Taleda Square Pvt. Ltd. not entitled to exemption from municipal taxes and fire cess, rules High Court
In a significant judgment, the Rajasthan High Court, Jaipur Bench, has ruled against Taleda Square Pvt. Ltd., a lessee of railway land, denying it exemption from municipal taxes and fire cess. The Division Bench, comprising Mr. Sanjeev Prakash Sharma, A.C.J. and Mr. Baljinder Singh Sandhu, J., delivered the judgment on January 13, 2026.
The petitioner, Taleda Square Pvt. Ltd., had filed a writ petition challenging the imposition of urban development tax, fire cess, and the requirement to obtain a Fire No Objection Certificate (NOC) by the Municipal Corporation of Ajmer. The petitioner contended that since the land was owned by the Railways and vested under the Central Government, it should be exempt from state taxation under Article 285 of the Constitution and Section 184 of the Railways Act, 1989.
The court, however, dismissed the petition, stating that the immunity provided under Article 285 and Section 184 applies only to properties owned by the Union of India or the Railways, and not to private entities leasing land for commercial purposes. The court emphasized that the lessee is a separate juristic entity and not entitled to the exemption claimed.
The judgment highlighted that the Rail Land Development Authority (RLDA) leased the land to Taleda Square Pvt. Ltd. for developing a commercial complex. As per the lease agreement, the lessee is obligated to pay all taxes, fees, and comply with local laws, including obtaining necessary regulatory approvals like the Fire NOC.
The High Court further noted that the imposition of fire cess and the requirement for a Fire NOC are regulatory measures aimed at ensuring public safety, and do not fall within the ambit of exemptions provided under Article 285. The court ruled that regulatory statutes enacted for public safety, like fire safety laws, are applicable to all entities, including those using Union properties for commercial purposes.
Citing precedents from the Supreme Court, the court reiterated that statutory corporations or companies, even if wholly owned by the government, are distinct entities and cannot claim immunity from state taxes on the grounds of Union ownership.
This decision underscores the judiciary's stance on tax liabilities of private entities leasing government land for commercial purposes, affirming the application of municipal laws and regulatory requirements to ensure public welfare and safety.
Bottom Line:
A lessee holding land from a statutory authority is not entitled to exemption from municipal taxes or fire cess under Article 285 of the Constitution or Section 184 of the Railways Act, as the immunity under these provisions is confined to the Union or Central Government properties and does not extend to a private entity utilizing the land for commercial purposes.
Statutory provision(s): Article 285 of the Constitution of India, Section 184 of the Railways Act, 1989, Sections 102, 103, 107, 130, 194, 225, 337 of the Rajasthan Municipalities Act, 2009.
