# Union of India & Anr v. State of U.P. & Ors

- **Citation:** (2015) 3 ILRA 1431
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2015-12-07
- **Case number:** Writ Tax No. 101 of 2012
- **Bench:** Arun Tandon, Harsh Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/union-of-india-anr-v-state-of-u-p-ors-43336
- **Pages:** 6

## Headnote

Constitution of India, Art.-285-Demand of
Service
Tax-by
Municipal
Corporation
Varanasi-unless
exempted
by
Central
Government-Service
Tax
can
not
be
avoided-in view of Apex Court judgment in
case of Rajkot municipal corporation as well
as Union of India case-petitioner to deposit
entire
amount
within
one
month-the
Secretary
Nagar
Vikas
Sansthan
to
constitute mediation committee.
Held: Para-10
Having heard learned counsel for the
parties and examined the record of the
present writ petition, we are
of the
considered opinion that as on date, the
law as explained by the Apex Court in
the case of Union of India and others Vs.
State of U.P. and others 2007 (11) SCC
324 and that laid down in the case of
Rajkot Municipal Corporation Vs. Union
of India (Supra), stands on record. The
petitioner railways cannot avoid the
liability of payment of service charges,
however, no property tax can be levied
upon the property of the Railways.
Case Law discussed:
2010-CALHN (SC)-3-168; 2007 (11) SCC 324

## Text

3 All.
Union of India & Anr. Vs. The State of U.P. & Ors.
1431
petitioner under Section 302 IPC, giving
of notice would have been an empty
formality, therefore, no prejudice has
been caused to the petitioners.
48.
For the reasons aforesaid, this
Court is of the considered opinion that
merely because appeal was pending against
the order of the trial court and the execution
of the sentence had been suspended, it cannot
be said that, punishment order cannot be
passed by the disciplinary authority. If and
when the appeal against conviction is
allowed, the delinquent employee can seek
review of the decision passed by the
disciplinary authority. Thus, this Court
declines
to
exercise
its
discretionary
jurisdiction under Article 226 of the
Constitution of India in favour of the
petitioners as this Court do not find any valid
ground to interfere with the impugned orders.
49. Accordingly, the writ petitions
filed by the petitioners being devoid of
merits, are hereby dismissed.
50. Costs easy
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 07.12.2015
BEFORE
THE HON'BLE ARUN TANDON, J.
THE HON'BLE HARSH KUMAR, J.
Writ Tax No. 101 of 2012
Union of India & Anr.
 ...Petitioners
Versus
State of U.P. & Ors.
...Respondents
Counsel for the Petitioner:
Vivek Singh, Tarun Varma
Counsel for the Respondents:
C.S.C., B.P. Singh, Vivek Verma
Constitution of India, Art.-285-Demand of
Service
Tax-by
Municipal
Corporation
Varanasi-unless
exempted
by
Central
Government-Service
Tax
can
not
be
avoided-in view of Apex Court judgment in
case of Rajkot municipal corporation as well
as Union of India case-petitioner to deposit
entire
amount
within
one
month-the
Secretary
Nagar
Vikas
Sansthan
to
constitute mediation committee.
Held: Para-10
Having heard learned counsel for the
parties and examined the record of the
present writ petition, we are
of the
considered opinion that as on date, the
law as explained by the Apex Court in
the case of Union of India and others Vs.
State of U.P. and others 2007 (11) SCC
324 and that laid down in the case of
Rajkot Municipal Corporation Vs. Union
of India (Supra), stands on record. The
petitioner railways cannot avoid the
liability of payment of service charges,
however, no property tax can be levied
upon the property of the Railways.
Case Law discussed:
2010-CALHN (SC)-3-168; 2007 (11) SCC 324
(Delivered by Hon'ble Arun Tandon, J.)
1. Heard Sri Tarun Verma, learned
Special Counsel on behalf of petitioners
and learned Standing Counsel for the
State-respondents.
2.
The Union of India through
Divisional
Railway
Manager,
North
Eastern Railway, Varanasi, and the
Divisional
Railway
Manager,
North
Eastern Railway, Varanasi, as petitioner
nos. 1 and 2, have approached this Court
against the demand of service charges
raised by Nagar Nigam, Varanasi vide
notices issued in December, 2011, which
bears the subject "regarding payment of
house tax" on property C-33/9-R. The
Nagar Nigam, Varanasi has demanded an
1432
 INDIAN LAW REPORTS ALLAHABAD SERIES
amount of Rs.2, 22, 37, 185/- as arrears of
balance tax, surcharge and the current
demand.
