A.B.N Sinha, J.:— The Union of India as the owner of the Eastern Railway Administration is the petitioner in this case and has obtained a rule from this Court calling upon the respondents, namely, the Commissioners of Sahebganj Municipality through its Chairman to show cause why the notices dated 28th March, 1961 and 23rd December, 1961 which, are annexures 3 and 5 to this petition demanding municipal taxes from the petitioner with effect from the 1st April, 1961 in respect of as many as 113 buildings, some constructed after the 31st March, 1937 and others after the 25th January, 1950 by the aforesaid Eastern Railway Administration within the limits of Sahebganj Municipality and the order dated the 21st December, 1961 passed by the Review Committee of Sahebganj Municipality on the application filed by the Eastern Railway Administration for review of the aforesaid assessment under Section 116 of the Bihar and Orissa Municipal Act, 1922, be not quashed and for issue of a writ in the nature of certiorari for quashing the same. The respondents have shown cause and have resisted this application.

2. Annexure 3 to this application purports to be a copy of the notice dated the 28th March, 1961 under Section 115(2) of the Bihar and Orissa Municipal Act given to the Divisional Superintendent, Eastern Railway, Howrah, under the signature of the Chairman, Sahebganj Municipality, of the assessment of the buildings constructed after the 1st of April, 1937 by the Eastern Railway within the limits of that Municipality. The Railway Administration, thereafter, filed an application for review of the said assessment and urged that the structures in question were exempt from taxation under the provisions of Section 154 of the Government of India Act, 1935 read with Article 285 of the Constitution of India, and, as such, they were not liable to pay any municipal tax in respect of the buildings constructed after the 1st April, 1937. The Review Committee by its order dated the 21st December, 1961, a copy thereof is part of Annexure 5 to this application, rejected the review application and desired the Chairman to proceed with the realisation of the outstanding Municipal taxes from the petitioner representing the Eastern Railway. Accordingly, under a letter dated the 23rd December, 1961 (a copy whereof is also Annexure 5 to this application), the Chairman, Sahebganj Municipality, demanded payment of the Municipal taxes assessed in respect of the buildings constructed after the 31st March, 1937. Thereafter, another unsuccessful attempt appears to have been made by the General Manager, Eastern Railway, Calcutta, to get the assessment order cancelled, and the respondents finally called upon the Eastern Railway authorities to pay the Municipal taxes as assessed and outstanding, otherwise recourse to appropriate legal proceedings for their recovery would become necessary. In these circumstances, the petitioner moved this Court under Articles 226 and 227 of the Constitution and has obtained rule nisi as mentioned above.

3. It has been contended by Mr. B.C Ghose, appearing on behalf of the Union of India, that in view of the provisions of Section 154 of the Government of India Act, 1935 and Article 285 of the Constitution, the buildings constructed after the 31st March, 1937 and 25th January, 1950 were exempt from local taxation, and the notification dated the 24th August, 1911 under sub-section (1) of Section 135 of the Indian Railways Act, 1890, was wholly ineffective so far as the buildings not in existence before the 31st March, 1937 were concerned.

4. On behalf of the respondents, on the other hand, it has been urged that the present case, like the case of the Gumti which had been constructed at Motihari Railway Station after the 1st of April, 1937, and the assessment in respect of which was the subject-matter of the decision in the case of Dominion of India v. Motihari Municipality, AIR 1954 Pat 568, was really governed by Section 4 of the Railways (Local Authorities' Taxation) Act, 1941, and in view of the fact a Federal law or a law made by the Parliament, namely, the aforesaid Railways (Local Authorities' Taxation) Act, 1941 by its S. 4 provided otherwise, neither Section 154 of the Government of India Act, 1935 nor Article 285 of the Constitution stood as a bar to the assessment of the buildings constructed by the Eastern Railway after the 1st of April, 1937 within the limits of Sahebganj Municipality.

5. The question of the liability of Railway property to local taxation has a legislative history of its own. Even before the passing of the Government of India Act, 1935, when the scheme of the Government was unitary in character and there was no law exempting Government properties from taxation and such properties were being governed in this respect by the general law enunciated by the courts which by and large took the view that the law in India was the same in this respect as in England, properties belonging to a Railway were not liable to any local tax unless there was a specific notification under sub-section (1) of Section 135 of the Indian Railways Act making the railway property liable to pay the tax or taxes specified in the said notification.

6. Section 135 of the said Act inter alia provided as under:

“135. Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy, of taxes in respect of railways and from railway administrations in aid of the funds of local authorities, namely:

(1) A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Governor-General-in-Council has, by notification in the Official Gazette, declared the railway administration to be liable to pay the tax.”

