ORDER
Devinder Gupta, ACJ.
1. This petition when initially instituted on 19.7.1993 sought quashing of the roceedings initiated by the respondent through notice dated 26.3.1993 (Annexure-A) proposing to impose property tax for the pipelines laid down by the petitioner in New Delhi with further prayer to stay the proceedings for assessment stated to be pending before the Joint Assessor and Collector-I, Municipal Corporation of Delhi.
2. In view of the pendency of proceedings before the Assessing Authority, when the petition was taken up for admission, it was directed that the petition would be taken up after the matter had been heard and decision rendered by the Assessing Authority. On the Assessing Authority passing its order on 30.3.1993 (Annexure-H), the petitioner sought amendment of the petition. It was allowed on 30.8.1996. Notice was directed to be issued to the respondents to show cause as to why the petition be not admitted. On 11.10.1996 by an interim order, recovery proceedings were stayed. The parties exchanged their respective affidavits. They prayed that in view of the stay being in operation instead of formally admitting the writ petition, the entire matter be heard on merits. Accordingly, we proceeded to hear the parties on merits.
3. The petitioner's challenge is to the order dated 30.3.1993 (Annexure-H) passed by Deputy Assessor and Collector, Municipal Corporation of Delhi by which Rateable value, as proposed in the notice dated 26.3.1993 (Annexure-A) of Rs. 9,90,00,000/- was confirmed w.e.f. 1.4.1992, on account of the petitioner having laid pipelines within the MCD area, New Delhi.
4. The facts giving rise to filing of the instant petition are that the petitioner is a Government of India Undertaking and has laid down pipelines within the limits of Delhi Municipal Corporation for its onward destination in Haryana and U.P. except to the extent that the pipelines supply gas to the Delhi Electric Supply Undertaking at the Indraprastha Terminal. There is no other function of the pipelines at Delhi except that the gas through it is carried to its ultimate destination in Haryana and U.P. The pipelines have been laid underground along the roads in the land basically belonging to Delhi Administration, i.e., Union of India. As per the data, produced by the petitioner before the respondent for which there is no dispute, the total length of the gas pipeline in Delhi is 99.70 kms. 91.60 kms. is within the limits of Municipal Corporation of Delhi. It also included 6.5 kms. length in U.P. irrigation land near Sahibabad and 4.3 kms. under DESU/Railway land. The breakup of the total length of the gas pipeline laid within the limits of Municipal Corporation of Delhi is 8.68 kms. under the Government land leased to farmers for cultivation purposes only; 58.42 kms. is under the Government land and 24.50 kms. is under the private lands.
5. On 26.3.1993, notice (Annexure-A) under Section 126 of the Act was served upon the petitioner with a view to assess tax on the pipeline, stated to have been laid by the petitioner within the limits of Municipal Corporation of Delhi, proposing a Rateable value of Rs. 9,90,00,000/- w.e.f. 1.4.1992. In response to this notice, the petitioner on 27.4.1993 submitted its objections (Annexure-B) inter alia, on the ground that it was not a tenant of land under which pipelines had been laid for more than one year, as required under Section 120(2) of the Act; pipelines are in the nature of plant and thus are not liable to be taxed in terms of Section 116(3); no tax could be levied merely on the pipelines having been laid within the limits of Delhi, as laying of the pipelines was a kin to laying of cables by MTNL, also a Central Public Sector Undertakings like the petitioner; the petitioner is a service utility organisation and no tax is imposable. Cost of laying the pipelines within the Municipal limits was also supplied by the petitioner to the respondent.
6. On 26.5.1993, the Joint Assessor and Collector-I informed the petitioner through letter (Annexure-E) that the petitioner was liable to tax, in view of the decision of Supreme Court in the case of The Municipal Corporation of Greater Bombay & Ors. Vs . Indian Oil Corporation Limited, : AIR1991SC686 , observing that petroleum products stored through pipes and petroleum storage tanks fall within the definition of 'building' and are assessable to property taxes.
