UNION OF INDIA Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) By this writ petition the petitioner seeks to quash the notices and orders Anx. 1, Anx. 2, Anx. 3, and Anx. 4 whereby demand in respect of motor vehicles tax was raised against the petitioner and in respect of one of the vehicles of the petitioner bearing registration No. RSN 8024 a sum of Rupees 31,715/- was paid. The petitioner claims that the said amount be refunded alongwith interest thereon and it is also prayed that the non-petitioner be restrained from realising any tax for the petitioners' vehicles. The petitioner's case is that the petitioner Union of India and its Northern Railway own the vehicles for its use. This property belongs to Union of India and is exempted from all state taxes under Art. 285 of the Constitution and the State has no authority to levy and realise any tax on the property of Union of India. Article 285 of the Constitution reads as under : -

(2.) Clause (1) of Art. 285 clearly envisages that the property belonging to the Union of India shall be exempt from all taxes imposed by a State or by any authority within the State. This provision is specifically clear and no tax can be imposed on the property of Union as all properties are exempted from state taxes. The only situation in which the union can be taxed is when the Parliament by law otherwise provides. Admittedly there is no law by Parliament which provide otherwise. Clause (2) of Art. 285 is not at all attracted and this is not the case of the state that tax was imposed on property in question before the commencement of the Constitution. Thus there is a clear bar of imposition of tax on the property of Union under cl. (1) of Art. 285. Reference in this connection may be made to Union of India v. The City Municipal Council, Bellary AIR 1978 SC 1803. In this case after analysing the provisions of Art. 285 cl. (1) and cl. (2) it has been held that the general bar of cl. (1) of Art. 285 applied and the property in question was exempted from all taxes levied by the Bellary Municipal Council. Thus this writ petition deserves to be allowed.

(3.) Accordingly, the writ petition is allowed, Anexs. 1 to 4 are quashed and the respondents are restrained from imposing any tax under the Motor Vehicles Taxation Act in relation to vehicles of the petitioner. It is further ordered that the non-petitioner shall refund the amount of Rs. 31715.00 together with interest thereon at the rate of 12 per cent per annum from the date of deposit till realisation. Petition allowed.