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TMI Blog2008 (1) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... n W.P. No. 36063 of 2006, M.P. No. 1 of 2007 in W.P. No. 12162 of 2007, M.P. No. 1 of 2007 in W.P. No. 12690 of 2007, W.P.M.P. No. 1 of 2007 in W.P. No. 1314 of 2007, W.P.M.P. No. 1 of 2007 in W.P. No. 6112 of 2007, W.P.M.P.(MD) No. 2770 of 2007 and M.P.(MD) No. 1 of 2007 in W.P.(MD) No. 7039 of 2007 For the Appellant : T.V. Ramanujun, Sr. Adv. for T.V. Krishnamachari, Adv. in W.A. No. 2080 of 2003 in W.A. No. 2080 of 2003, K. Selvaraj, Adv., for petitioner in W.P. No. 9659 of 2003 and 9906 of 2004 and 4456 of 2005, S. Vijayan, Adv. in W.P. No. 37562 of 2003, G. Masilamani, Sr. Adv. for T. Meikandan in W.P. Nos. 12681 of 2003 and 22509 and 22510 of 2006, Kandavadivel Doraisami, Sr. Adv. for V.P. Sengottuvel, Adv. in W.P. Nos. 41399 of 2005/12049, 12696 and 17030 of 2006 and 1314 and 6112 of 2007, R.Thamaraiselvan, Adv. in W.P. Nos. 7499 of 2004 and 2013 of 2006, V. Raghavachari, Adv. W.P.(MD) No. 9071 of 2005, M.S. Krishnan, Adv. for Sarvabhauman Associates in W.P. Nos. 10763 and 10764 of 2005, S. Udayakumar, Adv. in W.P. Nos. 10768 of 2005, 18260 of 2006 and 12162 and 12690 of 2007, S.K. Nachimuthu, Adv. in W.P. No. 11368 of 2005, A. Thiyagarajan, Adv. in W.P. No. 11943 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ appeal/writ petitions are educational institutions. They challenge the correctness of the demand for property tax under Section 172 of the Tamil Nadu Panchayats Act, 1994, on the ground that buildings used for educational purpose are exempt from liability under Rule 15(c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999. 2. It is seen that on the issue of exemption, there are two decisions of this Court taking two different views. In the decision reported in (2006) 3 MLJ 1068 (Kamaraj College of Engineering And Technology, Managing Board, rep. by its Secretary, Virudhunagar v. President, K. Vellakulam Panchayat, Madurai District), Justice P.Jyothimani considered the question of exemption on the assessment of house tax on the educational institutions under Rule 15(c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999. The learned Judge held that buildings used for educational purposes including hostels recognised by the State and other educational authorities, and irrespective of the fact as to whether they are aided or unaided or run on self-financing pattern are entitled to have the benefit of exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s now under challenge in W.A. No. 2080 of 2003. Considering the conflicting views, writ petitions are placed before the Division Bench for considering the claim for exemption along with the writ appeals. 4. In all these writ petitions, the educational institutions are not charitable institutions. The sum and substance of the contentions of the petitioners herein is that buildings used for educational purposes and the hostels attached thereto are entitled to the benefit of tax exemption. The charitable character is not of any relevance to the consideration of the application of the exemption provisions. The respondents however support the order of the learned single Judge holding that charitable educational institutions alone qualify for exemption under the provisions of Rule 15(c). 5. Before going into the individual contentions of the counsel appearing in different writ petitions and writ appeals, the provisions of the Act of 1994 and the Rules need to be adverted to. Section 172 of the Tamil Nadu Panchayats Act, 1994, is the charging provision to levy house tax on all houses in every panchayat, village on the basis on which such tax was levied in the local area concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for educational purposes including hostels and libraries which are open to the public and public buildings used for charitable purpose of sheltering the destitutes or animals. (d) to (k) ... Provided that nothing contained in Clauses (a) and (c) shall be deemed to exempt from house-tax, if any building for which rent is payable by the person or persons using the same for the purposes referred to in the said clauses: Provided further that educational institution (nor commercial in nature) exempted from levy of house-tax, immediately before the commencement of the Act shall continue to be exempted under the said Act. Explanation. -- The exemption granted under this rule shall not extend to residential quarters attached to schools or colleges not being the hostels or residential quarters attached to hospitals, dispensaries and libraries. 7. A reading of the Rule 15 shows that apart from panchayat buildings and Government maintained buildings, the various Sub Rules list out buildings entitled to exemption subject to the qualification as to the character of use and purpose provided for therein. On a reading of the exemption provision, it is clear that wherever the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not contemplated under the Rules to deny the benefit of the exemption. 9. Mr.R. Muthukumaraswamy, learned senior counsel, also referred to the decision reported in AIR 1931 Mad 55 (Municipal Council Trichinopoly v. S.Venkatarama Aiyar) to explain the phrase open to public , apart from [1979] 2 SCR 357 (TELCO v. STO) and 1989 CriLJ 1 (Kehar Singh v. State Delhi Admn.) to impress on the meaning of the term Public and further submitted that the said phrase qualified only a library. Referring to the need for going by the language of the provisos on the aspect of interpretation, he referred to the decision reported in [1991] 2 SCR 802 (Tribhovandas Haribhai Tamboli v. Gujarat Revenue Tribunal and Ors.) to impress on the submission that when the main provision is unambiguous, proviso cannot be read into the main provision to understand the same. 10. Mr. T.V. Ramanujun, learned senior counsel appearing for the appellant in W.A. No. 2080 of 2003, filed against the judgment of Justice P.K.Misra, referred to the recovery proceedings originally made and contended that a civil suit was filed in O.S. Nos. 85 of 2001 and 270 of 2001 against the Tahsildar and Commissioner seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, learned Counsel submitted that it denotes a payment in respect of amenities and services provided by the landlord under the terms of tenancy. In an educational