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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1041 OF 2008

INDIAN OIL CORPORATION LTD. .....APPELLANT(S)

VERSUS

A.P.  INDUSTRIAL  INFRASTRUCTURE  CORPORATION LTD. & ORS.

.....RESPONDENT(S)

W I T H

WRIT PETITION (C) NO. 499 OF 2007

J U D G M E N T

A.K. SIKRI, J.

Indian Oil  Corporation Limited (hereinafter  referred to as  

the 'IOC') has challenged the common judgment rendered by the  

High Court of Judicature, Andhra Pradesh at Hyderabad in the  

two  writ  petitions  which  were  filed  by  the  IOC impugning  the  

order  dated  14.12.2002  coupled  with  demand  notice  dated  

10.07.2002 and order  dated 14.10.2002 coupled with  demand  

notice dated 12.06.2003 respectively.  By the aforesaid orders,  

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respondent  No.1,  which  is  Andhra  Pradesh  Industrial  

Infrastructure Corporation Limited, had taken the stand that IOC  

is liable to pay the property tax on the value of storage and water  

tanks of the IOC situated in the industrial development area of  

Cuddapah (A.P.)  and in  the demand notices,  specific  demand  

was made for payment of the property tax on the said storage  

tanks.   The  property  tax  was  demanded  under  The  Andhra  

Pradesh Panchayat Raj Act, 1994 (hereinafter referred to as the  

'Act').  Thus, identical relief was claimed in the two writ petitions  

and the occasion for filing two writ petitions was that the demand  

notices calling upon the IOC to pay the property tax related to  

four different years.  Assessment Years 2000-01, 2001-02 and  

2002-03 were covered by the demand notice dated 10.07.2002  

and demand notice dated 12.06.2003 pertained to Assessment  

Year 2002-03.  This was the reason for the High Court to dispose  

of the two writ petitions by the common decision.  The High Court  

has, by reason of the said judgment, dismissed the writ petitions  

of  the  IOC  holding  that  property  tax  is  payable  under  the  

provisions of the aforesaid Act.   

2. We may mention at the outset that though the impugned demand  

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was challenged on number of grounds which, inter alia, included  

the ground that the demands were violative of the principles of  

natural justice as well as provisions of the Act itself, there was no  

challenge to the vires of any provision of the Act.  The question  

that fell for consideration before the High Court, thus, was as to  

whether the aforesaid storage and water tanks could be termed  

as 'building' within the meaning of Section 2(3) of the Act and be  

covered by the definition of 'house' contained in Section 2(19) of  

the Act as the tax is payable on the 'house'.

After  the High Court  had given its  judgment,  another  demand  

notice  dated  03.07.2007  was  issued,  creating  demands  of  

property  tax  for  the  Assessment  Years  upto  2006-07  and  

challenging the said demand notice on the same grounds, IOC  

has also filed Writ Petition (C) No. 499/2007 in this Court directly  

under Article 32 of the Constitution.  This is how the appeal and  

writ  petition  touching  upon the  identical  issue,  as  enumerated  

above, have been taken up for hearing.

3. Having regard to the nature of issue involved, though it may not  

be necessary to traverse through the facts in detail, those minimal  

facts which are to be kept in mind while deciding the issue, are  

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recapitulated below:

The IOC is a Central Government undertaking, which is in  

the business of marketing products including petrol, high speed  

diesel, liquified petroleum gas, lubricants etc.  For the purpose of  

efficient distribution of its products, the IOC has storage depots  

and LPG bottling plants at various places.  One such LPG bottling  

plant of the IOC is situated in the industrial  development area,  

Cuddapah.  This bottling plant is spread over a large extent of  

land and consists of various building, machinery and LPG storage  

tanks.  The entire bottling plant falls within in the jurisdiction of the  

Chinnachowk Grama Panchayat.   

