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Friday, December 30, 2016

levy of property tax on “mobile towers =The first are the appeals arising from the judgment and order dated 24/25.04.2013 passed by the Gujarat High Court declaring Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949 (hereinafter referred to as “the Gujarat Act”) as ultra vires the Constitution and on that basis interdicting the levy of property tax on “mobile towers”. The High Court, by the impugned judgment, however, took the view that the Cabin in a mobile tower in which BTS system, details of which are noticed below, is located, would be a building and, therefore, exigible to tax under the Gujarat Act. The State Government and the different Municipal Corporations have challenged the first part of the order of the High Court whereas the Cellular operators have challenged the later part.=Though several other decisions of this Court and also of different High Courts have been placed before us we do not consider it necessary to refer to or to enter into any discussion of the propositions laid down in the said decisions as the views expressed in all the aforesaid cases pertain to the meaning of the expressions ‘land’ and ‘building’ as appearing in the definition clause of the statutes in question. We, therefore, set aside the judgment passed by the Gujarat High Court and answer the appeals arising from the order of the Bombay High Court; transferred cases and the writ petitions accordingly. However, we leave it open, so far as the cellular operators in the Bombay cases are concerned, to agitate the issue with regard to the retrospective operation of the assessment/demand of tax and the quantum thereof before the appropriate forum, if so advised. Consequently, and in the light of the above all the appeals, writ petitions and the transferred cases are disposed of.


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                     CIVIL APPEAL  NOS.5360-5363 OF 2013





C.A. No. 5364/2013, C.A. No. 5365/2013, C.A. Nos. 6385-6387/2013, C.A.  Nos.
6737-6738/2013, C.A. No. 6739/2013,  C.A.  Nos.  6836-6926/2013,  C.A.  Nos.
7865-7894/2013, C.A. No. 8114/2013, C.A. No. 8115/2013, C.A. No.  8116/2013,
C.A. No. 8117/2013,              C.A. No.12209/2016 @ SLP(C)  No.  362/2014,
C.A. Nos. 2854-2855/2014,  C.A. No.12211/2016 (arising out  of   SLP(C)  No.
12567/2014),      C.A.   No.12212/2016   (arising   out   of    SLP(C)   No.
21521/2014), C.A. No.12213/2016 (arising out  of   SLP(C)  No.  22653/2014),
C.A. Nos.          12214-12215/2016 (arising  out  of   SLP(C)  Nos.  29803-
29804/2014), C.A. No. 12216/2016 (arising out of   SLP(C)  No.  29765/2014),
C.A.  No.  12217/2016  (arising  out  of   SLP(C)  No.   31442/2014),   C.A.
No.12218/2016   (arising   out   of     SLP(C)   No.   31986/2014),     C.A.
No.12220/2016 (arising out of SLP(C)  No.  24053/2014),  C.A.  No.12219/2016
(arising out of   SLP(C) No. 3550/2015),  C.A.  No.12221/2016  (arising  out
of  SLP(C) No. 6149/2015),     C.A. No. 12222/2016 (arising  out  of  SLP(C)
No. 8705/2015), C.A. No.12223/2016 (arising out of   SLP(C) No.  9004/2015),
C.A.  No.12224/2016  (arising  out  of   SLP(C)  No.  9104/2015),       C.A.
No.12225/2016  (arising  out  of  SLP(C)  No.37142/2016   arising   out   of
SLP.(C)...CC No. 4938/2015),                C.A. No.12226/2016 (arising  out
of   SLP(C)  No.9233/2015),  C.A.  No.12227/2016  (arising  out  of   SLP(C)
No.8698/2015),         C.A.   No.12228/2016   (arising   out    of    SLP(C)
No.9620/2015),        C.A.   No.   12229/2016   (arising   out   of   SLP(C)
No.10288/2015),      C.A.  No.  12230/2016  (arising  out  of   SLP(C)   No.
9827/2015), C.A.  No.12231/2016  (arising  out  of  SLP(C)  No.  9994/2015),
C.A.  No.12232/2016  (arising  out  of   SLP(C)  No.11479/2015),        C.A.
No.12233/2016 (arising out of SLP(C)  No.  15175/2015),  C.A.  No.12234/2016
(arising out of SLP(C) No. 28473/2015),        C.A.  No.12235/2016  (arising
out of SLP(C) No. 1457/2016),       C.A.  No.  12236/2016  (arising  out  of
SLP(C) No. 12563/2016),    C.A. No. 5348/2015, W.P.(C) No.216/2015,  W.P.(C)
No.611/2015,  W.P.(C)  No.577/2015,   T.C.(C)   No.108/2015,   T.C.(C)   No.
128/2015, T.C.(C)  No.  129/2015,  T.C.(C)  No.  130/2015  and  T.C.(C)  No.

