BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 20/04/2010
CORAM
THE HONOURABLE MR. JUSTICE R.S.RAMANATHAN
W.P.(MD)No.10448 of 2007
and
M.P.(MD)No.2 of 2007
A.Subramanian
Managing Trustee of Merit Educational Charitable Trust
-cum-Principal of Merit Matriculation School,
Ambasamudram,
Tirunelveli District. ... Petitioner
Vs
The Executive Officer,
III Grade Municipality,
Ambasamudram,
Tirunelveli District. ... Respondent
Writ Petition has been filed under Article 226 of the Constitution of
India praying for the issuance of a writ of Certiorarified Mandamus, to call
for the records of the respondent relating to the proceedings of assessment of
tax for the door Nos.1,1A,1B,1C and 1D, Ward No.21, 6th Street, Ambasamudram,
Tirunelveli District including the property tax receipt in No.6650, dated
15.03.2007 and special notices in Nos.6801, 6802, 6803 and 6804, dated
05.11.2007 and quash the same and further forbearing the respondent from
assessing, making demand, and collecting any property tax in respect of door
No.1,1A,1B,1C and 1D,Ward No.21, 6th Street, Ambasamudram, Tirunelveli District.
!For Petitioner ... Mr.V.Meenakshisundaram
for Mr.M.Vallinayagam
^For Respondent ... Mr.M.Saravanakumar
:ORDER
Heard both sides.
2.The petitioner is the Managing Trustee of Merit Educational Charitable
Trust cum Principal of Merit Matriculation School, Ambasamudram, Tirunelveli
District. It is an unaided educational institution run by the said Trust and
the Matriculation school is imparting education to 200 students studying in that
school. The school has constructed buildings namely Block A to E and Door No.1
was allotted to the buildings and the respondent Municipality issued demand
notice and the said notification, dated 05.10.2007 was issued for collecting the
property tax for buildings owned by the petitioner’s Institution and the same is
challenged in this writ petition.
3.It is stated in the affidavit that the petitioner’s Institution
buildings are used for educational purpose and therefore, as per section 83(c)
of the Tamil Nadu District Municipalities Act, such buildings are exempted from
the property tax and hence, the respondent cannot levy any property tax for
those buildings.
4.The respondent filed a counter stating that the petitioner is not
entitled to claim any exemption and they are not imparting education as a
Charitable Trust and they are collecting huge fees from the students and
therefore, even though the school is run by the Trust, they are not entitled to
claim exemption from property tax. It is further stated that the petitioner has
not obtained permission from the Municipal Council for exemption of property tax
for their buildings and therefore, they are liable to pay the property tax for
the buildings owned by them.
5.Mr.V.Meenakshisundaram, the learned counsel appearing for the petitioner
submitted that under Section 83(1)(c) of the Tamil Nadu District Municipalities
Act, exemption was given to buildings used for educational purpose, including
hostel attached thereto and they are claiming exemption not on the basis of
running a Charitable Trust, but on the basis of the buildings used for
educational purposes and therefore, as per the above said provision, property
tax cannot be levied in respect of buildings used for educational purpose.
6.Mr.M.Saravanakumar, the learned Counsel appearing for the respondent
submitted that in the Full Bench Judgment reported in 2009(8)MLJ 245, in the
case of President, K.Vellakulam Panchayat, Kallikudi Chatram, Madurai District
vs. Kamaraju College of Engineering and Technology Managing Board, rep. by its
Secretary S.P.G.C. Srimurugan, Virudhungar. and in 2008(4) CTC 715, in the case
of Kamalakshi Pandyurangan College of Pharmachy, rep. by its Secretary &
Correspondent, R.Parimala Chandran, Ayyampalayam Village Post, Tiruvannamalai-
606 603 vs. The President, Ayyampalayam Village, Panchayat, Tiruvannamalai,
this Court has held that there is no automatic exemption to the buildings used
for educational purpose and that has to be decided by the Local Authorities and
unless, exemption is granted by the local authorities, the buildings owned by
the educational institutions are liable to be assessed for property tax and
further, the petitioner is running educational institution as an un-aided
institution and therefore, exemption cannot be claimed for such institution as
laid down in the judgment reported in 2008(4) CTC 715, in the case of Kamalaksh
Panddyurangan College of Pharmacy vs. The President, Ayyampalayam Village
Panchayat.
