Jeevan Reddy, J.
1. Andhra pradesh Non-agricultural Lands assessment Act. 1963 was enacted by the state of Andhra pradesh to provide for the levy of assessment on lands used for non-agricultural purposes. It has been amended by the andhra pradesh Act (No. XXVIII) to 1974, which amendment Act came into force on 1-7-1974 the Amendment Act amended the definition of owner' in cl. (J) of sec. 2 along with certain other provisions of the Act. The definition of 'owner' reads as follows:-
'Owner' includes any person for the time being receiving or entitled to receive whether on his own account or as agent trustee guardian Manager, or receiver for another person or for any religious educational or charitable purpose rent or profits for the nonagricultural land or for the structure constructed on such land in respect of which the word is used and also includes in respect of the land owned by the state Government or the central Government.
(i) a lessee. If the land has been leased out by the Government for any commercial industrial or other non-agricultural purpose; and
(ii) a local authority, if the land is vested in the local authority and used for any commercial industrial or other non-agricultural purpose deriving income therefrom'.
We may also notice the definition of 'occupier and non-agricultural land continued in cls. (I) and (g) respectively of sec. 2:-
(1) any person for the time being paying or liable to pay to the owner rent or any portion of the rent for the non-agricultural land or for the structure constructed on such land or part of such lnad or structure. In respect of which the word is used or damages on account of the occupation of such land structure or part : and
(ii) a rent-free occupant'.
'Non-agricultural land' menas land othere than the land used exclusively for the purpose of agriculture but does not include the land was exclusively for include the land used exclusively for-
(i) cattle sheads;
Section 3 if the charging section It reads to the following effect:-
'3. Levy of assessment of non-agricultural lands.
(i) in the case of of non-agricultural land in the local area with the population specified in col. (1) of the schedule there shall be levied and collected by the Government for each Fasli year commencing on hte first day of July, from the owner of such land an assessment at the rate specified in col (2) where the land is used for any industrial purpose. At the rate specified against it in col. (3) where the land is used for any commercial purpose and at the rate specified against it in col. (4) Where the land is used for any other non-agricultural purpose including residential purpose;
Provided that where assessment is levied and collected in respect of such land under this Act no land revenue shall be payable in respect of that land and nothing contained in any enactment, regulation, order bye-law. Rule, Scheme notification. Or other instrument having the force of law, in operation immediately before the commencement of this Act relating to the assessment levy and collection of land revenue on non-agricultural land shall apply in respect of that land. Except as respect things doen or omitted to be done before the commencement of the aact.
Provided further that any amount payable on such land at the commencement of this Act towards the arrears of land revenue may be recovered under the provision of the andhra pradesh Revenue Recovery Act 1864.
EXPLANATION:- Where the land is used for any industrial of commercial purpose and also for any other nonagricultural pupose such land shall be assessed at the rates specified in col. (2) or col (3) of the schedule as if it were used solely for any industrial or commercial purpose as the case may be.
(2) Notwithstanding anything contained in sub-sec. (1) where the assessment leviable on any non-agricultural land under this Act is less than the land revenue alone shall be payable on that land'.
2. The land of levy is provided in the schedule to the Act and sec. 6 8 empowers the stat Government to amend the same from time to time. Indeed the schedule was also amended by the aforesaid Amendment Act.
3. The writ petitioner herein is the electronics corporation of iNdia ltd., MOulali, Hyderabad. A notice of demand was served upon by the petitioner calling upon it to pay a sum of Rupees 11,98,826-32 Ps. Towards the years 1974-75 to 1978-79, and a further sum of Rupees 1, 91.189-68 Ps. For the years 1970- 71 to 1973-74, on account of the nonagricultural tax due under the Act. The present writ petition is filed questioning the said demand.
4. The contention of hte writ petitioner is that it is a lessee of the land which belongs to the Union of India and since the property of the Union of India cannot be taxed by a state legislature the andhra pradesh Non-agricultural Lands assessment Act. 1963 cannot apply to the property owned by the Union of India and accordingly no demand can be made upon the petitioner, which is a lessee of the Union of India. It is stated that an area of aproximately 1000 Acres was granted by the state Government to the department of Atomic Energy Government of India and the Department of Atomic Energy in turn leased out an extent of 280-25 acres to the petitioner-corporation for establishing its plant and machinery. It is further contended, that out of the extent granted to the petitioner an extent of 29 acres is covered by buildings; an extent of 12 acres is covered bu buildings; an extent of 12 acres by roads and the rest of the area is meant for future expansion It is also submitted that an extent of 14.25 acres is being used for agricultural purposes.
5. In the counter-affidavit filed by the respondents the fact of grant to the Union of India, Atomic energy department and the lease by the atmoic energy Department to the writ petitioner, have not been denied. We shall therefore have to take the said facts as true and proceed on that basis.
6. Article 285 of the Constitution reads as follows:-
'285. (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 aauthority within a state.
