Supreme Court: While relying upon Anant Mills Co. Ltd. v. State of Gujarat, (1975) 2 SCC 175, the Division Bench of Rajan Gogoi, Prafulla C. Pant, JJ. held that State Legislatures’ competency to enact laws to impose taxes on lands and buildings, by virtue of Entry 49, List II of the Seventh Schedule to the Constitution, includes the power to levy taxes on mobile towers. Gujarat High Court, in an order dated 25.04.2013, had declared Section 145A of the Gujarat Provincial Municipal Corporations Act, 1949, that provided for levying of taxes on mobile towers, as ultra vires the Constitution. Taxes were also imposed on mobile towers under the Bombay Provincial Municipal Corporations Act, 1949, on the reasoning that towers are “buildings” as defined in the Act. In reference to both legislations, the mobile operators contended that State Legislatures are incompetent to impose taxes on mobile towers, since mobile towers are covered by Entry 31 of List I (Posts and telegraphs), and are beyond the scope of Entry 49 of List II (Taxes on lands and buildings).

Supreme Court observed that even if a mobile tower is covered by Entry 31 of List I, the State Act could still provide for a levy of taxes on mobile towers, if mobile towers can come within the ambit of “land and building” in Entry 49 of List II. The Court further noted that a broad, liberal and expansive interpretation is to be preferred as to the meaning of an Entry. Therefore, the expression ‘land’ not only includes the surface of the ground, but also everything on or over or under it, and general word like ‘building’ must be construed to reasonably extend to all ancillary and subsidiary matters, and shall not be confined to a residential building, as commonly understood. Thus, a state law levying taxes on mobile towers can trace its source to Entry 49, List II of the Seventh Schedule to the Constitution. [Ahmedabad Municipal Corporation v. GTL Infrastructure Ltd., 2016 SCC OnLine SC 1490, decided on December 16, 2016]

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