7.Mr.V.Meenakisundaram, the learned counsel appearing for the petitioner
distinguished the Full Bench judgment reported in 2009(8)MLJ 245 in the case of
President v. Kamaraj College of Engg & Technology Managing Board, rep. by its
Secretary S.P.G.C. Srimurugan, Virudhungar and submitted that the Full Bench
judgment was rendered with reference to the provision of the Tamil Nadu
Panchayat Act and as per the provision of the Tamil Nadu Panchayat Act, no
exemption can be given for property tax, except in accordance with Rules and
Rule 15(c) of the Tamil Nadu Panchayat speaks about the exemption to be given to
the Educational Institution and the Honourable Full Bench of this Court, after
interpreting sections 171, 172 and 176 of the Tamil Nadu Panchayat Act and Rule
15(c) held that Rule 15 is not mandatory and it is only an enabling provision
empowering Village Panchayat or Panchayat Union to grant exemption and unless
exemption is granted, the buildings are not eligible to claim exemption. But,
in the case of Municipality, there is no such provision similar to section 176
of the Tamil Nadu Panchayat Act and under Section 83(1)(c)of the Tamil Nadu
District Municipalities Act, exemption is given to buildings used for
educational purposes and therefore, the Full Bench judgment cannot be made
applicable to the facts of this case.
8.He further argued that similarly the judgment reported in 2008(4) CTC
715 cannot also be applied to the facts of this case as it was rendered with
reference to the Tamil Nadu Village Panchayat Act (Assessment and Development of
Taxes) Rules 1999 and Rule 15(c) as amended by Act G.O.Ms.No.38, Rural
Development and Panchayat Raj, dated 05.03.2008.
9.I have given my anxious consideration to the submissions made by both
counsels.
10.A perusal of the Full Bench judgment reported in 2009(8)MLJ 245, in
the case of President, K.Vellakulam Panchyat, Kallikudi Chatram, Madurai
District vs. Kamaraj College of Engineering and Technology Managing Board, rep.
by its Secretary S.P.G.C, Srimurugan Virudhunagar would reveal that with
reference to Tamil Nadu Panchayat Rules and Act made therein, having regard to
the provisions of Sections 171, 172 and 176 of the Tamil Nadu Panchayat Act,
Rule 15(c) was interpreted and is was held as follows:- “Rule 15 is a
subordinate legislation which cannot over-ride the substantive provisions of the
Act such as Section 171(1), 172 and 176. Section 171 (1) mandates the Village
Panchayat to levy house tax on all the houses of the Village Panchayat. The
mandate is also clear from Section 172, wherein the basis of levy of house tax
has been prescribed. There is a prohibition from grant of exemption of
surcharge or tax under Section 176 except in accordance with the rules.
Therefore, if Rule 15 is read with the aforesaid Sections 171, 172 and 176, it
is to be held that under Rule 15 it is not mandatory to grant exemption from
house tax, but is an enabling provision allowing the Village Panchayat to grant
exemption to a class of buildings a specified therein, if it so chooses. Rule
15 cannot be held to be mandatory to exempt a class of buildings from payment of
house tax, which otherwise will run counter to Sections 171, 172 and 176 of the
Act and may render Rule 15 ultra vires. Therefore, the word “shall” used in
Rule 15 has to be read as “may” to give effect to the said rule of exemption.
We, accordingly, hold that the exemption prescribed under Rule 15 is not
mandatory and is an enabling provision empowering the Village Panchayat or
Panchayat Union to grant exemption to a class of buildings as specified therein.
The corollary is that it is open for the Village Panchayat or Panchayat Union
not to grant such exemption in favour of one or other class of such buildings”.
Therefore, having regard to the specific provision of Section 171, which
mandates Village Panchayat to levy house tax on all houses of the Village
Panchayat and the provisions contained under Section 176, by which no exemption
shall be granted to the payment of tax except in accordance with rules, it was
held that though Rule 15(c) permits exemption to be given to buildings used for
educational purpose, that cannot be claimed as of right and exemption has to be
given by Municipal Council. But the provision of Tamil Nadu District
Municipalities Act is different and under that Act exemption is given under
83(1)(c) of the Tamil Nadu District Municipalities Act and there is no total
prohibition from granting exemption to certain buildings from the payment of
house tax under the said Act.
