Gujarat High Court
Sadhu Vaswami Center ... vs Rajkot Municipal Corporation on 29 January, 2020
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, Bhargav D. Karia
C/SCA/1039/2010 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 1039 of 2010
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA Sd/-
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1 Whether Reporters of Local Papers may be allowed to Yes
see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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SADHU VASWAMI CENTER (SAURASHTRA)THRO'AUTHORISED
MEMBER OF
Versus
RAJKOT MUNICIPAL CORPORATION
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Appearance:
MR ANAND B GOGIA(5849) for the Petitioner(s) No. 1
MR RB GOGIA(5850) for the Petitioner(s) No. 1
MR NISHANT LALAKIYA(5511) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 29/01/2020
ORAL JUDGMENT
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C/SCA/1039/2010 JUDGMENT (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. By this writ application under Article 226 of the Constitution of India,the writ applicant, a public charitable trust registered under the Bombay Public Trusts Act, 1950 vide Registration No.E-1482, has prayed for the following reliefs;
"(A) Your Lordships be pleased to quash and set aside the impugned order and demand notice dtd. 24.12.2009 respectively annexed at Annexure-A & AA and may further be declared and directed that petitioner trust be treated as exempted from general taxes u/s.132 BPMC Act in relating to the buildings used for education i.e. S.V. School for girl at Rajkot.
(B) Your Lordships be pleased to issue appropriate writ or direction and be pleased to direct the respondent Corporation to grant the exemption from the General Taxes as per Section 132 (b) BPMC Act in relation to buildings used by Sadhau Vasani School for Girls at Rajkot in the interest of justice.
(C ) Your Lordships be pleased to hold that the circular dtd. 13.08.2007 issued by Commissioner of respondent Corporation is null and void and ultravires to the provisions of B.P.M.C Act and may please be order to be quashed.
(D) Pending admission and till final disposal of this petition, Your Lordships may be pleased to stay the operation and implementation of the impugned order dtd.24.12.2009 and demand notice dtd. 24.12.2009 annexed as Annexure-A & AA.
(E) Your Lordships be pleased to pass such other and further order as the nature and circumstances of the case may be required."
2. The facts, giving rise to this writ application, may be summarized as under;
2.1 The writ applicant seeks a declaration from this Court that it Page 2 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT being a public charitable trust running a school, the respondent- Corporation is not entitled to collect general tax under the provisions of the Gujarat Provincial Municipal Corporation Act, 1949 (for short "the Act, 1949"). It is the case of the writ applicant that it being a public charitable trust, it is exempted from the payment of the general tax in view of Section 132 of the Act, 1949. The writ applicant seeks to challenge the order dated 24th December, 2009 rejecting the application of the writ applicant seeking exemption from the payment of general tax.
2.2 It appears that the writ applicant is running a school in the name of "Sadhu Vaswani Girls School". The school imparts education from 1st standard to 12th standard. The school is situated at Plot Nos.162 and 163 respectively of the Survey No.318 at the Village: Raiya, Rajkot.
2.3 It is the case of the writ applicant that the sole object of the trust is to impart education on no profit no loss basis.
2.4 It is also the case of the writ applicant that many representations were preferred in the past addressed to the Commissioner of the Corporation seeking exemption from payment of general tax in terms of the provisions of Section 132 of the Act. It is also the case of the writ applicant that the representations were considered by the Corporation and those were rejected. Against such decision of the Corporation, one Special Civil Application No.4782 of 2008 was preferred. The said petition came to be disposed of vide order dated 20 th November, 2008. The order reads thus;
"1. RULE. Mr. R.M. Chhaya learned counsel waives Page 3 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT service of Rule on behalf of the respondent.
2. The petitioner by this petition, has prayed for appropriate writ to direct the respondent Corporation not to insist for payment of general tax under Section 132 of the Bombay Provincial Municipal Corporation Act, 1949, for the plot No.162 and 163 in Ward No.23, since as per the petitioner, the building is used for school, which is wholly a charitable purpose. The petitioner by this petition has challenged the decision of July, 2008 of the Corporation, whereby exemption has been declined.