3. In Rajkot Municipal Corporation
vs. Union of India 2010-CALHN (SC)-3168 decided on 19.11.2009, the Supreme
Court, while hearing an appeal against the
judgment of Gujarat High Court, by
which the High Court had quashed all the
demands
raised
by
the
Municipal
Corporation against the properties of the
Central Government imposing property
taxes on the ground that under Article 285
(1) of Constitution of India, no such
demand can be raised by the State
Government
against
the
Central
Government, held as follows:-
"(4) Article 285 of the Constitution
provides that:
(1) 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.
(2) Nothing in clause ( 1 ) shall, until
Parliament by law otherwise provides,
prevent any authority within a State from
levying any tax on any property of the
Union to which such property was
immediately before the commencement of
this Constitution is liable or treated as
liable, so long as that tax continues to be
levied in that State.
(5) In Union of India and ors, vs.
State of Uttar Pradesh and ors, 2007 (11)
SCC 324, this Court upheld the decision
of the High Court that charges for supply
of water or for other services rendered
under any statutory obligation, is a fee
and not tax. It was held that the Union of
India was liable to pay such charges and
should honour the bills served in that
behalf. Referring to Section 52 of the U.P.
Water Supply and Sewerage Act, 1975, it
was held that the charges were loosely
termed as "tax", that the nomenclature
was not important and what was charged
is a fee for the supply of water as well as
maintenance of the sewerage system, and
such service charges are to be considered
as a fee and were not hit by Article 285 of
the Constitution. It was further made clear
that what was exempted by Article 285
was a tax on the property of Union of
India but not a charge for service which
were being rendered in the nature of water
supply or for maintenance of sewerage
system.
(6) When these appeals were earlier
listed for hearing, both sides agreed that they
will attempt a broad consensus on several
pending issues and narrow down the areas of
controversy and agree for a dispute
resolution mechanism. We are told that in
pursuance of it, discussions were held among
various departments of the Government of
India with the Department of Urban
Development. In pursuance of it, an affidavit
dated 9.4.2009 has been filed on behalf of
Union of India crystallizing its stand on
various issues. Union of India has now
agreed in principle for the following: (i) It is
liable to pay service charges to the municipal
corporations for providing services like
supply of water, conservancy/sewerage
disposal, apart from general services like
approach roads with street lights, drains etc.
(ii) It will pay service charges to the
Municipal Corporations, for the services, as
stated in its circulars dated 10.5.1954,
29.3.1967, 25.5.1976 and 26.8.1986, but will
not pay any taxes. (iii) Having regard to the
fact that only service like supply of water
could be metered and other services like
drainage, solid waste management/approach
roads, street lighting etc., could not be
metered, the percentage of property tax will
be worked out as service charges, on the
3 All.
Union of India & Anr. Vs. The State of U.P. & Ors.
1433
basis of instructions issued by the Ministry of
Finance. (iv) The concerned Ministry of the
Union to which the property belongs will
enter into separate contracts with the
respective municipal corporation for supply
of services and payment of service charges
and pay the bills for annual service charges
regularly. (v) Union of India and its
departments will periodically review the
arrangements with the respective municipal
corporations, as suggested by its advisory
committees and make modifications or
revisions in the rates of service charges. (vi)
Whenever properties of State Government
are exempted, such exemption shall apply to
properties of Central Government also.
Under no circumstances, the service charges
payable by the Union of India will be more
than the service charges paid by the State
Government, (vii) The arrangement will not
affect the legal rights conferred by the
appropriate laws, in regard to any property
held by the union.
(7) The Union of India has also
stated that taking note of the relevant
circumstances, it has decided to pay
service charges at the following rates: (a)
75% of the property tax levied on private
owners, where the properties of the Union
are
provided
by
the
municipal
corporations with all services/facilities as
were provided to other areas within the
municipal corporation; (b) 50% of the
property tax levied on private owners, in
regard to properties of the Union, where
only some of the services/facilities were
availed; and (c) upto a maximum of onethird (33 and 1/3%) of the property tax
levied on private owners in regard to
properties which did not avail any of the
services provided by the municipal
corporation, as they were self-sufficient
on account of all services being provided
by the Union itself.
(8) It was also clarified that where no
services were availed from the municipal
corporation, a rate within the ceiling of 33
and 1/3% of the property tax, will be
negotiated and settled having regard to the
relevant circumstances. In so far as
properties
of
Indian
Railways
are
concerned, it was stated that as it owns
properties in virtually every municipal
corporation in India and normally all its
properties do not utilise the services
provided
by
municipal
corporations,
Railways propose to pay only a token
service charge of 5% or such other rate as
may be agreed by mutual negotiations.