7. The Government of India (Adaptation of Indian Laws) Order, 1937 deleted the expression ‘Governor-General-in-Council’ and substituted it by the expression general controlling authority, acting in pursuance of this provision. A general notification dated the 24th August, 1911 (a copy whereof is Annexure 1 to this application) declaring the Administration of the East Indian Railway liable to pay in aid of the funds of several local authorities, including Sahebganj Municipality, the taxes specified against each of those local authorities in the second column of the said notification was issued. In the case of Sahebganj Municipality, the East Indian Railway was declared liable to pay two types of taxes only, namely, house tax and latrine tax. I shall deal with the terms and effect of this notification in relation to the buildings constructed after the 1st April, 1937, the assessment whereon alone is subject to challenge in this case, hereafter.

8. Next in sequence came Section 154 of the Government of India Act, 1935. For the purposes of providing for inter-Governmental tax immunities in a Federal polity which was envisaged by the Government of India Act, 1935, provisions like those of Ss. 154 and 155 became necessary. While S. 154 provided for the exemption of public properties for the purposes of the Government of the Federation from State taxation or taxation by any authority within the State which will include a Municipality, S. 155 provided for exemption of provincial Government and Rulers of Federal States in respect of Federal taxation. The rule in either case was subject to certain provisos or conditions. S. 154 was in these terms:

“Property vested in His Majesty for purposes of the Government of the Federation shall, save in so far as any Federal law may otherwise provide, be exempt from all taxes imposed by, or by any authority within, a province or Federated State:

Provided that, until any Federal law otherwise provides, any property so vested which was immediately before the commencement of Part III of this Act liable or treated as liable, to any such tax, shall, so long as that tax continues, continue to be liable, or to be treated as liable, thereto.”

9. It is quite clear that while the main paragraph of S. 154 exempted the property of the Central Government from provincial or local taxation, save in so far as any Federal law might otherwise provide, the proviso maintained the liability existing on the 1st April, 1937 — the date on which Part III of the Government of India Act came into force until the Central Legislature provided otherwise. Whatever may he the position in regard to other types of public property for the purpose of the Govern-anent of the Federation, so far as Railway property was concerned Federal law, as contemplated by Section 154 of the Government of India Act, came into force by the passing of the Railways (Local Authorities Taxation) Act, 1941. This is made evident by the very preamble to this Act which reads as under:

“Whereas it is expedient to regulate the extent to which property vested in His Majesty for the purpose of the Central Government, toeing property of a railway, shall be liable to taxation imposed by an authority within a Province.”

10. This Act is comprised of only five sections; out of which Ss. 1 and 2 state the short title and extent of the Act and give the definitions of certain terms respectively. Section 3 contemplates the issuing of a notification for making the property of a Railway liable to pay any Sax in aid of the funds of any local authority by the Central Government and for enabling the Railway to either pay the tax mentioned in the notification during the subsistence of the said notification or to pay in lieu thereof such sum as might be determined to be fair and reasonable by a person appointed in that behalf by the Central Government. Section 3, however, has no application to this case. Neither any notification as contemplated by sub-section (1) thereof has been issued, nor has any one determined any sum as payable by the Railway Administration to the Sahebganj Municipality in lieu of tax in accordance with sub-section (2) of the said section. Section 4, on which reliance has been placed on behalf of the respondents, is no doubt relevant for our purpose. Section 5, which saves the power of the Railway Administration to enter into a contract with any local authority for the supply of water or light etc. or for any other service, is also beside the point so far as the present case is concerned.

11. The provisions of S. 4 may, however, be set out in extenso, and it reads as under:

“The Central Government may, by notification in the Official Gazette, revoke or vary any notification issued under Clause (1) of Section 135 of the Indian Railways Act, 1890; and where a notification is so revoked any liability arising out of the notification to pay any tax to any local authority shall cease, and where a notification is so varied the liability arising out of the notification shall be varied accordingly.”

12. It is this section read with the notification of the year 1911 issued under sub-section (1) of Section 135 of the Railways Act which, according to the respondents, constitutes the ‘Federal Law’, contemplated under the main paragraph of Section 154 of the Government of India Act, 1935, or, the law made by the Parliament as contemplated by Clause (1) of Article 285 of the Constitution, and, accordingly, it has been urged that so far as the Railway properties are concerned in respect of which a notification under sub-section (1) of Section 135 of the Railways Act has been issued they will be governed by the provisions of this section.