3. Heard Mrs. Pahva, learned counsel for the petitioner and Mr. Chhaya, learned counsel for the respondent Corporation.
4. Upon hearing the learned counsel appearing for the parties, it appears that the impugned decision for refusal to grant exemption to the petitioner by the Commissioner of the Corporation is without recording any reason whatsoever nor it speaks for consideration of the case as to whether the school is run on charitable basis or not. Under these circumstance, the impugned decision as such cannot be sustained.
5. An attempt was made by the learned counsel for the respondent Corporation to contend that in the affidavit- in-reply, the reasons are mentioned and therefore, the same may be considered. As such, even if they are considered, they are not reflected in the impugned order. Further, when the decision is taken for not granting exemption, it must be with the reasons and consideration, germane to the exercise of the power. As the order is a non-speaking order, it cannot be maintained and deserves to be quashed and set aside.
6. In view of the above, the impugned decision refusing the exemption to the petitioner is quashed and set aside with the direction that the matter shall be reconsidered afresh by the respondent Corporation after giving opportunity of hearing to the petitioner and appropriate decision shall be taken.
7. The petition is allowed to the aforesaid extent. Rule is made absolute. No order as to costs."Page 4 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020
C/SCA/1039/2010 JUDGMENT 2.5 It appears that, thereafter, one another petition was filed by the writ applicant being the Special Civil Application No.10758 of 2009. A Division Bench of this Court disposed of the said petition vide order dated 20th January, 2010. The same reads thus;
"1. The petitioner has filed this petition under Article 226 of the Constitution of India praying for the direction to the respondent Corporation not to insist for payment of General Tax under Section 132 of the BPMC Act for Plot Nos.162 & 163 in Ward No.23, Survey No.318, Raiya village in view of the fact that the buildings used by the petitioner Trust for School are wholly used for charitable purpose and, therefore, eligible for exemption under Section 132 (b) of the BPMC Act and also seeking further direction to the respondent Corporation to grant water connection irrespective of the payment of General Tax.
2. This Court has issued notice on 20.11.2009. Pursuant to the notice, Mr. R. M. Chhaya, learned Counsel appeared for the respondent Corporation. He submitted that as per the direction given by this Court, the petitioner was heard in the matter and the Commissioner vide his order dated 24.12.2009 took the decision to grant water connection and accordingly, the water connection was granted to the petitioner Trust. However, the petitioner's prayer for exemption under Section 132
(b) of the BPMC Act was rejected.
3. Mr. Anand B. Gogia, learned advocate appearing for the petitioner Trust states that he wants to challenge the said order by way of filing separate petition or to avail an appropriate remedy available under the law. Hence, with this liberty, he wants to withdraw the present petition.
4. In view of the above fact and without going into the merits of the matter, we allow the petitioner to withdraw this petition reserving liberty to challenge the order dated 24.12.2009 passed by the Commissioner, Rajkot Municipal Corporation by way of filing separate petition or by resorting to any other remedy available under the law.
5. Subject to the above liberty, this petition is Page 5 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT accordingly disposed of as withdrawn. Notice discharged without any order as to costs. "
2.6 In the circumstances, referred to aforesaid, the writ applicant had to come, once again, before this Court with the present petition.
3. Mr. Gogia, the learned counsel appearing for the writ applicant submitted that this is a third round of litigation. His client has tried his best to convince the Corporation that it is entitled to seek exemption from payment of general tax in terms of the provisions of Section 132 of the Act. 1949 According to Mr. Gogia, the Corporation has overlooked the statutory provision in terms of Section 132 of the Act, 1949 and has evolved a policy of its own which has been made applicable to all the public charitable institutions. Mr. Gogia would submit that Section 132 of the Act, 1949 makes it abundantly clear that the general tax shall be levied in respect of all buildings and lands in the city except the buildings and lands or portion thereof solely occupied and used for public worship or for a public charitable purposes. Mr. Gogai invited the attention of this Court to sub-clause (3) of Section 132 of the Act, 1949 which provides that once any portion of any building or land is exempted from the general tax by reason of its being solely occupied for a public charitable purpose, such portion shall be deemed to be a separate property for the purpose of municipal taxation.
4. In such circumstances, referred to above, Mr. Gogia prays that there being merit in his petition, the same be allowed and the impugned order be quashed and set aside directing the Page 6 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT Corporation to grant exemption from payment of general tax.
