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2016 DIGILAW 3849 (ALL)

HINDUSTAN AERONAUTICS LIMITED v. STATE OF U. P.

2016-11-30

K.J.THAKER, SUDHIR AGARWAL

body2016
JUDGMENT By the Court.—Heard learned counsel for parties. 2. This writ petition under Article 226 of the Constitution of India has arisen from order dated 22.12.2015 sent by Zonal Officer, Zone 2, Nagar Nigam, Kanpur (hereinafter referred to as, ‘NNK’) deciding representation of petitioner and holding it liable for payment of House Tax for the period 1.4.1974 to 31.3.2013, to the following effect: S. No. Period Annual Value of Property Amount of Housing Tax 1. 1.4.1974 to 31.3.1978 36,24,477.00 47,58,250.00 2. 1.4.1978 to 31.3.1987 52,02,630.00 5,41,52,280.00 3. 1.4.1987 to 31.3.1992 1,39,40,809.00 8,42,28,470.00 4. 1.4.1992 to 31.3.1997 1,94,57,940.00 17,61,86,689.00 5. 1.4.2008 to 31.3.2013 4,75,28,010.00 71,54,07,810.00 3. For another property at Patel Nagar Residential/Township, NNK has assessed annual value for the period 1.4.2004 to 31.4.2008 at Rs. 1,18,67,709/- and from 1.4.2008 to 31.3.2013, it has assessed annual value at Rs. 2,20,83,643/-. From 1.4.2013 and onwards, annual value of property at Patel Nagar has been determined at Rs. 2,50,54,915/- and House Tax at 15% thereof has been demanded. 4. The aforesaid demand has been opposed and assailed by petitioner mainly on ground that petitioner-Hindustan Aeronautics Limited (hereinafter referred to as, ‘HAL’) is a company incorporated under Companies Act, 1956 (hereinafter referred to as, ‘Act, 1956) having its registered office at 15/1 Cubbon Road, Bangalore. It is a Central Government Company and engaged in manufacture, repair and overhauling of sophisticated Aircrafts and other Defence equipments and services. It caters to Defence Services in India. It is owned and controlled, to its entire share capital, by Ministry of Defence and and has several units across the Country. 5. The writ petition however is confined to the unit of HAL, being Transport Aircraft Division, HAL, Kanpur. The share capital is owned by President of India and higher officers of Ministry of Defence, Government of India. President of India possess power to issue directions as he may consider necessary in regard to exercise of performance of functions of company vide Clause 160 of Article of Association. A declaration has also been made in regard to HAL under Section 2 of Industries (Development and Regulation) Act, 1951 (hereinafter referred to as, ‘I.D.R. Act, 1951’). 6. President of India possess power to issue directions as he may consider necessary in regard to exercise of performance of functions of company vide Clause 160 of Article of Association. A declaration has also been made in regard to HAL under Section 2 of Industries (Development and Regulation) Act, 1951 (hereinafter referred to as, ‘I.D.R. Act, 1951’). 6. It is further stated that since entire Industrial Establishment is owned, controlled and possessed by Government of India, property of petitioner company is also owned and vested in the Government of India and therefore, is exempted from taxing power of Municipal Corporation by virtue of Article 285 of Constitution of India read with Section 177(f) of U.P. Municipal Corporation Act, 1959 (hereinafter referred to as, ‘U.P. Act, 1959’). 7. It is further stated that for the first time, NNK sent notice dated 28.7.1984 in which a reference was made to Government of India’s order dated 29.3.1967 stating that in respect to property vested in Government of India, “service charges” are payable to local body in respect to services rendered under Act, 1959. For the said purpose and for determining annual value of property owned by the petitioner, NNK required following information : “1. Description of property. 2. Yearwise date of Construction upto March, 1984. 3. Department of the Government of India to which the property belongs. 4. Capital Value of the building as per G.O. No. p-65 dated 29.3.1967 copy enclosed or alternately present value of the building including value of site as per record of the department or C.P.W.D.D. 5. Annual value of the building @ 9% of the capital value.” 8. Thereafter another notice was issued after more than 13 years i.e. dated 10.2.1998, in which reference was made to earlier letters dated 13.11.1997, 2.12.1997 and 23.1.1998. Herein also petitioner was required to give details of area of its property, it construction details etc. Next notice is dated 17.10.2001 whereby petitioner was informed that estimated annual value of property owned by petitioner is Rs. 27,53,25,907/-whereupon it has to pay general tax at Rs. 4,12,98,886/- per annum w.e.f. 1.12.2001. It also informed petitioner, if it had any objection to said assessment and proposed tax, may submit objection and may also avail oral hearing on 20.11.2001. 