7. In response to the aforesaid letter of Joint Assessor dated 26.5.1993, the petitioner on 18.6.1993 submitted further objections (Annexure-F) pointing out that the petitioner's case would not be covered by the decision of Supreme Court, inasmuch as the decision was based on the ground that Indian Oil Corporation was a lessee for more than one year and under the Bombay Municipal Act, under which tax had been imposed, even an occupier of land is taxable whereas under the Delhi Municipal Corporation Act, mere occupier is not taxable unless he has a tenancy interest in the land for more than one year and he constructs upon the land. It was also pointed out that petitioner's case was fully covered by the second part of the judgment of learned Single Judge of this Court in Municipal Corporation of Delhi v. M/s. Pradeep Oil Corporation & Ors., 1986(2) Municipalities & Corporation Cases 127. As the pipelines were not 'building' within the meaning of the expression used in sub-section (1) of Section 120 of the Act and the pipelines were also not 'land', thereforee, notice issued against the petitioner was bad in law and was liable to be withdrawn. There has been further hearing in the matter and it appears that the Joint Assessor asked the petitioner to supply further information about the nature of interest it had in the land, through which the pipes had been laid, particularly, with reference to the expression 'right of user' used in the balance sheet of the petitioner and on the amount of compensation paid to individuals for the purpose of laying down pipes through their land. In response to the said letter details were submitted by the petitioner on 11.3.1996 along with copies of permission from various Government departments urging that it was only a licensee and had no interest in the land except the licence, which it had to lay pipes.
8. On 30.3.1996, Deputy Assessor and Collector proceeded to pass the impugned order. Relying upon the decision of Supreme Court in Anant Mills Vs . The State of Gujarat, : [1975]3SCR220 and that of The Municipal Corporation of Greater Bombay & Ors. v. Indian Oil Corporation Ltd. (supra), the Deputy Assessor and Collector held that the liability of the structures to taxes may be different from that of the land and that the underground supply lines can be subjected to property tax. As petrol storage tanks connecting pipelines and structures can be subject to levy of property tax, thereforee, the pipelines being a structure, there was no alternative except to confirm the Rateable value, as proposed in the notice. The order of Deputy Assessor and Collector reads:-
'In this case there is a pending proposal proposing Rateable value of Rs. 9,90,00,000/- w.e.f. 1.4.1992.
In order to dispose of the pending proposal call letters were sent to Gas Authority of India Limited and in response the representative from the Company attended the proceedings from time to time and filed certain documents. The Gas Authority of India Limited have argued that since they are not the owners of the land through which the pipelines are running, they are not liable to property taxes. In this connection, it is pointed out that it has been held by various Courts that the ownership of land and the structures standing ereon may belong to different parties. Hence the liability of the structures to taxes may be different from that of the land. In the case of 'Anant Mills Vs . State of Gujarat', : [1975]3SCR220 the question was as to whether the underground supply lines can be subjected to property taxes. The Supreme Court held that the under-ground supply lines can be subjected to property taxes. In the case of 'Municipal Corporation of Greater Bombay v. Indian Oil Corporation' the point of dispute was as to whether petrol storage tanks and pipelines connecting these tanks are lands and buildings to be subjected to property taxes. The Supreme Court in its decision dated 27.11.90 has held that petrol storage tanks connecting pipelines or structures can be subjected to levy of property taxes.
The Gas Authority of India while arguing that they are not subjected to property taxes on the pipelines have not indicated the exact cost of these pipelines passing through M.C.D. areas. In the absence of complete information and in view of the Court Judgments cited above there is no alternative at this stage except to confirm the Rateable value proposed under Section 126 of the D.M.C. Act proposing Rateable value of Rs. 9,90,00,000/-. thereforee, Rateable value is fixed at Rs.9,90,00,000/- w.e.f. 1.4.1992 on account of the pipelines passing through M.C.D. areas.
Assessed. Billing shall be on commercial basis.'
9. Thus the impugned order proceeded on the assumption that the pipelines are building. The property tax bill was also raised by the respondent on the basis that the pipelines are building. The petitioner has challenged the impugned order also on the premise that the ipelines are not building. It was urged that ownership of building without ownership, nterest or tenancy in the land is not sufficient for chargeability of tax and assuming that the pipelines are building, which they are not, the ownership of the same, without simultaneous ownership of the land is not enough to make the owner of the pipelines liable to tax. It was also urged that the pipeline at the most can be said to be a plant only and thus was not liable to tax in view of sub-section (3) of Section 116.