                               J U D G M E N T


      Delay condoned. Leave granted in all the special leave petitions.

2.    This group of cases may be conveniently  arranged  in  four  different
categories. The first are the appeals arising from the  judgment  and  order
dated 24/25.04.2013 passed by the Gujarat High Court declaring Section  145A
of the Gujarat Provincial  Municipal  Corporations  Act,  1949  (hereinafter
referred to as “the Gujarat Act”) as ultra vires  the  Constitution  and  on
that basis interdicting the levy of property tax  on  “mobile  towers”.  The
High Court, by the impugned judgment, however, took the view that the  Cabin
in a mobile tower in which BTS system, details of which are  noticed  below,
is located, would be a building and, therefore, exigible to  tax  under  the
Gujarat Act. The State Government and the different  Municipal  Corporations
have challenged the first part of the order of the High  Court  whereas  the
Cellular operators have challenged the later part.

3.    The Bombay High Court which  was  in  seisin  of  a  somewhat  similar
challenge, by the order under challenge, has taken the view  that  the  writ
petitions challenging the levy of property tax on mobile towers  should  not
be  entertained  and  the  aggrieved  writ  petitioners  therein   (cellular
operators) should be left  with  the  option  of  exhausting  the  alternate
remedies provided by the Act. This would be the third category of cases.  In
this regard, it must be noticed that  in  the  Bombay  Provincial  Municipal
Corporations  Act,  1949,  the  charging  section  does   not   specifically
contemplate levy of taxes on mobile  towers  as  in  the  Gujarat  Act.  The
impugned levy, nevertheless,  was  imposed  on  the  reasoning  that  mobile
towers are buildings as defined in the Act.  At this stage, it must also  be
noticed that the Bombay Provincial  Municipal  Corporations  Act,  1949  was
applicable to the State of Gujarat also until the  year  2011  when  by  the
Gujarat Short Titles (Amendment) Act,  2011  the  word  ‘Gujarat’  has  been
inserted in place of the word ‘Bombay’.

4.    The fourth and fifth categories of cases would be the  writ  petitions
raising identical issues which have been transferred from  the  Bombay  High
Court to this Court and the writ petitions filed before this  Court  by  the
cellular operators under Article 32 of the Constitution  raising  a  similar
challenge as in the writ petitions filed before the High Court.

5.    As the elaborate arguments advanced in the  course  of  the  prolonged
hearing have centered around the provisions of the Gujarat Act,  it  may  be
convenient to take up the Gujarat cases in the first  instance.  The  answer
to the issues arising therein would, in  any  way,  effectively  decide  the
issues arising in the Bombay cases also as well as in the transferred  cases
and the writ petitions filed under Article 32 of the Constitution.

6.    The relevant provisions of the Gujarat Act  defining  the  expressions
“building”, “land” and “mobile tower” are as follows:

“Section 2(5) “building”  includes a house,  out-house,  stable,  shed,  hut
and other enclosure or structure whether  of  masonry,  bricks,  wood,  mud,
metal or any other material whatever whether used as  a  human  dwelling  or
otherwise,  and  also  includes   verandahs,   fixed   platforms,   plinths,
doorsteps, walls including compound walls and fencing and the like.

                         xxx   xxx   xxx  xxx   xxx

Section 2(30) “land” includes land which is being built  upon  or  is  built
upon or covered with water, benefits to arise out of land,  things  attached
to the earth or permanently fastened to anything attached to the  earth  and
rights created by legislative enactment over any street.

                         xxx   xxx   xxx  xxx   xxx

Section 2(34AA) “Mobile tower” means a  temporary  or  permanent  structure,
equipment or instrument erected or installed on land or  upon  any  part  of
the building or premises for providing telecommunication services.”

7.    Section 127(1) of the Gujarat Act, the charging  section,  is  in  the
following terms:

“127. Taxes to be imposed under this Act.-

(1) For  the  purposes  of  this  Act,  the  Corporation  shall  impose  the
following taxes, namely:-

(a)   Property taxes either under section 129 or under section 141AA.

(b)   a tax on vehicles, boats and animals.

(c)   a tax on mobile towers:

Provided that xxx  xxx  xxx  xxx  xxx  xxx  xxx

8.    Section 129 of the Gujarat Act deals with different components of  the
property tax which can be  levied  under  the  Act.  Briefly  put  the  said
components are water tax; conservancy and sewerage tax;  general tax of  not
less than 12% but not exceeding 30% of the rateable value etc.

9.    Section 141AA deals with the rate at which water tax, conservancy  tax
and sewerage tax are  to  be  imposed.  Section  141B  of  the  Gujarat  Act
provides for the rate at which the general tax is leviable.

