Enemy Properties Not Government Assets; Municipal Taxes Applicable, Rules Bench
Last Updated on February 25, 2024 by News Desk
The Supreme Court has ruled that enemy properties vested with government-appointed custodians are not assets of the central government and cannot be sought exemption from paying municipal cess, including house and water taxes.
The ruling was delivered by a bench comprising Justices BV Nagarathna and Ujjal Bhuyan on an appeal of the Lucknow Municipal Corporation against an Allahabad High Court judgment holding that the civic body cannot seek property taxes from assessees who are in occupation of an enemy property.
The property in question is located on Mahatma Gandhi Marg in Lucknow and was once owned by the ‘Raja’ of Mahmudabad, Mohammad Amir Ahmed Khan, who had migrated to Pakistan in 1947.
The son and wife of Khan remained in India and later sought its return after the death of the ‘Raja’. A portion of the property is currently occupied and used for “profit-generating purposes” by a respondent-assessee, Kohli Brothers Colour Lab Pvt Ltd, who had contested the demand for house and other taxes by the civic body.
The Union of India cannot assume ownership of enemy properties once the said property is vested in the custodian. The court held that the enemy properties that vest in the custodian are not Union properties, as there is no transfer of ownership from the owner of the enemy property to the custodian, and consequently, there are no ownership rights transferred to the Union of India.
The ‘Custodian for Enemy Property in India’ does not acquire ownership of such assets that vest in it, and the authority is “a trustee only for the management and administration of such properties.”
The top court set aside the high court verdict, saying it was not right in holding that the respondent (Kohli Brothers Colour Lab Pvt Ltd), one of the occupiers of the enemy property, was not liable to pay any property tax or other local taxes to the appellant.