10. In response to the show cause notice, the respondent filed its reply on the affidavit of K.K. Mishra, Deputy Assessor and Collector justifying the passing of the impugned order alleging that the petitioner is liable for property tax on the ground that the levy of property tax with respect to the area/pipe beneath the surface of the earth occupied by and under the possession of the petitioner constitute 'land' and thus amenable to property taxes under Section 116 of the Act. The reply says that even according to the petitioner, the term 'land' includes any interest in the land, thereforee, such an interest being land is amenable to property taxes. The petitioner Company has laid pipeline, which exclusively belong to the petitioner. The interest which the petitioner has under the surface of the land, is 'land' under the Act and liable to be taxed, as such, to property tax. The petitioner Company has also paid compensation to individuals, for laying down pipeline through their lands, and thus definitely an amount of interest is created i the land in favor of the petitioner Company. Inso far as the Railway land is concerned, the same has been given to the petitioner Company for a consideration, in lieu to use and occupation with a further right to construct the pipelines. This interest is also land within the meaning of MCD Act. Reply says that it is the pipelines, which is sought to be taxed and not the land under which gas pipelines have been laid. As far as the Government land, not leased out to the petitioner, is concerned, MCD has levied tax only on the interest in land, which the petitioner had in the land of private individuals or of the Railway and not on the consolidated value of the land taken to be the property of individuals or the Railways. In addition to this reply on merits, preliminary objection, as regards the maintainability of the writ petition was also taken, which says that as the assessment order has been passed and demand has been raised under the Act, there being no error involved in this case, the writ petition is not maintainable. Otherwise also the petitioner has an adequate and efficacious remedy of preferring an appeal against the impugned order.
11. In rejoinder, the petitioner took up an objection that entirely a new case has been set up by the respondent for the first time in reply, filed in this Court. Before the Assessing Officer, the entire proceedings were contested on the premise that the pipelines were building. The impugned order has also been passed assuming that the pipelines were building; demand has also been raised on that basis, i.e., the pipeline is building. Now in reply, the assessment order as well as raising of demand are being justified on the ground that the pipeline is covered by the definition of 'land', which was not the case of the respondent either at the stage, when notice was issued to the petitioner, or at any subsequent stage till filing of the reply by the respondent in this Court. For that reason, it is stated in the rejoinder that this writ petition is maintainable. The action of the respondent is against the statutory provisions and is in violation of the principles of natural justice. There is a serious question of law arising for determination regarding interpretation of the provisions of law. Alternative remedy of preferring an appeal is not an efficatious remedy. Impugned order and proceedings would be without jurisdiction and vocative of principles of natural justice and there is clear jurisdictional error inasmuch as the impugned order and the demand raised are now being justified not on the ground on the basis of which notice was served upon the petitioner, the proceedings were conducted before Joint Assessor and the impugned order was passed; but on a different ground, for which neither a notice was served on the petitioner, nor any opportunity was afforded to the petitioner by the Assessor.
12. Learned counsel for the parties were heard at length, who did put forth their respective cases elaborately relying upon various pronouncements and projecting their submissions on the following points:-
(a) Whether the pipelines are 'building' and thus taxable under Section 120(1) of Delhi Municipal Corporation Act (Act No. 66 of 1957), (hereinafter referred to as 'the Act')?
(b) In case the pipelines are building, is the petitioner not liable under Section 120(2) of the Act on the ground that the petitioner is neither the owner of the land nor lessee of the same for more than one year and buildings cannot be taxed separately from the land on which it is situated?
(c) Whether the pipelines are 'land' and hence taxable under Section 120(1)?
(d) In case the pipelines are lands, would it not be exempted on the ground:-
(i) The pipelines being 'plant' and hence not exigible to tax by virtue of Section 116(3) of the Act?
(ii) The pipelines are not 'capable/expected of being let' under Section 116() of the Act inasmuch as the petitioner is only a licencee on the land and licencee cannot create a right greater than it has.
OR
(iii) In case the pipelines are land, would not the individual owners of the land itself be liable for tax and not the petitioner?
13. The preliminary objection raised on behalf of the respondent about maintainability of the Writ petition, in view of the alternate remedy available, deserves to be turned down solely on the ground that the impugned order was passed on a different premise than that on which the same is now sought to be supported. The basis on which the same is sought to be supported was neither made the subject-matter of the show cause notice, nor was relied upon in the impugned order and thus, no opportunity was ever allowed to the petitioner before raising the demand. As a result of this, there has been complete violation of the principles of natural justice and for that reason, we are of the view that the petitioner is not debarred from approaching this Court by filing petition under Article 226 of the Constitution of India and is justified in not resorting to the alternative remedy of preferring an appeal.