5. He further prays that this Court may declare that the writ applicant, being a public charitable institution engaged in imparting education, it is exempted from payment of general tax.
6 On the other hand, this writ application has been vehemently opposed by Mr. S.N. Shelat, the learned senior counsel assisted by Mr. Nishant Lalakiya, the learned counsel appearing for the Rajkot Municipal Corporation. Mr. Shelat would submit that although the writ applicant may be a public charitable institution, yet it is not exempted from the payment of general tax in view of the specific policy framed by the Corporation and made applicable universally to all the educational institutions falling within the area of the Corporation. Mr. Shelat pointed out that all the educational institutions readily accepted such policy except the writ applicant. According to Mr. Shelat, assuming for the moment that the writ applicant is covered by Section 132 of the Act, an inquiry in this regard will have to be undertaken. It is only if certain conditions are fulfilled for the purpose of availing exemption under Section 132 of the Act, 1949 that such benefit can be extended. On behalf of the Corporation, an affidavit-in-reply has been filed, duly affirmed by its Assistant Manager, inter alia, stating as under;
"5. I respectfully say and submit that I crave leave to refer to and rely upon the true and correct interpretation of section 132 of the Bombay Public Trust Act, 1949 (hereinafter referred to as "the BPMC" Act" for the sake of of brevity), at the time of hearing of this petition and hence, I am not dealing with the petition parawise.Page 7 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020
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6. I say and submit that, as stated in the order, the petitioner Trust has been given the water connection as requested by the petitioner Trust. I say and submit that the case of the petitioner Trust has been examined in detail by the answering respondent and it has been found that the school run by the petitioner Trust is not for a charitable purpose and therefore, it has been rightly held that the petitioner Trust does not fall within the ambit of section 132 of the BPMC Act. I therefore state and submit that the petitioner is not entitled to any exemption as contemplated under the provisions of the BPMC Act.
7. It is pertinent to note at this stage that the petitioner Trust has submitted his financial details of the years 2004, 2006 and 2007 in particular. I say and submit that, from the accounts submitted by the petitioner Trust, it appears that in the year 2004, the petitioner has earned a surplus of Rs.22,81,747=06. Similarly, in the year 2006, the petitioner has earned a surplus of Rs.23,15,572=87 and in the year 2007, the petitioner has earned a surplus of Rs.20,75,923=75. The copies of the income and expenditure accounts as submitted by the petitioner Trust before the respondent Corporation at the time of hearing, are annexed hereto and marked as ANNEXURE "I"colly. to this affidavit in reply.
8. I further say and submit that it has also been examined and it has come to light that the petitioner Trust also earns a sizable amount by charging fees from the students studying in the school run by the petitioner Trust, for which an exemption is claimed under section 132 of the BPMC Act. I say and submit that having examined the record in toto, the respondent Corporation has, therefore, come to the conclusion that the petitioner Trust is not running the said school for public charitable purpose and therefore, is not entitled to any exemption u/s 132 of the BPMC Act.
9. It is further pertinent to note that as a matter of Page 8 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT policy, the respondent Corporation by an order dated 13/8/2007, after taking into consideration the representation made by several schools situated within the area of the Rajkot Municipal Corporation, has granted the exemption as per the said order at Annexure "A". at page 19 of the petition. I, therefore, say and submit that the petitioner Trust is not entitled to exemption under section 132 of the BPMC' Act as claimed for.
10. I say and submit that the judgments relied upon by the petitioner are not applicable to the facts of the present case and I crave leave of the Hon'ble Court to refer to and rely upon the true and correct ratio laid down by the Hon'ble Supreme Court as well as this Hon'ble Court in catena of decisions, on this point, at the time of hearing of this petition.
11. I, therefore, say and submit that, taking into consideration the submissions made by the petitioner and the documentary evidence produced before the respondent, the respondent Corporation has passed the order dated 24/12/2009 which is just, legal and proper, and the petition deserves to be dismissed in limine."
7. In such circumstances, referred to above, Mr. Shelat prays that there being no merit in this writ application, the same may be rejected.
8. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the writ applicant is entitled to seek exemption from payment of general tax in view of the provisions of Section 132 of the Act, 1949.