9. Petitioner then filed objection dated 20.11.2001. 27,53,25,907/-whereupon it has to pay general tax at Rs. 4,12,98,886/- per annum w.e.f. 1.12.2001. It also informed petitioner, if it had any objection to said assessment and proposed tax, may submit objection and may also avail oral hearing on 20.11.2001. 9. Petitioner then filed objection dated 20.11.2001. NNK vide letter dated 1.2.2002 informed petitioner that as per request made by it, proposal for realising only “service charge”, considering the period of establishment of petitioner-unit as 1965, has been determined at Rs. 6,94,323.22 w.e.f. 1.4.1965 per month and petitioner should pay current dues of 2001-02 forthwith and arrears from 1965 to 2001-02 at Rs. 2,49,95,635.92 in three installments. Petitioner failed to make payment, either of current dues or installments, hence demand letter dated 11.3.2002 was issued stating that in case of failure to make payment, proceedings for recovery under Section 509, 512 and 513 of Act, 1959 shall be initiated. 10. Petitioner submitted letter dated 26.3.2002 raising dispute with regard to determination of “service charge” stating that it should be 33.33 percent of normal tax of private colonies and not on annual value and this would ultimately come to Rs. 1,04,159/- only vide another letter dated 25.5.2002, petitioner informed NNK that township of petitioner-unit was constructed in 1965 but later on other phases commenced from 1971 and therefore determination of annual value and computation of tax has to vary according to period of construction which was detailed in letter dated 26.3.2002, spread from 1970-71 to 1989-90. 11. NNK vide letter dated 2.8.2003 informed petitioner that as per own claim of petitioner, general tax from 1965 to 2003-04 is computed at Rs. 12,48,28,344/-. However, if petitioner has any objection, it may avail oral hearing. 12. Another written objection was filed by petitioner on 3.9.2003 which was decided vide order dated 10.9.2003 determining annual value at Rs. 71,79,672/- and amount payable by petitioner as Rs. 1,93,61,320/-. Details of computation was given in enclosure to order dated 10.9.2003. This order was challenged in Writ Petition No. 116 of 2005 in which an interim order was passed on 25.1.2005 staying demand subject to payment of Rs. 6,94,323.22 for the year 2002-03 and onwards, demanded vide letter dated 1.2.2002. Writ petition was ultimately allowed vide judgment dated 23.4.2014. Relevant extract of judgement reads as under : “We have considered submissions of the learned counsel for the petitioner. 6,94,323.22 for the year 2002-03 and onwards, demanded vide letter dated 1.2.2002. Writ petition was ultimately allowed vide judgment dated 23.4.2014. Relevant extract of judgement reads as under : “We have considered submissions of the learned counsel for the petitioner. Perusal of the various documents reveal that the petitioner has been asked to pay service charges from 1965. A detailed order has been passed in this regard by the Mukhya Nagar Adhikari, Nagar Nigam, Kanpur, which is Annexure-12 to the writ petition, asking the petitioner to pay service charges at Rs. 2,49,95,635.92 p. for the period 1965 to 2001-02. It also appears that the case of the petitioner was that the Lucknow Unit is also paying charged towards service charges and not the property tax. In the impugned order, the Sahayak Nagar Adhikari has not considered the earlier orders passed by the Mukhya Nagar Adhikari, Nagar Nigam, Kanpur and has not considered the reply of the petitioner. Perusal of the impugned order reveals that the property tax has been demanded merely on the basis of some departmental legal opinion without stating the details and basis of such opinion in the impugned order. In view of the above, we are of the view that the impugned order dated 10.9.2003 is not sustainable. In the result, the writ petition is allowed. The impugned order dated 10.9.2003 and the consequential demand notice dated 13.8.2004 are set aside and the matter is relegated to the Nagar Ayukt, Kanpur Nagar Nigam, Kanpur to pass a fresh order, after giving opportunity of hearing to the petitioner, in accordance to law, considering the earlier orders passed by the Mukhya Nagar Adhikari, Nagar Nigam, Kanpur and the Government Order issued by the Central Government and the reply filed by the petitioner. The petitioner is directed to file the certified copy of this order within a period of two weeks and the Nagar Ayukt, Kanpur Nagar Nigam, Kanpur is directed to pass order within another period of two months thereafter.” 