WRIT PETITION 8049 of 2004 on 30 September 2007

ORDER:

The petitioner, which is an educational institution viz., St. Xavier’s Industrial Training Centre, situated within the Eluru Municipal Corporation, Eluru limits, filed this writ petition questioning the demand notice vide Assessment No.49116 dated 22.03.2008, issued under the provisions of Section 268 of the Hyderabad Municipal Corporation Act, 1955 (for short ‘the H.M.C.Act’), on various grounds as being illegal, contrary to the provisions of the H.M.C. Act and violative of the principles of natural justice.

2. The petitioner states that it is registered under the Societies Act 21 of 1860 bearing Society Registration No.162 of 1988. It is being run by St. Xavier’s Charitable Institutions of Prime Regional Sector, Eluru. The petitioner institution being a charitable institution running on the amounts donated by various persons, is not a profit-oriented institution. The petitioner institution has been in existence since long time and the 2[nd] respondent corporation was then only a Municipality. It is only in the month of March, 2005, the Eluru Municipality was upgraded as Eluru Municipal Corporation. The petitioner institution constructed the buildings for the purpose of running vocational courses apart from administrative work. The petitioner institution also collects nominal fees from the students for imparting vocational courses. The petitioner institution was granted the status of Minority Institution by the A.P. Minorities Commission vide Proceedings No.183/MC.I/85-1 dated 23.01.1986.

3. The 2[nd] respondent filed counter stating that the petitioner’s institution is not a charitable institution and collecting fees on par with corporate schools and colleges. In the counter-affidavit, the 2[nd] respondent totally denied the averments of the affidavit filed in support of the writ petition as not true and correct. It does not reveal the procedure followed and decision taken as to whether the petitioner’s institution is a charitable institution and liable for payment of property tax as per the order of this Court passed in W.P.No.8049 of 2004 dated 28.12.2006.

4. The learned counsel for the petitioner would contend that the petitioner institution being a minority institution, is being run by the donations given by the charitable institutions or philanthropists. The petitioner institution is exempted from payment of property tax under the provisions of Section 202 of the H.M.C. Act and under Section 88 of the Andhra Pradesh Municipalities Act, 1965. The 2[nd]respondent issued the impugned property tax demand notice demanding the petitioner to pay Rs.29,51,460/- including the interest upto 30.09.2007 without mentioning the period for which the demand was raised, which is contrary to the earlier common order of this Court passed in W.P.No.8049 of 2004 dated 28.12.2006, whereby this Court quashed the impugned notices giving liberty to the respondents therein to raise fresh claims if any after hearing the petitioners therein and deciding their claim that they are charitable institutions. Accordingly, the petitioner institution submitted its representation dated 27.02.2007 to the 2[nd] respondent. Basing on its representation, the 2[nd] respondent issued special notice dated 23.09.2007. Then, the petitioner filed Revision Petition on 08.10.2007 before the 2[nd] respondent, requesting to exempt the petitioner institution from the payment of property tax since it is a charitable institution. The impugned demand notice was issued without following the procedure prescribed either under the provisions of the A.P. Municipalities Act, 1965 for period from March, 2005 or under the H.M.C. Act, and not preceded by any enquiry or notice.

5. The learned counsel appearing for the 2[nd] respondent would contend that there is no legal infirmity in issuing the impugned demand notice. The petitioner institution is not exempted from payment of property tax. As the petitioner institution is imparting vocational training courses by collecting fee from the students, it is liable for payment of property tax. The institutions whose buildings and property comes within the provisions of section 88 of the A.P.

Municipalities Act, 1965 alone are exempted from payment of property tax. The petitioner institution would not come within the general category of exemption from payment of property tax. However, the impugned demand notice does not refer to the earlier notices, but the 2[nd] respondent followed the procedure while issuing the impugned demand notice. He would fairly concede that no vacate stay petition has been filed in spite of stay order granted on 01.04.2008. He seeks to remand the matter for fresh consideration by giving notice and opportunity to the petitioner institution.

6. In the facts and circumstances of the case and considering the submissions of both the learned counsel, and on perusal of the record, this Court is constrained to observe that the 2[nd] respondent has not taken proper care and caution and has not followed the prescribed procedure under the provisions of the H.M.C. Act and A.P. Municipalities Act before issuing the impugned demand notice demanding payment of property tax of Rs.29,51,460/- with interest, taking into consideration the order passed in W.P.No.8049 of 2004 dated 28.12.2006. The arguments of the learned counsel for the 2[nd] respondent could not merit consideration as he failed to state the procedure followed and opportunity given to the petitioner before impugned demand notice with reference to the order passed by this Court in W.P.No.8049 of 2004 dated 28.12.2006. Accordingly, the demand notice is set aside by allowing the writ petition.

7. On considering the relevant provisions of the A.P. Municipalities Act and the H.M.C. Act, this Court, in the interest of justice, felt it appropriate to give liberty to the 2[nd]respondent to make a demand for payment of property tax as per the provisions of the H.M.C. Act, by issuing proper notice as per law, by giving opportunity to the petitioner institution and pass reasoned order by deciding as to whether the petitioner institution is a charitable institution and entitled for exemption from payment of property tax, etc., as per law.

8. Accordingly, in view of the above discussion, the Writ Petition is allowed while directing the 2[nd] respondent to take follow up action, as per law for recovery of the property tax from the petitioner institution. No order as to costs.

9. Miscellaneous Petitions, if any, pending in this writ petition shall stand closed.

___________________________

___________________________ JUSTICE M.GANGA RAO

21-12-2019 PNR/anr

PNR/anr

THE HON’BLE SRI JUSTICE M.GANGA RAO

WRIT PETITION No. 6927 of 2008

21-12-2019