INDIAN OIL CORPORATION LTD. Vs. A.P.INDUSTRIAL INFRACTRCTURE CORPN.& ORS
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 1041 of 2008, Judgment Date: Dec 09, 2015
NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1041 OF 2008
INDIAN OIL CORPORATION LTD. .....APPELLANT(S)
VERSUS
A.P. INDUSTRIAL INFRASTRUCTURE CORPORATION .....RESPONDENT(S)
LTD. & ORS.
W I T H
WRIT PETITION (C) NO. 499 OF 2007
J U D G M E N T
A.K. SIKRI, J.
Indian Oil Corporation Limited (hereinafter referred to as the 'IOC') has
challenged the common judgment rendered by the High Court of Judicature,
Andhra Pradesh at Hyderabad in the two writ petitions which were filed by
the IOC impugning the order dated 14.12.2002 coupled with demand notice
dated 10.07.2002 and order dated 14.10.2002 coupled with demand notice
dated 12.06.2003 respectively. By the aforesaid orders, respondent No.1,
which is Andhra Pradesh Industrial Infrastructure Corporation Limited, had
taken the stand that IOC is liable to pay the property tax on the value of
storage and water tanks of the IOC situated in the industrial development
area of Cuddapah (A.P.) and in the demand notices, specific demand was made
for payment of the property tax on the said storage tanks. The property
tax was demanded under The Andhra Pradesh Panchayat Raj Act, 1994
(hereinafter referred to as the 'Act'). Thus, identical relief was claimed
in the two writ petitions and the occasion for filing two writ petitions
was that the demand notices calling upon the IOC to pay the property tax
related to four different years. Assessment Years 2000-01, 2001-02 and
2002-03 were covered by the demand notice dated 10.07.2002 and demand
notice dated 12.06.2003 pertained to Assessment Year 2002-03. This was the
reason for the High Court to dispose of the two writ petitions by the
common decision. The High Court has, by reason of the said judgment,
dismissed the writ petitions of the IOC holding that property tax is
payable under the provisions of the aforesaid Act.
We may mention at the outset that though the impugned demand was challenged
on number of grounds which, inter alia, included the ground that the
demands were violative of the principles of natural justice as well as
provisions of the Act itself, there was no challenge to the vires of any
provision of the Act. The question that fell for consideration before the
High Court, thus, was as to whether the aforesaid storage and water tanks
could be termed as 'building' within the meaning of Section 2(3) of the Act
and be covered by the definition of 'house' contained in Section 2(19) of
the Act as the tax is payable on the 'house'.
After the High Court had given its judgment, another demand notice
dated 03.07.2007 was issued, creating demands of property tax for the
Assessment Years upto 2006-07 and challenging the said demand notice on the
same grounds, IOC has also filed Writ Petition (C) No. 499/2007 in this
Court directly under Article 32 of the Constitution. This is how the
appeal and writ petition touching upon the identical issue, as enumerated
above, have been taken up for hearing.
Having regard to the nature of issue involved, though it may not be
necessary to traverse through the facts in detail, those minimal facts
which are to be kept in mind while deciding the issue, are recapitulated
below:
The IOC is a Central Government undertaking, which is in the
business of marketing products including petrol, high speed diesel,
liquified petroleum gas, lubricants etc. For the purpose of efficient
distribution of its products, the IOC has storage depots and LPG bottling
plants at various places. One such LPG bottling plant of the IOC is
situated in the industrial development area, Cuddapah. This bottling plant
is spread over a large extent of land and consists of various building,
machinery and LPG storage tanks. The entire bottling plant falls within in
the jurisdiction of the Chinnachowk Grama Panchayat.
The Andhra Pradesh Panchayat Raj Act, 1994 was enacted which deals with
various facets of Panchayati Raj. It also provides for provisions for levy
of property tax and machinery for collection thereof. Under the aforesaid
provisions, the Chinnachowk Grama Panchayat initially fixed the property
tax for the Assessment Year 1998-99 at Rs.9,11,380.60. This property tax
was collected on the basis of cost of machinery equipment, which according
to IOC do not form part of any 'building'. The aforesaid entire area was
handed over to the first respondent which was also vested with all
necessary powers conferred on the Gram Panchayat under the Act. Respondent
No.1, thus, assumed jurisdiction over the area with power to collect the
property tax. On the assumption of such powers, respondent No.1 issued
demand notice dated 10.01.1999 to the IOC demanding tax to the tune of
Rs.9,11,380.60 for the Assessment Year 1998-99. However, this demand was
revised on the representation by the IOC pointing out the mistake committed
in the calculation of the property tax and was reduced to Rs.7,14,393. The
IOC paid the aforesaid amount of tax.