14. Chapter VIII (Section 113 to 184) of the Act deals with taxation. Kind of taxes, which the Corporation can levy are enumerated in Section 113, one of which is the property tax. Sections 114 to 135 deal exclusively with the levy of property tax. Components and rates of property tax are dealt with in Section 114. It states that the property tax shall be levied on lands and buildings in Delhi and shall consist of a water tax, a scavenging tax, a fire tax and a general tax. A general tax within the urban areas of not less than 10% and not more than 30% of the Rateable value of the land and building can be levied. Section 114 of the Act reads:-
'114. Components and rates of property taxes.-(1) Save as other-wise provided in this Act, the property taxes shall be levied on lands and buildings in Delhi and shall consist of the following, namely:-
(d) a general tax -
(i) of not less than ten and not more than thirty per cent of the Rateable value of lands and buildings within the urban areas, and
(ii) on lands and buildings within the rural areas at such lower rates and with effect from such date as may be determined by the Corporation;
Provided that the Corporation may when fixing the rate at which the general tax shall be levied during any year, determine that the rate livable in respect of lands and buildings or portions of lands and buildings in which any particular class of trade or business is carried on shall be higher than the rate determined in respect of other lands and buildings or portions of other lands and buildings by an amount not exceeding one-half of the rate so fixed.
[Provided further that the general tax may be levied on a graduated scale, if the Corporation so determines.]
Explanationn. - Where any portion of a land or building is liable to a higher rate of the general tax such portion shall be deemed to be a separate property for the purpose of Municipal taxation.
(2) The Corporation may exempt from the general tax lands and buildings of which the Rateable value does not exceed one hundred rupees.'
15. A bare reading of Section 114 makes it clear that property tax can be levied only on 'lands' and 'building'.
16. Rateable value is defined in clause (47) of Section 2 to mean the value of 'land' or 'building' fixed, in accordance with the provisions of the Act.
17. Clause (24) of Section 2 is an inclusive definition of the 'land' and says that land includes benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by the law over any street.
18. Building is defined under clause (3) of Section 2 and reads:-
'(3) 'building' means a house, out-house, stable, latrine, urinal, shed, hut, wall (other than a boundary wall) or any other structure, whether of masonry, bricks, wood, mud, metal or other material but does not include any portable shelter.'
19. Determination of the Rateable value of lands and buildings, assessable to property tax is made under Section 116 of the Act, which reads:-
'116. Determination of Rateable value of lands and buildings assessable to property taxes-(1) The Rateable value of any lands or building assessable to property taxes be the annual rent at which such land or building might reasonably by expected to let from year to year less-
(a) a sum equal to ten per cent of the said annual rent which shall be in lieu of all allowances for costs of repairs and insurance, and other expenses, if any, necessary to maintain the land or building in a state to command that rent, and
(b) the water tax or the scavenging tax or both, if the rent is inclusive of either or both of the said taxes:
Provided that if the rent is inclusive of charges for water supplied by easurement, then, for the purpose of this section the rent shall be treated as inclusive of water tax on rateable value and the deduction of the water tax shall be made as provided therein:
Provided further that in respect of any land or building the standard rent of which has been fixed under the Delhi and Ajmer Rent Control Act, 1952 (38 of 1952), the rateable value thereof shall not exceed the annual amount of the standard rent so fixed.
[Explanation - The expressions 'water tax' and 'scavenging tax' shall mean such taxes of that nature as may be levied by an appropriate authority.]
(2) The rateable value of any land which is not built upon but is capable of being built upon and of any land on which a building is in process of erection shall be fixed at five per cent of estimated capital value of such land.
(3) All plant and machinery contained or situate in or upon any land or building and belonging to any of the classes specified from time to time by public notice by the missioner with the approval of the Standing Committee, shall be deemed to form part of such land or building for the purpose of determining the rateable value thereof under sub-section (I) but save as afore- said no account shall be taken of the value of any plant or machinery contained or situated in or upon any such land or building.'
20. Primary liability of payment of taxes is dealt with in Section 120 and it says:-
'120.Incidence of property taxes. - (1) The property taxes shall be primarily livable as follows:-
(a) if the land or building is let upon the lessor;
(b) if the land or building is sub-let, upon the superior lessor
(c) if the land or building is unlet, upon the person in whom the right to let the same vests:
[Provided that the property taxes in respect of land or building, being property of the Union, possession of which has been delivered in pursuance of Section 20 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (44 of 1954) shall be primarily livable upon the transferee.]
(2) If any land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the property taxes assessed in respect of that land and the building erected shall be primarily livable upon the said tenant, whether the land and building are in the occupation of such tenant or a subtenant.
Explanationn - The term 'tenant' includes any person deriving title to the land or the building erected upon such land or from the tenant whether by operation of law or by transfer inter vivos.
(3) The liability of the several owners of any building which is, or purports to be, severally owned in parts of flats or rooms, for payment of property taxes or any stallment thereof payable during the period of such ownership shall be joint and several.'
