ORDER
Syed Shah Mohammed Quadri, J.
1. The petitioner in these two writ petitions is a residential educational institution. It challenges the validity of the demand notice claiming property tax in respect of the building in which the school is being run. The demand in W.P. 14122/89 relates to the assessment years 1984-85 to 1988-89 and the demand notice for the assessment years 1994-95 and 1995-96 is the subject matter of W.P.No. 3282/96.
2. As the questions of fact and law in these two writ petitions are common they are heard together and are being disposed of by a common order.
3. The petitioner educational institution is run by a trust called /Vasishta Educational Trust’ which is a registered trust. It is stated that the building was constructed by contribution from the trustees and by raising funds and obtaining loan. The school started functioning in the year 1981. It is affiliated to the Indian Council of Secondary School Examination, New Delhi; Course prescribed by the said Council are taught in the school. The petitioner contends that the building is within the limits of the Gram Panchayat, Basinikonda in Pamarahgaripalle. Basinikonda Gram Panchayat demanded house tax from the petitioner which is contrary to Rule 5 (c) of the A.P. Gram Panchayat Rules issued in G.O.Ms.No. 282 dt 12-3-1965. As under the said rule the building is exempt from house tax, the demand is said to be illegal and unsustainable in law.
4. The Sarpanch of the Gram Panchayat filed counter-affidavit stating that during the year 1984-85 general revision of house tax assessment was conducted in Basinikonda Gram Panchayat and accordingly house tax was fixed for the building of the petitioner in question which the petitioner was due. The petitioner institute is due a sum of Rs. 8,442-20 for the years 1984-85 to 1988-89 and therefore the demand notice was issued. It is stated that the institute is not a public institute catering to the needs of common men and children. It is run on commercial lines and is serving the needs of wealthy people. According to the fee structure appearing in the prospectus, the children seeking admission from I to X standard have to pay annual fee of Rs. 7,500/- per year which includes Boarding and Lodging, tuition and care taking of child. The day-boarders have to pay Rs. 4,000/- per year. In addition to that an admission fee of Rs. 1,000/- is collected. A student will have also to make a deposit of Rs. 5,000/- interest free, at the time of admission which is liable to be refunded at the time of the child leaving the institution. Other amounts representing cash deposit of Rs. 1,000/- and a further sum of Rs. 500/- for child’s requirement of stationery, text-books etc. will also be recovered. In these circumstances, it is contended that Rule 5 (c) has no application to the facts of the case.
5. Sri K.V. Reddy, learned counsel for the petitioner, submits that in view of Clause (c) of Rule 5 of the A.P. Gram Panchayat Rules, the educational institutions are exempt from house tax and therefore the demands are illegal and are liable to be quashed.
6. Sri Bathula Venkateswara Rao, learned Standing Counsel for the respondent, on the other hand submits that the petitioner can claim exemption only when it is imparting free education and catering to the needs of the common men; Where the educational institute is run on commercial lines Rule 5 (c) has no application.
7. The short question that arises for consideration is whether the buildings occupied by educational institutions are exempt from payment of tax under Rule 5 (c) of the Rules relating to levy of house tax. The A.P. Gram Panchayats Act provides for levy of house tax Under Section 70 of the Act. In exercise of the powers conferred Under Section 70 the Governor framed rules relating to levy of house tax. They were issued in G.O.Ms.282, PR dt. 12-3-65 (hereinafter referred to as ‘the House Tax Rules’). By Section 276 of the A.P. Panchayat Raj Act, 1994 the A.P.Gram Panchayats Act of 1964 was repealed. Sub-section (2) of Section 276 of the A.P. Panchayat Raj Act provides mat on such repeal the provisions of Sections 8 and 18 of the A.P.General Clauses Act, 1891 shall apply. It may also be noted that Under Section 60 of the A.P. Panchayat Raj Act the Gram Panchayat has power to levy house tax. It is not in dispute that the above said rules framed under the repealed Act continue to apply. Rule 5 on which reliance is placed by the learned counsel for the petitioner reads as under:
“Rule 5. The following classes of houses shall be exempt from the house tax:-
(a) buildings set apart for public workshop and either actually so used or used for no other purpose;
(b) choultries for the occupation of which no rent is charged and if charged, it is used exclusively for charitable purposes;
(c) buildings used for educational and hostel purposes and for public libraries and public buildings used for the charitable purposes of sheltering the destitute or animals;
(d) such ancient monuments protected under the Ancient Monuments Preservation Act, 1904 (Central Act 7 of l904)or parts thereof, as are not used as residential quarters or public offices;
(e) Charitable hospitals and dispensaries and other buildings which are exclusively used for charitable purposes.
