Karnataka High Court
Gandhi Institute Of Technology And ... vs The State Of Karnataka on 13 September, 2019
Author: H T Narendra Prasad
Bench: H. T. Narendra Prasad
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13th DAY OF SEPTEMBER 2019
BEFORE
THE HON'BLE MR. JUSTICE H. T. NARENDRA PRASAD
W.P.No.18253 OF 2019(LB-TAX)
C/W
W.P.No.36001 OF 2018
&
W.P.Nos.36345-36349 OF 2018 & 36351 OF 2018
IN WP 18253/2019
BETWEEN:
Gandhi Institute of Technology
and Management
Society registered under the
Societies Registration Act, 1860,
Nagadenahalli, Doddaballapurtaluk,
Bangalore Rural District-562 163,
Represented by its Estate Officer,
Nanduri Venkataramanamurthy,
S/o Late. Venkatasatyanarayana,
Aged about 51 years. ... Petitioner
(By Sri. Basavaraj S., Advocate)
AND:
1. The State of Karnataka,
Represented by its Principal secretary,
Department of Urban Development,
2
M.S.Building, Dr. Ambedkar Road,
Bangalore-560 001.
2. The Principal Secretary,
Panchayath and Rural Development Department,
M.S.Building, Dr.Ambedkar Road,
Bangalore-560 001.
3. The Gram Panchayat,
Bashettyhalli,
Doddaballapur Taluk,
Bangalore Rural District-561 203.
By its Panchayat Development Officer. ... Respondents
(By Sri.M.A.Subramani, HCGP. for R1 & R2:
Sri.G.A.Srikantegowda, Advocate for R3)
This writ petition is filed under Article 226 of the
Constitution of India praying to quash the demand for property
tax made on the petitioner educational institution by the
respondent-3 by its latest notice dated:16.04.2019 copy
produced at Annexure-R as without Jurisdiction (bearing No.2
(2019-20) and etc.
IN WP 36001/2018 & 36345-36349/2018 & 36351/2018
BETWEEN:
Gandhi Institute of Technology and Management,
(a registered education society),
Nagadenahalli Village, Kasaba Hobli,
Doddaballapura,
Bengaluru Rural District-561 203,
Represented by its Estate Officer,
Sri.N.V.R.Murthy. ... Petitioner
(By Sri. Rahul S., Advocate)
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AND:
1. The State of Karnataka,
Represented by its Secretary,
Panchayath Raj and Rural Department,
M.S.Building, Dr. B.R. Ambedkar Veedhi,
Bangalore-560 001.
2. The Chief Executive Officer,
Zilla Panchayat,
Bengaluru Rural District,
Bangalore-561 203.
3. The Panchayat Development Officer,
Bashetty Halli Grama Panchayat,
Bashettihalli Village, Kasaba Hobli,
Doddaballapura Taluk,
Bengaluru Rural District-561 203. ... Respondents
(By Sri.M.A.Subramani, HCGP for R1:
Sri.Poornachandra B Pattar, Advocate for R2:
Sri.G.A.Srikantegowda, Advocate for R3)
These writ petitions are filed under Articles 226 & 227 of
the Constitution of India praying to quash the Notice dated:
10.08.2018 in No.82/2018-19 vide Annexure-L issued by the
respondent-3 and quash the letter dated:08.08.2018 vide
Annexure-K issued by the respondent-2 and direct the
respondent - 2 to dispose off the appeal as per the law without
insisting the petitioner to deposit the 50% of the demanded tax
amount under Annexure-G and etc.
These writ petitions, having been heard and reserved for
orders on 04.09.2019, coming on for pronouncement, this day,
the Court, made the following:
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ORDER
Writ Petition No.18253/2019 is directed against the notice dated 16.04.2019 issued by the third respondent vide Annexure- R and the Circular dated 19.11.2016 issued by the second respondent vide Annexure-J in so far as it imposes property tax on the educational institutions falling within the Gram Panchayat area. Writ Petition Nos.36001/2018 & 36345-36349/2018 & 36351/2018 are directed against the notice dated 10.08.2018 issued by the third respondent vide Annexure-L and the letter dated 08.08.2018 issued by the second respondent vide Annexure-K. Petitioner has also sought for a direction directing the second respondent to dispose off the appeal as per law without insisting the petitioner to deposit 50% of the demanded tax amount vide Annexure-G.
