In Brief
The Food Corporation of India challenged a municipal demand for property tax on godowns in Mumbai that it occupies but that are owned by the Government of India. The Supreme Court held that property of the Union is exempt from State taxation under Article 285(1). The exception in Article 285(2)—which permits continued taxation of properties that were already taxable before the Constitution came into force—does not apply here because the godowns were built after 1964, after the Constitution commenced. Although the FCI is the occupier, this does not override the owner's Constitutional exemption. The Court clarified, however, that service charges for water and other services rendered by the Municipal Corporation are not taxes but fees, and must still be paid.
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