10.     Section  145A  (inserted  by  the  Gujarat  Local  Authorities  Laws
(Amendment) Act, 2011) provides for  tax  on  mobile  towers  at  rates  not
exceeding those prescribed by order in  writing  by  the  State  Government.
Such tax which is levied on mobile towers is to be  collected  from  persons
engaged in providing  telecommunication  services  through  service  towers.
Section 145A is in the following terms.

“145A Tax on mobile towers.-

 (1) A tax at the rates not exceeding those prescribed by order  in  writing
by the State Government in this behalf from time to time shall be levied  on
mobile  towers  from  the  person  engaged  in  providing  telecommunication
services through such mobile towers.

(2) The Corporation shall from year to year, in accordance with Section  99,
determine the rates at which the tax shall be levied."

11.   By the aforesaid Gujarat Local Authorities Laws (Amendment) Act,  2011
similar provisions for levy of tax on mobile towers have  been  inserted  in
the Gujarat Municipalities Act, 1963 and also the  Gujarat  Panchayats  Act,

12.   The short contention of the cellular  operators  advanced  before  the
High Court is that Section 127(1)(c) read with Section 145A of  the  Gujarat
Act are legislatively incompetent as mobile towers are beyond the  scope  of
Entry 49 of List II of the Seventh Schedule to the Constitution which is  in
the following terms.

 “49.  Taxes on lands and buildings.”

13.   The High Court thought it proper to accept the said contention and  on
that basis to hold that levy of tax on mobile towers under the  Gujarat  Act
is ultra vires the Constitution except insofar as the Cabin that houses  the
BTS system is concerned.

14.   Two significant aspects connected to the issues arising may  be  taken
note of at the outset. The meaning of any Legislative Entry e.g.  “Taxes  on
lands and buildings” (Entry 49 of List  II)  should  not  be  understood  by
reference to the definition of the very  same  expressions  appearing  in  a
statute traceable to the particular Legislative Entry. In the present  case,
though the Gujarat Act defines the expressions  “land”  and  “building”,  as
rightly held by the High Court, it would be  self  defeating  to  understand
the meaning and scope of Entry 49 of List II by reference to the  definition
clauses in the Gujarat Act. Definitions contained  in  the  statute  may  at
times be broad and expansive; beyond the natural meaning  of  the  words  or
may even contain deeming provisions. Though the wide  meaning  that  may  be
ascribed to a particular expression by the  definition  in  a  statute  will
have to be given effect to, if the statute is otherwise found to  be  valid,
it will, indeed, be a contradiction in terms to test  the  validity  of  the
statute on the touchstone of it being within the  Legislative  Entry,  by  a
reference to the definition contained in the statute.

15.   The second aspect, mentioned above, is one concerning the  permissible
operation of two different statutes relatable to two  different  Entries  in
List I  or  II  or  even  in  List  III  of  the  Seventh  Schedule  to  the
Constitution. This has been acknowledged by the High Court, in the  impugned
Order, by accepting that even if a mobile tower is a part of  the  apparatus
pertaining to “telegraphs” covered by Entry 31 of List I,  yet, the  Gujarat
Act could still co-exist as a statute levying a tax on lands  and  buildings
so long and if only mobile towers can come within the  scope  and  ambit  of
the aforesaid expressions “land and building” in Entry 49 of  List  II.  The
endeavour, therefore,  must  be  to  trace  out  the  true  meaning  of  the
expressions “land and building” appearing against Entry 49 of List II  by  a
correct  application  of  the  parameters  and  principles   governing   the
interpretation of a Constitutional provision specially an Entry  in  any  of
the legislative fields under the Seventh Schedule to the Constitution.

16.    Certain   accepted   and   settled   principles   of   Constitutional
interpretation may now be taken note of. It will not be necessary  to  enter
into any detailed deliberations and debate in this regard  in  view  of  the
undisturbed precedents on which such principles have come to rest.   Broadly
and illustratively some of the principles which have been  culled  out  from
the decisions of this Court are enumerated hereinbelow.

(i)   In interpreting the provisions of the Constitution,  particularly  the
Legislative Entry, a broad, liberal and expansive interpretation  is  to  be
preferred as the meaning of an Entry is always  inclusive.  [Synthetics  and
Chemicals Ltd. vs. State of Uttar Pradesh[1]]

(ii)  Principles  of  interpretation  of  a  statute  are  not  foreign  and
altogether irrelevant for the  purposes  of  interpreting  a  constitutional
provision and/or a specific Legislative Entry. [Good Year  India  Ltd.   vs.
State of Haryana & Anr.[2]]

(iii) A Constitution is an organic document that must  grow  and  live  with
the times. [State of West Bengal  vs.  Kesoram Industries Ltd.[3]]

