whether used for the purposes of human
habitation or otherwise, and whether of masonry, bricks, wood, mud,
thatch, metal or any other material whatsoever, and includes a wall and a
The distinction between a building which merely houses
achinery and an installation which itself forms part of the manufacturing
apparatus is material. In the present case, the A
together with its associated refrigeration and compression systems,
performed an active industrial function and constituted an integral
component of the manufacturing process. It cannot, therefore, be treated
merely as an ordinary building or warehouse f
House Tax. The decision of the Hon’ble Supreme Court in
Chowk Spinning and Weaving Mills Co. Ltd.
significance in this context. The constitutional power under Entry 49 of
List II of the Seventh Schedule extends to taxation of lands and buildings
and does not authorise taxation of plant and machinery merely because the
same is situated upon or attached to land or a building. The said principle
was reiterated by the Hon’ble Supreme Court in
(supra).
17601 of 1995
mmonia manufacturing plant and was
necessary for the storage and controlled withdrawal of excess ammonia for
its subsequent use in the urea plant and other units. Its utility and function
were, therefore, intrinsically connected with the manufacturing process.
Section 3(2) of the Act defines “building” as “any shop, house,
hut, outhouse, shed or stable, whether used for the purposes of human
habitation or otherwise, and whether of masonry, bricks, wood, mud,
al whatsoever, and includes a wall and a
a building which merely houses
achinery and an installation which itself forms part of the manufacturing
rial. In the present case, the Ammonia storage facility,
together with its associated refrigeration and compression systems,
performed an active industrial function and constituted an integral
component of the manufacturing process. It cannot, therefore, be treated
merely as an ordinary building or warehouse for the purpose of levy of
The decision of the Hon’ble Supreme Court in New Manek
Chowk Spinning and Weaving Mills Co. Ltd.(supra), also assumes
significance in this context. The constitutional power under Entry 49 of
ule extends to taxation of lands and buildings
and does not authorise taxation of plant and machinery merely because the
same is situated upon or attached to land or a building. The said principle
was reiterated by the Hon’ble Supreme Court in Anant Mills Co.
mmonia manufacturing plant and was
necessary for the storage and controlled withdrawal of excess ammonia for
its subsequent use in the urea plant and other units. Its utility and function
any shop, house,
hut, outhouse, shed or stable, whether used for the purposes of human
habitation or otherwise, and whether of masonry, bricks, wood, mud,
al whatsoever, and includes a wall and a
a building which merely houses
achinery and an installation which itself forms part of the manufacturing
,
together with its associated refrigeration and compression systems,
performed an active industrial function and constituted an integral
component of the manufacturing process. It cannot, therefore, be treated
or the purpose of levy of
New Manek
, also assumes
significance in this context. The constitutional power under Entry 49 of
ule extends to taxation of lands and buildings
and does not authorise taxation of plant and machinery merely because the
same is situated upon or attached to land or a building. The said principle
Co.
CWP-17189 of 1995
CWP-17601 of 1995
22.
Ltd.(supra)
does not alter the conclusion. The said decision recognises the distinction
between a building used for
installed therein. In the present case, the question is not whether an
ordinary factory building used for industrial purposes can be subjected to
House Tax. The question is whether the specialised Ammonia Gas Storage
Tank installation
merely by reason of its permanent attachment to the land and the civil
construction involved, be treated as a taxable building.
23.
integration of the installation with the manufacturing process, we are of the
considered view that the Ammonia Gas Storage Tank cannot be treated as
a building merely because it is a permanent structure erected upon and
attached to the
Ammonia Gas Storage
and cannot, in its entirety, be subjected to House Tax by treating it as a
building. Accordingly, Point No. 1 is answered
No. 1 is answered in the negative, the remaining questions framed for
consideration do not require any independent adjudication. The entire
assessment of House Tax proceeds on the foundational assumption that the
Ammonia Gas St
capital cost could consequently be taken into account for determining its
annual rental value.
17189 of 1995 and
17601 of 1995
-16-
At the same time, the decision in
(supra), relied upon by learned counsel for the Municipal Council,
does not alter the conclusion. The said decision recognises the distinction
between a building used for an industrial purpose and the machinery
installed therein. In the present case, the question is not whether an
ordinary factory building used for industrial purposes can be subjected to
House Tax. The question is whether the specialised Ammonia Gas Storage
installation itself constitutes part of the P
merely by reason of its permanent attachment to the land and the civil
construction involved, be treated as a taxable building.