In the year 2001, IOC approached respondent No.1 for further reduction of
property tax on the ground that LPG storage tanks consisting of Horton
Sphere and 3 bullets cannot be taken into consideration for calculation of
the tax as these structures do not answer the description of 'building' and
'house' as defined under the Act. Vide order dated 08.12.2001, this
request of the IOC was rejected by respondent No.3. Thereafter, demands
were made for other Assessment Years and representations of IOC against
those demands were also rejected. This is how, challenging the said
demands, the two writ petitions were filed by the IOC, as already noted
earlier.
The case of the IOC was that the value of LPG storage tanks which amounts
to Rs.557 lakhs and the value of the water storage tanks which amounts to
Rs.35 lakhs, do not fall for levy of property tax. The LPG storage tanks
are the sphere and bullets which are pressure vessels fabricated out of
special materials to store liquefied petroleum gas and have fittings like
safety relieve valve, high level alarm, fixed tube gauge, liquid inlet and
outlet pipes, manhole cover, Servogauge, differential pressure gauge and
other fittings which are mandatory under the safety guidelines of the Chief
Controller of Explosive and Oil Industry safety norms. These structures
are pressure vessels, in which no human being can enter or stay. These
structures are also operated for long period of time. It is only after a
lapse of more than a few years, humans enter the structure for cleaning.
Similarly, the water storage tanks are normally filled with water or use in
case of emergencies. These tanks also cannot be inhabited by human being
during their normal operation. These tanks are also cleaned after a lapse
of few years only.
In the aforesaid backdrop, the question that arises for consideration is as
to whether the storage tanks which store LPG can be considered as 'house'
within the meaning of the Act as the taxes are leviable, inter alia, on
houses. The material provisions which have to be taken into consideration
are the definition of the terms 'building' and 'house' which are defined by
sub-section (3) of Section 2 of the Act and sub-section (19) of Section 2
of the Act. These are as follows:
“Section 2(3) : 'building' includes a house, out-house, shop, stable,
latrine, shed (other than a cattle shed in an agricultural land), hut, wall
and any other such structure whether of masonry, bricks, wood, mud, metal
or other material whatsoever;
Section 2(19) : 'House' means a building or a hut fit for human
occupation, whether as a residence or otherwise and includes any shop,
factory, workshop or warehouse or any building used for garraging or
parking buses or as a bus-stand, cattle shed (other than a cattle shed in
any agricultural land, poultry shed or dairy shed);”
Before proceeding further, we would also take note of some
other provisions of the Act which were pointed out by the learned counsel
for the parties. These are:
“Section 2(20) : 'Hut' means any building which is constructed
principally of wood, mud, leaves, grass, or thatch and includes any
temporary structure of whatever size or any small building of whatever
material made, which the gram panchayat may declare to be a hut for the
purposes of this Act;
Section 60 - Taxes leviable by gram panchayats
(1) A gram panchayat shall levy in the village,
(a) a House-tax;
(b) kolagaram, or katarusum that is to say, tax on the village produce sold
in the village by weight measurement or number subject to such rules as may
be prescribed;
(c) such other tax as the Government may, by notification, direct any gram
panchayat or class of gram panchayats to levy subject to such rules as may
be prescribed;
Provided that no such notification shall be issued and no such rule shall
be made except with the previous approval of the Legislative Assembly of
the State.
(2) A duty shall also be levied on transfers of property situated in the
area under the jurisdiction of the gram panchayat in accordance with the
provisions of Section 69.
(3) Subject to such rules as may be prescribed the gram panchayat may
also levy in the village,-
(i) a vehicle tax;
(ii) a tax on agricultural land for a specific purpose;
(iii) a land-cess at the rate of two naya paise in the rupee on the annual
rental value of all occupied lands which are not occupied by or adjacent
and appurtenant to, buildings;
(iv) fees for use of porambokes or communal lands under the control of the
gram panchayat;
(v) fees for the occupation of building including chavadies and sarais
under the control of the gram panchayat.
(4) Every gram panchayat may also levy a duty in the form of a surcharge
on the seigniorage fees collected by the Government on materials other than
minerals and minor minerals quarried in the village:
Provided that the rate at which such duty shall be levied shall be fixed by
the gram panchayat with the previous approval of the Government.