4. The Andhra Pradesh Panchayat Raj Act, 1994 was enacted which  

deals with various facets of Panchayati Raj.  It also provides for  

provisions for levy of  property tax and machinery for  collection  

thereof.  Under the aforesaid provisions, the Chinnachowk Grama  

Panchayat initially fixed the property tax for the Assessment Year  

1998-99 at Rs.9,11,380.60.  This property tax was collected on  

the basis of cost of machinery equipment, which according to IOC  

do not form part of any 'building'.  The aforesaid entire area was  

handed over to the first respondent which was also vested with all  

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necessary powers conferred on the Gram Panchayat under the  

Act.  Respondent No.1, thus, assumed jurisdiction over the area  

with power to collect the property tax.  On the assumption of such  

powers,  respondent  No.1  issued  demand  notice  dated  

10.01.1999  to  the  IOC  demanding  tax  to  the  tune  of  

Rs.9,11,380.60 for the Assessment Year 1998-99.  However, this  

demand was revised on the representation by the IOC pointing  

out the mistake committed in the calculation of the property tax  

and was reduced to Rs.7,14,393.  The IOC paid the aforesaid  

amount of tax.

5. In the year 2001, IOC approached respondent No.1 for further  

reduction of property tax on the ground that LPG storage tanks  

consisting of Horton Sphere and 3 bullets cannot be taken into  

consideration for calculation of the tax as these structures do not  

answer the description of 'building' and 'house' as defined under  

the Act.  Vide order dated 08.12.2001, this request of the IOC  

was  rejected  by  respondent  No.3.   Thereafter,  demands were  

made for  other  Assessment  Years  and representations  of  IOC  

against  those  demands  were  also  rejected.   This  is  how,  

challenging the said demands, the two writ petitions were filed by  

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the IOC, as already noted earlier.

6. The case of the IOC was that the value of LPG storage tanks  

which  amounts  to  Rs.557  lakhs  and  the  value  of  the  water  

storage tanks which amounts to Rs.35 lakhs, do not fall for levy of  

property tax.  The LPG storage tanks are the sphere and bullets  

which are pressure vessels fabricated out of special materials to  

store liquefied petroleum gas and have fittings like safety relieve  

valve, high level alarm, fixed tube gauge, liquid inlet and outlet  

pipes,  manhole  cover,  Servogauge,  differential  pressure gauge  

and  other  fittings  which  are  mandatory  under  the  safety  

guidelines of the Chief Controller of Explosive and Oil  Industry  

safety norms.  These structures are pressure vessels, in which no  

human  being  can  enter  or  stay.   These  structures  are  also  

operated for long period of time.  It is only after a lapse of more  

than  a  few  years,  humans  enter  the  structure  for  cleaning.  

Similarly, the water storage tanks are normally filled with water or  

use  in  case  of  emergencies.   These  tanks  also  cannot  be  

inhabited by human being during their normal operation.  These  

tanks are also cleaned after a lapse of few years only.

7. In  the  aforesaid  backdrop,  the  question  that  arises  for  

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consideration is as to whether the storage tanks which store LPG  

can be considered as 'house' within the meaning of the Act as the  

taxes are leviable, inter alia, on houses.  The material provisions  

which have to be taken into consideration are the definition of the  

terms 'building' and 'house' which are defined by sub-section (3)  

of Section 2 of the Act and sub-section (19) of Section 2 of the  

Act.  These are as follows:

“Section 2(3) :  'building' includes a house, out- house, shop, stable, latrine, shed (other than a  cattle shed in an agricultural land), hut, wall and  any  other  such  structure  whether  of  masonry,  bricks,  wood,  mud,  metal  or  other  material  whatsoever;

Section 2(19)   :  'House'  means a building or a  hut  fit  for  human  occupation,  whether  as  a  residence or  otherwise and includes any shop,  factory, workshop or warehouse or any building  used for garraging or parking buses or as a bus- stand,  cattle  shed (other  than a  cattle  shed in  any  agricultural  land,  poultry  shed  or  dairy  shed);”

Before proceeding further, we would also take note of some  

other provisions of the Act which were pointed out by the learned  

counsel for the parties.  These are:

“Section 2(20) :  'Hut' means any building which  is constructed principally of wood, mud, leaves,  grass,  or  thatch  and  includes  any  temporary  structure of whatever size or any small building  of  whatever  material  made,  which  the  gram  panchayat  may  declare  to  be  a  hut  for  the  purposes of this Act;

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Section 60   - Taxes leviable by gram panchayats

(1) A gram panchayat shall levy in the village,

(a) a House-tax;

(b) kolagaram, or katarusum that is to say, tax on  the village produce sold in the village by weight  measurement or number subject to such rules as  may be prescribed;

(c)  such other tax as the Government  may,  by  notification, direct any gram panchayat or class  of gram panchayats to levy subject to such rules  as may be prescribed;

Provided that no such notification shall be issued  and no such rule shall be made except with the  previous approval of the Legislative Assembly of  the State.