13. Petitioner then requested NNK to refund amount already paid. NNK however ultimately passed a fresh order of assessment and demand, dated 22.12.2015, which has been challenged in this writ petition. 14. First submission of learned Senior counsel appearing for petitioner is that petitioner company, owned by Central Government, is exempted from taxing power of State by virtue of Article 285 of Constitution of India. 15. NNK however ultimately passed a fresh order of assessment and demand, dated 22.12.2015, which has been challenged in this writ petition. 14. First submission of learned Senior counsel appearing for petitioner is that petitioner company, owned by Central Government, is exempted from taxing power of State by virtue of Article 285 of Constitution of India. 15. Learned counsel appearing for NNK sought to support order on the ground that petitioner Company though owned by Government of India/Union of India but a company incorporated under Act, 1956 and has separate legal entity. The mere fact that its entire share capital is owned by Government of India and it is a Government Company but this by itself will not dilute its own independent status. It is not a department of Union of India as such Article 285 of Constitution of India is not attracted in case in hand. 16. First issue which has to be examined in this matter, whether provison of Article 285 of Constitution of India is available to petitioner or not. If this question is answered in negative, then question would be, whether determination of liability by respondent-NNK is in accordance with law or not. 17. In order to consider first question, we may examine Article 285 of Constitution of India, which reads as under : “285. Exemption of property of the Union from State taxation: (1) The property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State (2) Nothing in clause (1) shall, until Parliament by law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State.” 18. It is not disputed before us by learned counsel for petitioner that HAL is a company incorporated under Act, 1956. It has been issued a Certificate of Incorporation by Registrar of Companies under Provisions of Act, 1956. HAL itself can acquire property, enter into contract and has a perpetual succession so long as Certificate of Incorporation continues. It is governed by Provisions of Act, 1956. 19. It has been issued a Certificate of Incorporation by Registrar of Companies under Provisions of Act, 1956. HAL itself can acquire property, enter into contract and has a perpetual succession so long as Certificate of Incorporation continues. It is governed by Provisions of Act, 1956. 19. Upon Food Corporation of India, when House Tax was imposed under Provision of Punjab Municipality Act 1911 similar argument was raised on behalf of Food Corporation of India. Court in Food Corporation of India v. Municipal Committee, Jalalabad and another, AIR 1999 SC 2573 , Court held that Food Corporation of India was a Government Company and not a Government Department. It was a distinct entity from Central Government. Hence, not entitled to exemption from tax under Article 285 of Constitution. Court relied on its earlier judgment in M/s. Electronics Corporation of India Ltd. v. Secretary, Revenue Department, Government of Andhra Pradesh and others, AIR 1999 SC 1734 , wherein also similar argument was raised on behalf of Electronics Corporation of India Limited, a Government of India Company incorporated under Act, 1956 but was rejected by Supreme Court. 20. In A.K. Bindal and another v. Union of India and others, (2003) 5 SCC 163 , Court on another occasion, has considered similar argument and held that identity of Government company remains distinct from Government. A Government company is not identified with Union of India but has been placed under a special system of control and conferred certain privileges by virtue of the provisions contained in Sections 619 and 620 of Act, 1956. Merely because entire shareholding is owned by Central Government, will not make incorporated company, as Central Government. 