(2) Nothing in cl. (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'.
This Article corresponds to sec. 154 of the Government of India Act, 1935. Cl. (1) of art. 285 declares that the property of the Union shall be exempt from all taxes imposed by a state except in so far as the parliament may be law provide otherwise the contention of Sr. P. R. Ramachandra Rao, the learned counsel for the writ petitioner, is that inasmuch as the property upon which the non-agricultural tax is being levied is the property of the Union the State Legislature is not competent to levy and tax thereon. The is disputed by sri N. Subba Reddy, the learned Government
Pleader with reference to the language of sec. 3 read with the definition of owner in the Act His contention is that the levy is not upon the property of the Union, but is upon the interest of the lessee/occupier and that therefore the bar in Art. 285 has no application. We are inclined to agree with Mr. Subba Reddy.
7. The definition of the expression 'owner' in cl. (J) of sec. 2 is an inclusive definition. It includes (j) any person for hte time being receiving or entitled to receive whether on his own account or as agent. Trustee guardian manager or receiver. For another person or for any religious educational. Or charitable purpose rent or profits for the non-agricultural land or for the structure constructed on such land in respect of which the word is used:
(ii) a lessee of the land owned by hte state Government or the central Government. Provided the lease has been granted for any commercial, industrial or other non-agricultural purpose; and (iii) a local authority. If the land is vested in the local authority and is used for any commercial industrial or other nonagricultural purpose deriving income therefrom.
8. Now coming to the charging section sec. 3 91) levies the assessment on the land used for industrial commercial or other non-agricultural purpose, including residential purpose, and declares that it shll be collected from the owner of such land. It is significant to notice that the assessment is not levied on the non-agricultural land as such but only on such non-agricultural land as is used for industrial commercial or other non-agricultural purpose, including residential purpose. What attracts the assessment is the user for specified purposes. The expression Owner' occurring in section 3 (1) must be understood it would follow that in clause of lands owned by the central Government the levy is upon the lessees' interest, provided the land has been leased out by the central Government for any commercial, industrial or other non-agricultural purpose and to the extent it is used for any of those purposes. Looked at from this angle the tax or assessment as the case may be, is not levied upon the property owned by the central Government but upon the interest of the lessee in such land. The two privy council decisions which we shall presently refer to deal with almost a similar situation and as we shall point out presently, the principle of those decisions clearly governs the present case.
9. The first decision is in smith v. Vermillion Hills Rural council (1916) 2 AC 569. Sec. 125 of the British North American Act, 1867 provided that 'no lands or property belonging to canada or any province shall be liable to taxation'. The appellant was granted a lease by the crown in respect of certain lands for grazing purposes. The lands leased were situated within a local improvement District, which was subsequently organized as a Municipality. Under a statute of the province the Municipality levied a tax upon 'every owner or occupant in the district for land owned or occupied by him' 'Owner was defined to include any person who has any right title or estate whatsoever or any interest other than that of a mere occupant in any land 'occupant' was defined to include the inhabitant occupier of any land or, if there be no inhabitant occupier, the person entitled to the possession thereof, and the lease holder or holder under agreement for sale. And any person having or enjoying in any way or for any purpose whatsoever, the use of the land 'Land' was defined to include, inter alia any estate or interest therein. The appellant questioned the levy on hte ground that if amounts to a levy on the ground that if amounts to a levy upon the land owned by the dominion of canada and was therefore violative of S. 125 of the British North-America Act, 1867 (Constitution of canada). The specific contention of the appellant was that the tax was levied upon the land itself which belongs to the crown and not on any individual who has interest in it while the contention of the Municipality was that the tax was levied upon the interest of the appellant as a lessee of the land, and not on the land itself a sowned by the crown. The principle of the decision of the privy council is to be found in the following observations:
'Following their decision in the analogous case from Alberta of calgry and Edmonton Land co. V, Attorney General of Alberta (45 can SCR 170), Where the scheme and definitions in the local improvement Act of that province were substantially the same as those in the present case, the Supreme Court of canada held that the taxing statute of Baskatchawan must be read in accordance with a well known principle as not applying to the crown or its lands. But they thought that there was no reason why it should not be treated as applying to an interest acquired by a private person under a lease from the crown. The definitions of land Owner and occupant' make it easy to interpret the expression land as excluding any interest which still remains in the crown. Their Lordships agree with this reasoning. They are of opinion that alothough the appellant is sought to be taxed in respect of his occupation of land the fee of which is in the crown. The operation of the statute imposing the tax is limited to the appellant's own interest. It appears to them that not only can the statutes be read as meaning this and no more than this when they use the word 'land' but that they ought to be so read in order to make them consistent with S. 125 of the British North America Act 1867 and not a nullity..................'
