Indira Gandhi Memorial Trust Eramalloor v. State of Kerala and Nellikkuzhi Grama Panchayat

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 11[TH] DAY OF NOVEMBER 2022 / 20TH KARTHIKA, 1944** **WP(C) NO. 18136 OF 2013** ## **PETITIONER:** **INDIRA GANDHI MEMORIAL TRUST ERAMALLOOR, NELLIKKUZHI P.O, KOTHAMANGALAM, REPRESENTED BY ITS CHAIRMAN** **BY ADVS.SRI.K.JAJU BABU SRI.BRIJESH MOHAN SRI.T.R.SADEESAN SMT.M.U.VIJAYALAKSHMI** ## **RESPONDENTS:** **1 STATE OF KERALA REPRESENTD BY SECRETARY TO GOVERNMENT, LOCAL SELF GOVERNMENT DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM 695 001 2 NELLIKUZHI GRAMA PANCHAYAT NELLIKUZHI, KOTHAMANGALAM 686 691, REPRESENTED BY ITS SECRETARY** **R1 BY SRI.JOBY JOSEPH,SENIOR GOVERNMENT PLEADER R2 BY SRI.C.A.MAJEED,SC BY ADVS.SRI.N.N.ELAYATH SRI.PAULSON THOMAS** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C.) No. 18136/2013 2 ## **JUDGMENT** This writ petition is filed by the petitioner seeking the :- following reliefs - _“i) Issue a wit of certiorari, or any other appropriate writ order on direction, calling for the records leading to Exts. P2 to P6 and quash the same;_ - _ii) Declare that the 2[nd] Respondent is not entitled to levy property tax in violation of Rules and procedures prescribed under the Kerala Panchayat Raj Act, 1994 and the Rules made thereunder._ - _iii) Declare that the amendment made to Section 207 whereby only those education institutions owned by the Government or aided by the Government exempt from payment of property tax is of unreasonable classification and is discriminatory and violative of Constitution of India and that all educational institutions recognized by the Central Government or State Government should be exempt, from payment of property tax as applicable to educational institutions owned by Government or aided by Government._ - _iv) Issue a writ of mandamus or any appropriate writ, order or direction, directing the 2[nd] Respondent, Petitioner being a charitable society exempt the buildings owned by it from payment of property tax in exercise of it powers to provide such exemption;_ - _v) to grant such other further reliefs as this Hon'ble Court may deem fit just to proper in the circumstances of the case;_ - _vi) Award costs of this petition.”_ 2. Petitioner is a trust conducting a dental college, an engineering college, arts and science college and a teachers training college in the unaided sector. The subject issue relates to W.P.(C.) No. 18136/2013 3 the exemption granted to buildings belonging to educational institutions. Section 207 as it stood originally in the Kerala Panchayat Raj Act, 1994 (for short, the 'Act, 1994') did not make a distinction by and between a building owned by an aided institution and an unaided institution. Therefore, when property tax was levied on buildings belonging to unaided educational institutions, this Court interfered and held that no distinction can be drawn by and between an aided and unaided educational institutions, in the judgment in **Usha P. Panicker v. State of Kerala [2008(4) KLT 894]** . Later, Section 207 of the Act, 1994 was amended and the exemption for the buildings is confined to the building exclusively used for educational purposes or allied purpose under the ownership of educational institutions owned by the Government, aided or functioning with the financial assistance of the Government and the hostel building wherein the students of the said institutions resides. 3. Therefore, when property tax was imposed on the petitioner institution, the constitutional validity of Section 207 of the Act, 1994, to the extent specified, is challenged in this writ W.P.