2. The case of the petitioner is that the petitioner is a Society registered under the Societies Registration Act, 1860. The petitioner Society has established the Education Institution in the name of Gandhi Institute of Technology (declared as deemed to be University) offering Engineering and Management 5 Courses. The concerned authority has granted permission on 27.09.2012 to establish the Education Institution. The petitioner Society has established the Education Institution in the rural area with the intention of providing education at a professional level for the rural areas of the State. At the time of issuing 'No Objection Certificate' by the State Government on 06.06.2012, it has imposed a condition that the Education Institution shall admit 25% from the merit quota and charge concessional fee fixed by the Government.
3. On 26.08.2014, the third respondent issued a notice under Rule 31 of the Karnataka Panchayat Raj (Grama Panchayats Taxes and Fees) Rules, 1994 (for short, 'the said Rules'). Being aggrieved by the same, the petitioner has filed an appeal before the second respondent in Appeal No.1/2014-15 challenging the rate of assessment and demand made with respect to the tax on the vacant land. The said appeal came to be disposed of by order dated 18.07.2015 with a direction to the third respondent to assess the vacant land as per the rates fixed in the Schedule 4. The order passed by the appellate authority is 6 produced herewith as Annexure-C. Accordingly, the petitioner has made a representation on 15.02.2017 vide Annexure-D requesting the third respondent to assess the rate of tax on the vacant land as per the observations made in the order dated 18.07.2015. Considering the representation submitted by the petitioner the third respondent re-assessed the tax on vacant land and issued a fresh demand notice for the assessment years 2015-16, 2016-17 and 2017-18 demanding for payment of total assessment of Rs.46,15,703/- and deducted the excess tax paid by the petitioner of Rs.30,47,322/- and demanded to pay the balance amount of Rs.15,68,381/- as per Annexure-E. Accordingly, the petitioner has paid the entire demanded tax amount to the third respondent.
4. It is the further case of the petitioner that it is utter shock and dismay to the petitioner that second respondent has sent another re-assessment notice dated 27.12.2017 vide Annexure-G assessing the vacant land for the period from 2011- 12 to 2017-18 and demanded the tax amount of Rs.1,28,33,677/-. On receipt of the demand notice, the 7 petitioner has filed an objection on 20.01.2018 vide Annexure-H requesting for re-assessment of the property belonging to the petitioner on the ground that the petitioner Education Institution is a charitable institution and it is exempted from tax. Without considering the petitioner's representation at Annexure-H the third respondent served a Distraint Warrant in Form No.3 vide Annexure-J dated 08.06.2018. Under these circumstances, the petitioner has filed an appeal before the second respondent under Section 201 of the Karnataka Gram Swaraj and Panchayath Raj Act, 1993 (for short, 'the said Act'). The second respondent has issued a notice dated 08.08.2018 requesting the petitioner to pay 50% of the demand amount, a copy of the letter is produced as Annexure-K. In the meantime, the third respondent also issued a notice for attachment and auction of the property belonging to the petitioner Society on 10.08.2018 vide Annexure-L. Being aggrieved by the notices dated 08.08.2015 vide Annexure-K and dated 10.08.2018 vide Annexure-L the petitioner has filed W.P.Nos.36001/2018 & 36345-36349/2018 & 36351/2018.
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5. During the pendency of the writ petitions, the third respondent has issued the demand notice dated 16.04.2019 vide Annexure-R, demanding payment of tax for the year 2018-19 at Rs.1,07,54,433/-. Being aggrieved by the demand notice, the petitioner has filed W.P.No.18253/2019.
6. Sri S.Basavaraj, the learned counsel appearing for the petitioner in W.P.No.18253/2019 firstly submitted that the petitioner Society registered under the Societies Registration Act has established the Education Institution in the rural area with an intention to provide quality education at professional level in the rural areas of the State. Secondly, he submitted that the petitioner also provides education at concessional fee to the students studying in Educational Institution run by the petitioner. At the time of issuing NOC by the State Government, there is a condition imposed that the Education Institution shall admit 25% from the merit quota and charge concessional fee fixed by the Government. Thirdly, he submitted that the petitioner Institution being a charitable non-profit making Education Institution, the same is exempted from levy of 9 building and vacant land tax under Rule 6(c) of the said Rules. Fourthly, he submitted that even under the Karnataka Municipal Corporations Act, 1976 and Karnataka Municipalities Act itself the building or land exclusively used for education purpose by the recognized education institutions are exempted from property tax and in the abovesaid Rules, Rule 6(c) is very clear that if the building and land is used solely for the charitable purpose or/are exempted from the levy of tax. Since the petitioner institution is a non-profit making charitable Education Institution, they are exempted from payment of tax. To that effect, the petitioner has submitted a representation requesting the third respondent to re-assess the demand notice. The third respondent, without considering the same held that in the earlier round of litigation the appellate authority has rejected the request of the petitioner. That contention of the respondent No.3 is not correct. In fact, in the earlier round the appellate authority has not considered the case of the petitioner under Rule 6(c) of the said Rules. In support of his case he has placed reliance on the judgment of this Court decided on 13.12.1985 in W.P.No.5381/1979.