(5) Every gram panchayat may, with the previous approval of the
prescribed authority also levy, in respect of lands lying within its
jurisdiction, a duty in the form of a surcharge at such rate, not exceeding
twenty-five naya paise in the rupee, as may be fixed by the gram panchayat-
(a) in the Andhra Area, on the land cess, leviable under Section 78 of the
Andhra Pradesh (Andhra Area) District Boards Act, 1920 and on the education
tax leviable under section 37 of the Andhra Pradesh Education Act, 1982;
(b) in the Telangana area, on the local cess leviable under section 135 of
the Andhra Pradesh (Telangana Area) District Boards Act, 1955 and on the
education tax leviable under section 37 of the Andhra Pradesh Education
Act, 1982.
(6) Any resolution of a gram panchayat abolishing an existing tax or
reducing the rate at which a tax is levied shall not be carried into effect
without the previous approval of the Commissioner.
Section 61 - House-tax
(1) The house-tax referred to in clause (a) of sub-section (1) of section
60 shall, subject to such rules as may be prescribed, be levied on all
houses in the village on any one of the following basis, namely:
(a) annual rental value, or
(b) capital value, or
(c) such other basis as may be prescribed:
Provided that no house tax shall be levied on poultry sheds and annexes
thereto which are essential for running the poultry farms.
(2) The house-tax shall, subject to the prior payment of the land
revenue, if any due to the Government in respect of the site of the house
be a first charge upon the house and upon the movable property, if any,
found within or upon the same and belonging to the person liable to pay
such tax.
(3) The house-tax shall be levied every year and shall, save as otherwise
expressly provided in the rules made under sub-section (1) be paid by the
owner within thirty days of the commencement of the year. It shall be
levied at such rates as may be fixed by the gram panchayat, not being less
than the minimum rates and not exceeding the maximum rates, prescribed in
regard to the basis of levy adopted by the gram panchayat.
(4) The Government may make rules providing for--
(i) the exemption of special classes of houses from the tax;
(ii) the manner of ascertaining the annual or capital value of houses or
the categories into which they fall for the purposes of taxation;
(iii) the persons who shall be liable to pay the tax and the giving of
notice of transfer of houses;
(iv) the grant of exemptions from the tax on the ground of poverty;
(v) the grant of vacancy and other remissions; and
(vi) the circumstances in which, and the conditions subject to which houses
constructed, reconstructed or demolished, or situated in areas included in,
or excluded from the village, during any year, shall be liable or cease to
be liable to the whole or any portion of the tax.
(5) If the occupier of a house pays the house-tax on behalf of the owner
thereof, such occupier shall be entitled to recover the same from the owner
and may deduct the same from the rent then or thereafter due by him to the
owner.
Section 62 - Levy of House-tax on a direction by Government
(1) The Government may, by order published in the Andhra Pradesh Gazette,
for special reasons to be specified in such order direct any gram panchayat
to levy the house-tax referred to in clause (a) of sub-section (1) of
section 60 at such rates and with effect from such date not being earlier
than the first day of the year immediately following that in which the
order is published, as may be specified in the order.
Such direction may be issued in respect of all buildings in a gram
panchayat or in respect of only such buildings belonging to the
undertakings owned or controlled by the State Government or Central
Government and the buildings belonging to the State Government as may be
specified therein.
(2) When an order under sub-section (1) has been published, the
provisions of this Act relating to house-tax shall apply as if the gram
panchayat had, on the date of publication of such order, by resolution
determined to levy the tax at the rate and with effect from the date
specified in the order, and as if no other resolution of the gram panchayat
under Section 60 determining the rate at which and the date from which the
house-tax shall be levied, had taken effect.
(3) A gram panchayat shall not alter the rate at which the house-tax is
levied in pursuance of an order under sub-section (1) or abolish such tax
except with the previous sanction of the Government.”
From the aforesaid definition of 'building' contained in Section 2(3) of
the Act, it becomes apparent that very expansive meaning is assigned to the
expression 'building' which inter alia includes a 'house'. Apart from some
specific nature of structures, namely, out-house, shop, stable, latrine,
shed etc., other 'such structures' are also covered by the definition. Of
course, in this process, other structures are qualified by the word 'such'
which means that they have to be read ejusdem generis with the earlier part
of the definition that mentions specific kind of structures. The case set
up by the IOC, is that though the term 'building' is very broad and 'house'
is only one of the structure qualifies as building, the text in question is
to be on 'house' and not on all other kinds of buildings. In this process,
it was argued that the structures in question, namely, LPG storage tanks
may be 'building' but they are not 'house', as every building is not a
house. It was argued that the term 'house' is to take its flavour from the
purpose for which 'house' is used, namely, the one which is fit for human
occupation as the definition of 'house' itself specifically provides. It
was argued that storage tanks were not at all fit for human occupation and
they could not even visited by the humans. It was submitted that these
structures are pressure vessels in which no human being can enter or stay.