(2) A duty shall also be levied on transfers of  property  situated  in  the  area  under  the  jurisdiction of the gram panchayat in accordance  with the provisions of Section 69.

(3) Subject  to  such  rules  as  may  be  prescribed the gram panchayat may also levy in  the village,-

(i) a vehicle tax;

(ii) a tax on agricultural land for a specific  purpose;

(iii) a land-cess at the rate of two naya paise in  the rupee on the annual rental value of all  occupied lands which are not occupied by or  adjacent and appurtenant to, buildings;

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(iv) fees for use of porambokes or communal  lands under the control of the gram panchayat;

(v) fees for the occupation of building including  chavadies  and  sarais  under  the  control  of  the  gram panchayat.

(4) Every  gram  panchayat  may  also  levy  a  duty  in  the  form  of  a  surcharge  on  the  seigniorage fees collected by the Government on  materials other than minerals and minor minerals  quarried in the village:

Provided that the rate at which such duty shall be  levied shall be fixed by the gram panchayat with  the previous approval of the Government.

(5) Every  gram  panchayat  may,  with  the  previous  approval  of  the  prescribed  authority  also  levy,  in  respect  of  lands  lying  within  its  jurisdiction, a duty in the form of a surcharge at  such rate, not exceeding twenty-five naya paise  in  the  rupee,  as  may  be  fixed  by  the  gram  panchayat-

(a) in the Andhra Area, on the land cess, leviable  under Section 78 of the Andhra Pradesh (Andhra  Area)  District  Boards  Act,  1920  and  on  the  education  tax  leviable  under  section  37  of  the  Andhra Pradesh Education Act, 1982;

(b)  in  the  Telangana  area,  on  the  local  cess  leviable  under  section  135  of  the  Andhra  Pradesh  (Telangana  Area)  District  Boards  Act,  1955  and  on  the  education  tax  leviable  under  section 37 of the Andhra Pradesh Education Act,  1982.

(6) Any  resolution  of  a  gram  panchayat  abolishing an existing tax or reducing the rate at  which  a  tax  is  levied  shall  not  be  carried  into  effect  without  the  previous  approval  of  the  

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Commissioner.

Section 61 - House-tax

(1) The house-tax referred to in clause (a) of  sub-section  (1)  of  section  60  shall,  subject  to  such rules as may be prescribed, be levied on all  houses in the village on any one of the following  basis, namely:

(a) annual rental value, or

(b) capital value, or

(c) such other basis as may be prescribed:

Provided that  no  house tax  shall  be  levied  on  poultry  sheds  and  annexes  thereto  which  are  essential for running the poultry farms.

(2) The  house-tax  shall,  subject  to  the  prior  payment of the land revenue, if any due to the  Government in respect of the site of the house  be a first charge upon the house and upon the  movable property, if any, found within or upon the  same and belonging to the person liable to pay  such tax.

(3) The house-tax shall  be levied every year  and shall, save as otherwise expressly provided  in the rules made under sub-section (1) be paid  by  the  owner  within  thirty  days  of  the  commencement of the year. It shall be levied at  such  rates  as  may  be  fixed  by  the  gram  panchayat,  not  being  less  than  the  minimum  rates  and  not  exceeding  the  maximum  rates,  prescribed in regard to the basis of levy adopted  by the gram panchayat.

(4) The Government may make rules  providing for--

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(i) the exemption of special classes of houses  from the tax;

(ii)  the  manner  of  ascertaining  the  annual  or  capital  value  of  houses  or  the  categories  into  which they fall for the purposes of taxation;

(iii) the persons who shall be liable to pay the tax  and the giving of notice of transfer of houses;

(iv) the grant of exemptions from the tax on the  ground of poverty;

(v) the grant of vacancy and other remissions;  and

(vi)  the  circumstances  in  which,  and  the  conditions subject to which houses constructed,  reconstructed or demolished, or situated in areas  included in, or excluded from the village, during  any year, shall be liable or cease to be liable to  the whole or any portion of the tax.

