Union Properties Exempted from State Taxes Irrespective of its Use: Madras HC overturns Single bench’s Decision

In a significant constitutional interpretation, the Madras High Court has overturned a single bench's decision and has ruled that the property of the Union of India is exempt from state taxes, irrespective of its use. The court reaffirmed the principle laid down in Article 285 of the Constitution, which provides a blanket exemption to Union properties from all taxes levied by a state. The earlier single bench had held that this exemption would not apply if the property was used for commercial purposes. However, the larger bench has now clarified that the use of the property is irrelevant. As long as the ownership of the property vests with the Union government, the constitutional exemption will apply. This is a major ruling that provides broad protection to central government properties, including those of the Railways, from local property taxes.