21. A far-fetched argument was raised in National Textile Corporation Limited v. Nareshkumar Badrikumar Jagad, (2011) 12 SCC 695 . It was argued that a company, when owned by Government which is virtually a corporation or agency, company is basically an agent, principal being Government of India, therefore possession of property by agent is to be treated as possession of property of principal, for all purposes. Reliance was placed in support of aforesaid argument on Southern Roadways Ltd., Madurai v. S.M. Krishnan, AIR 1990 SC 673 , Smt. Chandrakantaben v. Vadilal Bapalal Modi, AIR 1989 SC 1269 , 695, Prem Nath Motors Ltd. v. Anurag Mittal, AIR 2009 SC 569 and Vivek Automobiles Ltd. v. Indian Inc., (2009) 17 SCC 657 . Reliance was placed in support of aforesaid argument on Southern Roadways Ltd., Madurai v. S.M. Krishnan, AIR 1990 SC 673 , Smt. Chandrakantaben v. Vadilal Bapalal Modi, AIR 1989 SC 1269 , 695, Prem Nath Motors Ltd. v. Anurag Mittal, AIR 2009 SC 569 and Vivek Automobiles Ltd. v. Indian Inc., (2009) 17 SCC 657 . Court in National Textile Corporation Limited (supra) held that appellant company may be called ‘’agency’ or ‘’instrumentality’ of Central Government for a limited purpose, namely to label it to be ‘State’ within the ambit of Article 12 of Constitution, and in this regard referred to judgement in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and others, (2002) 5 SCC 111 , but then held, “however, even by stretch of imagination, the appellant cannot be held to be an ‘’agent’ of the Central Government as defined under Section 182 of the Contract Act”. 22. Having said so, Court in National Textile Corporation Limited (supra) state as under : “Thus, if the aforesaid settled legal principles are applied to the appellant, it becomes evident that appellant is neither the Government nor the department of the Government, but a Government Company. Appellant cannot identify itself with the Central Government. The submission made by Mr. Tripathi that appellant is merely an agent of the Central Government is not worth consideration at all for the simple reason that rights vested in the appellant stood crystallised after being transferred by the Central Government. Appellant is being controlled by the provisions of the Act 1995 and not by the Central Government. Whereas an agent is merely an extended hand of the principal and cannot claim independent rights.” (emphasis added) 23. The applicability of Article 285 of Constitution of India in respect to property of Government of India vis-a-vis demand of “service charge” made by U.P. Jal Nigam, for the purpose of sewerage and water supply came up for consideration in Union of India and others v. State of Uttar Pradesh and others, 2007 (11) SCC 324 , Court held that Article 285 of Constitution of India protects from charging of tax on property of Union of India from any provincial legislature, but fee in lieu of certain services is distinct from tax and for rendering such services, “service charge” may be levied and it does not come within ambit of Article 285 of Constitution of India. Court held, “What is contemplated under Article 285 is taxation on the property of the Union. In our opinion the Jal Sansthan is not charging any tax on the property of the Union; what is being charged is a fee for services rendered to the Union through the Railways. Therefore, it is a plain and simple charge for service rendered by the Jal Sansthan for which the Jal Sansthan has to maintain staff for regular supply of water as well as for sewerage system of the effluent discharge by the railway over their platform or from their staff quarters. It is in the nature of a fee for service rendered and not any tax on the property of the Railways.” (emphasis added) 24. Court relied on its earlier decision in Municipal Corporation, Amritsar v. Senior Superintendent Post Offices, Amritsar Division and another, (2004) 3 SCC 92 . 25. Distinction between corporation or a company and the states of share holders whether Government or individual has been highlighted in Andhra Pradesh State Road Transport v. Income Tax Officer and another, 1964 SCR (7) 17. Court said that, “.......corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders. It cannot be said that a shareholder owns the property of the corporation or carries on the business with which the corporation is concerned. The doctrine that a corporation has a separate legal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately; and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation.” (emphasis added) 26. This was followed in Adityapur Industrial Area Development Authority v. Union of India and others, 2006 5 SCC 100 . 