Service charge

No Service Fee Waiver for Center Properties: HC

The Kerala High Court has ruled that properties owned by the central government or central government enterprises are not exempt from service charges payable to local bodies.

A divisional bench delivered the verdict while rejecting an appeal filed by BSNL against a single judge’s judgment upholding the opinion issued by the Njarackal grama pancahyat in Ernakulam district demanding charges against BSNL for providing various services to his property.

According to BSNL, companies or enterprises owned by the central or central government were exempted from paying charges or taxes under Article 285 of the Constitution.

The court observed that it was clear from the provision that what was exempt was the property of the Union Government from all taxes imposed by a State Government or by any authority within a State. This meant that the Section 285 exemption only applied to property tax and not any other state levies imposed on Center property or Center-owned businesses.

The court said that under Rule 21 of the Kerala Panchayat Raj (Building Tax and Surcharge) Rules, 1996, it was very clear that fees could be levied on properties owned by the central government for providing services such as sanitation, water supply, public lighting and drainage.

The court observed that an assessment of the meanings attributed to the respective phraseology “tax” and “service tax” would make it clear that “the two operate in different fields and are not interchangeable so as to benefit from section 285 of the Constitution.