It is only after a lapse of more than a few years that human beings enter
these structures that too for the purpose of cleaning only. Similarly,
water storage tanks are normally filled with water in case of emergencies
and these tanks also cannot be inhabited by the human beings during their
normal operation. These tanks can be cleaned after a lapse of few years
only.
It is difficult to countenance the aforesaid submissions of the learned
senior counsel for the appellant. As was rightly argued by the learned
counsel for the respondents, the definition of 'house' is in two parts.
First part of this definition refers to building or a hut fit for human
occupation, whether as a residence or otherwise. In this context, house
means a building or a hut. Therefore, in the first instance, it has to
qualify as a building or as a hut. However, the second part of the
definition is inclusive in nature as it starts with the word 'includes' and
mentions so many other types of buildings and makes all those kinds of
buildings qualify as house even when used for garaging or parking buses or
as a bus stand or cattle shed.
It cannot be disputed that structures in question are building. The term
'building' as defined in Black's Law Dictionary, 10th Edition mentioned it
to be a structure with walls and a roof, esp. a permanent structure. Even
Mr. Guru Krishnakumar, learned senior counsel for the IOC accepted that the
storage tanks and water tanks would qualify as buildings. 'Storage' is
described in the Black's Law Dictionary as 'the act of putting something
away for future use; esp., the keeping or placing of articles in a place of
safekeeping, such as a warehouse or depository. Black's Law Dictionary
also gives the description of warehouse as 'a building used to store goods
and other items'. Oxford Dictionary also explains warehouse as combination
of ware plus house and assigns the meaning as under:
“A building or part of a building used for the storage of merchandise; the
building in which a wholesale dealer keeps his stock of goods for sale; a
building in which furniture or other property may be stored; a government
building where goods are kept in bond.”
More significant is the manner in which P. Ramnath Aiyar's Advanced Law
Lexicon, 4th Edition gives the description of storage and warehouse. It is
as follows:
“Storage and warehousing. “Storage and Warehousing” includes storage and
warehousing services for goods including liquids and gases but does not
include any service provided for storage of agricultural produce or any
service provided by a cold storage. [Finance Act (32 of 1994), S.
65(1)(87)].”
The above definition makes it clear that the goods which are meant for
storage and warehousing services include liquid and gases as well. In
Bijaya Kumar Agarwal v. State of Orissa[1], this Court made the following
observations which are apt in the context:
“The dictionary meanings suggest that ‘storing’ has an element of
continuity as the purpose is to keep the commodity in store and retrieve it
at some future date, even within a few days. If goods are kept or stocked
in a warehouse, it can be immediately described as an act of ‘storage’. A
vehicle can also be used as a storehouse. But, whether in a particular
case, a vehicle was used as a ‘store’ or whether a person had stored his
merchandise in a vehicle would be a matter of fact in each case. Carrying
goods in a vehicle cannot per se be ‘storing’ although it may be quite
possible that a vehicle is used as a store. Transporting is not storing.
Section 3(2)(d) of the Act extracted earlier in the judgment uses the
expressions ‘storage’ and ‘transport’ as two separate acts which could be
regulated by licences, permits or otherwise. The Order could as well
prohibit transporting of large quantities of rice or paddy within the
sanction of Section 3 of the Act. Was it the intention of the framers of
the Order to prohibit ‘transport’ per se? Unless the facts in a particular
case reveal that the vehicle was used not merely for transporting the goods
but also for ‘storing’ as understood in the English language or even in
common parlance, it is difficult to hold in the affirmative.”
When we read the definition of 'house' in the context of meaning that is to
be assigned to 'warehouse', it is clear that a place where goods are stored
would be 'warehouse' which is specifically mentioned in the definition of
house contained in Section 2(19) of the Act. It would, thus, follow that
it may not be necessary that such a place is capable of frequent visits by
the human beings or fit for human occupations. The High Court has rightly
pointed out that as per the said definition, the requirement that a house
should be fit for human occupations is only for huts which is defined under
Section 20 of the Act.
The Legislature has provided a particular definition to 'house' and levied
property tax thereupon. It is this fictional definition of 'house' which
is to be kept in mind for the purpose of levy of tax.
We, thus, do not find any merit in this appeal as well as writ petition
which are accordingly dismissed with cost.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ROHINTON FALI NARIMAN)
NEW DELHI;
DECEMBER 09, 2015.
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[1] (1996) 5 SCC 1
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