Karnataka High Court Issues Notice To State On Plea Against Levy Of Property Tax On Buildings & Lands Owned By Central Govt

The plea has been filed by Indian Plywood Industries and Research and Training Institute, which is a wholly Government of India owned society.

The petitioner is primarily aggrieved by issue of demand notices, imposing service charges on its property. Advocate M N Kumar appearing for the petitioner said the demand notices, latest being dated September 13, could not have been issued.

It is contended that as per Article 285 (1) of the Constitution of India, state or its authorities have no legislative competence to impose tax on the land and building belonging to the Union of India on the basis of use of land and building, including service charges.

The provision states: "The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State".

The bench has, till the next date of hearing, directed the Respondents not to precipitate further on the demand notices.

The petition states that Section 110 (1) (j) of the 1976 Act is ultra vires of the Constitution in so far as it classifies land and building belonging to Union of India. Moreover, section 110 (2) is alleged to be ultra vires to the extent it permits BBMP to levy service charges towards providing civic amenities and for general or special services on land and buildings owned and possessed by the Union of India.

The government of Karnataka passed an order in 1963, granting 16 acres and 18 guntas of land in Peenay Village, Bengaluru for putting up the main laboratory of the petitioner. The plea states that the petitioner has headquarters in Bengaluru and outreach field stations located at Kolkata and Punjab. The institute is receiving grant-in-aid from the Ministry of Industry, Department of Industrial Development.

Case Title: Indian Plywood Industries Research And Training Institute v. State Of Karnataka

Case No: WP 22283/2021