13. Next in sequence came the Constitution of India, Clause (1) of Article 285 corresponding to the first paragraph of S. 154 and Clause (2) thereof corresponding to the proviso to Section 154 of the Government of India Act, 1935. By reason of the commencement of the Constitution, however, the Railways (Local Authorities' Taxation) Act, 1941 did not cease to be operative, because as provided in Article 372(1) of the Constitution, notwithstanding the repeal of the Government of India Act, 1935, all the laws in force in the territory of India immediately before the commencement of the Constitution were to continue in force, subject, however, to the other provisions of the Constitution until altered or repealed or amended by a competent Legislature or other competent authority.

14. There can, therefore, be no doubt that the Railways (Local Authorities' Taxation) Act, 1941, hereinafter referred to as ‘the Act’, constitutes the “Federal Law” or ‘the law passed by the Parliament’ as contemplated by Section 154 of the Government of India Act and Article 285 of the Constitution respectively and, accordingly, the liability or otherwise of Railway properties to local taxation or the extent of that liability must be determined with reference to the provisions of this Act.

15. A perusal of Section 4 of the Act, as set out above, will show that it deals with modification of existing liability to taxation. It postulates the continuance of the liability imposed by the notification issued under sub-section (1) of Section 135 of the Indian Railways Act. In the present case, as has been pointed out above, such a notification was issued in August, 1911 and thereunder without reference to any property in specific terms a declaration was made that the Administration of the East Indian Railway shall be liable to pay in aid of the funds of Sahebganj Municipality house tax and latrine tax.

16. On the terms of S. 4, therefore, there can be no doubt that liability still exists, and, indeed, on behalf of the petitioner its existence and continuance with respect to the property in existence before the 1st of April, 1937 was not even disputed, in other words, it is conceded that by virtue of the said notification read with Section 4 of the Act properties which were in existence before the 1st of April, 1937 still continued to be liable to pay municipal taxes specified in the said notification. But so far as properties which have come into existence after the 1st of April 1937 are concerned, it has been urged on behalf of the petitioner that the said notification of 1911 issued under sub-section (1) of Section 135 of the Railways Act was wholly ineffective.

17. I am, however, inclined to hold that on the express terms of the notification issued in August, 1911, under sub-section (1) of Section 135 of the Railways Act read with Section 4 of the Act and the main paragraph of Section 154 of the Government of India Act, 1935 and Clause (1) of Article 285 of the Constitution, the said notification is fully effective even in regard to the properties which have been brought into existence after the 1st of April, 1937, and I respectfully agree with the view taken by Misra, J. on this question in AIR 1954 Pat 568.

18. It appears to me that the present case is governed by the main paragraph of Section 154 of the Government of India Act and by Clause (1) of Article 285 of the Constitution and not by the proviso to Section 154 of the Government of India Act or by Clause (2) of Article 285 of the Constitution. Both Section 154 of the Government of India Act and Article 285 of the Constitution raise two questions when exemption of tax is claimed under them (1) whether the tax is one on property, and (2) whether the ownership of such property is vested in the Central Government. In the present case, both these questions must be answered in the affirmative, but the words “save in so far as any Federal Law may otherwise provide” in Section 154 of the Government of India Act and the words “save in so far as the Parliament may by law otherwise provide” in Clause (1) of Article 285 of the Constitution show that the bar to taxation is not an absolute one, and the general immunity conferred on Union property from State or local taxation under the main paragraph of Section 154 of the Government of India Act or under Clause (1) of Article 285 of the Constitution admits of an exception, and so long as a case comes under that exception the general immunity will not apply.

19. The proviso to Section 154 of the Government of India Act, 1935 which corresponds to clause (2) of Article 285 of the Constitution, however, on express terms appears to have been inserted to exempt such properties belonging to the Union which were already liable or treated as liable to tax immediately before the commencement of Part III of the Government of India Act, 1935 or the commencement of the Constitution from the enacting clause, namely, from the main paragraph of Section 154 of the Government of India Act or Clause (1) of Article 285 of the Constitution and to continue that liability so long as the particular tax for which the property was liable continued and some Federal Law or law made by the Parliament did not provide otherwise.

20. In order to attract the proviso to Section 154 of the Government of India Act or Clause (2) of Article 285 of the Constitution and the exemption provided thereunder, therefore, the physical existence of the property before the commencement of Part III of the Government of India Act or the commencement of the Constitution, as the case may be, is essential. It appears that this was the view taken in the case of Governor-General of India in Council v. Corporation of Calcutta, AIR 1948 Cal 11(2), wherein Ormond, J. observed as follows:

“The four conditions which it would be necessary for the corporation to establish to bring the property within the proviso would be (1) Physical existence of the property before 1-4-1937, (2) Liability of that property to the tax then, (3) Physical existence of the same property now, that is to say, for the current period for which tax is sought to be levied and (4) Liability of the properly (if it were not Crown property) to the tax now.”