(iv)  The spirit of the Constitution,  the  constitutional  goals;  and  the
constitutional philosophy must guide the broad  and  liberal  interpretation
of a Legislative Entry. [State  of  West  Bengal   vs.   Kesoram  Industries

(v)   The dictionary meaning and  the  common  parlance  test  can  also  be
adopted. [Trutuf Safety Glass Industries vs.   Commissioner  of  Sales  Tax,

(vi)  Words and expressions in a  constitutional  provision  or  Legislative
Entry should not be given an unnatural meaning. [India Cement  vs. State  of
Tamil Nadu[6]]

(vii) If a general word is used  in  a  constitutional  Entry,  it  must  be
construed as to extend all ancillary and  subsidiary  matters  that  can  be
reasonably included. [Jagannath Baksh Singh  vs.  State  of  U.P.[7];   Elel
Hotels & Investments Ltd.  & Ors.  vs. U.O.I.[8].]

The abovesaid principles  which  are  firmly  entrenched  as  principles  of
Constitutional  interpretation  must  be  borne  in  mind  while  proceeding
further in the case.

17.   In re. The Bill to amend Section 20 of the Sea Customs Act,  1878  and
Section 3 of the Central Excise and Salt Act, 1944[9]  ,  a  Bench  of  nine
Judges of this Court has observed that,

“Neither the Union nor the States can claim unlimited rights as regards  the
area of taxation.  The  right  has  been  hedged  in  by  considerations  of
respective powers and responsibilities of  the  Union  in  relation  to  the
States, and those of the States in relation  to  citizens  inter  se  or  in
relation to the Union. Part XII of the  Constitution  relates  to  Finances.
At the very outset Article 265 lays down that “No tax  shall  be  levied  or
collected except by authority of law.”  That authority has to  be  found  in
the three Lists in the Seventh Schedule subject to the  provisions  of  Part
XI  which  deals  with  relations  between  the  Union   and   the   States,
particularly  Chapter  I  thereof  relating  to  legislative  relations  and
distribution of legislative powers with special reference to Article 246.”

18.   Article 246 is in the following terms:

(1) Notwithstanding  anything  in  clauses  (2)  and  (3),  Parliament   has
exclusive power to make laws with respect to any of the  matters  enumerated
in List I in the Seventh Schedule (in this Constitution referred to  as  the
“Union List”).

(2) Notwithstanding anything in clause  (3),  Parliament,  and,  subject  to
clause (1), the Legislature of any State also, have power to make laws  with
respect to any of  the  matters  enumerated  in  List  III  in  the  Seventh
Schedule (in this Constitution referred to as the “Concurrent List”).

(3) Subject to clauses (1)  and  (2),  the  Legislature  of  any  State  has
exclusive power to make laws  for  such  State  or  any  part  thereof  with
respect to any of the matters enumerated in List II in the Seventh  Schedule
(in this Constitution referred to as the “State List”).

(4) Parliament has power to make laws with respect to  any  matter  for  any
part of the territory of India not included  (in  a  State)  notwithstanding
that such matter is a matter enumerated in the State List”

19.   Though Article 246 has often been understood to  be  laying  down  the
principle of  Parliamentary  supremacy,  it  must  be  qualified  that  such
supremacy, if any, is extremely limited and very  subtle.  This  has  to  be
said when the federal structure of the Indian Union has been  recognised  as
a basic feature of  the  Constitution.  Both,  the  Central  and  the  State
legislatures,  are  competent  to  enact  laws  in  any  matters  in   their
respective Lists i.e. List I and List II.  Conflict  or  encroachments  must
be ironed out by the Courts and only on a failure to do  so  the  provisions
of Article 246 will apply.  Insofar as the common  List  i.e.  List  III  is
concerned, any repugnancy in law making by the Union and State  Legislatures
is dealt with by Article 254 which gives primacy to  the  Parliamentary  law
over the State law subject to the provisions of clause (2)  of  Article  254
of the Constitution which again is subject to a proviso which  may  indicate
some amount of Parliamentary supremacy.

20.   The fields of  taxation  on  which  the  Union  Parliament  and  State
legislatures are competent to enact legislations to meet the  constitutional
mandate under Article 265 of the Constitution are clearly indicated  in  the
respective Lists. While there can be  no  encroachment  either  way,  it  is
possible that in a given situation  though  there  may  be  some  similarity
between the taxes levied by a Central and a State enactment,  both  can  co-
exist having regard to the subject of the levy.  A  tax  on  income  derived
from land and a tax on  the  land  itself  wherein  the  income  or  earning
therefrom forms the basis of the rates of  the  levy  of  tax  is  one  such
example. The above  has  been  illustrated  only  to  answer  the  arguments
advanced before us on view expressed, in the order under challenge,  by  the
High Court that even if it is assumed that the cellular operators are  right
in contending that mobile towers  are  covered  by  the  field  “telegraphs”
(Entry 31 of List I), it cannot be said  that  if  mobile  towers  can  come
within the fold of Entry  49  of  List  II,  such  a  legislation  would  be
legislatively incompetent.