(5) If the occupier of a house pays the house- tax on behalf of the owner thereof, such occupier  shall  be entitled to  recover  the same from the  owner and may deduct the same from the rent  then or thereafter due by him to the owner.

Section 62   - Levy of House-tax on a direction by  Government

(1) The Government may, by order published  in  the  Andhra  Pradesh  Gazette,  for  special  reasons to be specified in such order direct any  gram panchayat to levy the house-tax referred to  in clause (a) of sub-section (1) of section 60 at  such rates  and with  effect  from such date  not  being  earlier  than  the  first  day  of  the  year  immediately following that in which the order is  published, as may be specified in the order.

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Such direction may be issued in respect  of  all  buildings in a gram panchayat or in respect of  only  such  buildings  belonging  to  the  undertakings  owned or  controlled  by  the  State  Government  or  Central  Government  and  the  buildings belonging to the State Government as  may be specified therein.

(2) When an order under sub-section (1) has  been published, the provisions of this Act relating  to house-tax shall apply as if the gram panchayat  had, on the date of publication of such order, by  resolution determined to levy the tax at the rate  and  with  effect  from  the  date  specified  in  the  order, and as if no other resolution of the gram  panchayat under Section 60 determining the rate  at which and the date from which the house-tax  shall be levied, had taken effect.

(3) A gram panchayat shall not alter the rate  at which the house-tax is levied in pursuance of  an order under sub-section (1) or abolish such  tax  except  with  the  previous  sanction  of  the  Government.”

8. From the  aforesaid  definition  of  'building'  contained  in  Section  

2(3) of the Act, it becomes apparent that very expansive meaning  

is assigned to the expression 'building' which inter alia includes a  

'house'.  Apart from some specific nature of structures, namely,  

out-house, shop, stable, latrine, shed etc., other 'such structures'  

are also covered by the definition.  Of course, in this process,  

other structures are qualified by the word 'such' which means that  

they have to be read ejusdem generis with the earlier part of the  

definition that mentions specific kind of structures.  The case set  

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up by the IOC, is that though the term 'building' is very broad and  

'house' is only one of the structure qualifies as building, the text in  

question is to be on 'house' and not on all other kinds of buildings.  

In  this  process,  it  was  argued  that  the  structures  in  question,  

namely,  LPG storage tanks may be 'building'  but  they are not  

'house', as every building is not a house.  It was argued that the  

term 'house'  is  to  take  its  flavour  from the  purpose  for  which  

'house' is used, namely, the one which is fit for human occupation  

as  the  definition  of  'house'  itself  specifically  provides.   It  was  

argued that storage tanks were not at all fit for human occupation  

and they could not even visited by the humans.  It was submitted  

that  these structures are pressure vessels in  which no human  

being can enter or stay.  It is only after a lapse of more than a few  

years that human beings enter these structures that too for the  

purpose  of  cleaning  only.   Similarly,  water  storage  tanks  are  

normally filled with water in case of emergencies and these tanks  

also cannot be inhabited by the human beings during their normal  

operation.  These tanks can be cleaned after a lapse of few years  

only.   

9. It  is  difficult  to  countenance  the  aforesaid  submissions  of  the  

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learned senior counsel for the appellant.  As was rightly argued  

by  the  learned  counsel  for  the  respondents,  the  definition  of  

'house'  is  in  two  parts.   First  part  of  this  definition  refers  to  

building or a hut fit for human occupation, whether as a residence  

or otherwise.  In this context, house  means a building or a hut.  

Therefore, in the first instance, it has to qualify as a building or as  

a hut.  However, the second part of the definition is inclusive in  

nature as it starts with the word 'includes' and mentions so many  

other types of buildings and makes all those kinds of buildings  

qualify as house even when used for garaging or parking buses  

or as a bus stand or cattle shed.   

