In view
of the specific exemption given under the lease deed regarding
payment of any taxes on the demised premises, in our
considered opinion, the appellant-Company is not at all
required to pay any municipal taxes on the demised premises.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 4944-4945 OF 2016
M/s Welspun Projects Ltd.
(Formerly known as M/s MSK Projects
India Ltd.)
V
Director, State Transport,
Punjab & Anr
Citation:(2016) 10 SCC203
Dated:NOVEMBER 8, 2016.
1) Challenge in the above said appeals is to the legality of
the impugned common judgment and order dated 14.11.2011
rendered by learned single Judge of the High Court for the
States of Punjab & Haryana at Chandigarh in F.A.O. Nos.
3372 and 3488 of 2011 whereby the High Court allowed the
appeals filed by the respondent-State.
2) Factual position in a nutshell is as follows:-
(a) On 22.06.2005, a Concession Agreement was entered
into between the Government of Punjab (through Director,
State Transport, Punjab) and M/s Welspun Projects Ltd.
(formerly known as M/s MSK Projects India Ltd.)-the
appellant-Company to design, finance, construct, operate and
maintain the Bus Terminal Project at Jalandhar on Build,
Operate and Transfer (B.O.T) basis and to determine, levy,
demand, collect and retain the fees for a period of 8 years, 5
months and 21 days.
(b) A similar Concession Agreement was entered into
between the parties mentioned above for the Bus Terminal at
Ludhiana on the same basis for a period of 10 years and 3
months.
(c) On 16.08.2005 and 25.10.2005, lease deeds were entered
into between the parties for the project sites at Jalandhar and
Ludhiana respectively. According to the said lease deeds, the
appellant-Company was required to pay only the annual rent
of Re. 1 as lease rental.
(d) On 26.11.2008, the Commissioner, Municipal
Corporation, Jalandhar-Respondent No. 2 herein issued a
notice under Section 103 of the Punjab Municipal Corporation
Act, 1976 (in short ‘the Act’) stating that the premises in
question was assessed for an annual rental value of Rs.
3,98,73,600/- for the year 2008-09.
(e) Similarly, on 08.02.2010, the appellant-Company
received a notice from the Municipal Corporation, Ludhiana
stating the house tax assessment for the year 2008-09 and
2009-10 had been carried out and the said property at
Ludhiana was assessed at Rs.64,59,588.80/- for an annual
rental value of the premises.
(f) The appellant-Company informed Respondent No. 2
herein that it was handling the project on BOT basis and as
such the actual owner is the State Transport Authorities.
However, when the contents of the notices were brought to the
knowledge of the State Transport Authorities, the State
Transport Authorities informed that the appellant-Company is
the actual user, occupant and beneficiary of the properties of
the Bus Terminals and as such is liable to pay all taxes
including House Tax as per the terms and conditions of the
Concession Agreements.
(g) Being aggrieved by the demand notices, the
appellant-Company approached the High Court. The High
Court, vide order dated 09.02.2010 directed the
appellant-Company to approach Punjab Infrastructure
Regulatory Authority (PIRA). The appellant-Company
preferred Petition Nos. 1 and 2 of 2010 before the PIRA against
the State Transport Authorities of Jalanadhar and Ludhiana
respectively.
(h) Vide orders dated 08.09.2010 and 15.12.2010, the PIRA
allowed the petitions filed by the appellant-Company. Being
aggrieved by the above orders, the State Transport Authorities
preferred F.A.O. Nos. 3372 and 3488 of 2011 before the High
Court.
(i) Learned single Judge of the High Court, vide common
judgment and order dated 14.11.2011, allowed the appeals
filed by the respondents herein.
(j) Aggrieved by the order dated 14.11.2011, the
appellant-Company has preferred these petitions before this
Court by way of special leave.
3) We have heard learned counsel for the parties and perused
the records.