21.   The Constitutional scheme with respect to financial relations  between
the Union and the State is dealt with by Part XII of the  Constitution.  The
scheme  discernible  contemplates  an  equitable  distribution  of  revenues
between the Centre and the  States.   Though  the  Union  and  each  of  the
federating units have their respective  consolidated  funds,  the  financial
arrangements  and  adjustments  that  are  to  be  found  in  the  different
provisions of Part XII of the Constitution  would  indicate  an  attempt  at
equitable distribution of revenues between  the  Union  and  the  federating
units even though such revenue may be derived from taxes and duties  imposed
by the Union and collected by it or through the agencies of  the  States.  A
perusal of the legislative  entries  relating  to  taxes  imposable  by  the
Central and the State legislatures do indicate that the larger share of  the
revenue goes to the Union because of the very nature of the  taxes  leviable
by the Union Parliament which would stand credited to the consolidated  fund
of the Union. The allocation of revenue heads/taxation power in  the  States
certainly shows a disequilibrium which, however, is sought  to  be  balanced
by the constitutional scheme aforementioned, namely, equitable  distribution
of revenues between the Union and the States even though such  revenues  may
be derived from taxes and duties imposed by the Union and collected  by  it.
This aspect of the Constitutional scheme which has been echoed  in  para  50
of the decision in  State  of  West  Bengal  vs.  Kesoram  Industries  Ltd.,
(supra) has to be kept in mind as the discussions unfold.

22.   We may now see what a Mobile Tower is and consists  of.  In  technical
terms a Mobile Tower is called a “Base Transceiver  Station.”   It  involves
the making of structure consisting of the following:

a.    A pre-fabricated shelter made  of  insulating  PUF  material  made  of

b.    Electronic Panel.

c.    Base Transceiver  Station  (BTS)  and  other  radio  transmission  and
reception equipment.

d.    A diesel generator set.

e.    Six poles  of  6  to  9  meters  length  each  made  of  hollow  steel
galvanized pipes.

A mobile tower is constructed either on vacant land or  on  the  terrace  of
existing buildings on the basis  of  agreements  with  the  owners  of  such

23.   To answer the question as to  whether  such  mobile  towers  can  come
within the fold of ‘land and building’ appearing in Entry 49 List II of  the
Seventh Schedule it will be useful to take notice of  the  meanings  of  the
two  expressions  as  appearing  in  the  leading   judicial   and   English
dictionaries.  A comprehensive list of the different meanings  expressed  in
different works so far as the two  expressions  ‘land’  and  ‘building’  are
concerned are set out below.


Stroud’s  Judicial  Dictionary  (Fifth  Edition)  defines  that  ‘land’,  or
‘lands’, not only means the surface  of  the  ground,  but  also  everything
(except gold or silver mines) on or over or under it, for  Cujus  est  solum
ejus est usque ad coelum et ad inferos (Co. Litt. 4  a;  Touch.  91;  2  Bl.
Com. 18; Lord Coke calls the earth “the suburbs of heaven”).

Black’s Law Dictionary  (Seventh  Edition)  defines  that  ‘land’  means  an
immovable and indestructible three-dimensional area consisting of a  portion
of the  earth’s  surface,  the  space  above  and  below  the  surface,  and
everything growing on  or  permanently  affixed  to  it.  The  lexicographer
further observes, “In its legal significance, ‘land’ is  not  restricted  to
the earth’s surface, but extends below and above  the  surface.  Nor  is  it
confined to solids, but may encompass  within  its  bounds  such  things  as
gases and liquids. A definition of ‘land’ along the  lines  of  ‘a  mass  of
physical matter occupying space’ also is not sufficient,  for  an  owner  of
land may remove part or all of that physical matter, as nevertheless  retain
as part of his ‘land’ the space that  remains.  Ultimately,  as  a  juristic
concept, ‘land’ is simply an area of three-dimensional space,  its  position
being identified by natural or imaginary points located by reference to  the
earth’s surface. ‘Land’ is not the fixed contents of that  space,  although,
as we shall see, the owner of that space may well own those fixed  contents.
Land is immovable, as distinct from chattels,  which  are  moveable,  it  is
also, in its legal significance, indestructible. The contents of  the  space
may be physically severed, destroyed or consumed, but the space itself,  and
so the ‘land’, remains immutable.” Peter Butt,  Land  Law  9  (2nd  Edition,

P. Ramanatha Aiyar’s Law Lexicon (Second Edition)  observes  that  the  word
‘land’  is  a  comprehensive  term,  including  standing  trees,  buildings,
fences, stones, and waters, as well as  the  earth  we  stand  on.  Standing
trees must be regarded as part and parcel of the  land  in  which  they  are
rooted and from which they draw their  support.  The  word  ‘land’,  in  the
ordinary legal sense,  comprehends  everything  of  a  fixed  and  permanent
nature and therefore embraces growing trees. 48 All 498 95 IC 150 =  24  ALJ
583 = 1926 All 689.