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7. Sri Rahul S.Reddy, the learned counsel appearing for the petitioner in W.P.Nos.36001/2018 & 36345-36349/2018 & 36351/2018 has contended that pursuant to the petitioner's request the Panchayat Development Officer vide Annexure-E has assessed the tax from 2015-16 to 2017-18 for a sum of Rs.46,15,703/-. The third respondent, without the authority of law, has reviewed its earlier demand notice by notice dated 27.12.2017 vide Annexure-G and demanded the tax of Rs.1,28,33,677/-. Hence, the petitioner sought for allowing writ petitions.
8. Per contra, Sri G.A.Srikante Gowda, the learned counsel appearing for respondent No.3 submits that the request for exemption under Rule 6(c) of the said Rules has been considered by the appellate authority in the earlier appeal filed by the petitioner and the same has been rejected. Hence, the contention of the petitioner cannot be considered by the Panchayath. Secondly, he submitted that against the demand notice the petitioner has filed an appeal before the second respondent under Section 201 of the said Act. Since it has an 11 alternative remedy, the writ petition is not maintainable. Thirdly, he has contended that Annexure-E demand notice dated 17.04.2017 is issued by the Panchayath Development Officer, the same has been issued without the authority of law. Such notice is not placed in the original record of the Panchayath. He has not properly calculated the tax as per the provisions of the Acts and Rules. Pursuant to the directions of the appellate authority in the order dated 18.07.2015 vide Annexure-C the third respondent has reassessed the property tax vide Annexure- G dated 27.12.2017. Annexure-G demand notice is in accordance with law. Fourthly, he submitted that the petitioner Society is not a charitable Education Institution. Along with the memo dated 21.08.2019 he has produced the brochure of the college submitting that they are collecting excess amount from the students. They are not giving any service to the rural candidates. Hence, they are not entitled for the exemption under Section 6(c) of the said Rules. He further relied on the judgments of the Hon'ble Apex Court in the case of DR.RAJBIR SINGH DALAL vs. CHAUDHARI DEVI LAL UNIVERSITY, SIRSA AND ANOTHER reported in 2008 AIR SCW 5817 and 12 in the case of R.L.JAIN (D) BY legal representatives. vs. DDA AND OTHERS reported in (2004) 4 SCC 79 to support his argument that the judgment of this Court produced by the petitioner vide Annexure-E where no law has been declared and it has no precedentive value. Para 49 of the judgment in DR.RAJBIR SINGH DALAL (supra) is extracted hereinbelow:
"49. The decision of a Court is a precedent if it lays down some principle of law supported by reasons. Mere casual observations or directions without laying down any principle of law and without giving reasons does not amount to a precedent."
Para 14 of the judgment in R.L.JAIN (supra) is extracted hereinbelow:
"14. In Shree Vijay Cotton & Oil Mills the precise question raised here, namely, whether in a case where the possession is taken prior to the issuance of notification under Section 4(1) of the Act, interest can be awarded in accordance with Section 28 or 34 of the Act was not examined and the only issue examined was whether in an appeal which has been preferred by the State Government challenging the 13 quantum of compensation awarded by the District Judge it is open to the High Court to award interest to the claimant even though he had not preferred ay appeal or cross-objection for the said purpose. It is well settled that a decision is an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made therein. (See Krishena Kumar v. Union of India Municipal Corpn. Of Delhi v.Gurnam Kaur and Orient Paper and Industries Ltd. v. State of Orissa) Shree Vijay Cotton & Oil Mills is therefore not an authority for the proposition that where possession is taken before issuance of notification under Section 4(1), interest on the compensation amount could be awarded in accordance with Section 34 of the Act with effect from the date of taking of possession."
Hence, he sought for dismissal of the writ petitions.