4) Concession Agreement was entered into between the
Government of Punjab through the Director Transport, Punjab
and M/s MSK Projects Ltd., to design, finance, construct,
operate and maintain the Bus Terminal Projects at Jalandhar
and Ludhiana on B.O.T. basis and to determine, levy, demand,
collect and retain the fees. Lease deeds were also executed
between the parties. Municipal Corporation is alleged to have
issued notices for recovery of House Tax which led to the issue
in question. The appellant-Company filed Petition No. 1 and
Petition No. 2 before the PIRA which was allowed vide orders
dated 08.09.2010 and 15.12.2010. Being aggrieved by the
above said orders, the State Transport Authorities filed FAO
Nos. 3372 and 3488 of 2011 before the High Court. Learned
5Page 6
single Judge of the High Court allowed the same vide common
order dated 14.11.2011.
5) Learned senior counsel for the appellant-Company
contended that fastening the liability on the appellant–
Company is manifestly erroneous and is based on without
complete and comprehensive appreciation of relevant aspects
of the case in proper manner and is liable to be set aside.
There is overwhelming material and also the case in Delhi
Golf Club Ltd. and Another vs. N.D.M.C., (2001) 2 SCC 633
is squarely applicable to the facts of the present case and,
therefore, the impugned order of the High Court is liable to be
set aside. Per contra learned Additional Advocate General for
the respondent-State strenuously argued that in view of the
various clauses in the Concession Agreement as well as the
provisions of the Act, the High Court was justified in fastening
liability upon the appellant-Company for payment of the house
tax for the period under consideration.
6) Learned senior counsel for the appellant-Company
strenuously contended that it does not fall in the category of
the “owner” as defined under Section 2(35) of the Act and is
6Page 7
neither an owner nor a tenant nor is entitled to receive rent
etc. In a special arrangement determined by the Concession
Agreements and the Lease Deeds, the appellant-Company is
required to pay only Re. 1/- as annual rent to the Director
State Transport, Punjab and is entitled to collect all the
incomes from the Project for a short and limited period so as
to enable the appellant-Company to recover the investments
made in the Projects. Though the buildings on the Project sites
have been raised by the appellant-Company, it has been done
for the respondent-State who owns the land as well as the
building. Therefore, under section 97 of the Act, no house tax
could be levied on it. On the other hand, such a tax is entirely
the liability of the Director, State Transport, Punjab. The
appellant-Company further referred to Clause 13(e) of the
Lease Deed which stipulates, “that except the lease rental
specified in Clause 6 of the Lease Deed, it (Lessor) shall not
levy any fee, rental, tax or any other charge on the lessee for
the demised premises”. It further stipulates that the
appellant-Company will only pay Re.1/- as annual lease
rental.
7) Undoubtedly, the inter-se relationship between the
parties and all the relative rights and obligations are entirely
governed by the Concession Agreements and the Lease Deeds.
It is thus to be seen first of all that if these Agreements can
provide any conclusive direction to settle the matter in hand.
8) For appreciating the relevant provisions of the Lease
Deeds and Concession Agreements referred to above, it is to be
mentioned here that house tax is always assessed and paid in
accordance with the provisions of the Act. The definition of
owner has been described in sub-Section 35 of Section 2
which reads as under:
“2(35) “Owner” includes a person who for the time being is
receiving or is entitled to receive, the rent of any land or
building whether on his own account or on account of
himself and others or as an agent, trustee, guardian or
receiver for any other person who should so receive the rent
or be entitled to receive it if the land or building or part
thereof were let to a tenant;”
9) Section 97(2) of the Act (as it stood at the relevant time)
provides with the incidence of tax on lands and buildings. It
reads as under:-
“97(2) – Incidence of taxes on lands and buildings:-
If any land has been let for a term exceeding one year to a
tenant and such tenant has built upon the land, the taxes
on land and buildings assessed in respect of that land and
the building erected thereon shall be primarily leviable upon
the said tenant, whether the land and building are in the
occupation of such tenant or sub-tenant of such tenant.”
10) Clause 6 and Clause 13(e) of the first lease deed dated
16.08.2005 are reproduced below:-
“6. The Lessee shall pay unto the Lessor an annual rent of Re
1/- as lease rental, which shall be paid as an advance lease
rental in single lump sum payment of Rs. 15/- (in
consideration of a possible extension of the Concession Period)
on or prior to the date upon which this deed is executed.