10. It cannot be disputed that structures in question are building.  The  

term 'building' as defined in Black's Law Dictionary, 10th Edition  

mentioned  it  to  be  a  structure  with  walls  and  a  roof,  esp.  a  

permanent  structure.   Even  Mr.  Guru  Krishnakumar,  learned  

senior counsel for the IOC accepted that the storage tanks and  

water tanks would qualify as buildings.  'Storage' is described in  

the Black's Law Dictionary as 'the act of putting something away  

for future use; esp., the keeping or placing of articles in a place of  

safekeeping, such as a warehouse or depository.  Black's Law  

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Dictionary also gives the description of warehouse as 'a building  

used to  store  goods and other  items'.   Oxford  Dictionary  also  

explains  warehouse  as  combination  of  ware  plus  house  and  

assigns the meaning as under:

“A building  or  part  of  a  building  used  for  the  storage of merchandise; the building in which a  wholesale  dealer  keeps his  stock of  goods for  sale;  a  building  in  which  furniture  or  other  property may be stored; a government building  where goods are kept in bond.”

11. More  significant  is  the  manner  in  which  P.  Ramnath  Aiyar's  

Advanced  Law  Lexicon,  4th  Edition  gives  the  description  of  

storage and warehouse.  It is as follows:

“Storage  and  warehousing.   “Storage  and  Warehousing” includes storage and warehousing  services  for  goods  including  liquids  and  gases  but  does  not  include  any  service  provided  for  storage  of  agricultural  produce  or  any  service  provided by a cold storage. [Finance Act (32 of  1994), S. 65(1)(87)].”

12. The  above definition  makes  it  clear  that  the  goods  which  are  

meant for storage and warehousing services include liquid and  

gases as well.   In  Bijaya Kumar Agarwal v.  State of Orissa1,  

this Court made the following observations which are apt in the  

context:

“The dictionary meanings suggest that ‘storing’ has  

1 (1996) 5 SCC 1

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an element of continuity as the purpose is to keep  the  commodity  in  store  and  retrieve  it  at  some  future date, even within a few days. If  goods are  kept  or  stocked  in  a  warehouse,  it  can  be  immediately  described  as  an  act  of  ‘storage’.  A  vehicle  can  also  be  used  as  a  storehouse.  But,  whether in a particular case, a vehicle was used as  a  ‘store’  or  whether  a  person  had  stored  his  merchandise in a vehicle would be a matter of fact  in each case. Carrying goods in a vehicle cannot  per se be ‘storing’ although it may be quite possible  that a vehicle is used as a store. Transporting is not  storing. Section 3(2)(d) of the Act extracted earlier  in the judgment uses the expressions ‘storage’ and  ‘transport’  as  two  separate  acts  which  could  be  regulated  by  licences,  permits  or  otherwise.  The  Order could  as  well  prohibit  transporting of  large  quantities of  rice or  paddy within  the sanction of  Section  3  of  the  Act.  Was it  the  intention  of  the  framers of the Order to prohibit ‘transport’ per se?  Unless the facts in a particular case reveal that the  vehicle  was used not  merely  for  transporting the  goods but  also  for  ‘storing’ as  understood in  the  English language or even in common parlance, it is  difficult to hold in the affirmative.”

13. When we read the definition of 'house' in the context of meaning  

that is to be assigned to 'warehouse', it is clear that a place where  

goods  are  stored  would  be  'warehouse'  which  is  specifically  

mentioned in the definition of house contained in Section 2(19) of  

the Act.  It would, thus, follow that it may not be necessary that  

such a place is capable of frequent visits by the human beings or  

fit for human occupations.  The High Court has rightly pointed out  

that  as  per  the  said  definition,  the  requirement  that  a  house  

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should  be  fit  for  human occupations  is  only  for  huts  which  is  

defined under Section 20 of the Act.

14. The Legislature has provided a particular definition to 'house' and  

levied  property  tax  thereupon.   It  is  this  fictional  definition  of  

'house' which is to be kept in mind for the purpose of levy of tax.   

15. We,  thus,  do not  find any merit  in  this  appeal  as well  as writ  

petition which are accordingly dismissed with cost.   

.............................................J. (A.K. SIKRI)

.............................................J. (ROHINTON FALI NARIMAN)

NEW DELHI; DECEMBER 09, 2015.

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