21. In this Calcutta decision, the properties which had come into existence after the 1st April, 1937, that is, after the commencement of Part III of the Government of India, 1935, were held exempt from the liability to local taxation. The same view was expressed in the case of Corporation of Calcutta v. Governors of St. Thomas' School, Calcutta, AIR 1949 FC 121 by their Lordships of the Federal Court. None of these two cases, however related to railway property belonging to the Union and, accordingly, they were both covered by the proviso to Section 154 of the Government of India Act and not by the main paragraph of Section 154 of the Government of India Act lit the present case, we are concerned with Railway property belonging to the Union.

22. It is quite clear to me that this case wilt be governed by Section 4 of the Act read with the main paragraph of Section 154 of the Government of India Act or with Clause (1) of Article 285 of the Constitution, in other words, the present case is governed by the exception incorporated in the main paragraph of Section 154 of the Government of India Act and not by the proviso to that section. Admittedly, the buildings sought to be taxed by the respondent Municipality were not in existence before the 1st of April, 1937 and, accordingly, no question of continuing any liability to tax existing from, before in respect of the properties in question can arise. But I see no reason why, the general immunity envisaged under the main paragraph of Section 154 of the Government of India Act or under Clause (1) of Article 285 of the Constitution will not be cut down to the extent a Federal Law provides for. The Federal law in question, as already indicated, is the Railways (Local Authorities' Taxation) Act, 1941.

23. It will be noticed that the notification issued under sub-section (1) of Section 135 of the Indian Railways Act, 1890, a copy whereof is Annexure I to this application, does not speak of any particular property which would be liable to taxation. It merely specifies the taxes which could be levied in respect of railway property within the limits of Sahebganj Municipality. It is this notification which is continued under Section 4 of the Act until it is revoked or varied. It is common case that this notification has neither been revoked, nor have its terms been varied in any respect. It follows that the notification issued in August, 1911, not being in respect of any particular property and incorporating a general authorisation in favour of the Sahebganj Municipality to levy two types of taxes specified therein, it will apply with equal force to all Railway properties belonging to the Union of India, whether such property was in existence before the 1st of April, 1937 or has come into existence after that date. If the notification on its terms were confined to specified properties and had not made the general declaration that the Administration of East Indian Railway shall be liable to pay in aid of the funds of the local authorities the taxes specified thereunder, a notification under sub-section (1) of Section 3 of the Act might have been necessary. But in the present case on the terms of the notification, I am satisfied that no fresh notification, as contemplated by Section 3 of the Act, was called for.

24. This finds support from the decision of Misra, J. in respect of a Railway Gumti at Motihari which had been constructed after 1937 in the case of AIR 1954 Pat 568.

25. The learned Judge after referring to the terms of the notification issued under Section 135 of the Railways Act and their application to the case of the Gumti which had been constructed after the 1st of April, 1937, observed as follows at page 574:

“Since the notifications under Section 135 of the Indian Railways Act, Exts. 9 and 9(a), which are held as operative by virtue of Section 4 of the Act 25 of 1941, are in different terms, the present case must be governed by the terms of Exts. 9 and 9(a). As I have said that Exts. 9 and 9(a) do not provide any restriction upon the power of the local authorities to impose the tax specified thereunder, there is no reason to restrict their operation to the properties which existed prior to 1937 as would be the case where the matter is governed only by the provisions of Section 154 of the Government of India Act, 1935. Were it not so, every little structure to be put up by the railway authorities at a particular place would impose exemption of that property from liability to a local tax although the other properties are so liable unless there is a notification by the Central Government to that effect.”

26. In my opinion, therefore, the position so far as railway property belonging to the Union in respect of which there is already a notification in general terms, as in the present case, under Section 135 of the Railways Act authorising a local authority to levy certain specified taxes generally and without reference to any specific property is that so long as that notification remains unrevoked and unchanged, all properties coming into existence after the said notification shall be liable to the local taxes of the type specified in the notification and no fresh notification would be necessary. Accordingly, it must be held that the buildings which have been constructed after the 1st of April, 1937 by the petitioner within the limits of Sahebganj Municipality have rightly been assessed to taxes, and the exemption incorporated in the main paragraph of Section 154 of the Government of India Act, 1935 or in Clause (1) of Article 285 of the Constitution must be held to be ousted.

27. In the result, it must be held that the petitioner has failed to make out a case for the issue of any writ as prayed for and the application is without any merit. It is accordingly, dismissed with costs; hearing fee Rs. 200 (Two Hundred) only.

28. Chaudhary, J.:— I agree.

LI/G.G.M/D.V.C

29. Application Dismissed.