Explanation:- Buildings used for office purpose located separately from the hospitals and dispensaries and residential quarters will continue to be taxed. If any doubt arises in determining whether the hospital or dispensary is a charitable one or not, the Executive Authority shall refer the matter to the Collector whose decision shall be final and binding on the Gram Panchayat.
(f) such hospitals and dispensaries maintained by railway administration as may from time to time be notified by the Government or such hospitals, dispensaries, rest sheds, creches, canteens, recreation and other clubs as are maintained or provided by any industrial establishment or factory for the benefit of their employees under the provisions of the Factories Act,1948;
(g) buildings belonging to the Gram Panchayat; and
(h) light-house;
(i) properties belonging to the Railways which came into existence on or after the 1st April, 1937 unless a notification to that effect is issued by the Railway Board;
(j) all classes of huts and houses whose value does not exceed the following limits——”
From a perusal of the above rule it is clear that classes and categories of houses specified in Clauses (a) to (j) of the said rule are exempt from the house tax. Clause (c) on which reliance is placed mentions buildings used for educational and hostel purposes and for public libraries and public buildings used for the charitable purpose of sheltering the destitute or animals. Clause (c) is in three parts. The first part relates to buildings used for educational and hostel purposes. the second part relates to public libraries and the third part relates to public buildings used for charitable purposes of sheltering the destitute or animals. It is only when public buildings are used for charitable purpose the concept of ‘charity’ has to be fulfilled. In regard to the buildings used for educational and hostel purposes it is not laid down that it should be on charitable basis. It may be perhaps because imparting of education in itself is treated as a charitable purpose. Be that as it may, the fact remains mat any building used for educational and hostel purpose is exempt under Rule 5 (c) whether the institution is charging fee or is imparting free education. If the intention of the rule making authority was to grant exemption only to such buildings occupied by institutions wherein instructions are imparted free of tuition fee it should have provided so. In the absence of such a provision such a condition cannot be imported in Clause (c) of Rule 5.
8. From the above discussion it follows that the building occupied by the petitioner institution which squarely falls within Clause (c) of Rule 5 is exempt from house tax and therefore any demand of house tax is to be declared as illegal.
9. However, Sri Bathula Venkateswara Rao, learned Standing Counsel for the respondent, invited our attention to letter No. 56272/Pts. III/A1 /95-2 dt22-2-1996 and submits that by virtue of the clarification contained in the letter the school building will be liable to be taxed. The material portion of the letter reads as follows:
“I am directed to invite your attention to the letter 1st cited and to inform that according to rules inforce, the buildings used for educational, library and hostel purposes are only exempted from payment of house tax under sub-clause “c” of Rule 5 of rules issued in G.O.Ms.No. 282, PR dt. 12-3-65. The buildings used for occupation of the staff are not eligible for exemption from house tax.”
Though a statutory rule is not controlled by the clarification issued by the Government, yet from a plain reading of the above letter it is clear that what is not exempt under Rule 5 (c) is a building used for occupation of the staff as their quarters and the subject matter of dispute in this writ petition is not the staff quarters but the building occupied by the students as hostel and the building used for educational purpose.
10. For the above reasons, the impugned demands have to be quashed and they are accordingly quashed. The writ petitions are allowed, but in the circumstances of the case, we make no order as to costs.