Stroud’s Judicial  Dictionary  (Fifth  Edition)  observes  that  what  is  a
‘building’ must always be  a  question  of  degree  and  circumstances:  its
“ordinary and usual meaning is, a block of brick or stone work,  covered  in
by a roof” (per Esher M.R.,  Moir  v.  Williams  [1892]  1  Q.B.  264).  The
ordinary and natural meaning of the word ‘building’ includes the fabric  and
the ground on which it stands (Victoria City v. Bishop of  Vancouver  Island
[1921] A.C. 384, at p. 390).

Black’s Law  Dictionary  (Fifth  Edition)  observes  that  ‘building’  is  a
structure designed for habitation,  shelter,  storage,  trade,  manufacture,
religion,  business,  education  and  the  like.  A  ‘building’  is  also  a
structure or edifice enclosing a space within its  walls  and  usually,  but
not necessarily, covered with a roof.

P. Ramanatha Aiyar’s Law Lexicon (Second Edition) observes  that  ‘building’
is a house, out-house,  garage  or  any  other  structure  which  cannot  be
erected without  the  ground  on  which  it  is  to  stand;  the  expression
‘building’ includes, the fabric of which it is  composed,  the  ground  upon
which its walls stand and the ground within those walls. (per D.G.  Gouse  &
Co. v. State of Kerala, AIR 1980 SC 271 [Kerala Building Tax Act  (1975)  S.


‘Building’ is something with a roof and walls, such as a house  or  factory.
(Collins Dictionary of the English Language, First Edition, 1979)

‘Land’ refers to the solid part of the surface of  the  earth,  as  distinct
from seas, lakes, etc. (Collins Dictionary of the  English  Language,  First
Edition, 1979)

All other English dictionaries  convey  a  more  or  less  similar  meaning,
namely, as understood in common parlance – an enclosed space used for  human
use and dwelling.

24.   A cardinal principle of interpretation of a Legislative Entry  in  any
of the Lists of the Seventh Schedule is to treat the words  and  expressions
therein as inclusive in meaning and give the same all  possible  flexibility
instead of restricting such meaning to the perceptions contemporaneous  with
the times when the Constitution was framed.  The  Constitution,  an  organic
document, has  to  be  allowed  a  natural  growth  by  such  a  process  of
interpretation.  Interpretation of a Legislative Entry has to grow and  keep
up with the pace of times.

25.   We may now see how judicial opinion has dealt with the question.

In Anant Mills Co. Ltd. Vs. State of Gujarat and Others[10] this  Court  had
occasion to consider the scope and ambit  of  the  provisions  contained  in
Entry 49 List II in the context of the provisions of the very same  Act  (as
applicable to Bombay).  Sufficient illumination and elucidation  flows  from
such consideration which is available in para 44 of the report which may  be
very conveniently extracted below.

“44. Mr. Tarkunde on behalf of the petitioner Company has urged  that  under
Entry 49 of the State List in the Seventh Schedule to the Constitution,  the
State Legislature is empowered to enact a law relating  to  taxes  on  lands
and buildings. It is submitted that the State Legislature has no  competence
under the above entry to enact a law for levying tax in respect of the  area
occupied by the underground supply lines. The word “land”, according to  the
learned counsel, denotes the surface of the land  and  not  the  underground
strata. We are unable to accede to the above submission. Entry  49  of  List
II contemplates a levy of tax on lands and buildings or both as units.  Such
tax is directly  imposed  on  lands  and  buildings  and  bears  a  definite
relation to it. Section 129 makes provision for the levy of property tax  on
buildings and lands. Section 139 merely specifies the persons who  would  be
primarily responsible for the payment of that tax. The word “land”  includes
not only the face of the earth, but everything under or over it, and has  in
its legal signification an indefinite extent  upward  and  downward,  giving
rise to the maxim, Cujus est solum ejus est usque ad coelum (see p. 163,  73
Corpus Juris Secondum). According to Broom’s Legal  Maxims,  10th  Edn.,  p.
259, not only has land in  its  legal  signification  an  indefinite  extent
upwards, but in law it extends also downwards, so  that  whatever  is  in  a
direct line between the surface and the centre of the earth  by  the  common
law belongs to the owner of the surface (not merely  the  surface,  but  all
the land down to the centre of the earth and up to the  heavens)  and  hence
the word “land” which is nomen generalissimum, includes, not only  the  face
of the earth, but everything under it or over it.”

