SRIRAM EDUCATIONAL TRUST Vs. PRESIDENT

JUDGEMENT

(1.) THE appellant/petitioners in these batch of writ appeal/writ petitions are educational institutions. They challenge the correctness of the demand for property tax under Section 172 of the Tamil Nadu Panchayats Act, 1994, on the ground that buildings used for educational purpose are exempt from liability under Rule 15 (c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999.

(2.) IT is seen that on the issue of exemption, there are two decisions of this Court taking two different views. In the decision reported in (2006) 3 MLJ 1068 (Kamaraj College Of Engineering And Technology, Managing Board, Rep. By Its Secretary, Virudhunagar Vs. President, K. Vellakulam Panchayat, Madurai District), Justice P. Jyothimani considered the question of exemption on the assessment of house tax on the educational institutions under Rule 15 (c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999. The learned Judge held that buildings used for educational purposes including hostels recognised by the State and other educational authorities, and irrespective of the fact as to whether they are aided or unaided or run on self-financing pattern are entitled to have the benefit of exemption from the levy of house tax as per Rule 15 (c ). Learned Judge held 'when once the approval is given by the competent authority or affiliation given by the Universities, then such educational institutions, whether they are aided or not, are deemed to be the educational institutions as in the general terms that, after the law relating to prohibition of capitation fee had been introduced by the legislation, there is no question of any commercial character in the educational institutions at all which are recognized".

(3.) IN W. P. No. 48068 of 2002, by order dated 30. 4. 2003, Justice P. K. Misra,j. had an occasion to consider the very same issue of exemption on the levy of house tax under the Tamil Nadu Panchayats Village (Assessment and Collection of Taxes) Rules, 1999 on buildings used for educational purposes. The decision reported in (2006) 3 MLJ 1068 (Kamaraj College Of Engineering And Technology, Managing Board, Rep. By Its Secretary, Virudhunagar Vs. President, K. Vellakulam Panchayat, Madurai District), however, was not placed before the learned single Judge. Going through Rule 15, the learned single Judge held that charitable organisations running hostels or libraries or shelter for animals alone would be eligible for exemption. The learned Judge held, where the person using the hostels or libraries paid rent, it could not be said that taxes are not leviable. The learned Judge pointed out that "a reading of the entire provisions make it clear that the intention is to exempt charitable organisations which are running such hostels or libraries or shelters for animals. Where however the persons using the hostels and libraries are paying rent, it cannot be said that tax is not leviable. The intention seems to be for the benefit of the charitable organisation and not for organisations which are collecting money for particular use. " Referring to the saving clause in Rule 15 (c) and the old Rule under the 1958 Act, learned single Judge held that in view of the decision reported in 1990 (II) MLJ 381 (Nepco Schlenk Engineering College, Sivakasi Vs. The President Keriseri Panchayat And Others), the benefit of exemption would apply to institutions in spite of charging rent from the occupants for the period 1985 to 2003. The present provision after 2003, however, restricted the exemption to institutions run on charitable basis. The said order of Justice P. K. Misra is now under challenge in W. A. No. 2080 of 2003. Considering the conflicting views, writ petitions are placed before the Division Bench for considering the claim for exemption along with the writ appeals.