21. Two other provisions worth noticing are Sections 121 and 122. Section 121 provides for apportionment of the liability of property taxes, when premises assessed are let or sublet and reads:-
'121. Apportionment of liability for property taxes when the premises assessed are let or sub-let -(1) If any land or building assessed to property taxes is let, and is rateable value exceeds the amount of rent payable in respect thereof to the person upon whom under the provisions of Section 120 the said taxes are leviable, that person shall be entitled to receive from his tenant the difference between the amount of the property taxes levied upon him and the amount which would be livable upon him if the said taxes were calculated on the amount of rent payable to him.
(2) If the land or building is sub-let and its rateable value exceeds and amount of rent payable in respect thereof to the tenant by his sub-tenant, or the amount of the rent payable in respect thereof to a sub-tenant by the person holding under the sub-tenant, the tenant shall be entitled to receive from his subtenant or the sub-tenant shall be entitled to receive from the person holding under him, as the case may be, the difference between any sum recovered under this section from such tenant or sub-tenant and the amount of property taxes which would be livable in respect of the said land or building if the rateable value thereof were equal to the difference between the amount or rent which tenant or sub-tenant received and the amount of rent which he pays.
(3) Any person entitled to receive any sum under this section shall have for the recovery thereof, the same rights and remedies as if such sum were rent payable to him by the person from whom he is entitled to receive the same.'
22. On failure to recover any amount due on account of property taxes from the person, primary liable, Section 122 says that it can be recovered from the occupier of the land and building by attachment of the rent payable by the occupier. It reads:-
'122. Recovery of property taxes from occupiers. - (1) On the failure to recover any sum due on account of property taxes in respect of any land or building from the person primarily liable thereof under section 120, the Commissioner shall recover from every occupier of such land or building by attachment, in accordance with section 162 of the rent payable by such occupier, a portion of the total sum due which bears, as nearly as may be, he same proportion to that sum as the rent annually payable by such occupier bears to the total amount of rent annually payable in respect of the whole of the land or building.
(2) An occupier from whom any sum is recovered under sub-section (1) shall be entitled to be reimbursed by the person primarily liable for the payment, and may in addition to having recourse to other remedies that may be open to him, deduct the amount so recovered from the amount of any rent from time to time becoming due from him to such person.'
23. Clause (37) of Section 2 defines the term 'owner', which is also an inclusive definition and reads :-
'(37) `owner' includes a person who for the time being is receiving or is entitled to receive, the rent of any land or building whether on his own account or on account of himself and others or as an agent, trustee, guardian or receiver for any other person or who should so receive the rent or be entitled to receive it if the land or building or part thereof were let to a tenant and also includes-
(a) the custodian of evacuee property in respect of evacuee property vested in him under the Administration of Evacuee Property Act, 1950 (31 of 1950); and
(b) the estate officer to the Government of India, the Secretary of the Delhi Development Authority, constituted under the Delhi Development Act, 1957 (61 of 1957), the General Manager of a Railway and the head of a Government department, in respect of properties under their respective control.'
24. A perusal of the statutory provisions, particularly Section 120 sugests that the liability to pay tax is primarily on the owner or the person having interest in land or building, as defined in the Act.
25. In Anant Mills' case (supra), the Apex Court upheld the liability of Ahmedabad Electricity Company Ltd. for the property tax under the Bombay Provincial Municipal Corporation Act (Bombay Act 59 of 1949), as amended by Gujarat Acts No. 8 of 1968 and No. 5 of 1970. The Company had laid underground supply lines under most of the roads and public streets in the city of Ahmedabad. Corporation assessed the Company liable to property tax on the ground that supply lines occupy space below the surface and the said space constitute land. The argument on behalf of the Company before Supreme Court that space below the land is not covered by definition of land, was turned down holding that the word 'land' includes not only the face of earth, but everything under or over it and has its legal significance an indefinite extent upward and downward giving rise to the maxim Cujusest slum emus est usque ad coelum, 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 center of 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 earth and up to the heaven) 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 The Municipal Corporation of Greater Bombay's case (supra), the question was whether petroleum storage tank was a building or land. It was held that on a mere look at a petroleum storage tank, by no stretch of imagination, it can be said to be a building, but were held to be covered by the definition of building as the same had permanently been erected without being shifted. Definition of building in Bombay Municipal Corporation Act is similar to the definition of building in Delhi Municipal Corporation Act. It was held that the definition of building is an inclusive definition, bringing within its ambit, amongst others, every other such structure. The structure must be an entirety in itself although not necessarily a building in itself, adopted to a particular purpose it serves. In its ordinary sense, a structure is something, which is constructed or is being built as is a building. But method of construction by itself is not conclusive. Structure by itself may not a building, but it may be analogous to a building. It was held that tanks were structures or things attached to the land within the definition of sub-section (3)(s) of Section 3 of Bombay Municipal Corporation Act and were exigible to property tax.