27. This was followed in Adityapur Industrial Area Development Authority v. Union of India and others, 2006 5 SCC 100 . 27. We also find similar view taken in several other authorities but instead of referring all, we may notice some of them like Board of Trustees, Visakhapatnam Port Trust v. State of A.P., AIR 1999 SC 2552 , Municipal Commissioner of Dum Dum Municipality and others v. Indian Tourism Development Corporation and others, 1995 SCC (5) 251, Central Warehousing Corporation v. Municipal Corporation, 1994 Supp (3) SCC 316, Western Coalfields Ltd. v. Special Area Development Authority, Korba and another, AIR 1982 SC 697 , and Bharat Aluminum Company Ltd. v. Special Area Development Authority, Korba and others, MANU/MP/0056/1978. 28. In view of well-settled law in aforesaid authorities, it goes beyond doubt that Article 285 of Constitution of India is not attracted in the context of petitioner-HAL and its units. Therefore exemption claimed by petitioner under Article 285 read with Section 177 (f) of U.P. Act, 1959 is misconceived and hence decided against it. First question is answered against petitioner. 29. Then comes second question, whether assessment of annual value of property of petitioner has been made in accordance with procedure prescribed in law and demand of tax from petitioner is justified or not. Impugned order shows that NNK has determined and raised demand in respect to Property Tax. Section 172 of U.P. Act, 1959 details various taxes, which may be imposed under U.P. Act, 1959. It has six kinds of taxes under sub Section (1) of Section 172. Clauses (c) to (f) were substituted by U.P. Act No. 38 of 2006, but for our purposes Section 172(1)(a) is relevant. We reproduce Section 172(1) as amended by U.P. Act, 38, as under : “172. Taxes to be imposed under this Act.—(1) For the purposes of this Act and subject to the provisions thereof and of Article 285 of the Constitution of India the Corporation shall impose the following taxes, namely, (a) property taxes; (b) a tax on vehicles other than mechanically propelled vehicles, and other conveyances plying for hire or kept within the City or on boats moored therein; (c) a tax on helicopters or any other type of planes, when they land on or take off from the helipads, airports, airsteps (sic airstrip) or places made for this purpose situated within the Corporation. The tax so imposed shall be paid by the airport authority or person or persons, or managers, or director or institution or department or agency involved in the maintenance, management and supervision of the airport, airstrip, helipad or the place as the case may be; (d) a tax on trades and professions; (e) a tax on deeds of transfer of immovable property situated within the city; (f) a tax on vacant land situated within the city;” 30. Property taxes under sub-section (1) of Section 172 of Act, 1959 comprised of four kinds of taxes detailed in Section 173, which reads as under : “173. Property Taxes leviable.—(1) For the purposes of Sub-section (1) of Section 172 property taxes shall comprise the following taxes which shall, subject to the exceptions, limitations and conditions hereinafter provided, be levied on building and lands in the city- (a) a general tax which may be levied, if the Corporation so determines, on a graduated scale; (b) a water tax; (c) drainage tax leviable in areas provided with sewer system by the Mahapalika; (d) a conservancy tax in areas in which the Mahapalika undertakes the collection, removal and disposal of excrementitious and polluted matter from privies, urinals and cesspools.” (emphasis added) 31. Proviso of Section 173(2) of Act, 1959 was substituted by U.P. Act No. 17 of 1999. Section 174 of Act, 1959 talks about definition of “annual value”, which was substituted by U.P. Act No. 17 of 1999. Section 174 of Act, 1959 as it was before substitution by U.P. Act No. 17 of 1999; and as substituted and stood after 1999 read as under: Before Substitution : 174. Section 174 of Act, 1959 talks about definition of “annual value”, which was substituted by U.P. Act No. 17 of 1999. Section 174 of Act, 1959 as it was before substitution by U.P. Act No. 17 of 1999; and as substituted and stood after 1999 read as under: Before Substitution : 174. Definition of “annual value”.