9. Heard the learned counsel appearing for the parties and perused the writ papers.
10. The petitioner is a Society registered under the Societies Registration Act, 1860. The petitioner Society has a 14 registered office at Vishakapatnam, Andhra Pradesh. The petitioner Society has established an Education Institution in the name of Gandhi Institute of Technology, which is a deemed to be University offering Engineering and Management Courses for last 7 years. The petitioner Education institution is established in Nagadenahalli Village, Doddaballapur, Bengaluru Rural District. It is coming within the jurisdiction of the third respondent Panchayat. At the time of establishing the Education Institution the petitioner Society has obtained 'No Objection Certificate' from the Government on 06.06.2012 with a condition that Education institution shall admit 25% of the merit quota and charge concessional fee fixed by the Government. As per the provisions of Section 199 of the said Act, every Grama Panchayat, subject to such exceptions as may be prescribed, has the power to levy the tax upon the building and the land. Pursuant to the abovesaid Act and Rules the Panchayath has issued a demand notice for payment of property tax. On an earlier occasion the petitioner has challenged the same by filing an appeal under Section 201 of the said Act before the second respondent and has taken a contention that the petitioner 15 Education Institution is exempted under Rule 6(c) of the said Rules. Rule 6(c) of the said Rules is extracted hereinbelow:
"6. Exemption:- The following buildings and lands shall be exempted from the levy of tax under sub- section(1) of Section 199 namely:-
a) ..........
b) ...........
c) Buildings and lands, used solely for
charitable or public religious purposes and not let out for rent; and.
d) ............"
11. The appellate authority while remanding the matter vide Annexure-C has only made a reference that under the said Rules the Education Institution is not included. There is no determination either by the second respondent or the third respondent whether the petitioner Education Institution is a non- profit making charitable Education Institution and it is exempted from the payment of tax as per Rule 6(c) of the said Rules. After the remand the third respondent has issued a demand notice vide Annexure-G from the years 2011-12 to 2017-18, demanding a sum of Rs.1,28,33,677/-. Immediately after the 16 petitioner has given a representation to the third respondent, requesting for re-assessment of the tax on the ground that the petitioner Institution is a non-profit making charitable Education Institution and it is exempted under the said Rules, without considering the petitioner's representation for determination as to whether the petitioner Institution is exempted under Rule 6(c) of the said Rules, the respondent has issued a distraint notice vide Annexure-J. Under these circumstances, the petitioner has filed an appeal before the appellate authority under Section 201 of the said Act. The appeal filed by the petitioner was not admitted since the petitioner has not deposited 50% of the demand amount. In the meantime, the respondent has issued one more demand notice for the year 2018-19 demanding a sum of Rs.1,74,49,380/-. Immediately thereafter, petitioner has given one more representation requesting to re-assess the tax on the ground that the petitioner Education Institution is exempted from the tax on the ground that they are running a non-profit making Institution. Since the respondent has not considered the request, instead they have issued the attachment warrant the petitioner has approached this Court. 17
12. It is not in dispute that under Rule 6(c) of the said Rules, the building and the lands used solely for the charitable and public religious purposes and not let out for rent are exempted from levy of tax under Section 199(1) of the said Act. The specific contention of the petitioner before the third respondent is that the petitioner is a non-profit making charitable Education Institution which is exempted under Rule 6(c) of the said Rules. Since to issue a notice under Section 199 for demanding the property tax the third respondent has to determine whether the building and land used by the petitioner is for charitable or public religious purpose or not let out for rent. Without adjudicating the facts which are raised by the petitioner the respondent has issued an attachment notice and demand notice and that the respondent has refused to consider the representation of the petitioner on the ground that earlier vide Annexure-C dated 18.07.2015 the second respondent appellate authority has already decided this issue and rejected the same. What is stated in Annexure-C dated 18.07.2015 is extracted hereinbelow:18
"ªÉÄîä£À«zÁgÀgÀÄ vÀªÀÄä ºÉýPÉAiÀÄ°è ºÁUÀÆ ªÀÄ£À«AiÀÄ°è w½¹gÀĪÀAvÉ PÀ£ÁðlPÀ UÁæªÀÄ ¸ÀégÁeï ªÀÄvÀÄÛ ¥ÀAZÁAiÀÄvï gÁeï (UÁæªÀÄ ¥ÀAZÁAiÀÄw vÉjUÉ ªÀÄvÀÄÛ ¦üÃdÄUÀ¼ÀÄ) ¤AiÀĪÀÄ 1994 gÀ PÀ®A (6) gÀ°è «£Á¬Äw ¤ÃqÀ§ºÀÄzÁzÀ D¹ÛUÀ¼À£ÀÄß £ÀªÀÄÆ¢¹zÀÄÝ, CzÀgÀ°è «zÁå ¸ÀA¸ÉÜUÀ¼ÀÄ ¸ÉÃjgÀĪÀÅ¢®è. DzÀÝjAzÀ F DPÉëÃ¥ÀªÀ£ÀÄß vÀ½îºÁPÀ¯ÁVzÉ.