27. The case of respondents, on which premise notice was served on the petitioner and the impugned order was passed was that the pipeline is building. Now it is neither the case put forth on behalf of the respondent during the course of the arguments, nor has been set up in the reply affidavit. In any case, if pipeline is taken as building, without there being any tenancy interest in the land of the petitioner, in terms of sub-section (2) of Section 120 of the Act, the petitioner would not be liable to property tax.
28. In M/s. Pradeep Oil Corporation & Ors., case (supra), decided by learned Single Judge of this Court, the respondent therein had made oil storage tanks together with pump houses, chowkidar cabins, switch room, residential rooms and verandas on lands being administered by the Railway administration. Oil storage tanks were made for storing oils decanted from the Railway tanks. The case of Municipal Corporation of Delhi was that on the basis of agreements executed by President of India through Superintendent, Railways large areas had been let to Pradeep Oil Corporation and that the purpose of letting was to construct and maintain thereon depots for storage of petroleum products etc. It was held that oil storage tanks being an article of manufacture is not structure within the meaning of Delhi Municipal Corporation Act. As regards the agreement between President of India and the respondents, it was held that the same was license and, thereforee, the respondents would not be covered by the provisions of Section 120 of the Act inasmuch as the said provision takes into account only the owners of the land and the tenants of the land, but not the licencees. It was thus held that as Pradeep Oil Corporation was not tenant and the structure erected by them having not been erected on the lands as tenants of the land, Property tax cannot be imposed thereupon.
29. First part of the said decision in Pradeep Oil Corporation's case (supra), in view of the decision of Supreme Court in The Municipal Corporation of Greater Bombay (supra), does not now hold good. However, the latter part of the decision that a person not being a tenant of land and structure erected by him having not been erected on the land as tenant, property tax cannot be imposed upon that person inasmuch as under Section 120, the same can be levied only on the owner or the tenant, would hold good. A licencee is not liable to pay property tax by virtue of Section 120(2) of the Act wherein emphasis has been laid that if the land has been let for a term exceeding one year to a tenant and such tenant has built upon the land, the property tax assessed in respect of that land and building erected there-upon shall be primarily liable upon the said tenant.
30. Land and building cannot be separately taxed in the hands of different person, which becomes clear from the language of sub-section (2) of Section 120. If land is let for a period of more than one year, in that eventuality, owner of the land would continue to be liable to pay property tax. There are two essential elements, before liability to pay property tax would shift from owner of the land to the owner of the building, namely, when the lease is for more than one year and that such a lessee for more than one year constructs upon such land.
31. On the liability for tax as land, reference was also made to the decision in National and Grand lays Bank v. Municipal Corporation of Greater Bombay, 1969 SC 1048 that when land is let and tenant has built upon the land, there should be composite assessment of tax on the land and building taken together. In the case of such a composite unit, primary liability of assessment of tax is intended to be on the Lesser of the land. Lesser of the premises must be construed to be Lesser of the land on which the building has been constructed. Relying upon the said decision, the liability to pay tax primarily, which is on the owner, shall stand shifted to the lessor, provided the lease, in terms of sub-section (2) of Section 120 is for a term exceeding one year of the land, which has been built upon and not otherwise.
32. The decision in Anant Mills' case (supra) was based upon the wording of Section 139 of the Bombay Municipal Corporation Act, which makes the occupier liable to pay property tax unlike Delhi Municipal Act, while in Bombay Municipal Corporation Act, primary liability is on the occupier, in Delhi Municipal Act liability is on the owner or lessee for more than one year who has constructed on the land. There is no provision in the Delhi Act similar to Section 139(1A) of Bombay Act. Section 139(1B) of Bombay Act is almost reproduction of Section 120(1) of Delhi Municipal Corporation Act. The liability of the occupier, who is not a lessee of more than one year and has not built upon the land, is only for recovery of the tax and that also by attachment of land, as would be evident from Section 122 of the Act. Liability is not personal on the occupier. Neither he is primarily liable, as is the position in Bombay Act, namely Section 139(1A) thereof.
33. In D.G. Gouz & Co. v. State of Kerala, 1980 SC 271, it was held that 'ground' would not have a separate existence, apart from the building, and would not be 'lands' jointly stated with buildings as the subject matter of tax. In other words, 'ground' would not be subject matter of a separate tax, apart from tax on the building standing on it.