(9)
Learned
counsel
for
the
appellants submitted that the appellant
municipal corporations submitted that
they were broadly in agreement with what
has been stated and agreed by Union of
India in the said affidavit. The appellantMunicipal Corporations also confirmed
and agreed:
(i) that they will not levy or demand
any "property tax" in respect of the
properties belonging to Union of India
and used for the purposes of the
Government; (ii) that the demands will
relate only to service charges for direct
services like supply of water and
conservancy/sewerage disposal services
and other general services such as
approach roads with street lighting,
drainage etc.; (iii) that they broadly
agreed to the rates of service charges
agreed by Union of India; and (iv) that if
there is defaults or if negotiations with the
concerned departments for in regard to
service charges fail they will not take any
coercive steps for recovery (like cutting
off supplies) nor resort to revenue
recovery proceedings, but will take
recourse to other remedies available to
them in law for recovery.
1434
 INDIAN LAW REPORTS ALLAHABAD SERIES
(10)
The
appellants,
however,
expressed reservations only in regard to
the stand of the Railways that it will only
pay nominal service charges at 5% of the
property tax. They point out that there can
be no property of Railways which can be
termed as 100% self sufficient in regard
to services, as common indirect services
provided by the Municipal Corporation
(like approach roads with street lighting
etc.) will be enjoyed by them. They also
drew our attention to the fact that
Ministry of Railways (Railway Board)
had also issued a circular dated 24.7.1954,
similar to the circulars issued by the
Government
of
India,
Ministry
of
Finance, providing for payment of part of
the property tax, as services charges for
water, scavenging etc. The learned
Solicitor General however stated that she
was not sure whether the said circular
continues in force or was superseded by
other circulars. Be that as it may.
(11). In view of the above, there is no
need to consider the appeals on merits. We
dispose of appeals and pending applications
by recording the following broad agreement
between the parties: (i) The Union of India &
its departments will pay service charges for
the services provided by appellant Municipal
Corporations. They will not pay any property
tax. The service charges will be paid at 75%,
50%, or 33 1/3% respectively of the property
tax levied on property owners, depending
upon whether Union of India or its department
is utilising the full services, or partial services
or nil services. The Union of India represented
by its concerned department will enter into
agreements/understandings
in
regard
to
service charges for each of its properties, with
the respective municipal corporation. (ii) The
above arrangement is open to modification or
periodical revisions by mutual consent. In the
event of disagreement on any issue, parties
will resort to a dispute resolution mechanism
by reference to a three Member Mediation
Committee consisting of a representative of
the Central Government, a representative of
concerned Municipal Corporation and a
senior representative (preferably the Secretary
in charge of the department of municipal
administration) of the State of Gujarat. (iii) If
Railways or any other department of Union of
India owning a property changes the
agreement/understanding unilaterally, or fail
to reach a settlement through the Medication
Committee in regard to any disputes, or fails
to clear the dues, it is open to the concerned
Municipal Corporation to initiate such action,
as it deems fit in accordance with law by
approaching the Jurisdictional Courts/Tribunal
for final and interim reliefs. (iv) The
municipal corporations shall not resort to
coercive
steps
(such
as
stoppage
of
services/services) nor resort to revenue
recovery proceedings for recovery of service
charges from Union of India or its
departments. (v) The services charges payable
by Union of India will under no circumstances
be more than the service charges paid by State
Government for its properties. Whenever
exemptions or concessions are granted to the
properties belonging to the State Government,
the same shall also apply to the properties of
Union of India. (vi) If the Railways does not
abide by the four general circulars of the
Union of India dated 10.5.1954, 29.3.67,
28.5.1976 and 26.8.1986 and the general
consensus set out above, it is open to
Municipal Corporation to take suitable action
as is permissible in law."
4. In compliance with the judgment of
the Apex Court in Rajkot Municipal
Corporation vs. Union of India (supra) the
Central
Government
vide
Office
Memorandum dated 15/17.12.2009 issued by
UCD/LSG Section, Ministry of Urban
Development, Government of India provided,
that the Union of India and its departments
3 All.
Union of India & Anr. Vs. The State of U.P. & Ors.
1435
will pay service charges for the services
provided
by
appellant
Municipal
Corporations. No property tax will be paid by
Union of India but service charges calculated
@ 75%, 50%, 33 1/3% of Property Tax levied
on property owners will be paid, depending
upon utilization of full or partial or nil
services. For this purpose agreements will be
entered into Union of India represented by
concerned
departments
with
respective
Municipal Corporation. The arrangement will
be open to modification or revision by mutual
consent. In the event of disagreement, the
same shall be resolved by a three Member
Mediation
Committee
consisting
of
a
representative of Central Government, a
representative
of
concerned
Municipal
Corporation & a senior representative
(preferably the Secretary in charge of
department of Municipal administration) of
the State.
5. The Railway Board has by its
letter dated 9.3.2010 accepted the policy
decision taken by the Central Government
in compliance with the judgments of the
Supreme Court.