—“Annual value” means— (a) in the case of railway stations, colleges, schools, hostels, factories, commercial buildings, and other non-residential buildings, a proportion not below 5 per cent, to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building less depreciation at a rate to be fixed by rules, to the estimated value of the land appurtenant thereto; and (b) in the case of a building or land not falling within the provisions of clause (a) the gross annual rent for which such building, exclusive of furniture or machinery therein, or such land is actually let, or where the building or land is not let or in the opinion of the assessing authority is let for a sum less than its fair letting value, might reasonably be expected to be let from year to year: Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the Corporation, be excessive if calculated in the aforesaid manner, the Corporation may fix the annual value at any less amount which appears to it equitable. Provided further that where the corporation so resolves, the annual value in the case of owner occupied building and land shall for the purposes of assessment of property taxes be deemed to be 25 per cent less than the annual value otherwise determined under this section. After Substitution : 174. Provided further that where the corporation so resolves, the annual value in the case of owner occupied building and land shall for the purposes of assessment of property taxes be deemed to be 25 per cent less than the annual value otherwise determined under this section. After Substitution : 174. Definition of “annual value”.—(1) “Annual value” means - (a) in the case of railway stations, colleges, schools, hostels, factories, commercial buildings, and other non-residential buildings, a proportion not below 5 per cent, to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building less depreciation at a rate to be fixed by rules, to the estimated value of the land appurtenant thereto; and (b) in the case of a building or land not falling within the provisions of clause (a), twelve times the value arrived at on multiplying the carpet area of the building, or the area of the land, by the applicable minimum monthly rate of rent per square foot of the carpet area in the case of building or the applicable minimum monthly rate of rent per square foot of the area in the case of land, as the case may be, and for this purpose the minimum monthly rate of rent per square foot shall be such as may be fixed once in every two years by the Mukhya Nagar Adhikari on the basis of the location of the building or the land, nature of the construction of the building, the circle rate fixed by the Collector for the purposes of the Indian Stamp Act, 1899 and the current minimum rate of rent in the area for such building or land and such other factors, and in such manner, as may be prescribed: Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the Corporation, be excessive if calculated in the aforesaid manner, the Corporation may fix the annual value at any less amount which appears to it equitable. Explanation I.—For the purpose of calculation of annual value the carpet area shall be calculated as under : (i) Rooms - fully measurement of internal dimension; (ii) Covered Verandah - full measurement of internal dimension; (iii) Balcony, Corridor, Kitchen and Store - 50 per cent measurement of internal dimension; (iv) Garage - one-fourth measurement of internal dimension; (v) Area covered by bathroom, latrines, portico and staircase shall not form part of the carpet area. Explanation II.—The standard rent, the agreed rent or the reasonable annual rent of a building for the purposes of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 shall not be taken into account while calculating the annual value of that building. (2) Where the Corporation so resolves, the annual value for the purpose of assessment of property taxes shall - (a) in the case of land and owner-occupied residential building which is not more than ten years old, be deemed to be 25 per cent less and if it is more than ten years but not more than twenty years old, be deemed to be 32.5 per cent less, and if it is more than twenty years old, be deemed to be 40 per cent less than the annual value determined under clause (b) of subsection (1); and (b) in the case of residential building let on rent, which is not more than ten years old, be deemed to be 25 per cent more, and if it is more than ten years but not more than twenty years old, be deemed to be 12.5 per cent more than the annual value determined under clause (b) of subsection (1), and if it is more than twenty years old, be deemed to be equal to the annual value determined under clause (b) of sub-section (1). 32. Sub Section (1) of Section 174 of Act, 1959 was further substituted by U.P. Act No. 16 of 2004 w.e.f. 21.11.2002 and substituted provision reads as under : “174. 