9. Before adverting to the rival submissions canvassed on either side, we should look into Section 132 of the Act. Section Page 9 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT 132 of the Act reads thus;
"132. General tax on what premises to be levied (1) The general tax shall be levied in respect of all buildings and lands in the City, the rateable value of which exceeds [six hundred rupees except]
(a) buildings and lands solely used for purposes connected with the disposal of the dead ;
(b) buildings and lands or portions thereof solely occupied and used, for public worship or for a public charitable purposes ;
(c) buildings and lands vesting in the[Government] used solely for public purposes and not used or intended to be used for purposes of trade or profit or vesting in the Corporation, in respect of which the said tax, if levied, would under the provisions hereinafter contained by primarily leviable from the [Government] or the Corporation, respectively.
(2) 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 purpose within the meaning of clause (b) of sub-section (1), 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.
(3) Where any portion of any building or laud is exempt from the general tax by reason of its being solely occupied and used for public worship or for a public charitable purpose, such portion shall be deemed to be a separate property for the purpose of municipal taxation.
Footnotes:
1. These words were substituted for the words '"The general tax shall be levied in respect of all buildings and Page 10 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT lands in the City except" by Guj. 1 of 1978, section 3.
2. These words were substituted for the words "three hundred rupees" by Guj. 21 of 1989, section 2.
3. This word was substituted for the word "Crown" by the Adaptation of Laws Order, 1950."
10. Section 132 of the Act, 1949, referred to above, fell for consideration before a Division Bench of this Court in the case of Navsarjan Trust vs. Ahmedabad Municipal Corporation & Anr., 2002 (1) GLR 482. This Court took the view that a public charitable trust can claim exemption from payment of tax of a building and lands as mentioned in Section 132 of the BPMC Act provided the premises is solely occupied and used for public charitable purposes. We may quote the relevant observations made by this Court;
"6. It is stated on oath that the Trust is the owner and occupier of Flat No. 101 on the first floor of Ruchi flats which is situated opposite Suraj Party Plot, B/h Dhamidhar Derasar, Vasna, Ahmedabad being Tenement No. 7541-4903-00-0001-0. It is further averred that as per the municipal tax bill, the said flats are known as 'Abhikalp' flats of Abhikalp Flats Owners Association, a Non-Trading Corporation. The Certificate dated 12-5- 1994, issued by the said Corporation is produced at Annexure 'B' indicating that Navsarjan Trust is a member of Abhikalp Flat Owners Association. The grievance made by the petitioner is that the respondent-Corporation discharging its duties under the Bombay Provincial Municipal Corporations Act, 1949 (hereinafter referred to as "the Act") is entitled to levy and recover the property tax. However, the learned Advocate submitted that for this purpose, Section 132(1) will have to be taken into consideration. The said Section reads as under : "132. (1) The general tax shall be levied in respect of all buildings and lands in the City the rateable value of which exceeds Six hundred rupees except. (a) buildings and lands solely used for purposes connected with the disposal of the dead; (b) building and lands or portions Page 11 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT thereof solely occupied and used for public worship or for a public charitable purposes; (c) buildings and lands vesting in the Government used solely for public purposes and not used or intended to be used for purposes of trade or profit or vesting in the Corporation, in respect of which the said tax, if levied, would under the provisions hereinafter contained by primarily leviable from the Government or the Corporation, respectively."
Relying on Sub-section (b) of Sub-section (1), it is submitted that it is not open to levy any general tax on buildings and lands solely used for the purposes connected with or occupied and used for a public charitable purpose.
7. It is required to be noted that the respondent- Corporation is entitled to levy the taxes amongst other taxes such as water tax, conservancy tax and general tax. The Court is at present concerned with water tax, conservancy tax and general tax. Reading Section 130 for water tax and Section 131 for conservancy tax, it is very clear that there is no exemption to any premises. Section 130 reads as under :
"130. Subject to the provisions of Section 134, the water tax shall be levied only in respect of premises :-- (a) to which private water supply is furnished from, or which are connected by means of communication pipes with, any municipal water works; or (b) which are situated in a portion of the City in which the Commissioner has given public notice that the Corporation has arranged to supply water from municipal water works by means of private water connections or of public standposts, or by any other means."
