SCA/6577/1987 11/ 11 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 6577 of 1987 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= SHETH NARSINH NATHA CHARITY TRUST FUND & 1 - Petitioner(s) Versus STATE OF GUJARAT & 2 - Respondent(s) ========================================================= Appearance : NOTICE NOT RECD BACK for Petitioner(s) : 1,NOTICE UNSERVED for Petitioner(s) : 2, MR KL PANDYA, AGP for Respondent(s) : 1, RULE SERVED for Respondent(s) : 2, MR DD VYAS for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 09/09/2008 ORAL JUDGMENT
The
short facts of the case appear to be that the petitioner No.1 is a
charitable Trust registered under the Bombay Public Trust Act. It is
having the property located at Palitana and the property comprises
of Dharamshala, which is used for the pilgrimage of the people
believing in Jainism. As per the petitioner Trust, in the said
Dharamshala, various facilities of accommodations are being provided
to thousands of pilgrims visiting the holy place of Palitana and
there is no condition precedent for charging any amount. It is the
case of the petitioners that the entire premises of Dharamshala are
used for giving accommodation free of charge for the pilgrims. If
the pilgrims so feel, they may offer amount by way of donation, but
the same is not compulsory and the donation is also being used for
charitable purpose.
As
per the petitioners, the property of the petitioner Trust is
exempted for the levy of education cess and for such purpose, the
Government has issued Notification dated 24.12.1963. Therefore, no
education cess can be recovered from the property held by the
petitioners, but it appears that the Municipality had taken action
and notices were issued for recovery of education cess by coercive
measure and the petitioner had preferred Special Civil Application
No.921 of 1986, wherein this Court observed that the petitioners can
approach the State Government by preferring the appeal. A copy of
the order passed by this Court on 9.4.1986 in Special Civil
Application No.921 of 1986 is also produced on record. It was also
observed by this Court that till the applications are decided, the
Municipality shall not proceed to collect any education cess from
the petitioners. It appears that thereafter the State Government
considered the matter and vide order dated 25.11.1987 Annexure
C , the State Government took the view that as the portion of
the Dharamshala is given on rent for business purpose, the
petitioner is not entitled for exemption and, therefore, the
decision is taken accordingly. It is under these circumstances, the
petitioners have approached this Court by preferring the present
petition.
It
may be recorded that as per the contention of the petitioners
earlier respondent No.3 Municipality did grant exemption to the
portion of the premises, which was used for Dharamshala and for the
property, which was given on rented basis, a separate assessment was
made. Hence, the petitioners have approached this Court with the
prayer to declare that the petitioners are entitled for the
exemption from payment of education cess as per the Government
Notification dated 24.12.1963 on the land and building of
Dharamshala and have prayed for setting aside of the order of the
State Government dated 25.11.1987 Annexure C . The
petitioners have also consequently prayed to direct respondent
Municipality to refund the amount of the cess already collected with
the interest at the rate of 9% per annum.
None
has appeared for the petitioners. However, I have heard Mr.Pandya,
learned AGP appearing for the State Authorities and Mr.Vyas, learned
Counsel appearing for respondent No.3 Municipality.
Section
13 of the Gujarat Education Cess Act, 1962 (hereinafter referred to
as the ‘Act’), inter alia, provides for enabling power to the State
Government to grant exemption. It is an admitted position that the
State Government has issued Notification dated 24.12.1963 for grant
of exemption to the class of the land and building solely for public
worships or for public charitable purpose and owned by a public
Trust registered under the Bombay Public Trust Act or for a Society
registered under the Societies Registration Act. The explanation
provides that if the building or the land or the portion thereof is
used for any trade or any business is carried on or any rent is
derived from such building or the land or the portion thereof, it
shall not be deemed solely occupied and used for public worship or
for public charitable purpose. The relevant portion of the
Notification for ready reference reads as under:-
2. Lands
and buildings or portions thereof solely used for public worship or
for a public charitable purposes and held for a public trust
registered under the Bombay Public Trust Act, 1950 or for a society
registered under the Societies Registration Act, 1960.
Explanation:- The
following buildings and lands or portions thereof shall not be
deemed to be solely occupied and used for public worship or for a
public charitable purposes within the meaning of clause 2 namely:-
(a) buildings
or lands or portions thereof in which any trade or business is
carried on, and
(b) buildings
or lands or portions thereof in respect of which rent is derived,
whether such rent is or is not applied solely to religious or
charitable purposes.
The
aforesaid resolution, if read as it is, it is apparent that if the
land or building is solely or a portion thereof is solely used for
public worship or public charitable purposes and then held by a
Public Trust registered under the Bombay Public Trust Act or Society
registered under the Societies Registration Act, the exemption is
available. The explanation if considered would not go beyond the
clause 2 itself and at the most, can be read as an exception to the
category of clause 2. Therefore, if the building or the portion
thereof is used for trade or business is carried over such land or
portion thereof, it may not be deemed to be solely occupied for the
public worship or public charitable purpose. Such explanation can
be given effect to the extent of the portion which is used for trade
or business purpose or for deriving rental income. The explanation
cannot mean to convey that if out of the whole building which is
used for religious or charitable purpose, a portion thereof is used
for trade or business or rental income is derived therefrom, no
exemption whatsoever would be available for the whole building.
In
such circumstances, the exemption may not be available in respect of
the portion which is used for business or trade or rental income as
derived therefrom. But, the exemption would still be available for
the property which is used for public worship or public charitable
purpose. It may be that in a given case, a premises in part or a
portion thereof is used for public worship or public charitable
purpose and a portion thereof is also used for trade or business.
In such circumstances, it will be required for the concerned
Municipality to separately make assessment for the portion which is
used for public worship or for public charitable purpose and a
separate assessment for the portion of the premises which is used
for trade or business or rental income is derived therefrom. In
respect of the prior category, the exemption for the education cess
would be available, whereas for the later category, the exemption
would not be available. Such segregation for the purpose of
assessment of tax is required under such contingencies. The
aforesaid is apparent since in clause 2, the language used is lands
and buildings or portion thereof . Therefore, all contingencies
are considered by the authority while issuing the notification that
if the portion is used for pubic worship or public charitable
purpose, the exemption would be available only qua that. But, if a
portion thereof is used for trade or business or rental income is
derived therefrom, such benefit of exemption would not be available.
If
the facts of the present case are considered in light of the
aforesaid observations, it appears that the State Government has
declined the exemption on a mere ground that a portion of it is
given on rental basis for trade purposes. It has ignored the
aspects that the building as such, is used for Dharamshala and only
a portion of it is used for trade or for deriving rental income. It
was required for the State Government to direct the Municipality to
undertake separate assessment and to grant exemption in respect of
the property, which is used for public worship or public charitable
purpose of Dharamshala and it could have disallowed the exemption
qua the portion of the property which has been given for trade
purposes on rental basis. Therefore, the impugned decision of the
State Government is not only arbitrary, but is running counter to
the Government Resolution dated 24.12.1963 (Annexure-A) and also not
in accordance with the Scheme for grant of exemption to the
proportionate extent of utilisation of the property for public
worship or for public charitable purpose.
In
view of the above, the impugned order passed by the State Government
dated 25.11.1987 is quashed and set aside with the direction that
the matter shall stand restored to the Government for considering
the question of exemption and the Government shall decide the said
aspects keeping in view the observations made by this Court in the
present Judgement and shall render the decision as early as possible
preferably within a period of 3 months from the receipt of the order
of this Court.
Petition
is allowed to the aforesaid extent. Rule made absolute accordingly.
No order as to costs.
9.9.2008 (Jayant Patel, J.) vinod/bijoy