13(e). That except the lease rental specified in Section 6
hereof, it shall not levy any fee, rental, tax or any other charge
on the Lessee for the lease of the Demised Premises.”
11) Another lease deed was executed on 25.10.2005. Clause
6 and Clause 13(e) of the said lease deed are reproduced
below:-
“6. The Lessee shall pay unto the Lessor an annual rent of Re
1/- as lease rental, which shall be paid as an advance lease
rental in single lump sum payment of Rs. 15/- (in
consideration of a possible extension of the Concession Period)
on or prior to the date upon which this deed is executed.
13(1)(e). That except the lease rental specified in Section 3
hereof, it shall not levy any fee, rental, tax or any other charge
on the Lessee for the lease of the Demised Premises.”
12) From a perusal of the aforesaid clauses, it is clear that
they are identical and no change has been made. The
Concession Agreement was executed on 22.06.2005. Clause
24.1(a) of the Agreement, which is relevant and heavily relied
upon by the respondents, is reproduced below:-
“24.1 Local Taxation:-
a. The concession period shall include all charges towards
import license, toll, customs, duties, import duties,
business taxes etc. that may be levied in accordance with
the applicable laws as on the proposal acceptance date in
India on the concessionaire’s equipment, plant and
Machinery and Materials (whether permanent, temporary
or consumable) acquired for the purpose of this
concession agreement and on the services to be
performed under this concession agreement. Nothing in
this concession agreement shall relieve the concessionaire
from its responsibility to pay any tax that may be levied in
India on profits made by it in respect of this concession
agreement.
13) It may be mentioned here that both the lease deeds were
executed by the Director, State Transport, Punjab for and on
behalf of the Governor of the State of Punjab. From a perusal
of Clauses 6 and 13(e) of the lease deeds reproduced above, we
are of the opinion that the appellant-Company was required to
pay rent of Re. 1 only as lease rental and further the
Government has specifically mentioned that except the lease
rental, it shall not levy any fees, rent, tax or any other charge
on the lessee for the lease of the demised premises. We find
that even though under the provisions of Section 2(35) read
with 97(2) of the Act, normally the tenant who has been given
land on lease for a term exceeding 1 (one) year is primarily
liable to pay taxes on lands and buildings yet in view of the
provisions of Section 157(1) of the Act, the Government is
empowered to exempt in whole or in part from the payment of
any such tax any person or class of persons or any property or
description of property which in the present case has been
done on behalf of the government when the lease deeds were
executed. For ready reference, Section 157(1) of the Act is
reproduced below:-
“157. Powers of Government in regard to taxes-(1) The
Government may by order exempt in whole or in part from
the payment of any such tax any person or class of persons
or any property or description of property.”
14) A reading of Concession Agreement dated 22.06.2005,
more so, Clause 24.1(a) which deals with the local taxation
states that the concession period shall include all charges
towards import license, toll, customs, duties, import duties
etc. which is to be payable by the appellant-Company. In view
of the specific exemption given under the lease deed regarding
payment of any taxes on the demised premises, in our
considered opinion, the appellant-Company is not at all
required to pay any municipal taxes on the demised premises.
We may also mention here that the house tax was being paid
by the transport department prior to the signing of the
Concession Agreement and if it was intended that this burden
should be passed on to the appellant-Company, a clear clause
interpreting this point would have certainly been inserted in
the Agreement itself. Not only this, the Department continued
to pay the house tax for 3 to 4 years even after the date of the
signing of the agreement.
15) In view of the forgoing discussion, we are of the
considered opinion that the appellant-Company is not liable to
pay any house tax under the Act and the demand and
payment of house tax from the appellant-Company was
without the authority of law and the appellant-Company is
entitled to the refund of the amount of house tax paid by it
alongwith rate of interest at the rate of 10% p.a. from the date
of deposit.
16) In view of the above, the impugned judgment and order of
the High Court dated 14.11.2011 is set aside and,
consequently, the appeals are allowed.
...…………….………………………J.
(ANIL R. DAVE)
[[[[
…....…………………………………J.
(R.K. AGRAWAL)
...…………….………………………J.