Thus, the premises which are connected by means of communication pipes with, any municipal water works then there is no question of exemption. Clause (b) of Section 130 would not be applicable in the instant case. So far as Section 131 is concerned, it refers to conservancy tax on premises. Mr. Joshi could not point out from the Section that as the exemption is given under Section 132, an exemption should be given under Section 131 from payment of conservancy tax. Reading these provisions, it is clear that exemption can be claimed from payment of tax of a building and lands as mentioned in Section 132 of the B.P.M.C. Act. In the instant case, the building, so far as premises is solely Page 12 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT occupied and used for public charitable purposes, benefit can be granted. In the instant case, in absence of affidavit-in-reply and the documents produced on record by the petitioner, it can be said that for the year in question, the building was used and occupied for a public charitable purpose, and therefore, for that year it goes without saying that the general tax cannot be levied by the Corporation. In view of what we have stated hereinabove, general tax levied as per bill Annexure 'C' stands quashed as the property is used by a charitable trust for charitable purpose. We are required to consider the bill for the year 1996-1997. "
11. We may also refer to a decision of the Supreme Court in the case of Indian Red Cross Society vs. New Delhi Municipal Committee & Ors., reported in AIR 2004 SC 1222. The Supreme Court had the occasion to consider the legality and validity of imposition of house tax under the provisions of the New Delhi Municipal Council Act (44) of 1994. The Indian Red Cross Society is a charitable organization. The case of the Indian Red Cross Society before the Supreme Court was that it was not liable to pay tax under the Act, 1994. Section 62 of the Act, 1994 appears to be para materia to Section 132 of the Act, 1949. The Supreme Court, while dismissing the appeal filed by the Indian Red Cross Society in so far as it claimed statutory exemption under Section 62 in respect of the rented portion of the building, it granted liberty to the Indian Red Cross Society to go before the Council seeking exemption from payment of tax leviable in respect of the rented portion. We quote the relevant observations;
"12) If one analyses the relevant clauses of Section 62(1), lands and buildings or portions of lands and buildings are exempt from property tax if they are:
(i) exclusively occupied by a society or body for a charitable purpose;Page 13 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020
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(ii) such society or body is supported wholly or in part by voluntary contributions;
(iii) the said society applies its profits, if any or other income in promoting its objects and does not pay any dividend or bonus to its members,
13) It is clear that under Section 62(1) of the NDMC Act, if the appellant-society fulfills these three conditions it is entitled as a matter of right to be exempted from payment of property tax. Where the Assistant Secretary erred, was in treating the right to exemption in respect of the self-occupied portions of the appellant's building as a matter of discretion. It is not. It is a matter of right provided of course of the conditions laid down in Section 62(1) are fulfilled by the society.
14) Sub-section (2) of Section 62, however, carves out two exceptions to this exemption, namely if (a) any trade is carried out in such lands and buildings, or (b) in respect of any portion of such land or building or portion thereof any rent is derived. In such a case, under sub-
section (3), the portion of the land or building exclusively occupied and used for charitable purposes under Section 62(1) and the portion, which is excepted under sub- section (2) are deemed to be separate properties for the purpose of municipal taxation. Thus the statutory exemption under Section 62(1) is not available to the society if the building is not self-occupied but is rented out. The section does not make any allowance even if the rental income is used for charitable purposes. The phrase 'for a charitable purpose' only qualifies self occupation under Section 62(1)(a). The appellant's claim for the benefit of such statutory exemption under Section 62 of the Act in respect of the rented portion of the building is, therefore, untenable and the Assistant Secretary had rightly rejected it.