26.   In Goodricke Group Ltd. and Others  vs. State of W.B.  and  Others[11]
cess imposed on green tea (leaves) by weight was held to be a  tax  on  land
and not on the produce.  In an earlier  decision  in  Ajoy  Kumar  Mukherjee
vs. Local Board of Barpeta[12]  a levy on holding a market was  held  to  be
essentially a levy on land and, therefore, authorized by Entry  49  List  II
though the levy was imposed only on the  days  when  the  market  was  held.
This Court, in Ajoy Kumar Mukherjee  (supra) had inter alia held that,
“It follows therefore, that the use to which the land is put  can  be  taken
into account in imposing a tax on it within the meaning of entry 49 of  List
II, for the annual value of land which can certainly be taken  into  account
in imposing a tax for the purpose of this  entry  would  necessarily  depend
upon the use to which the land is put.  It is in the light of  this  settled
proposition that we have to examine the scheme of S. 62 of  the  Act,  which
imposes the tax under challenge.”

27.   In  Municipal Corporation of Greater Bombay[13]   the  definitions  of
‘land’ and ‘building’ in Sections 3(r) and 3(s)  of  the  Bombay  Provincial
Municipal Corporations Act,  1949 were dealt with  and  considered  by  this
Court and a broad and wide meaning of the  said  expressions  was  favoured.
However,  we may skip over the said part of the report in view of  what  has
been earlier indicated by  us,  namely,  that  to  test  the  vires  of  the
provisions of the statute in question the scope and  expanse  of  the  words
‘land’ and ‘building’ has to be understood in the context of the  provisions
of the Legislative Entry (Entry 49 List II) and not  the  Statute  relatable
to the Entry.  However, what would  be  of  significance  is  to  take  into
account the principles of interpretation which were followed by  this  Court
in coming to its conclusions with regard to the true meaning  and  scope  of
the expressions ‘land’ and ‘building’ contained in the statute.  As  already
observed by us principles of interpretation of the ordinary statute are  not
foreign  to  the  principles  of  interpretation   of   the   constitutional
provisions.  Paragraph 18 of the report in Municipal Corporation of  Greater
Bombay  (supra) may now be noticed.
18. In S.P. Gupta v. Union of India[14]  interpreting  Section  123  of  the
Indian Evidence Act, this Court held that the section  was  enacted  in  the
second half of the last century, but its meaning and content  cannot  remain
static. The interpretation of every statutory provision must keep pace  with
changing concepts and the values and it must, to the  extent  to  which  its
language permits or rather does not  prohibit,  suffer  adjustments  through
judicial interpretation so as to accord with the requirements  of  the  fast
changing  society  which   is   undergoing   rapid   social   and   economic
transformation. The language of  a  statutory  provision  is  not  a  static
vehicle of ideas and concepts and as ideas and concepts change, as they  are
bound to do in any country like ours with the establishment of a  democratic
structure  based  on  egalitarian  values   and   aggressive   developmental
strategies, so must the meaning  and  content  of  the  statutory  provision
undergo a change. It is elementary that law does not operate  in  a  vacuum.
It is not an antique to be taken down, dusted, admired and put back  on  the
shelf, but rather it is a powerful instrument fashioned by society  for  the
purpose of adjusting conflicts and tensions which arise by reason  of  clash
between conflicting interests. It is, therefore, intended to serve a  social
purpose and it  cannot  be  interpreted  without  taking  into  account  the
social, economic and political setting in which it is intended  to  operate.
It is here that a judge is called upon to perform a  creative  function.  He
has to  inject  flesh  and  blood  in  the  dry  skeleton  provided  by  the
legislature and by a process of dynamic interpretation,  invest  it  with  a
meaning which will harmonise  the  law  with  the  prevailing  concepts  and
values and make it an effective instrument for delivering justice.

      The discussions that had preceded on the financial  relations  between
the Union and the States would suggest a constitutional scheme  wherein  the
federating  States  of  the  Indian  Union  are  not  destined   to   remain
financially weak despite a situation where the  Union  undoubtedly  has  the
upper hand by an allocation of  the  more  lucrative  subjects  of  taxation
under the Seventh Schedule.  Constitutionality of the Gujarat  Act,  in  the
above light, must be answered in favour of the State.