(L. NAGESWARA RAO)
NEW DELHI;
NOVEMBER 8, 2016.
of the specific exemption given under the lease deed regarding
payment of any taxes on the demised premises, in our
considered opinion, the appellant-Company is not at all
required to pay any municipal taxes on the demised premises.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 4944-4945 OF 2016
M/s Welspun Projects Ltd.
(Formerly known as M/s MSK Projects
India Ltd.)
V
Director, State Transport,
Punjab & Anr
Citation:(2016) 10 SCC203
Dated:NOVEMBER 8, 2016.
1) Challenge in the above said appeals is to the legality of
the impugned common judgment and order dated 14.11.2011
rendered by learned single Judge of the High Court for the
States of Punjab & Haryana at Chandigarh in F.A.O. Nos.
3372 and 3488 of 2011 whereby the High Court allowed the
appeals filed by the respondent-State.
2) Factual position in a nutshell is as follows:-
(a) On 22.06.2005, a Concession Agreement was entered
into between the Government of Punjab (through Director,
State Transport, Punjab) and M/s Welspun Projects Ltd.
(formerly known as M/s MSK Projects India Ltd.)-the
appellant-Company to design, finance, construct, operate and
maintain the Bus Terminal Project at Jalandhar on Build,
Operate and Transfer (B.O.T) basis and to determine, levy,
demand, collect and retain the fees for a period of 8 years, 5
months and 21 days.
(b) A similar Concession Agreement was entered into
between the parties mentioned above for the Bus Terminal at
Ludhiana on the same basis for a period of 10 years and 3
months.
(c) On 16.08.2005 and 25.10.2005, lease deeds were entered
into between the parties for the project sites at Jalandhar and
Ludhiana respectively. According to the said lease deeds, the
appellant-Company was required to pay only the annual rent
of Re. 1 as lease rental.
(d) On 26.11.2008, the Commissioner, Municipal
Corporation, Jalandhar-Respondent No. 2 herein issued a
notice under Section 103 of the Punjab Municipal Corporation
Act, 1976 (in short ‘the Act’) stating that the premises in
question was assessed for an annual rental value of Rs.
3,98,73,600/- for the year 2008-09.
(e) Similarly, on 08.02.2010, the appellant-Company
received a notice from the Municipal Corporation, Ludhiana
stating the house tax assessment for the year 2008-09 and
2009-10 had been carried out and the said property at
Ludhiana was assessed at Rs.64,59,588.80/- for an annual
rental value of the premises.
(f) The appellant-Company informed Respondent No. 2
herein that it was handling the project on BOT basis and as
such the actual owner is the State Transport Authorities.
However, when the contents of the notices were brought to the
knowledge of the State Transport Authorities, the State
Transport Authorities informed that the appellant-Company is
the actual user, occupant and beneficiary of the properties of
the Bus Terminals and as such is liable to pay all taxes
including House Tax as per the terms and conditions of the
Concession Agreements.
(g) Being aggrieved by the demand notices, the
appellant-Company approached the High Court. The High
Court, vide order dated 09.02.2010 directed the
appellant-Company to approach Punjab Infrastructure
Regulatory Authority (PIRA). The appellant-Company
preferred Petition Nos. 1 and 2 of 2010 before the PIRA against
the State Transport Authorities of Jalanadhar and Ludhiana
respectively.
(h) Vide orders dated 08.09.2010 and 15.12.2010, the PIRA
allowed the petitions filed by the appellant-Company. Being
aggrieved by the above orders, the State Transport Authorities
preferred F.A.O. Nos. 3372 and 3488 of 2011 before the High
Court.
(i) Learned single Judge of the High Court, vide common
judgment and order dated 14.11.2011, allowed the appeals
filed by the respondents herein.
(j) Aggrieved by the order dated 14.11.2011, the
appellant-Company has preferred these petitions before this
Court by way of special leave.
3) We have heard learned counsel for the parties and perused
the records.