15) The appellant's reliance on the decision of this Court in Municipal Corporation of Delhi V. Children Book Trust and Anr. ( supra) is misplaced although in that decision, this Court had construed Section 115(4) (5) and (6) of the Delhi Municipal Corporation Act, 1957 which are verbatim the same as Sections 62(1), (2) and (3) of Page 14 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT the NDMC Act. There the Court had disposed of two appeals. The first appeal was filed by the Corporation against the Children Book Trust and the second was by the Safdarjung Enclave Education Society against the Corporation. As far as the appeal filed by the Children Book Trust was concerned, a portion of the premises occupied by the Trust was rented out to a Press. The Municipal Corporation had sought to levy property tax under the Delhi Municipal Corporation Act, 1957 in respect of the entire premises. The Trust filed a writ petition claiming total exemption from payment of property tax under Section 115 (4) of the 1957 Act before the High Court at Delhi. The writ petition was allowed by the learned Single Judge who held that the Trust was entitled to claim total exemption from payment of tax under Section 115(4) of the 1957 Act except in respect of that portion which was rented out. However, the learned Judge held that even from the rental value, the Trust was entitled to claim exemption in the proportion of the income accruing to it from the publication of children's book which was held to be a charitable purpose. The Division Bench partly allowed the Municipal Corporation's appeal holding that in view of the mandatory provisions of Section 115(4) of the New Delhi Corporation Act, exemption from the payment of property tax could not be allowed in respect of the area which was rented out or not occupied by the Trust itself for charitable purposes within the meaning of the 1957 Act. The further appeal of the Municipal Corporation before this Court was dismissed. It is to be noted that the Court was only considering the Municipal Corporation's appeal in respect of the portion of the premises which had not been rented out by the Trust. As far as the rented portion was concerned, the Court noted "Admittedly, no exemption could be claimed concerning this portion. It is the other portions which are otherwise relevant for the purpose of this case".
16) In the appeal of the Education Society, the Education Society claimed an exemption in respect of premises owned by it where a school was being run. The Society had filed a writ petition challenging an assessment order of the Municipal Corporation. The writ petition was dismissed by the High Court. The Education Society then preferred an appeal before this Court. The Page 15 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT contention which was raised before this Court was that the Society was running the school which was in occupation of the premises and that the giving of education was a charitable purpose and, therefore, the society was entitled to exemption under the provisions of Section 115(4) of the Act. This Court held that the Society could not be said to be occupying the building. "The School being a separate entity, premises occupied by the school will belong to it and not to the society. Therefore, the society cannot claim to be in exclusive occupation and use of the land and building in question." It was also held that although the imparting of education may be a charitable purpose, the Society would have to further show that education was the primary objective and not the making of profit. It was also held that unless the society was supported wholly or substantially by voluntary contributions, in view of the proviso to Section 115(4)(a), [Section 62(1)(a) of the NDMC Act] exemption from payment of property tax could not be claimed. None of these findings are relevant for our present purpose. There is no dispute that the appellant-Society before us exclusively occupies a portion of the premises for a charitable purpose and otherwise fulfils the conditions required for exemption from property tax in respect of such portion. We are, in this appeal, unlike in the appeals in the Children Book Trust, only concerned with the balance portion of the building which has been rented out by the appellant. It is true that this Court in Children Book Trust made an observation that:
".if the profits or income of trade or business is devoted to a charitable purpose and no part thereof is distributed among the members as dividends or bonus, then that trade or business is a means to an end. It is charity.
But, if there is a trade or business carried on in a land or building and its profits are not applied to a charitable purpose, sub-section (6) says that that part of the land or building where a trade or business is carried on or from which rent is derived, will be subject to tax."
17) However, these observations were made in the context of Section 115(4) [Section 62(1) of the NDMC Page 16 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT Act)] which envisages societies occupying the subject premises, making profit or deriving income. The proviso to sub-Section 4, clause
(a) requires such profits or income to be utilised in promoting the objects of the society and not to be paid by way of dividend or bonus to the members of the society. It was in that connection that the Court made the observation quoted above. The observation would not be relevant to a situation where property is not in occupation of the Society at all but is rented out.
18) Coming to the alternative case of the appellant viz., the grant of exemption in respect of the tax leviable on the rented portions, although, the Assistant Secretary did not have any other option but to consider the appellant's claim for exemption in view of the direction of the High Court, no discretion is conferred under Section 62 of the NDMC Act on the Assistant Secretary for granting any exemption to the assessee from any portion of the taxes leviable except to the extent the statute itself provides.
19) Section 72(1)(e) on which the appellant has relied provides:
"72(1) The chairperson may, at any time, amend the assessment list
(e) by making or cancelling any entry exempting any land or building from liability to property tax; "
20) This section also does not confer any discretion on the Chairperson to exempt any property from payment of tax. All that it does is to empower the Chairperson to give effect to any exemption otherwise granted, by amending the Assessment List. The power and discretion to grant exemption under the NDMC Act has been conferred on the Council under Section 124.