34. The lands under which pipelines have been laid by the petitioner are of three types, namely: (a) belonging to the Government; (b) being used by the petitioner after acquiring right of user under the provision of Petroleum and Mineral Pipelines (Acquisition of Right of User) Act, 1962; and (c) lands primarily owned by the farmers.
35. The petitioner is not the owner of the land on which pipelines have been laid. The petitioner is also not a lessee of more than one year. A reference to the license deed filed by the petitioner at p. 201 on the face of it suggests that this land of Railways is with the petitioner on license basis. Paras-2(A), 14 and 19 of the document suggest that license is only temporary, not capable of being renewed, as a matter of right, with liberty reserved to the Railways to terminate the same without assigning any reasons. Similar license deed was the subject matter in M/s. Pradeep Oil Corporation's case (supra).
36. As the case of respondent now is that the gas pipelines are land inasmuch as it is the interest, which the petitioner has in having the pipelines taken through land, which is sought to be taxed, in view of the observations of Supreme Court in Anant Mills' case (supra) that definition of land is inclusive and does not exclude from its ambit underground strata of the land. Reference was also made on behalf of the respondent to the definition of land in the Black's Law Dictionary as follows:-
'In the most general sense, Comprehends, any ground, soil or earth whatsoever; including....rocks... `Land' may include any estate or interest in lands, either legal or equitable as well as easements and incorporeal hereditaments....Technically, land nifies everything....comprehending all things of a permanent and substantial nature, and even of an unsubstantial provided they be permanent....Ordinarily, the term is used as descriptive of the subject of ownership and not the ownership...
Land is the material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other subtance, and includes free or occupied space for an indefinite distance upwards as well as downwards, subject to limitations upon the use of airspace granted by law.'
37. Meaning of the word 'land' was also emphasised, as appearing in law Lexicon:-
'The word `land' in the ordinary legal sense comprehends everything of a fixed or permanent nature and, thereforee, growing trees, land includes the benefit arising out of the land and things attached to the earth or permanently means everything attached to the earth and also the share in or charges on, the revenue or rent of villages or other defined portions of territory. Land includes the bed of the sea below high water ...Land shall extend to measuages, and all other hereditaments, whether corporeal or orporeal and whether freehold or of any other tenure and to money to be paid out in the purchase of land. Land in its widest signification would thereforee include not only the surface of the ground, cultivable, uncultivable or waste lands but also everything on or under it. In Jagannath Baksh Singh v. State of U.P. this Court held that the word `land' is wide enough to include all lands, whether agricultural or non-agricultural land.
In State of U.P. v. Sarjoo Devi, this Court held that the definition of the land in Section 3(14) shows that it is not necessary for the land to fall within its purview that it must be actually under cultivation or occupied for purposes connected with agriculture. The equirement is amply satisfied even if the land is either held or occupied for the purposes connected with agriculture. The word 'held' only means possession of legal title and does not require actual connected occupation. In State of Gujarat v. Kamlaben Jivanbhai, this Court held that actual cultivation is not necessary to constitute an estate and the right to collect grass is a right annexed to land which was held to be an estate and abolition of the right to pay annual amount was an agrarian reform. In Sri Ram Narain Medhi v. State of Bombay, this Court held that the Code is a law relating to land tenures. The right in relation to an estate used in Art. 31-A has been noted in a very comprehensive sense. In Digbijay singh ji Hamir singh ji v. Nanjissavdas, this Court interpreting Section 18 of Saurashtra Land Reforms Act, 1951 held that the Girasdar to whom the Ruler made the grant was bound by the provisions of that Act and that he was not entitled to have his tenant evicted except in accordance with the provision of the Act.'
38. In case it is assumed that the pipelines are land, as is contended by the respondent also or 'any interest in the land', ancillary question, which has to be taken into sideration would be that whether the existence of such pipeline underground the land would be considered as `plant', as urged on behalf of the petitioner and thus exempt from property taxes under sub-section (3) or Section 116.
39. The expression 'plant' has not been defined in the Act. As it has not so been defined, we will have to look at the ordinary and general meaning of the same, for which it will not be impermissible for us to take help of the meaning given to the expression 'plant' in some of the decisions. Word 'plant' is not defined in the Income-tax Act. In The Commissioner of In-come-tax, Andhra Pradesh Vs . M/s. Taj Mahal Hotel, Secunderabad, : [1971]82ITR44(SC) , it was held that as definition of the word 'plant' has not been given, it must be construed in its popular sense, if it is a word of everyday use and the popular sense means 'that sense which people conversant with the subject-matter with which the statute is dealing, would attribute to it.' Sanitary fittings and pipelines, installed in a hotel were held to be within the definition of 'plant'. It was the functional test, which was applied by the Supreme Court.
