Allowed

Greater Hyderabad Municipal Corporation Having its Office v. Loyola Academy (a Society Registeredf Under Andhra

Telangana HC24 Apr 2014CMSA/3/2014

Case brief

AI extract

What is this about?

Batch of civil miscellaneous second appeals challenging a lower court order that set aside property tax demand notices. The High Court held that Section 202(1)(bb) of the G.H.M.C. Act limits tax exemptions to primary education institutions, rejecting the argument for broader exemption for intermediate colleges.

What did the court decide?

Lower court orders setting aside demand notices set aside; respondents permitted to pay tax demanded by 31.07.2014.

Greater Hyderabad Municipal Corporation Having its… — Property and Title | Telangana HC (2014)

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*THE HONOURABLE SRI JUSTICE C.V.NAGARJUNA REDDY

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+C.M.S.A.Nos.85, 86, 94, 95, 96, 97, 98, 99 and 100 of 2013; 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 of 2014

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%Dated 24-04-2014

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Greater Hyderabad Municipal Corporation, Having its office at Tank Bund, Hyderabad, Rep. by its Commissioner and another.

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.. Appellants

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and

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Loyola Academy (A society registered under Andhra Pradesh (Telangana Area) Public Societies Act, 1974, Alwal rep. by its Vice Chairman & Chief Functionary, Rev. Fr. G.A.P. Kishore.

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.. Respondent

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! Counsel for the appellants: Mrs. A. Deepthi

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^ Counsel for the respondent: Mr. P. Dharmesh

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<GIST:

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>HEAD NOTE: ? CITATIONS: 2006 (3) ALD 657 (DB)

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THE HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY

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C.M.S.A.Nos.85, 86, 94, 95, 96, 97, 98, 99 and 100 of 2013; 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 of 2014

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Dated: 24.04.2014

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Between:

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Greater Hyderabad Municipal Corporation, Having its office at Tank Bund, Hyderabad, Rep. by its Commissioner and another.

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.. Appellants

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and Loyola Academy (A society registered under Andhra Pradesh (Telangana Area) Public Societies Act, 1974, Alwal rep. by its Vice Chairman & Chief Functionary, Rev. Fr. G.A.P. Kishore.

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.. Respondent

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Counsel for the appellants: Mrs. A. Deepthi

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Counsel for the Respondent: Mr. P. Dharmesh

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The Court made the following:

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COMMON JUDGMENT:

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This batch of civil miscellaneous second appeals arises out of separate but identical orders dated 19.11.2012 in M.A.Nos.27, 28, 30, 31 and 34 to 53 of 2011 on the file of the learned Chief Judge, City Small Causes Court, Hyderabad.

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In all the cases, common issue arises for adjudication, namely; whether the respondent is entitled to exemption from payment of tax to the appellants, under Section 202 (1) (bb) of the Greater Hyderabad Municipal Corporation Act, 1955 (for short ‘the Act’).

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It is the pleaded case of the respondent that it is running educational institutions such as junior colleges, degree colleges and P.G. colleges. It has approached the State Government for exemption from payment of property tax to the appellants. The respondent has relied upon Section 202 (1) (bb) of the Act for exemption from payment of the property tax. Pending the representation of the respondent, the Government appeared to have issued instructions to the appellants not to collect the property tax. When the appellants have issued demand notices in respect of separate buildings owned by the respondent, it has approached the lower Court by filing separate appeals questioning the validity of demand of tax made by the appellants. The lower Court, by its order under appeals, held that when the respondent’s representation for exemption from payment of property

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tax is pending with the State Government and instructions were issued by the State Government to the appellants not to collect the property tax pending a decision on the representation, the appellants are not justified in issuing demand notices. Accordingly, the demand notices are set aside by the lower Court.

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At the hearing, Mrs. Deepthi, learned counsel for the appellants, placed before the Court a Division Bench judgment of this Court in A.V. Education Society, Hyderabad v. Municipal Corporation of Hyderabad^[1] , in support of her submission that the respondent, which is admittedly not running educational institutions up to 10^th class, is not entitled to exemption under Section 202 (1) (bb) of the Act.

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Mr. P. Dharmesh, learned counsel for the respondent, while fairly admitting that his client is running educational institutions from the intermediate level and not running the classes up to 10^th class, however, made an endeavour to persuade this Court to interpret Section 202 (1) (bb) of the Act to the effect that not only the institutions which are running classes up to 10^th class, but also all other institutions which are being run in the buildings donated by charitable institutions or philanthropists or which are depending upon grant-in-aid by the Government for the maintenance are embraced by the provisions of Section 202 (1) (bb) of the Act.

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In order to test this submission of the learned counsel for the respondent, it is necessary to reproduce Section 202 (1) (bb) of the Act. This provision, to the extent it is relevant, reads as under:

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202. 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 except -

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(a) -----

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(b) ------

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(bb) educational institutions upto 10^th class, the buildings, of which are donated by charitable institutions or philanthropists, or which are depending on the grant-in-aid by the Government for the maintenance and such other educational institutions which are not running purely on commercial lines, but serving the cause of primary education which the Government may consider from time to time.”

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From the plain language of the above-reproduced provision, it is evident that two categories of educational institutions are exempted from payment of property tax. The first category is the educational institutions up to 10^th class, the buildings belonging to which are donated by charitable institutions or philanthropists or such educational institutions, which are depending upon the grant-in-aid by the Government for the maintenance. The other category of the institutions falling under this provision are the educational institutions which are not running purely on commercial lines, but serving the cause of primary education which the Government may consider from time to time.

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Relying upon the second part of the provision, namely; “such other educational institutions which are not running purely on commercial lines”, the learned counsel for the respondent submitted that this part of the provision will take within its sweep not only the institutions which are running classes upto 10^th class, but also other educational institutions which are not running purely on commercial lines irrespective of running the classes beyond 10^th for exemption from payment of property tax.

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I am afraid I cannot accept this submission. The words “but

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serving the cause of primary education” following the words “such other educational institutions which are not running purely on commercial lines” restrict the eligibility of exemption to those institutions, which impart primary education only. Therefore, the correct way of understanding this provision is that in case of buildings donated by charitable institutions or philanthropists or the institutions depending upon the grant-in-aid by the Government, all educational institutions up to 10^th class are entitled to exemption from property tax. Similarly, the other educational institutions which do not fall in the first limb of the provision are also entitled to exemption upto primary education, provided in the opinion of the Government such educational institutions are not running purely on commercial lines. Indeed, the Division Bench, in A.V. Education Society (supra), on the interpretation of Section 202 (1) (bb) of the Act, rejected the plea of the petitioner therein on the ground that it was not running any institutions, which are imparting education upto 10^th class. It was further held that on plain reading of Section 202 (1) (bb) of the Act, the petitioner therein was not exempted from payment of tax as it was running colleges and not classes upto 10^th .

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On the above analysis, the orders of the lower Court are not sustainable and the same are accordingly set aside.

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Learned counsel for the respondent submitted that the respondent will be liable to pay huge amount of tax. He, therefore, requested for reasonable time for payment of tax.

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Having regard to this request, the respondent is permitted to pay the tax demanded by the appellants on or before 31.07.2014.

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All the civil miscellaneous second appeals are accordingly

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allowed.

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As a sequel to the allowing of the appeals, miscellaneous petitions, if any, pending in these appeals shall stand disposed of as infructuous.

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_________________________ 24^th April, 2014 IBL

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C.V. NAGARJUNA REDDY, J