PÀ£ÁðlPÀ UÁæªÀÄ ¸ÀégÁeï ªÀÄvÀÄÛ ¥ÀAZÁAiÀÄvï gÁeï (UÁæªÀÄ ¥ÀAZÁ¬Äw vÉjUÉ ªÀÄvÀÄÛ ¦üÃdÄUÀ¼ÀÄ) ¤AiÀĪÀÄ 1994 gÀ PÀ®A 14 gÀ£ÀéAiÀÄ £Á®ÄÌ ªÀµÀðUÀ½UÉƪÉÄä ¤zsÀðgÀuÁ ¥ÀnÖAiÀÄ£ÀÄß ¥ÀjµÀÌj¸À§ºÀÄzÁVzÉ. ºÁUÀÆ C£ÀĸÀÆa 4 gÀ°è ¤¢üðµÀÖ¥Àr¹gÀĪÀAvÉ SÁ° eÁUÀ (¤ªÉñÀ£À) PÉÌ ¥Àæw £ÀÆgÀÄ ZÀzÀgÀ «ÄÃlgïUÉ MAzÀÄ ªÀµÀðPÉÌ MAzÀÄ gÀÆ¥Á¬Ä vÉjUÉ «¢ü¸À¨ÉÃPÁVgÀÄvÀÛzÉ."
13. By reading the above paragraphs, it is clear that there is no determination by the second respondent as to whether the petitioner Education Institution is a non-profit making Institution. When the petitioner has given a representation seeking for exemption that they are a non-profit making charitable Education Institution, the third respondent has to determine the question before demanding the taxes. In similar circumstances, this Court in the case of THE SAPTHAGIRI EDUCATIONAL AND CHARTIABLE TRUST vs. THE SAMANDUR GRAMA PANCHAYAT AND ANOTHER reported in ILR 2009 Kar.3165 has held as hereinbelow:
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"9. Though, it is strenuously urged that the petitioner has put to use the building and land for a charitable purpose and not let out for rent, being a pure question of fact, must be established before the Grama Panchayath and not for a decision by this Court in exercise of writ jurisdiction under Article 226 of the Constitution of India. It is for the petitioner to lay relevant material as available in law, to establish that the building in question is put to charitable use, so as to fall under Rule 6(c) of the 'Taxation Rules', for exemption from levy of tax for the said building. If the petitioner places such material before the 1st respondent - Grama Panchayat, with an appropriate representation, seeking exemption from payment of building tax, within one month from today, there is no reason to believe that the Grama Panchayat would not consider the petitioner's request."
14. In view of the above, since the appeal filed by the petitioner is not admitted and the above said question of fact has to be decided by the Grama Panchaayth, under the circumstances, remanding the matter to the appellate authority does not serve any purpose. The matter requires re- consideration by the third respondent Grama Panchayath to 20 consider the representation of the petitioner for exemption under Rule 6(c) of the said Rules before enforcing the demand notice.
15. In the result, I pass the following order:
(i) The writ petitions are allowed in part;
(ii) Without quashing the demand notice issued by
the third respondent, the matter is remitted back to the third respondent with a direction that before enforcing the impugned demand notice the third respondent to consider the representation of the petitioner as to whether the building in question is put to the charitable use, so as to fall under Rule 6(c) of the said Rules for exemption from levying of tax from the said building.
(iii) In addition to that, the petitioner is permitted to submit additional representation along with all the necessary documents to establish their claim within two weeks from the date of receipt of a copy of this order.
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(iv) Pursuant to the demand notice and pursuant to the interim order granted by this Court, the petitioner has paid Rs.32,08,417/- to the third respondent. The petitioner is directed to deposit a further sum of Rs.20,00,000/- within one month from the date of receipt of a copy of this order.
(v) It is made clear that if the third respondent has determined that the petitioner is exempted from payment of tax on the building and the land, the third respondent shall refund the said amount to the petitioner with interest.
Now that the main petitions are disposed of, nothing survives for consideration of pending interlocutory applications.
Sd/-
JUDGE Cm/-