WP/7483/2005 of Sri Vasavi Kanayakaparameswari Education Society, Vs The Municipal Commissioner, Satthenapalli Municipality, on 28 December 2006

HON’BLE MR. JUSTICE BILAL NAZKIHON’BLE MR. JUSTICE C.V. RAMULUANDHON’BLE MR. JUSTICE D. APPA RAO

WP NOs. 4214 of 2006, 15318 of 2005, 7483 of 2005,23323 of 2004, 3671 of 2005, 8049 of 2004, 5258 of2003, 17593 of 2005 and 17286 of 2006

Dt. 28.12.2006

WP NO. 4214 OF 2006 AND BATCH

Between:

Kakinada Education Society, Kakinada

and

Kakinada Muncipal Corporation

…Petitioner

…Respondent

HON’BLE MR. JUSTICE BILAL NAZKIHON’BLE MR. JUSTICE C.V. RAMULUANDHON’BLE MR. JUSTICE D. APPA RAO

WP NOs. 4214 of 2006, 15318 of 2005, 7483 of 2005,23323 of 2004, 3671 of 2005, 8049 of 2004, 5258 of2003, 17593 of 2005 and 17286 of 2006

COMMON ORDER: (Per Hon’ble Mr. Justice Bilal Nazki)

Heard learned counsel for the parties. These writpetitions have been filed challenging the notices issued to the petitioners demanding tax under the A.P.Municipalities Act, 1965 (for short “the Act”) and all thepetitioners’ institutions are educational institutions andthey have challenged the impugned notices on theground that they are exempt from paying municipal tax interms of Section 88 of the Act.

When these cases came up before a DivisionBench, it took notice of a judgment reported in VasishtaE.M. School, Madanapalle Vs. Basinikonda Gram Panchayat, Basinikonda and another[[1]].It wascontended before the Court that Rule 5 of the Rulesframed under the A.P. Panchayat Raj Act, 1995 was paramateria to Section 88 of the A.P. Municipalities Act, 1965,therefore the interpretation placed by this Court on Rule 5framed under the A.P. Panchayat Raj Act, 1995 shouldalso be placed on Section 88 (1) (c) of the A.P.Municipalities Act. This necessitates a reference and inthis way the matters have come up before the Full Bench.

Under Section 85 of the A.P. Municipalities Act theMunicipality has been empowered to levy tax and section88 is a provision which grants certain exemptions. Therelevant clause for the purpose of the present controversyis sub-section (1) (c) of Section 88 which lays down, “recognized educational institutionsincluding hostels, public buildings and placesused for the charitable purpose of shelteringdestitute or animals and libraries andplaygrounds which are open to the public”

This sub-section was redrafted in 1994 by Act 3 of1994. There was a sub-section (bb) to Section 88 of theAct which was deleted subsequently. Sub-section (bb)was in the following terms, “Educational institutions upto 10[th] class,the buildings of which are donated bycharitable institutions or Philanthropists, orwhich are depending on the grant-in-aid by thegovernment for the maintenance and suchother educational institutions which are notrunning purely on commercial lines, butserving the cause of primary education whichthe Government may consider from time totime.”

Sub-section (c) before the amendment was in thefollowing terms, “buildings used for hostels, publicbuildings and places used for the charitablepurpose of sheltering the destitute or animals,and libraries and playgrounds which are opento the public.”

The redrafting of sub-section (c) and deletion of sub-section (bb) would also be a pointer for coming to thecorrect interpretation of sub-section (c).

Mr. C.Kodanda Ram, learned counsel appearing forthe petitioners submits that sub-section (c) can beinterpreted to mean that all recognized educationalinstitutions are exempt from tax under Section 85 of the

Act. He places emphasis on the word “and” before‘places’ and after ‘buildings’ to give such an interpretation.But, in our view, the most important word in the whole sub-section is the word “including” before ‘hostels’ and after‘institutions’. If the word “including” is read along with theword “and”, which is found in between ‘places’ and‘buildings’, it becomes crystal clear that recognizededucational institutions shall be exempt from tax wherethe educational institutions which included hostels, publicbuildings and places used for the charitable purpose or forthe purpose of sheltering destitute or animals and librariesand playgrounds which are open to the public. There wasno need for the legislature to use the word “including”, ifthe intention of the legislature was to exempt all theeducational institutions. Therefore, in our view, all therecognized educational institutions including hostels,public buildings and places used for charitable purposesare exempt under Section 85 of the Act provided thoseinstitutions, hostels, public buildings and places are usedfor charitable purposes. That the charitable purpose isnecessary only for the places other than recognizedinstitutions as suggested by Mr. C. Kondanda Ram,learned counsel, is, according to us, not correct view. However, it will always be a question of fact whether aparticular institution is charitable institution or not.Therefore, while answering the reference in the terms asmentioned hereinabove, we make it clear that we have not gone into the question as to whether the petitioners’institutions are charitable institutions or not.

Therefore, with the consent of the learned counselfor the parties, we dispose of the writ petitions as well withan observation that before levying of the tax on thepetitioners’ institutions, the authorities concerned shouldaddress to the question as to whether the institutions arecharitable institutions or not and for such purpose thepetitioners are at liberty to make representations to theconcerned authorities within one month and afterconsidering such representations, the authorities maypass appropriate orders since at no point of time theauthorities have considered whether the petitioners’institutions are charitable institutions or not. Therefore, weare passing such orders to enable the authorities to passfresh orders after considering the submissions of thepetitioners. We are also quashing the impugned notices.The respondents shall be at liberty to raise fresh claims, ifany, after hearing the petitioners and deciding their claimthat they are charitable institutions.

It is also contended by Mr. C. Kondanda Ram,learned counsel that in the previous assessment theprocedure laid down by the law was not followed. We arenot going into that question since we have quashed theimpugned notices, but we direct that for futureassessment, the procedure laid down by the Act andRules shall be followed. If the parties had not approached within one month from the date of receipt of copies of thisorder, the respondents may pass appropriate orders.

______

BNJ

______CVRJ

Dt. 28.12.2006

______DARJ

N.B:

Registry to put up copies of this order in each bundle. (B/o) KR

[1]1996 (2) The Law Summary 13