4) Concession Agreement was entered into between the
Government of Punjab through the Director Transport, Punjab
and M/s MSK Projects Ltd., to design, finance, construct,
operate and maintain the Bus Terminal Projects at Jalandhar
and Ludhiana on B.O.T. basis and to determine, levy, demand,
collect and retain the fees. Lease deeds were also executed
between the parties. Municipal Corporation is alleged to have
issued notices for recovery of House Tax which led to the issue
in question. The appellant-Company filed Petition No. 1 and
Petition No. 2 before the PIRA which was allowed vide orders
dated 08.09.2010 and 15.12.2010. Being aggrieved by the
above said orders, the State Transport Authorities filed FAO
Nos. 3372 and 3488 of 2011 before the High Court. Learned
5Page 6
single Judge of the High Court allowed the same vide common
order dated 14.11.2011.
5) Learned senior counsel for the appellant-Company
contended that fastening the liability on the appellant–
Company is manifestly erroneous and is based on without
complete and comprehensive appreciation of relevant aspects
of the case in proper manner and is liable to be set aside.
There is overwhelming material and also the case in Delhi
Golf Club Ltd. and Another vs. N.D.M.C., (2001) 2 SCC 633
is squarely applicable to the facts of the present case and,
therefore, the impugned order of the High Court is liable to be
set aside. Per contra learned Additional Advocate General for
the respondent-State strenuously argued that in view of the
various clauses in the Concession Agreement as well as the
provisions of the Act, the High Court was justified in fastening
liability upon the appellant-Company for payment of the house
tax for the period under consideration.
6) Learned senior counsel for the appellant-Company
strenuously contended that it does not fall in the category of
the “owner” as defined under Section 2(35) of the Act and is
6Page 7
neither an owner nor a tenant nor is entitled to receive rent
etc. In a special arrangement determined by the Concession
Agreements and the Lease Deeds, the appellant-Company is
required to pay only Re. 1/- as annual rent to the Director
State Transport, Punjab and is entitled to collect all the
incomes from the Project for a short and limited period so as
to enable the appellant-Company to recover the investments
made in the Projects. Though the buildings on the Project sites
have been raised by the appellant-Company, it has been done
for the respondent-State who owns the land as well as the
building. Therefore, under section 97 of the Act, no house tax
could be levied on it. On the other hand, such a tax is entirely
the liability of the Director, State Transport, Punjab. The
appellant-Company further referred to Clause 13(e) of the
Lease Deed which stipulates, “that except the lease rental
specified in Clause 6 of the Lease Deed, it (Lessor) shall not
levy any fee, rental, tax or any other charge on the lessee for
the demised premises”. It further stipulates that the
appellant-Company will only pay Re.1/- as annual lease
rental.
7) Undoubtedly, the inter-se relationship between the
parties and all the relative rights and obligations are entirely
governed by the Concession Agreements and the Lease Deeds.
It is thus to be seen first of all that if these Agreements can
provide any conclusive direction to settle the matter in hand.
8) For appreciating the relevant provisions of the Lease
Deeds and Concession Agreements referred to above, it is to be
mentioned here that house tax is always assessed and paid in
accordance with the provisions of the Act. The definition of
owner has been described in sub-Section 35 of Section 2
which reads as under:
“2(35) “Owner” includes a person who for the time being is
receiving or is entitled to receive, the rent of any land or
building whether on his own account or on account of
himself and others or as an agent, trustee, guardian or
receiver for any other person who should so receive the rent
or be entitled to receive it if the land or building or part
thereof were let to a tenant;”
9) Section 97(2) of the Act (as it stood at the relevant time)
provides with the incidence of tax on lands and buildings. It
reads as under:-
“97(2) – Incidence of taxes on lands and buildings:-
If any land has been let for a term exceeding one year to a
tenant and such tenant has built upon the land, the taxes
on land and buildings assessed in respect of that land and
the building erected thereon shall be primarily leviable upon
the said tenant, whether the land and building are in the
occupation of such tenant or sub-tenant of such tenant.”
10) Clause 6 and Clause 13(e) of the first lease deed dated
16.08.2005 are reproduced below:-
“6. The Lessee shall pay unto the Lessor an annual rent of Re
1/- as lease rental, which shall be paid as an advance lease
rental in single lump sum payment of Rs. 15/- (in
consideration of a possible extension of the Concession Period)
on or prior to the date upon which this deed is executed.
