Constitution of India, 1950:

Articles 285 and 289-Exemption of property of Union from State taxation and exemption of property and income of State Government: from Union taxation Held, the immunity created under Article 285(1) in favour of the Union is absolute, but the immunity created under Article 289(1) in favour of the States is qualified by clause (2) and it can be denied by way of a law made by parliament authorising imposition of any tax in respect of a trade or business carried on by or on behalf of the Government of a State or any property used or occupied for the purpose of such trade or business-Pun- jab Municipal Act, 1911, Delhi Municipal Corporation Act, 1957 and New Delhi Municipal Council Act, 1994 are enactments with reference to Article 289(2) and tax levied thereunder on properties owned by the State Governments and used or occupied for the purpose of trade or business is valid It cannot be said that unless the law made under and with reference to Article 289(2) specifies the particular trading or business operations to be taxed, it would not be a law within the meaning of clause (2) Punjab Municipal Act, 1911, Delhi Municipal Corporation Act, 1957 and New Delhi Municipal Council Act, 1994-Government of India Act, 1935-Ss. 154 and 155.

Articles 246 and 289-Union taxation-Held, any tax levied within a Union Territory is "Union Taxation" Parliament is law making body for Union Territories Legislatures for Union Territories under Government of India Territories Act, 1963 are created by parliament.

Articles 1(2), 239-A, 239-AA, 239-B, 245(1), 246, 285 and 289 State Held, Union Territory of Delhi is not "State within the meaning of Articles 246, 285 and 289-Definition of State providing in s. 3(58) of H General Clauses Act, 1897 is inapplicable to Article 246.

Article 142-Exercise of power by Supreme Court Judgment to be F operative prospectively.

Centre State. Relations-Taxation Inter-governmental immunity- Maintaining balance between Union and States-Suggestion to Union of India.

Punjab Municipal Act, 1911/Delhi Municipal Corporation Act, 1957/New Delhi Municipal Council Act, 1994 :

S.61/s. 115(4)/s.62-Properties of State Governments situated within Union Territory of Delhi Levy of tax on Held, the provisions purport to levy tax on properties of States as well-But properties used for purposes of Government and not for purposes of trade or business are exempt under clause (1) of Article 289 of the Constitution.

Doctrine of inter-governmental immunity: Immunity from inter- governmental taxation Applicability of with reference to Constitution of India.

Interpretation of Statutes:

Constitutionality of Statutes-Presumption There is always a presumption of constitutionality of a statute What is not covered by the constitutional ban should be held to be applicable and effective Doctrine of Presumption of constitutionality of Legislations.

Words and phrases:

"Property Occurring in Article 289(1) of the Constitution-Meaning of.

 The appellant, New Delhi Municipal Committee, which continued to be governed at the relevant time by the Punjab Municipal Act, 1911, levied property tax on the immovable properties of the respondent-States situated within the Union Territory of Delhi. The respondents filed writ petitions before the High Court challenging the levy and the demand on the ground that the properties of the State Governments were, by virtue of Article 289(1) of the Constitution, exempt from property taxes levied under the municipal enactments in force in the Union Territory of Delhi. The High Court, allowed the writ petitions. Aggrieved, the N.D.M.C. filed appeals before this Court. The appeals along with some other petitions were listed before a Division Bench of this Court, which felt that in view of the previous decisions of the Court, the matter should be heard by a larger Bench; and ultimately the matter was referred to a Bench of nine Judges.

It was contended for the N.D.M.C. that the property taxes levied either under the Punjab Municipal Act, 1911 or under the Delhi Municipal Corporation Act, 1957 pertain to the State List (List-II of the Seventh Schedule to the Constitution) and cannot be characterised as "Union taxation" under Article 289(1); and, therefore, the States were bound to pay the taxes to the N.D.M.C. or to the Municipal Corporation of Delhi.

The contention of the respondent-States was that a Union Territory is not a "State" within the meaning of Article 246. It was submitted that the Punjab Municipal Act, 1911 (as extended and applied to the Union Territory of Delhi by part 'C' States (Laws) Act, 1950) and the Delhi Municipal Corporation Act, 1957 were Parliamentary laws enacted under and by virtue of the legislative power vested in the Parliament by clause (4) of Article 246; the taxes levied by the said enactments thus constituted "Union Taxation" within the meaning of Article 289(1) and, therefore, the properties of the States in the Union Territory of Delhi were exempt from the property tax.