21) Section 124 provides:
"The Council may, by resolution passed in this behalf, exempt either wholly or in part from the payment of any tax levied under this Act, any class of persons or any class of property or goods."
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22) The respondents are correct in their submission that under Section 124, as far as the present controversy is concerned, the Council's power must be exercised, if at all, in favour of a class of persons or a class of property. This power may be contrasted with the Punjab Municipal Act where exemption may have been allowed, even in respect of an individual by the Committee under Section 70(2)(c) and the State Government under Section 71.
23) Therefore, while dismissing the appellant's appeal in so far as it has claimed statutory exemption under Section 62 in respect of the rented portion of the building, we grant the liberty to the appellant-Society to apply to the Council for exemption from payment of taxes leviable in respect of the rented portion. It would be open to the Council to resolve under the provisions of Section 124 to exempt all persons who are similarly situated as the appellant-society on the application of the appellant. The Council will dispose of the appellant's representation after giving the appellants an opportunity of being heard. "
12) The dictum as laid by the Supreme Court is that the exemption from levy of house tax would not be a matter of discretion of the authorities. It is a matter of right provided the conditions laid down in Section 62 are fulfilled by the organization. At the same time, the Supreme Court took the view that the statutory exemption is not available to a charitable organization if the building is not self occupied but is rented out even if the rental income is used for charitable purposes.
13) The whole idea in referring to the aforesaid decision of the Supreme Court is that the Corporation could not have evolved any policy of its own with regard to levy of general tax ignoring or giving a go by to the statutory provision of law as Page 18 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT embodied in the form of Section 132 of the Act, 1949. We make it plain and clear that if any public charitable trust is able to make out a case that it is entitled to exemption under Section 132 of the Act from payment of general tax, the Corporation cannot say that It will go by its policy and not by the statutory provision of the Act, 1949.
14) To the aforesaid extent, we are of the view that the stance of the Corporation is not tenable in law. In fact, this litigation should have been brought to an end long time back.
A decision, one way or the other, should have been taken by the Corporation. We have explained the position of law.
15) In view of the above, we pass the following order;
(I) The impugned order dated 24th December, 2009, Annexure-A to this petition is hereby quashed and set aside.
(ii) The Authority concerned of the Corporation is directed to immediately consider whether the writ applicant is entitled to exemption from the payment of general tax in terms of the provisions of Section 132 of the Act. If the Corporation is of the view that the writ applicant is not entitled to seek exemption under Section 132 of the Act, 1949 from payment of general tax, then the Corporation shall pass an appropriate order assigning cogent reasons for the same. We are saying so because once Section 132 of the Act, 1949 is made applicable, a public charitable institution would be exempted from payment of general tax. However, whether a public charitable institution is fulfilling the requisite conditions for the applicability of Section 132 of the Act, 1949 is for the Corporation to look into. This exercise should have been Page 19 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020 C/SCA/1039/2010 JUDGMENT undertaken one decade back.
(iii) The Corporation shall pass an appropriate order and communicate the same to the writ applicant in writing at the earliest. For the purpose of passing an appropriate order, the Corporation shall give an opportunity of hearing to the writ applicant.
(iv) If the Corporation is of the view, having regard to the inquiry that the writ applicant is entitled to seek exemption under Section 132 of the Act, 1949, then it shall refund the entire amount deposited by the writ applicant towards the tax within a period of three months from the date of passing of the order. In the event if the Corporation takes the view that the writ applicant is not entitled to seek exemption under Section 132 of the Act, 1949, then it shall be open for the writ applicant to challenge such decision before the higher forum in accordance with law.
16) We hope that there is no fourth round of litigation. The Corporation is expected to put an end to this issue once and for all. For any reason if the writ applicant is once again dragged into unnecessary litigation, the same will not be appreciated by this Court.
17) This writ application stands disposed of accordingly. Rule is made absolute to the aforesaid extent.
Direct service is permitted.
(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) Vahid Page 20 of 20 Downloaded on : Mon Jun 15 15:25:33 IST 2020