32. Sub Section (1) of Section 174 of Act, 1959 was further substituted by U.P. Act No. 16 of 2004 w.e.f. 21.11.2002 and substituted provision reads as under : “174. Definition of “annual value”.—(1) “Annual value” means - (a) in the case of railway stations, colleges, schools, hostels, factories, commercial buildings, and other non-residential buildings, a proportion not below 5 per cent, to be fixed by rule made in this behalf of the sum obtained by adding the estimated present cost of erecting the building less depreciation at a rate to be fixed by rules, to the estimated value of the land appurtenant thereto; and (b) in the case of a building or land not falling within the provisions of clause (a), twelve times the value arrived at on multiplying the carpet area of the building, or the area of the land, by the applicable minimum monthly rate of rent per square foot of the carpet area in the case of building or the applicable minimum monthly rate of rent per square foot of the area in the case of land, as the case may be, and for this purpose the minimum monthly rate of rent per square foot shall be such as may be fixed once in every two years by the [Municipal Commissioner] on the basis of the location of the building or the land, nature of the construction of the building, the circle rate fixed by the Collector for the purposes of the Indian Stamp Act, 1899 and the current minimum rate of rent in the area for such building or land and such other factors, and in such manner, as may be prescribed:” Provided that where the annual value of any building would, by reason of exceptional circumstances, in the opinion of the Corporation, be excessive if calculated in the aforesaid manner, the Corporation may fix the annual value at any less amount which appears to it equitable. Explanation I.—For the purpose of calculation of annual value the carpet area shall be calculated as under : (i) Rooms - fully measurement of internal dimension; (ii) Covered Verandah - full measurement of internal dimension; (iii) Balcony, Corridor, Kitchen and Store - 50 per cent measurement of internal dimension; (iv) Garage - one-fourth measurement of internal dimension; (v) Area covered by bathroom, latrines, portico and staircase shall not form part of the carpet area. Explanation II.—The standard rent, the agreed rent or the reasonable annual rent of a building for the purposes of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 shall not be taken into account while calculating the annual value of that building.” 33. When we confronted learned counsel for NNK as to whether assessment of property in dispute belong to petitioner has been made in accordance with procedure prescribed under U.P. Act, 1959 as stood from time to time, and if so, show us material as to how it has been done, he clearly stated that there is no such exercise undertaken except claims made for different periods as detailed in impugned order. We could not be shown that for making assessment of annual value for different periods and for computing tax liability upon petitioner, provisions of U.P. Act, 1959 as amended from time to time have been followed and observed. In this state of affairs while answering question that petitioner is not exempted from tax liability by taking recourse to Article 285 of Constitution of India read with Section 177(f) of U.P. Act, 1959, as petitioner is neither a department of Government of India nor property belong to petitioner can be said to be property of Union of India, hence it is within ambit of tax liability imposed by a local authority under U.P. Act, 1959 and is within ambit of tax liability imposed by local authority under U.P. Act, 1959. We have to answer second question in favour of petitioner and against NNK. 34. We, therefore, have no hesitation in setting aside impugned order in so far as it has determined annual value of property in general way and made computation of tax therein without following mandatory procedure as discussed above. 35. Writ petition is allowed. Impugned order dated 22.12.2015 is hereby set aside. NNK is directed to undertake exercise of determination of annual value of property of petitioner in accordance with Provisions of U.P. Act, 1959, as amended from time to time, in respect to relevant periods and thereafter determine tax liability of petitioner and raise fresh demand. Aforesaid exercise shall be completed by competent authority of NNK within a period of six months from the date of production of certified copy of this judgment. 36. Costs made easy.