6. The petitioners did not approach
the Nagar Nigam, Varanasi protesting to
the levy of service charges and requesting
a Mediation Monitoring Committee to be
constituted. It is only after the demand has
been raised, the petitioners appear to have
realised that they have to comply with the
judgment of the Suprement Court, the
decision taken by the Ministry of Urban
Development, Government of India and
Railway Board in accordance with the
procedure set out and in case of any
dispute in resolving the same through the
Mediation Monitoring Committee.
7. Under the interim order of the
Court dated 23.7.2012 the petitioners
were called upon to deposit 1/3rd of the
total demand, within one month of the
order and the recovery of balance was
stayed.
8. Counsel for the petitioners has
referred to us another judgement of
Division Bench passed in Tax Writ
Petition No.1292 of 2011 "Cantonment
Board, Varanasi Vs. Union of India and
others", wherein the writ petition was
disposed of vide order dated 03.10.2013
with the direction that parties will enter
into agreement in accordance with the
judgment of the Apex Court in the case of
Rajkot Municipal Corporation Vs. Union
of India (Supra) as well as the office
memorandum of Ministry of Finance
within one month and the amount already
paid by the petitioners will be treated as
payment of the first installment towards
payment
of
the
services
charges
calculated from the year as mentioned in
the order. Remaining amount was directed
to be paid by the petitioners in three equal
monthly installments. It is stated that said
order has been challenged before Apex
Court
by
means
of
Civil
Appeal
No.10771 of 2014 by the Railway
Department, wherein no interim order has
been granted and the appeal is likely to be
heard in near future.
9. It is submitted before us that
similar arrangement may be made in
respect of the service charges demanded
by the Municipal Corporation, Varanasi.
10. Having heard learned counsel
for the parties and examined the record of
the present writ petition, we are of the
considered opinion that as on date, the
law as explained by the Apex Court in the
case of Union of India and others Vs.
State of U.P. and others 2007 (11) SCC
1436
 INDIAN LAW REPORTS ALLAHABAD SERIES
324 and that laid down in the case of
Rajkot Municipal Corporation Vs. Union
of India (Supra), stands on record. The
petitioner railways cannot avoid the
liability of payment of service charges,
however, no property tax can be levied
upon the property of the Railways.
11. Since the demand under challenge
is stated to be for the year 2011-12, we
deem it fit and proper to provide that the
petitioners may deposit the entire money as
demanded under protest within one month
from today. Thereafter they may make an
application before the Secretary of Nagar
Vikas U.P. Shashan for constitution of
Mediation Committee, on which the
Mediation Committee comprising of a
representative of Central Government, a
representative of concerned Municipal
Corporation and a Senior representative
(preferably the Secretary In-charge of
Department of Municipal Administration)
shall be constituted within one month of the
receipt of such request. The Committee
shall determine the issues as may be raised
by parties in the matter of levy and
collection of service charges. The amount
deposited by the petitioners in terms of the
order passed by us today, shall abide by the
decision to be taken by the Mediation
Committee. The Mediation Committee shall
finalize the proceedings within two months
by means of a reasoned order.
12. The writ petition is disposed of.
13. Interim order, if any, stands
discharged.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 16.12.2015
BEFORE
THE HON'BLE DR. DEVENDRA KUMAR
ARORA, J.
Service Single No. 584 of 1998
Ram Deo Tewari
 ...Petitioner
Versus
State of U.P.
...Respondent
Counsel for the Petitioner:
S.B. Pandey, S.P. Singh, Shiv Shankar
Singh
Counsel for the Respondents:
C.S.C.
Civil Services Regulations Art.-370-Pension
benefits-work charged employee-after 3
years 10 months and 7 days regularizationretired -whether period of working in work
charge establishment countable for pension
purpose ?-held-'no'-reasons disclosed.
Held: Para-11
As indicated above, the service of the
petitioner in the regular establishment is
only for a period of 3 years,10 months
and 21 days, he is not entitled to get the
pensionary benefits as claimed by hi.
Further, for the reasons indicated above,
t he services performed by the petitioner
in the work charged establishment are
not liable to be counted as qualifying
services for the purposes of payment of
post-retiral /terminal benefits.
Case Law discussed:
2014 (2) AWC 1771; 2010 (8) ADJ 664; (2009)
3 SCC 661; (1979) 4 SCC 440; (1997) 2 SCC
517
(Delivered by Hon'ble Dr. Devendra
Kumar Arora, J.)
1. Heard Sri Uma Shanker Tiwari,
Advocate holding brief on behalf of Sri
Shiv Shanker Singh, learned Counsel for
the petitioner and Sri Badrul Hasan,
learned
Additional
Chief
Standing
Counsel.