(C.) No. 18136/2013 4 petition. The said question was considered by a learned Single Judge of this Court in so far as the exemption of property tax under the Act, 1994 is concerned, in **Sree Narayana Gurukulam** **College of Engineering v. State of Kerala [2016 (4) KLT 997]** and held as follows:- _“8. In the instant case whether the buildings and hostels for the purpose of education and stay owned or financed by the Government and owned by the private management of Selffinancing Educational Institutions can be treated alike. Whether there is any intelligible differentia which distinguishes the buildings owned by the Government and owned by private management of self-financing institutions. The matter in issue involved in the instant case falls exclusively in the domain of taxation and has no connection with the academic affairs. Therefore, the extent of enquiry is confined to the fiscal status of institutions only. What is the basis of the classification? In my view, this classification is made, by granting exemption to the buildings owned or financed by the Government, on the basis that public money is utilised for the construction and maintenance of such buildings; whereas in the case of the buildings and hostels owned and maintained by private management of self-financing institutions, the public money has not been involved. Put it differently, this exemption is a privilege granted to the public money and it can be said that buildings and hostels constructed and maintained by using public money is exempted from payment of property tax and the people, as a whole, is the beneficiary of this exemption. If property tax is imposed on buildings and hostels owned by the Government, that amount also will be taken from the public fund. More importantly, exemption is_ W.P.(C.) No. 18136/2013 5 _given to the institutions, functioning under the administrative control of the Government and to which Governmental auditing of funds and expenditure is made compulsory; whereas , the case of self-financing institutions, such control and auditing of funds are absent._ _9. Secondly, the expression 'self financing' itself shows that such institutions are having their own fee structure, which cannot be compared with fees of a Government College. Though, it is regulated and controlled by the above referred statute, it is much higher than that of Government Colleges, wherein a nominal fee alone is collected from the students and certain rooms are reserved for students from socially and economically backward classes, in the hostels owned by the Government. In my view, this classification on the aforesaid basis is a rational one and there is an intelligible differentia in this classification. Self-financing Educational Institutions form a separate class, different from the Educational Institutions owned and financed or aided by the Government and the discrimination made under Sec.207(b) of the Panchayat Raj Act is marked by intelligible differentia._ _10. Thirdly, it is the case of the petitioner that the petitioner's institution is also governed and regulated by the the Kerala Professional Colleges or Institutions (Prohibition of Capitation Fees, Regulation of Admission, Fixation of Nonexploitative fee and other measures to ensure equity and excellence in professional Education) Act, 2006. The preamble of the above Act says that it is an Act to provide for prohibition of capitation fee, regulation of admission, fixation of non-exploitative fee, allotment of seats to Scheduled Castes, Scheduled Tribes and other socially and economically backward classes and other measures to ensure equity and excellence in professional education and for matters_ W.P.(C.) No. 18136/2013 6 _connected therewith or incidental thereto. The said Act is a preventive legislation to curb illegality and exploitation in the functioning of the self-financing institutions. Merely on the reason that the receipt of capitation fee is prohibited and the admission and fixation of fee are regulated, it cannot be said that the selffinancing colleges are owned or administered by the Government and the financial transactions are subjected to governmental scrutiny. So, such institutions are not entitled to get the privilege of the institution owned and administered by the Government. The petitioner institution is not the creation of a statute; but the functioning of the institute alone is regulated by several statutes, covering different field of activity and the Kerala Professional Colleges or Institutions (Prohibition of Capitation Fees, Regulation of Admission, Fixation of Non-exploitative fee and other measures to ensure equity and excellence in professional Education) Act, 2006 is one among various such statutes and on that reason the self-financing Educational Institutions cannot be equated with the Educational Institutions owned and administered by the Government, having the privilege under Sec.207 of the Kerala Panchayat Raj Act, 1994. The concept of 'sovereign immunity' is the basis of this privilege of tax exemption granted to the institutions owned or aided and administered by the Government.”