Article 285 of Constitution | Railway Property Will Be Exempt From All Taxes Imposed By State Even If Used For Commercial Purpose: Madras High Court

The Madras High Court has clarified the scope of the property tax exemption granted to the Railways under Article 285 of the Constitution. This article exempts the property of the Union from all taxes imposed by a state. The High Court ruled that this exemption does not extend to properties owned by the Railways that are being used for commercial purposes not directly related to railway operations. The case involved a dispute where the Railways had leased out its land to a third party for purely commercial activities. The court held that once the property is used for a commercial venture, it loses the character of "property of the Union" for the purpose of the tax exemption. This judgment prevents the misuse of the constitutional exemption and ensures that when government entities enter the commercial arena, they are subject to the same tax laws as private entities.