11.Section 81 of the Tamil Nadu District Municipalities Act deals with
Description and classes of property tax:- As per Section 81(1) If the council by
resolution determines that a property tax shall be levied, such tax shall be
levied on all buildings and lands within municipal limits save those exempted by
or under this Act or any other law.
Therefore, by resolution passed in the Municipal Council, property tax shall be
levied on all buildings and lands, unless exemption is granted under the Act.
12.In other-words, section 81 of the Tamil Nadu District Municipalities
Act clearly states that in the absence of any exemption under the Act or any
other law, all buildings can be assessed to property tax on the basis of the
resolution passed in the Municipal Council.
13.Section 83 of the Tamil Nadu District Municipalities Act deals with
general exemption and as per section 83(1)(c) of the Act, buildings used for
educational purpose including hostel attached thereto are exempted.
Therefore, having regard to section 81 and 83 of the Tamil Nadu District
Municipalities Act, the Act itself provides for exemption from the levy of
property tax in respect of buildings used for educational purpose and therefore,
the buildings used for educational purpose cannot be assessed to property tax.
In the case of Panchayat, while dealing with the property tax in respect of
house, section 171 of the Tamil Nadu Panchayat Act says that every Village
Panchayat shall levy in the Panchayat Village house tax and as per section 172,
house tax shall be levied on all houses in every Village Panchayat. Therefore,
it was mandated that every house in the Panchayat shall be assessed to property
tax.
14.Further, under section 176 of the Tamil Nadu Panchayat Act, no
exemption from the payment of any surcharge tax specified in section 171 shall
be granted by the Village Panchayat, except in accordance with the rules.
Therefore, when the section prohibits the granting of exemption except in
accordance with rules, though the rules provide for granting exemption to
buildings for educational purpose, it was held by the Full Bench of this
Honourable Court that exemption is not automatic, unless exemption is granted by
the Village Panchayat by passing a resolution, buildings used for the
educational purpose cannot claim exemption from the payment of property tax as
of right. But in the case of Municipalities, as stated supra, section 81 of the
Tamil Nadu District Municipalities Act, makes it clear that tax shall be levied
on all buildings on the basis of the resolution passed by the Municipal Council
save those exempted by or under this Act or any other law. Therefore, section 81
of the Tamil Nadu District Municipalities Act which deals with levy of property
tax also mention about exemption, that can be given to certain buildings from
the assessment of property tax and as per Section 83(1)(c) of the Tamil Nadu
District Municipalities Act, buildings used for educational purposes are
exempted.
15.Further, having regard to the exemption granted under section 83(1) of
the Tamil Nadu District Municipalities Act, the question of aided or un-aided or
minority or non-minority does not arise and any building used for educational
purposes including hostels are exempted.
16.It was contended by the learned counsel appearing for the respondent,
Mr.M.Saravanakumar that only buildings used for educational purpose are
exempted, even according to section 83(1)(c) of the Tamil Nadu District
Municipalities Act and in this case apart from class rooms and hostels other
buildings such as office of the educational institution can be assessed to
property tax and exemption cannot be claimed for those buildings. The argument
of the learned counsel appearing for the respondent cannot be accepted, having
regard to the wordings used in section 81(1)(c) of the Tamil Nadu District
Municipalities Act. As per section 83(1)(c) of the Tamil Nadu District
Municipalities Act, buildings used for educational purpose and hence, hostels
are given exemption. The phrase used “buildings” for educational purpose”, in
my opinion, it includes not only class rooms, but also office rooms, which are
essential and integral part of an educational institution and without an office,
an educational institution cannot be run. Therefore, the buildings used for
running office is also essential for imparting education and therefore, those
buildings will also come under the category of educational purpose. Therefore,
having regard to the specific provisions of section 83(1)(c) of the Tamil Nadu
District Municipalities Act, the buildings used for educational purposes of the
petitioner’s institution are exempted from assessment of property tax and the
respondents cannot claim any levy for those buildings.
17.In fine, the writ petition is allowed and the impugned notices are
quashed. Consequently, connected Miscellaneous Petition is closed. No costs.
er