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P. Venkatarama Reddi, J.—In this writ petition, the demand of house-tax by the Jayanathipuram Gram Panchayat (respondent No. 3) is sought to be resisted by the writ petitioner (Rashtriya Ispat Nigam Limited) from the stand point of Article 285(1) of the Constitution of India. An amount of Rs. 24,149/- was demanded towards the house-tax on the petitioner''s buildings at Jaggayyapet Limestone Mine Township for the year 1989-90. This has led to the filing of the present writ petition.
The house-tax is leviable by the Gram Panchayat under Sections 69 and 70 of the A.P. Gram Panchayats Act, 1964, (hereinafter referred to as the ''Act'') read with the Rules contained in Schedule II of the Act. Under the new A.P.Panchayat Raj Act, 1994, the corresponding provisions are Sections 60 and 61. Section 70 of the Act lays down that the house-tax may be levied on all the houses in the village either on the basis of annual rental value or capital value or such other basis as may be prescribed. According to sub-section (2) of Section 70, the house-tax shall be a first charge upon the house. Sub- section (3) of Section 70 declares that the house-tax shall be levied every year at the rates as may be fixed by the Gram Panchayat subject to the minimum and maximum rates prescribed and shall be paid by the owner. The expression ''house'' as per Section 2(15) of the Act means "a building or hut fit for human occupation, whether as a residence or otherwise, and includes any shop, factory, workshop .........................". Thus, the charge u/s 69 (sic. 70) of the Act attaches to a building-residential or non-residential and it includes a factory or a workshop.
It is the contention of the learned Counsel for the petitioner Mr. V. Rajagopal Reddy that the land on which the township buildings stand vests with the Union of India, the lands having been acquired by the State Government on behalf of the Central Government with the funds provided by the Central Government and placed at the disposal of the petitioner- Company. Relying upon the Power of Attorney dated 11-12-1983 executed by the Central Government, the learned Counsel points out that the petitioner- Company merely acted as an agent to the Central Government in connection with the land acquisition proceedings and it has taken over the possession of the lands cquired, on behalf of and on the authority of Central Government. The learned Counsel goes further and submits that the buildings constructed on the land should also have the same incidents of ownership and they must be deemed to have vested with the Central Government. It is on this basis the argument is developed that Article 285 of the Constitution is attracted.
Article 285(1) enjoins that the property of the Union shall be exempt from all taxes imposed by a State or any other authority within a State unless the Parliament otherwise provides by law. The question is whether by demanding the house-tax on the buildings in question, the Gram Panchayat has transgressed the constitutional limitation under Article 285 of the Constitution. The answer depends upon the question whether the buildings in respect of which the tax is sought to be imposed are the property of the Union of India.
The Power of Attorney relied upon by the learned Counsel for the petitioner prima facie leads to the inference that the ownership in the lands acquired for the purpose of Visakhapatnam Steel Plant rests with the Union. The petitioner is constituted as the lawful Attorney for the Central Government in relation to or in connection with the proceedings for acquisition of land required for the Steel Plant, project, township and other incidental purposes. The attorney i.e., the petitioner is authorised to allocate and utilize the acquired land for the project and related purposes. We are not very sure whether this Power of Attorney holds good in respect of all the lands acquired at any point of time in all the districts for the benefit of the petitioner-Company. We are saying this particularly because the opening paragraph of the deed refers to "acquisition of lands required for the Steel Plant, project, township and other purposes incidental thereto near Visakhapatnam for setting up of the Steel Plant". The Lime Stone mines in Jaggayyapet are situated in Krishna district quite far off from Visakhapatnam. However, in the absence of adequate material before us and in the face of the unrebutted averments contained in paragraph (3) of the affidavit, we are not prepared to go further and say that the acquired land did not vest in Union of India and that it remains as the property of the petitioner-Company itself. Assuming that the land belongs to the Union of India, it does not follow therefrom that the structures constructed thereon would also become the property of the Union. No material has been placed before us to establish that the petitioner-Company acted for and on behalf of the Central Government while constructing the buildings and treated the buildings as belonging to the Union of India. It is trite to say that the land may belong to one person or entity and the structures may belong to another. The building put up by a person, who is in occupation of the land does not necessarily become owner of the land unless, of course, it is so provided in the agreement between the parties. It is well settled by more than one decision of the Supreme Court that the Common law principle expressed in the maxim "quicquid plantatur solo, solo cedit" is not adopted in the law of our country. The law on the subject has been discussed by the Supreme Court in K.A. Dhairyawan and Others Vs. J.R. Thakur and Others, . The Supreme Court cited with approval the following observations of the Bombay High Court in Narayan v. Bhola Gir 6 Bom (AC) 80:-
"....................We cannot, however, apply to cases arising in India the doctrine of the English law as to buildings, viz., that they should belong to the owner of the land. The only doctrine which we can apply is the doctrine established in India that the party so building on another''s land should be allowed to remove the materials."