On an overall consideration of the nature,
integration of the installation with the manufacturing process, we are of the
considered view that the Ammonia Gas Storage Tank cannot be treated as
a building merely because it is a permanent structure erected upon and
attached to the land. In the facts and circumstances of the present case, the
Ammonia Gas Storage Tank is an integral part of the P
and cannot, in its entirety, be subjected to House Tax by treating it as a
Accordingly, Point No. 1 is answered
No. 1 is answered in the negative, the remaining questions framed for
consideration do not require any independent adjudication. The entire
assessment of House Tax proceeds on the foundational assumption that the
Ammonia Gas Storage Tank constitutes a taxable building and that its
capital cost could consequently be taken into account for determining its
annual rental value.
17601 of 1995
At the same time, the decision in Hindustan Machine Tools
, relied upon by learned counsel for the Municipal Council,
does not alter the conclusion. The said decision recognises the distinction
an industrial purpose and the machinery
installed therein. In the present case, the question is not whether an
ordinary factory building used for industrial purposes can be subjected to
House Tax. The question is whether the specialised Ammonia Gas Storage
itself constitutes part of the Plant and Machinery and can,
merely by reason of its permanent attachment to the land and the civil
construction involved, be treated as a taxable building.
On an overall consideration of the nature, function, design and
integration of the installation with the manufacturing process, we are of the
considered view that the Ammonia Gas Storage Tank cannot be treated as
a building merely because it is a permanent structure erected upon and
land. In the facts and circumstances of the present case, the
Tank is an integral part of the Plant and Machinery
and cannot, in its entirety, be subjected to House Tax by treating it as a
Accordingly, Point No. 1 is answered in the negative. Once Point
No. 1 is answered in the negative, the remaining questions framed for
consideration do not require any independent adjudication. The entire
assessment of House Tax proceeds on the foundational assumption that the
orage Tank constitutes a taxable building and that its
capital cost could consequently be taken into account for determining its
Hindustan Machine Tools
, relied upon by learned counsel for the Municipal Council,
does not alter the conclusion. The said decision recognises the distinction
an industrial purpose and the machinery
installed therein. In the present case, the question is not whether an
ordinary factory building used for industrial purposes can be subjected to
House Tax. The question is whether the specialised Ammonia Gas Storage
achinery and can,
merely by reason of its permanent attachment to the land and the civil
function, design and
integration of the installation with the manufacturing process, we are of the
considered view that the Ammonia Gas Storage Tank cannot be treated as
a building merely because it is a permanent structure erected upon and
land. In the facts and circumstances of the present case, the
achinery
and cannot, in its entirety, be subjected to House Tax by treating it as a
Once Point
No. 1 is answered in the negative, the remaining questions framed for
consideration do not require any independent adjudication. The entire
assessment of House Tax proceeds on the foundational assumption that the
orage Tank constitutes a taxable building and that its
capital cost could consequently be taken into account for determining its
CWP-17189 of 1995
CWP-17601 of 1995
24.
constitute a taxable building, the que
₹1,51,88,006/
the annual rental value does not survive for consideration. Likewise, the
questions relating to the retrospective assessment for the period fr
1982-83 to 1989
value for the subsequent years and the consequential adjustment of the
amounts deposited by the Company need not be examined independently.
25.
(DEEPAK SIBAL)
JUDGE
18.09.2026
Puneet
17189 of 1995 and
17601 of 1995
-17-
Having held that the Ammonia Gas Storage Tank itself does not
constitute a taxable building, the question whether its entire capital cost of
1,51,88,006/- could validly be taken into consideration for determining
the annual rental value does not survive for consideration. Likewise, the
questions relating to the retrospective assessment for the period fr
83 to 1989-90, the validity of carrying forward the annual rental
value for the subsequent years and the consequential adjustment of the
amounts deposited by the Company need not be examined independently.
The writ petitions are disposed of
(DEEPAK SIBAL)
JUDGE
Whether speaking/reasoned
Whether reportable
17601 of 1995
Having held that the Ammonia Gas Storage Tank itself does not
stion whether its entire capital cost of
could validly be taken into consideration for determining
the annual rental value does not survive for consideration. Likewise, the
questions relating to the retrospective assessment for the period from
90, the validity of carrying forward the annual rental
value for the subsequent years and the consequential adjustment of the
amounts deposited by the Company need not be examined independently.
disposed of accordingly.
(RUPINDERJIT CHAHAL)
JUDGE
: Yes
: Yes
Having held that the Ammonia Gas Storage Tank itself does not
stion whether its entire capital cost of
could validly be taken into consideration for determining
the annual rental value does not survive for consideration. Likewise, the
om
90, the validity of carrying forward the annual rental
value for the subsequent years and the consequential adjustment of the
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