Sri Rashtriya Academy Education Trust (R) Vs State of Karnataka

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NC: 2025:KHC:5869 WP No. 1236 of 2025

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10^TH DAY OF FEBRUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE N S SANJAY GOWDA WRIT PETITION NO. 1236 OF 2025 (LB-TAX)

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BETWEEN:

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SRI RASHTRIYA ACADEMY EDUCATION TRUST (R) A REGISTERED TRUST HAVING ITS OFFICE AT HULIYUR ROAD, HIRIYUR CHITRADURGA, KARNATAKA-577 598 REPRESENTED BY ITS TREASURER SRI P RAMESH, AGED ABOUT 52 YEARS.

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…PETITIONER

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(BY SRI. PAWAN SHYAM A., ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY URBAN DEVELOPMENT AUTHORITY VIDHANA SOUDA, BANGALORE - 560 001. REP. BY ITS SECRETARIAT

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Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA

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NAGARASABHA KARYALAYA HIRIYUR HIRIYUR-577 598 CHITRADURGA, KARNATAKA REPRESENTED BY ITS CHIEF OFFICER

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…RESPONDENTS

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(BY SRI. BOPANNA BELLIAPPA., AGA FOR R-1; SRI.S.MAHESH., ADVOCATE FOR R-2)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA., PRAYING TO DIRECTION AGAINST THE RESPONDENTS TO QUASH THE DEMAND NOTICE BEARING NO. 2024-25 DATED 27/11/2024 VIDE ANNEXURE-H, ETC.

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NC: 2025:KHC:5869 WP No. 1236 of 2025

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE N S SANJAY GOWDA

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ORAL ORDER

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The prayer in the writ petition is to quash AnnexureH – a demand notice, whereby the respondent - Hiriyur City Municipal Council is demanding a sum of Rs.68,88,765/- as property tax from the petitioner. Similar demand notices at Annexures-J & K are also challenged in this petition.

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It is the case of the petitioner that it is an educational institution which is also recognized by the Government and therefore, it is entitled for an exemption under Section 94(1-A)(i) of the Karnataka Municipalities Act, 1964 (for brevity, “ the Act ”).

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It is, however, the case of the Municipal Council that even a school can be subjected to a property tax, if it does not have the approval of the Government as contemplated under Section 94(1-A)(c) of the Act.

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NC: 2025:KHC:5869 WP No. 1236 of 2025

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The petitioner has produced the copy of the Registration Certificate made under the Karnataka Education Act at Annexure-A which indicates that it has registered itself as an educational institution. Annexures-B and C are certificates which indicate that the school that is being run by the petitioner is recognized under the provisions of the Karnataka Education Act. It is therefore clear that the petitioner is using the building for educational purpose and it is a recognized educational institution as contemplated under Section 94(1-A) (i) of the Act.

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Section 94(1-A) (i) of the Act reads as under:

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“94(1-A) The following buildings and vacant lands shall be exempted from the property tax, namely:-

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(i) buildings or vacant lands exclusively used for,-

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(i) student hostels, which are not established or conducted for profit;

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(ii) educational purposes by recognized educational institutions;”

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A plain reading of said section makes it absolutely clear that if any land or building is being used for

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educational purpose and is a recognized educational institution, the said land or building has an exemption from payment of property tax. Since Annexures-A, B and C clearly indicate that the petitioner is running a school, which is also a recognized educational institution as provided under the Karnataka Education Act, it is obvious that the building against which the demand is made is exempted from payment of property tax.

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Learned counsel appearing for Municipal Council, however, submits that Section 94(1-A)(c) of the Act would be attracted in this case.

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Section 94(1-A)(c) of the Act reads as under:

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“[(1-A) The following buildings and vacant lands shall be exempted from the property tax, namely:-

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(c) places used for the charitable purpose of sheltering the destitute or animals and orphanages, homes and schools for the deaf and dumb, asylum for the aged and fallen women and such similar institutions run purely on philanthropic lines as are approved by the State Government;”

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As could be seen from the above, it is clear that said section deals with land and building which are used specifically for charitable purpose and even if such land or building is used for charitable purpose, the same can be exempted only if it is approved by the State Government. Admittedly, in the instant case, the petitioner is not running an institution on philanthropic lines, which requires approval of the State Government and therefore, said section would have no application to the present case.

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An argument is also sought to be advanced that the demand for property tax is amenable to revision and therefore, the petitioner should be relegated to avail said remedy. In my view, since the petitioner is challenging the very authority to demand property tax and the power of revision would only be confined to the claim made by the Municipal Council on its merits, it is obvious that revisional remedy would not be an efficacious remedy. It may be pertinent to

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state here that the revisional authority cannot declare that the building in question is being used for educational purpose or that it is not being used for educational purposes. In light of Annexures-A, B and C referred to above, I am therefore of the view that this argument is without any substance.

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Learned counsel for the Municipal Council also puts forth an argument that one of the objective of the Trust is that the Trust is entitled to engage itself in the business of stocks and shares and therefore, the petitioner has to pay the property tax.

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Merely because one of the objective of the Trust is to enable the Trust to engage itself in the business of stocks and shares, that cannot lead to an inference that it is not running an educational institution. If any portion of the building in question is being used for the purpose other than the educational purposes, then the Municipal Council would be at liberty to

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NC: 2025:KHC:5869 WP No. 1236 of 2025

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proceed against that portion of the building which is not being used for educational purpose.

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Liberty is reserved to the Municipal Council to proceed against the petitioner, if they are using any portion of the building in question for the purpose other than the educational purpose. I am therefore of the view that the impugned demand notices are unsustainable and the same are accordingly quashed, subject to the above.

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Learned counsel for the Municipal Council lastly submits that the structure put up by the petitioner is in gross violation of building byelaws and sanctioned plan and this order should not come in the way of the Municipal Council to proceed against the illegality. If the petitioner had indeed deviated from sanctioned plan and had constructed the building contrary to the building byelaws and sanctioned plan, liberty is always reserved to the Municipal Council to proceed

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