_ 4. Therefore, in my considered opinion, the issue raised by the petitioner is squarely covered by the said judgment. After **ree** going through the judgment of the learned Single Judge in S **Narayana Gurukulam College of Engineering supra** , I am in respectful agreement with the same. In that view of the matter the W.P.(C.) No. 18136/2013 7 question raised is squarely covered and therefore I do not think the petitioner is entitled to get any relief as sought in the writ petition. Furthermore, so far as the exemption with respect to the buildings of unaided educational institutions in Municipal areas is concerned another learned Single Judge of this Court in **The Manager, Vimal Jyothi Engineering College and Others v. State of Kerala and Others [2019 SCC Online Ker 4728]** has held as follows:- _“12. On an analysis of the precedents referred above, and applying the principles discernible therefrom to the facts in the instant cases, it can be seen that the tax concessions envisaged under the Acts are intended to provide a level playing field for Government/aided educational institutions on the one hand and the self-financing educational institutions on the other. Tax concessions have been granted to the former category, keeping in mind the role played by them in discharging the sovereign obligation of the State to provide education, despite the economic limitations faced by them. It is trite that Government and Government Aided Educational institutions are subjected to a different system of control when compared to Unaided Educational institutions that do not function under the restrictions imposed on the former category in respect of collection of fees and payment of salaries/wages to teaching and non-teaching staff. In that sense therefore, this is not a case where there is an under-inclusion in a classification that is effected for the purposes of extension of the benefit of exemption. It is simply a case of exemption granted to persons in an identified class, with those left out forming a distinct and separately identifiable class. In other words, the classification brought about is between unequals, and when viewed_ W.P.(C.) No. 18136/2013 8 _against the objective of the provision granting exemption, which is to provide relief from the financial burden imposed through taxation, it cannot be said that the classification effected has no nexus with the object sought to be achieved by the legislature through the exemption provision.”_ 5. Taking into consideration the above aspects, the petitioner has not made out a case for interference with the demand raised by the Grama Panchayat for the payment of the property tax. The writ petition fails, accordingly, it is dismissed. I make it clear that by dismissing this writ petition, I have not said anything about the quantum of the property tax assessed by the Secretary of the Grama Panchayat. The said issue is left open. Sd/- ## **SHAJI P. CHALY** **JUDGE** DCS/11.11.2022 W.P.(C.) No. 18136/2013 9 ## **APPENDIX** ## **PETITIONER EXHIBITS** - **EXHIBIT P1** **COPY OF THE JUDGMENT DATED 30.01.2009 IN W.P.(C)NO.35537/2008 OF THIS HON'BLE COURT.** - **EXHIBIT P2 COPY OF THE DEMAND NOTICE DATED 15.05.2013 AND COVERING LETTER ISSUED BY THE 2ND RESPONDENT FOR THE BUILDING USED FOR DENTAL COLLEGE.** - **EXHIBIT P3 COPY OF THE DEMAND NOTICE DATED 15.05.2013 AND COVERING LETTER ISSUED BY THE 2ND RESPONDENT FOR THE BUILDING USED FOR COLLEGE OF ARTS AND SCIENCE.** - **EXHIBIT P4 COPY OF THE DEMAND NOTICE DATED 15.05.2013 AND COVERIGN LETTER ISSUED BY THE 2ND RESPONDENT FOR THE BUILDING USED FOR ENGINEERING COLLEGE.** - **EXHIBIT P5 COPY OF THE DEMAND NOTICE DATED 15.05.2013 AND COVERING LETTER ISSUED BY THE 2ND RESPONDENT FOR THE BUILDING USED FOR TEACHERS TRAINING COLLEGE.** - **EXHIBIT P6 COPY OF THE GOVERNMENT CIRCULAR NO.49590/RC2/2011/LSGD DATED 12.04.2012.** - **EXHIBIT P7 COPY OF THE LETTER NO.4976/13 DATED 16.07.2013 ISSUED BY NELLIKUZHI GRAMA PANCHAYAT.** **EXHIBIT P8 COPY OF THE ORDINANCE NO.65/2012 THE KERALA MUNICIPALITY (THIRD AMENDMENT) ORDINANCE, 2012 ISSUED BY THE GOVERNMENT.**