13(e). That except the lease rental specified in Section 6
hereof, it shall not levy any fee, rental, tax or any other charge
on the Lessee for the lease of the Demised Premises.”
11) Another lease deed was executed on 25.10.2005. Clause
6 and Clause 13(e) of the said lease deed are reproduced
below:-
“6. The Lessee shall pay unto the Lessor an annual rent of Re
1/- as lease rental, which shall be paid as an advance lease
rental in single lump sum payment of Rs. 15/- (in
consideration of a possible extension of the Concession Period)
on or prior to the date upon which this deed is executed.
13(1)(e). That except the lease rental specified in Section 3
hereof, it shall not levy any fee, rental, tax or any other charge
on the Lessee for the lease of the Demised Premises.”
12) From a perusal of the aforesaid clauses, it is clear that
they are identical and no change has been made. The
Concession Agreement was executed on 22.06.2005. Clause
24.1(a) of the Agreement, which is relevant and heavily relied
upon by the respondents, is reproduced below:-
“24.1 Local Taxation:-
a. The concession period shall include all charges towards
import license, toll, customs, duties, import duties,
business taxes etc. that may be levied in accordance with
the applicable laws as on the proposal acceptance date in
India on the concessionaire’s equipment, plant and
Machinery and Materials (whether permanent, temporary
or consumable) acquired for the purpose of this
concession agreement and on the services to be
performed under this concession agreement. Nothing in
this concession agreement shall relieve the concessionaire
from its responsibility to pay any tax that may be levied in
India on profits made by it in respect of this concession
agreement.
13) It may be mentioned here that both the lease deeds were
executed by the Director, State Transport, Punjab for and on
behalf of the Governor of the State of Punjab. From a perusal
of Clauses 6 and 13(e) of the lease deeds reproduced above, we
are of the opinion that the appellant-Company was required to
pay rent of Re. 1 only as lease rental and further the
Government has specifically mentioned that except the lease
rental, it shall not levy any fees, rent, tax or any other charge
on the lessee for the lease of the demised premises. We find
that even though under the provisions of Section 2(35) read
with 97(2) of the Act, normally the tenant who has been given
land on lease for a term exceeding 1 (one) year is primarily
liable to pay taxes on lands and buildings yet in view of the
provisions of Section 157(1) of the Act, the Government is
empowered to exempt in whole or in part from the payment of
any such tax any person or class of persons or any property or
description of property which in the present case has been
done on behalf of the government when the lease deeds were
executed. For ready reference, Section 157(1) of the Act is
reproduced below:-
“157. Powers of Government in regard to taxes-(1) The
Government may by order exempt in whole or in part from
the payment of any such tax any person or class of persons
or any property or description of property.”
14) A reading of Concession Agreement dated 22.06.2005,
more so, Clause 24.1(a) which deals with the local taxation
states that the concession period shall include all charges
towards import license, toll, customs, duties, import duties
etc. which is to be payable by the appellant-Company. In view
of the specific exemption given under the lease deed regarding
payment of any taxes on the demised premises, in our
considered opinion, the appellant-Company is not at all
required to pay any municipal taxes on the demised premises.
We may also mention here that the house tax was being paid
by the transport department prior to the signing of the
Concession Agreement and if it was intended that this burden
should be passed on to the appellant-Company, a clear clause
interpreting this point would have certainly been inserted in
the Agreement itself. Not only this, the Department continued
to pay the house tax for 3 to 4 years even after the date of the
signing of the agreement.
15) In view of the forgoing discussion, we are of the
considered opinion that the appellant-Company is not liable to
pay any house tax under the Act and the demand and
payment of house tax from the appellant-Company was
without the authority of law and the appellant-Company is
entitled to the refund of the amount of house tax paid by it
alongwith rate of interest at the rate of 10% p.a. from the date
of deposit.
16) In view of the above, the impugned judgment and order of
the High Court dated 14.11.2011 is set aside and,
consequently, the appeals are allowed.
...…………….………………………J.
(ANIL R. DAVE)
[[[[
…....…………………………………J.
(R.K. AGRAWAL)
...…………….………………………J.
(L. NAGESWARA RAO)
NEW DELHI;
NOVEMBER 8, 2016.
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