The decision of Federal Court in AIR 1949 121 (Federal Court) . is more directly in point. In that case the premises within the municipal limits of Calcutta belonging to St. Thomas School was requisitioned under the Defence of India Rules for purposes of the Government of the Federation and possession was taken by the Central Government. Subsequently the Central Government erected several buildings on the premises. The Corporation of Calcutta demanded property tax after taking into account the valuation of the buildings constructed by the Central Government. The question arose whether the Calcutta Corporation can demand tax in respect of such buildings by virtue of Section 154 of the Government of India Act as adapted by the India (Provisional Constitution) Order, 1947 which is similar to Article 285 of the Constitution of India. It was argued on behalf of the Corporation that by the order of requisition, the land was not vested in the Government and therefore, the structures erected on the land would be the property of the owner of the land. The Federal Court dealt with this contention as follows:
"This contention is based on the assumption that when someone puts up a structure on land not belonging to him, the owner of the land is the owner of the structure. We are unable to accept the correctness of this assumption in India in all cases."
After referring to the decision of the Privy Council in AIR 1927 135 (Privy Council) . and the passage from the judgment of Sir Barnes Peacock in Thakkor Chandra Pormanick v. Ram Dhone Bhuttacharjee''s case, 6 W.R. 228. observed as follows:-
"Without attempting to define affirmatively what the generic term will cover, it is sufficient for us to hold that the buildings in question are ''property'' and as in India the ownership of a building is not necessarily related to the ownership of the land on which the building stands, the buildings in the present case were vested in the Government. It is, therefore, clear that the main part of Section 154 covers the case."
For the above reasons, the Federal Court rejected the contention of the Corporation of Calcutta and held that the tax demand was illegal.
Thus, either by operation of law or by virtue of any contractual stipulations between the Union of India and the petitioner-Company, can it be said that the buildings constructed on the land placed at the disposal of the petitioner-Company by the Central Government became the property of the Union. Neither the power of attorney referred to by the learned Counsel for the petitioner nor the counter-affidavit filed by the Central Government (a true copy of which is placed before us) supports the contention of the learned Counsel. It is surprising that the counter-affidavit filed on behalf of the Government of India refers to non-agricultural land assessment which is made on the vacant land. The learned Counsel for the petitioner explains that the counter-affidavit in the writ petition in which the levy of tax under the A. P.Non-Agricultural Lands Assessment Act was questioned has been adopted in this case rather mechanically. In any case, the counter-affidavit repeatedly stresses and points to the ownership of the land. Nowhere, reference has been made to the buildings. Thus, neither the power of attorney nor the counter-affidavit of the Central Government comes to the rescue of the petitioner.
It is too late in the day to contend that the petitioner being a Company wholly controlled by the Government of India, who perhaps would have subscribed to the entire share capital is an inseparable part of Union of India and what belongs to the Company equally belongs to the Union of India. It is well settled that an incorporated company, even though it is a Government company, has a distinct juristic personality and the property owned by the company cannot by fiction or otherwise be deemed to be the property of its exclusive shareholder or the controlling authority. Chandrachud , J., (as he then was) speaking for the Supreme Court observed in Western Coalfields Limited Vs. Special Area Development Authority, Korba and Another, . thus:
"................. it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India, the lands and buildings owned by the companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India. The companies, which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the companies, the Government of India only owns the share capital."
Again, in a recent case i.e., in Municipal Commissioner of Dum Dum Municipality and Others Vs. Indian Tourism Development Corporation and Others, . the legal status of Government Companies incorporated or statutorilly created was clarified thus:
"The Central and State Governments started creating Corporations for carrying on these activities. In the case of major public utilities, statutory corporations were created under different enactments. In respect: of several undertakings, companies were registered under the Companies Act. With a view to enable these statutory corporations and companies to carry on the activity which was hitherto carried on by the Governments, the relevant properties, assets and liabilities were transferred to such new corporations. They were supposed to operate on business lines, pay taxes and justify their creation and constitution. These corporations, whether created under the statute or registered under the Companies Act, are distinct juristic entities owning their own properties, having their own fund, capable of borrowing and lending monies and entering into contracts like any other corporation."
In the light of this settled legal position and in view of the foregoing discussion, the conclusion is inevitable that the buildings in relation to which the house-tax demands are sought to be raised by the Gram Panchayat do not have immunity from taxation under Article 285 of the Constitution as they are the property of the petitioner-Company itself but not the Union of India. The ratio of the Division Bench decision is Rashtriya Ispat Nigam Ltd v. Government of Andhra Pradesh 1997 (2) An W.R. 690 : 1997 (3) ALD 378. has no application to the instant case because the charge under the A.P.Non-Agricultural Lands Assessment Act was in respect of the vacant land, that too, the land occupied by the Steel Plant at Vizag. Even assuming that the ownership in the vacant lands in Jaggayyapeta Limestone Mining Area vests with the Union of India, the buildings admittedly constructed by the petitioner-Company are not the property of the Union of India.
Before closing the case, it needs to be stated that the house-tax demand is bald and skeletal and it does not spell out on what basis the tax has been quantified. Even in the counter-affidavit filed by the Gram Panchayat, no details are set out. It is, therefore, open to the petitioner-Company to question the quantum of tax determined by filing an appeal as provided for under Rule 27 in Schedule II of the Act which is also retained in the new Act. If such an appeal is filed within fifteen days from to-day, the same shall be considered and disposed of on merits after giving a notice of hearing to the representative of the petitioner-Company.
Subject to the above direction, the writ petition is dismissed. No costs.