Date:09/01/2008 URL: http://www.thehindu.com/2008/01/09/stories/2008010958820800.htm

Tamil Nadu

“Buildings used for educational purposes entitled to tax exemption”

Special Correspondent

CHENNAI: Buildings used for educational purposes, including hostels, recognised by the State and other educational authorities, are entitled to exemption from house tax as per the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules 1999, the Madras High Court has ruled.

A Division Bench, comprising Justice K. Raviraja Pandian and Justice Chitra Venkataraman, passing orders on a writ appeal and a batch of writ petitions said: “The Rule does not put any condition on the educational institutions to avail themselves of the benefit of exemption. “Considering the unqualified terms in which the exemption provision is couched, and in contradistinction to those clauses which qualify the grant of exemption, all buildings used for educational purposes are entitled to have the benefit of exemption.” The petitioners challenged the correctness of the demand for property under Section 172 of the Tamil Nadu Panchayats Act 1994, on the ground that buildings used for educational purposes were exempt from liability under Rule 15(c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules 1999.

In two separate orders, two single judges had taken two different views earlier. Justice P. Jyothimani held that such buildings were exempted from paying the tax irrespective of the fact that whether they were aided or unaided or run on self-financing pattern. In another order in April 2003, Justice Prafulla Kumar Misra held that charitable organisations running hostels or libraries or shelter for animals alone would be eligible for exemption.

The Bench, agreeing with the findings of Mr. Justice Jyothimani, said, “The generality of the purpose stated as ‘for the purpose of education’ clearly supports the case of the petitioner that irrespective of the character of the institution as aided or unaided, free or restricted, recognised or otherwise, the purpose for which the building is used alone qualifies the claim for exemption.”

Pointing out that the wording of Section 15(c) was clear, and there were no conditions annexed to the user or the dominant purpose to exempt from tax, the Bench rejected the argument that the provision was applicable only to charitable institutions.

“We do not find any ground to go for any interpretative process to strain the language of the Rule to accept the submission.”