Case Summary: NDMC vs State of Punjab (1996)
📄 Citation: (1997) 7 SCC 339 | AIR 1997 SC 2847
🧑⚖️ Judges: A. M. Ahmadi (C.J.), S.C. Sen, S.C. Agrawal, K.S. Paripoornan, J.S. Verma, B.P. Jeevan Reddy, B.N. Kirpal, B.L. Hansaria, A.S. Anand
📅 Date of Decision: 19 December 1996
🏛️ Court: Supreme Court of India (Full Bench)
📂 Case No: Civil Appeal Nos. 1388–90 of 1975
[Judgment Source] https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=286908
Law Points Raised
1. Whether State properties located in the Union Territory of Delhi are exempt from municipal taxes under Article 289(1) of the Constitution?
2. Whether the Punjab Municipal Act, 1911 as extended to Delhi constitutes Union taxation?
3. Whether Delhi Municipal laws derive authority from the State or from Parliament under the constitutional scheme for Union Territories?
Ratio Decidendi
The Supreme Court held that the Punjab Municipal Act, 1911, as extended to Delhi under the Part C States (Laws) Act, 1950, must be considered a post-Constitutional law enacted by Parliament. Accordingly, taxes levied under the Act in Delhi are Union taxes and not State taxes. Article 289(1), which exempts State property from Union taxation, is not attracted. The legislative authority behind Delhi’s municipal laws is Parliament, not any State legislature.
Final Ruling
1. Properties of State Governments situated in Delhi are not exempt from municipal property tax under Article 289(1).
2. The Punjab Municipal Act, extended to Delhi by Parliament, forms part of Union law.
3. Delhi’s municipal taxes are valid Union taxes, and therefore, Article 289(1) does not apply.
4. Appeals by NDMC were dismissed, affirming the Delhi High Court's view.
Relevant Paragraph Numbers
🔹 Para 1–2: Framing of constitutional issue
🔹 Para 3–11: Historical and legal background
🔹 Para 12: Interpretation of Punjab Municipal Act as Union law
🔹 Final Holding: Para 12
Summary
In this significant case, the Supreme Court clarified the scope of Article 289(1) concerning property taxation of State governments in Union Territories. It ruled that taxes imposed under municipal laws enacted or extended by Parliament in Delhi qualify as Union taxes. Thus, State properties in Delhi are not immune from such taxation. This judgment reinforces the constitutional distinction between State and Union legislative powers, especially in the context of Union Territories like Delhi.
[Judgment Source] https://www.courtkutchehry.com/Judgement/Search/AdvancedV2?docid=286908