40. Classic definition to the word 'plant' was given by Lord Justice Lindley in Yarmouth v. France, 1987 (19) OBD 647 observing:-
'There is no definition of plant in the Act; but, in its ordinary sense, it includes whatever apparatus is used by a businessman for carrying on his business-not his stock in trade which he buys or makes for sale; but all goods and chattels, fixed or movable, live or dead, which he keeps for permanent employment in his business.'
41. Lord Justice Lindley in the aforementioned decision held that a horse was a plant. The general definition of the plant was given with reference to English Employers Liability Act, 1880 and not under the Income-tax Act. This classic definition was consistently adopted in a number of latter decisions including House of Lords. In Jarrold v. John Good & Sons, (1963) 1 All er141, the Court of Appeal, relying upon the decision in Yarmounth's case (supra), held the partitions as 'plant' on the basis that the same served as a part of the building in which tax payers' business was carried on. In Inland Revenue v. Barclay Curle, (1969) 1 All E.R. 732, House of Lords followed the definition of plant, as given in Yarmouth's case (supra) holding Dry Dock to be a plant by applying the functional test, being an integral part of the business of the assessee.
42. A swimming pool being a structure was held to be a plant in Cooke v. Beach Stations Caravans Ltd., (1974) 3 All E.R. 159 by applying the functional test that the same was used by the assessed for his trade or business and was part of the apparatus used by the tax payer ompany for carrying on its business as a Caravans Park Operator.
43. A cold storage building was held to be a plant by Division Bench of Punjab & Haryana High Court in Commissioner of Income-tax, Patiella-II Vs . Yamuna Cold Storage, by applying the functional test as the assessed used the building for his business.
44. Division Bench of this Court in Commissioner of Income-tax, Delhi-I Vs . National Air Products Ltd., : [1980]126ITR196(Delhi) held that the relevant test to be applied to hold that whether an article would be a plant or not is that does it fulfill the function of a plant in the assessor's trading activity or in other words is it a tool of tax payer's trade. If it is, then it is a plant. This decision was followed by the same Division Bench of this Court in R.C. Chemical Industries Vs . Commissioner of Income-tax, New Delhi, : [1982]134ITR330(Delhi) .
45. In Taj Mahal's case (supra), Supreme Court also followed the definition of plant given by Lord Justice Lindley in Yarmouth's case (supra).
46. In Scientific Engineering House (P) Ltd. Vs . Commissioner of Incometax, Andhra Pradesh, : [1986]157ITR86(SC) , applying the functional test that does the article fulfill the functions of a plant in the assessor's trading activity or is it a tool of his trade with which he carries on his business and holding that if the answer is in the affirmative, it will be a plant, it was held that drawings, designs, charts etc. taken collectively will have to be treated as book and would fall within the definition of plant.
47. In Taj Mahal's case (supra), pipeline was held by the Apex Court to be a plant. It was further held that it is not necessary for the pipeline to be a plant that the same must be within the factory or plant. It need not be confined to the factory itself.
48. For the purpose of petitioner's business, the pipeline is used by it for the purpose of transportation of gas from the bowls of the earth ultimately of Haryana and U.P. Applying the functional test, as applied in the aforementioned cases, at the most pipelines, which have been laid beneath the land, will have to be treated as a 'plant' contained in or situated upon the land. Holding gas pipelines to the plant, until such a plant is specified by a public notice by the Commissioner, with the approval of the Standing Committee, as envisaged in sub-section (3) of Section 116 of the Act, the same shall not be deemed to be forming a part of such land for the purpose of determining the rateable value thereof. In other words, pipeline has to be wholly excluded while determining the rateable value of the land and as the petitioner is not owner of the land, being only a licencee, there was no question of having issued any notice to the petitioner for the purpose of determining the rateable value of the pipelines, namely, the plant.
49. In view of the above, we are of the view that the pipeline, being a plant, the petitioner would not be liable for tax merely on the ground that the same has been laid within the municipal limits of Delhi, by virtue of arrangement with the private owners, Railways and Government, which arrangement is nothing, but amounts to a licence. Liability for taxation, if any, would be only on the respective owners of land, through whose land the pipeline is passing and not that of the petitioner, as the same would be a plant for the purposes of carrying on petitioner's business and value of the same, in the absense of any Notification issued under sub-section (3) of Section 116 will have to be excluded while determining the rateable value of the land, in case the same is liable for tax in the hands of the owner of lessor. Consequently, the petition is allowed. The impugned order and demand are quashed and set aside. No order as to costs.