The Kerala High Court has held that properties owned by Central government or Central government undertakings are not exempted from service charges payable to local bodies.
A Division Bench passed the verdict while dismissing an appeal filed by BSNL against a single judge’s judgment upholding the notice issued by the Njarackal grama pancahyat in Ernakulam district demanding charges from BSNL for providing various services to its property.
According to BSNL, the Centre or Central government-owned companies or undertakings were exempted from paying charges or taxes under Article 285 of the Constitution.
The court observed that it was evident from the provision that what was exempted was the property of the Union government from all taxes imposed by a State government or by any authority within a State. It meant the exemption under Article 285 was only for tax on the property alone and not for any other levy imposed by a State on the property of the Centre or Centre-owned undertakings.
The court said that as per Rule 21 of the Kerala Panchayat Raj (Building Tax and the Surcharge) Rules, 1996, it was very clear that charges could be levied on properties owned by the Central government for providing services such as sanitation, water supply, street lighting, and drainage.
The court observed that an evaluation of meanings assigned to the respective phraseology "tax" and "service charge" would make it clear that “both operate on different fields and are not interchangeable so as to get the advantage of Article 285 of the Constitution.
