PRESIDENT K VELLAKULAM PANCHAYAT KALLIKUDI CHATRAM MADURAI DISTRICT Vs. KAMARAJ COLLEGE OF ENGINEERING AND TECHNOLOGY MANAGING BOARD

JUDGEMENT

(1.) THE matter relates to grant of exemption of house tax u/r 15 (c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999 (hereinafter referred to as 'Rules, 1999'). Learned single Judge allowed the prayer of the respondent, Kamaraj College of Engineering and Technology ('college' for short) by impugned judgment dated 10th April, 2006, reported in 2006 (3) MLJ 1068. During the pendency of the appeal against the said judgment, in another case of Sriram Educational Trust Vs- President, 89 Perumalpattu Panchayat Union reported in 2008 (1) CTC 449, Division Bench of this Court having affirmed the view of learned single Judge, the matter has been referred to the Larger Bench.

(2.) THE question involved in the present case is - Whether Rule 15 (c) enables the Panchayat to exempt the educational institutions from payment of house tax or mandates the Panchayat to grant such exemption.

(3.) LEARNED counsel appearing on behalf of the Panchayat made the following submissions:-Section 176 of the Tamil Nadu Panchayats Act, 1994 (hereinafter referred to as the 'Act') mandates that no exemption of tax can be granted as specified u/s 168 or 171 of the Act except in accordance with the rules. Grant of exemption is an enabling provision empowering the Panchayat to grant exemption in accordance with the rules. Therefore, the High Court cannot direct the Panchayat to grant exemption to a particular educational institution till it is shown that the decision taken is arbitrary or discriminatory.LEARNED single Judge in the present case, as also the Division Bench in Sriram Educational Trust (supra) failed to notice the provision of Section 176, which specifically mandates that no exemption can be granted except in the manner as prescribed under the rules.Rule 15 (c) being a subordinate legislation cannot override Section 176 of the Act, which prohibits the Panchayat from giving any exemption except in the manner provided under the rules.The word -shall- used in Rule 15 (c) should be read as -may- in view of the provision of Section 176, which prohibits exemption of house tax.If the Panchayat takes a decision not to grant exemption to particular class of buildings, including the college for a specific reason, it cannot be forced to grant such exemption u/r 15(c). Thereby, no educational institution or any other category or class of buildings can claim exemption as a matter of right, till such decision is taken by the Panchayat to grant exemption to a class of buildings.For meeting the objects and reasons for inserting Article 243 to 243-O of the Constitution vide 73rd Amendment and to enable the Panchayats to acquire the status and dignity of viable institutions, the provision have been made u/s 168 to 171 and, therefore, the Court cannot force the Panchayat to grant exemption till the Panchayat decides to do so u/s 176 of the Act.Self-financing Colleges like the respondent having established within the Panchayat limits in view of negligible land value, the college being fully residential with canteen and other facilities available inside the campus and as it charges extraordinary fees and capitation fee against management quota and as the Panchayat do not get anything in return due to the establishment of those colleges, except house tax, the Panchayat cannot be forced to exempt house tax on colleges like the respondent.