10. A similar case again arose in city of Montreal v. Attorney General for canada (1923) AC 136 again from canada the facts of which case are very much similar to the case before us. Art. 362-A of the city of Montreal charter. Provided that persons occupying for commercial or industrial purposes buildings or lands belonging to His Majestry or to the Federal and provincial Government or to the Board of Harbour commissioner......shall be taxed as if they were the actual owners of such immovables and shall be held to pay the annual and special assessments. Taxes and other municipal dues'. In that case the Minister of Railways and canals for canada representing the crow granted a lease in respect of certain crown lands in the city of Montreal to one Andhrew Baile, for a period of five years. This property was subjected to the tax aforesaid and the same was demanded. When the taxes demanded were not paid an action was laid which though not defended by the lessee, was contested by the attorneyGeneral for canada who contended that art 362-a was Ultra vires the Quebec legislature and is unconstitutional in so far as it applied to hte occupants of lands belonging to the crown which are exempt by virtue of S. 125 of the British North America Act. When the matter ultimately came up before the privy council. It referred in the first instance to hte relevant provisions of the charter of the city of montreal and then noted that Art. 361 enacts that all immovable property situated within the limits of hte city shall be liable to taxation and assessment, exempt therefrom. Admittedly there was no exemption in the Act in favour of the Crown lands leased out to the subjects. The contention of the Attorney General for canada however was that the Municipality is in effect seeking to tax the property of the crown indirectly by levying a tax upon the occupants/Lessees and that such taxation is ultra vires its power the attorney general however agreed that if the tax is imposed in such a form that it is in reality a taxation on the interest of the tenant or occupant and not on the property of the crown such a law would not be ultra vires the provincial Legislature; in view of the earlier decision of hte privy council in smith's case (1916-2 Ac 569) (supra) the following passage in the Judgment brings out the essence of the decision: The question raised in this appeal, is, however, in the main dependent on the further enactment that the occupants shall be taxed as if they were the actual owners of immovables and shall be held to pay the annual and special assessments the taxes and other municipal dues. The effect of this is that the occupants are made liable to pay on an annual assessment, not to exceed 1 per cent of the capitalized value of the occupied property. The method of assessment determines the amount for which an occupier is liable during his occupancy, but does not alter the incidence of the taxation or transfer the incidence from the occupant to the owner. The ultimate incidence of taxation imposed on tenants, as the occupants of lands is a matter on which economic experts have expressed different opinions. If however municipal taxation is to be regarded as ultra vires on hte ground that the ultimate incidence of taxation or some portion of it, may or will fall on the owner it is difficult to see in what from such taxation could be validly imposed. The question to be determined is simpler one whether the taxation which is impeached, is assessed on the interest of the occupant and imposed on that interest. In the opinion of their Lordships the interest of an occupants consists in the benefit of the occupation to him during the period of his occupancy and does not depend on the length of his yenure. The annual assessment to which objection is taken is an assessment for which the tenant is only liable so long as his occupancy continues and which ceases so soon as his occupancy is determined if on the cessation of his tenancy the crown chooses to leave the land unoccupied or to occupy the land by an official acting in his official capacity, there would be no further liability to taxation under art. 362-A of the charter affecting either the land or the crow..........'
We respectfully agree with the above reasoning. The assessment of nonagricultural land tax under S. 3 (1) is made in this case not upon the propoety of union of India. (Central Government being the owner of the property) but upon the interest of the lessee under the central Government as per the definition of the word owner under S. 2 (j) of the a.P. Non-Agricultural land Assessment Act 1963 lessee under the central Government is deemed to be the owner for the purpose of assessment of tax. Art. 285 is therefore not attracted in such a case. The state Government can levy and collect the tax from the petitioner under S. 3 (1) of the said Act only so long as he continues as lessee of the central Government property. We make it clear that the tax can be levied only if the lease for any commercial industrial or other non-agricultural purpose. Of course in this case, there is no dispute that the lease is for an industrial purpose.
11. We must further make it clear, following our decision in W.P. 3494 of 1978 and batch disposed of on 10-6-1982: (reported in : AIR1983AP234 ) that the non-agricultural tax can be levied only upon that land which is, actually used for any of the specified purposes. Viz commercial industrial or any other non-agricultural purpose including residential purpose. What extent of land is so used, and which is the appropriate rate applicable to the petitioner, is a matter for the assessing authorities to decide. Having regard to the facts of this case, and following the similar directions given by us in the aforesaid batch of writ petitions, we direct that if the petitioner herein files an appeal within a period of one month from today before the appellate authoirty against the demand impugned herein the appellate authority shall entertain the same and shall dispose of the same on merits In such an appeal it shall be open to the appellants to establish the actual extent of the land used for the aforesaid purposes. Which rate or rates mentioned in the schedule to the Act are applicable can also be gone into and decided in such an appeal pending disposal of the appeal, we direct that the demand impugned herein shall remain stayed.
12. Subject to the above directions, the writ petition is dismissed; but, in the circumstances, we make no order as to costs. Government pleader's fee Rs. 500/- only.
13. Order accordingly.