28.   Coming specifically to the expression “building”  appearing  in  Entry
49 List II of the Seventh Schedule in view of the  settled  principles  that
would be applicable to find out the true and correct  meaning  of  the  said
expression it will be difficult to confine the  meaning  of  the  expression
“building” to a residential building as commonly understood or  a  structure
raised for the purpose of habitation.  In Government of Andhra  Pradesh  and
Others vs. Hindustan Machine Tools Ltd.[15]a tax on  a  building  housing  a
factory has been understood to be a tax on building and not on  the  factory
or its plant  and  machinery.   A  general  word  like  ‘building’  must  be
construed to reasonably extend to all ancillary and subsidiary  matters  and
the common parlance test adopted by the High Court to hold  the  meaning  of
levy of tax on building and machinery does not appear to  be  right  keeping
in mind the established and  accepted  principles  of  interpretation  of  a
constitutional provision or a Legislative Entry.  A dynamic, rather  than  a
pedantic view has to be preferred if the constitutional document is to  meet
the challenges  of  a  fast  developing  world  throwing  new  frontiers  of
challenge and an ever changing social order.

29.    The  regulatory  power  of  the  Corporations,   Municipalities   and
Panchyats in the matter of installation, location and operation  of  ‘Mobile
Towers’ even before the specific  incorporation  of  Mobile  Towers  in  the
Gujarat Act by the 2011 Amendment and such control under the Bombay  Act  at
all points of time would also be a valuable input  to  accord  a  reasonable
extension of such power and control by understanding the power  of  taxation
on ‘Mobile Towers’ to be vested in the State Legislature under Entry  49  of
List II of the Seventh Schedule.

30.   The measure of the levy,  though  may  not  be  determinative  of  the
nature of the tax, cannot also be altogether ignored in  the  light  of  the
views expressed by this Court in Goodricke  (supra).  Under  both  the  Acts
read with the relevant Rules, tax on Mobile Towers is levied  on  the  yield
from the land and building calculated in terms of the rateable value of  the
land and building.  Also the incidence of the tax is not on the use  of  the
plant and machinery in the Mobile Tower; rather it is  on  the  use  of  the
land or building, as may be, for purpose of the mobile tower.  That the  tax
is imposed on the “person engaged in  providing  telecommunication  services
through such mobile  towers”  (Section  145A  of  the  Gujarat  Act)  merely
indicates that it is the occupier  and  not   the  owner  of  the  land  and
building who is liable to pay the tax.  Such a liability to pay the  tax  by
the occupier instead of the owner is an accepted facet of  the  tax  payable
on land and building under Entry 49 List II of the Seventh Schedule.

31.   Viewed in the light of the above  discussion,  if  the  definition  of
“land” and “building” contained in the Gujarat Act is to be  understood,  we
do not find any reason as to why, though in common parlance and in  everyday
life, a mobile tower is certainly not a building, it would also cease to  be
a building for the purposes of Entry 49 List II so  as  to  deny  the  State
Legislature the power to levy a tax thereon.   Such  a  law  can  trace  its
source to the provisions Entry 49 List II of the  Seventh  Schedule  to  the

32.   Though several other decisions of this Court  and  also  of  different
High Courts have been placed before us we do not consider  it  necessary  to
refer to or to enter into any discussion of the propositions  laid  down  in
the said decisions as  the  views  expressed  in  all  the  aforesaid  cases
pertain  to  the  meaning  of  the  expressions  ‘land’  and  ‘building’  as
appearing in the definition clause of the statutes in question.
33.   We, therefore, set aside the  judgment  passed  by  the  Gujarat  High
Court and answer the appeals arising from  the  order  of  the  Bombay  High
Court; transferred cases and the writ petitions  accordingly.   However,  we
leave it open, so far as the cellular operators  in  the  Bombay  cases  are
concerned, to agitate the issue with regard to the  retrospective  operation
of  the  assessment/demand  of  tax  and  the  quantum  thereof  before  the
appropriate forum, if so advised.  Consequently, and in  the  light  of  the
above all  the  appeals,  writ  petitions  and  the  transferred  cases  are
disposed of.


                                                          (PRAFULLA C. PANT)

DECEMBER 16, 2016.

[1]     (1990) 1 SCC 109 Para 67

[2]    AIR 1990 SC 781 Para 17
[3]    (2004) 10 SCC 201 Para 50
[4]    (2004) 10 SCC 201 Para 31
[5]    (2007) 7 SCC 242 Para 13
[6]    (1990) 1 SCC 12 Para 18
[7]   AIR 1962 SC 1563 Para 10
[8]    (1989) 3 SCC 698 Para 14
[9]    1964 (3) SCR 787
[10]   (1975) 2 SCC 175
[11]   (1995) 1 Supp SCC 707
[12]   AIR1965 SC 1561
[13]   AIR 1991 SC 686
[14]   1981 Supp SCC 87
[15]   AIR 1975 SC 2037 = (1975) 2 SCC 274

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