institution, there is hardly any room even for suggesting the relationship of a landlord and tenant. Educational institutions not being commercial in their character and status, the denial of the exemption by making a distinction between those aided and unaided, or between institutions run by charitable institutions and Ors. is not warranted by the language of the Rule. He further submitted that the charitable character of the institution is not a rider for buildings housing educational institutions to earn an exemption. Hence, for the purpose of considering the exemption under Rule 15, charitable or commercial nature does not enter into the consideration at all. He submitted that when the language of the provision is couched in clear, unambiguous terms and the object to exempt buildings used for educational purpose is easily discernible from the language of the Section, the same cannot be strained to read anything more than what is written there. Mr.G.Masilamani, learned senior counsel, pointed out to Rule 15(c) and 15(e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e President, Keriseri Panchayat and Ors.) to point out the difference in the language of the provision as they stand now and as it stood prior to the amendment that, under the original provision, even if the institution charged rent from the occupants for the occupation of the hostels, the buildings were exempt from property tax, which is not so under the present provision. Learned Advocate General referred to the decisions reported in AIR 2003 SC 3724 (Islamic Academy of Education v. State of Karnataka), and (2005) 6 SCC 537 (P.A. Inamdar v. State of Maharashtra), the decisions of the Apex Court on the issue of institutions running educational institution only to contend that institutions charging fee cannot have the benefit of exemption. He referred to the decisions in [2003] 3 SCR987 (Indian Red Cross Society v. New Delhi Municipal Committee), [1957] 1 SCR 20 (Karnani Properties Ltd. v. Augustine), [1990] 2 SCR 564 (Puspa Sen Gupta v. Susma Ghose) 2007 (3) CTC 273 (Southern Petrochemicals Industries Co. Ltd. v. Electricity Inspector, E.T.I.O. and Ors.), AIR 2007 SC 797 (A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala) and 2005 (99) ECC 689 (Tata Iron Steel Co. Ltd. v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh to show that institutions offering free education are not over-burdened by taxation and hence, those alone would qualify for exemption. He submitted that even though the word charitable purpose is not used, yet, read with the proviso, the intention of Section 15(3) is clear that exemption is available only to those organisations run without commercial character. He referred to [1975] 101 ITR 234 (SC) (The Sole Trustee Loka Shikshana Trust v. The Commissioner of Income Tax, Mysore) and [1964] 1 SCR 561 (Shri Govindlalji v. State of Rajasthan) and submitted that the word public has to be understood as institutions open for all not restricted by any aspect by reason of it being run as a commercial institution. In the circumstances, the counsel for respondents pleaded that the order of the learned single Judge, Justice P.K.Misra, gives the correct approach to the exemption provision, and hence called for no interference. 16. Heard counsel for the parties. 17. Before going into the various contentions, we need to advert to few principles on the construction of statutes, particularly with reference to the taxing enactment and on the scope of the exemption provision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the exemption provision vide the decision reported in [1957] 32 ITR 466 (SC) (Commissioner of Income Tax v. Raja Benoy Kumar Sahas Roy (SC)) at 475 [1989] 177 ITR 431 (SC) (Commissioner of Income Tax v. Strawboard Mfg. Co. Ltd. [1988] 170 ITR 137 (SC) (Central Board of Direct Taxes v. Aditya V. Birla (SC)). These decisions give us the guiding principle on the understanding of an exemption provision to declare that exemption from tax is an exception to the general chargeability to tax under the provisions of the taxing enactment. Hence, those who claim an exception from liability must bring themselves within the terms of the exemption provision. Secondly, tax being the source by which the State gets its revenue, any claim of exemption from payment of tax must be clearly defined and founded on plain language. Where one is concerned with the interpretation of an exemption claim in a taxing statute, once the assessee proves that his case falls within the ambit of the proviso for exemption, then, that claim must, as far as possible, be liberally construed provided no violence is done to the language used. 21. In the decision reported in 1991 ECR 235 (SC) (Union of India v. Woo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen Rule 15 on exemption on specified classes of houses for house tax. We are concerned with Clause (c) of Rule 15 and the proviso to Section 15. A reading of the Rule indicates the plain language as to the intention that the exemption on buildings used for educational purposes including hostels rests on the user aspect of the building simpliciter. There are no conditions annexed to the user or the dominant purpose to exempt from tax. So long as the provision is plain and makes the reference to usage as for educational purposes as without any qualification to suggest that the exemption as conditioned as in other instances to say that it is available only to those charitable institutions or those which are imparting free education, we do not find any ground to go for any interpretative process to strain the language of the Rule to accept the submission of the respondents as suggested by the learned Advocate General or by the Counsel appearing for the respondents. The scope of the exemption contemplated has to be understood by the plain language of the Rule rather than by what is believed as its implied meaning or the supposed intention. The language in the Rule carries no uncerta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted admission and not free for all is not an institution open to public. 25. Mr.Gomathinayagam, appearing for respondents-1 2 in W.P. No. 35138 of 2003, referred to the decisions reported in [1979] 2 SCR 357 (TELCO v. STO) AIR 1968 SC 1638 Paragraph 23 (Tilkayal Shri Govindlalji Maharaja v. State of Rajasthan) and [1988] 1 SCR 948 (State of U.P. v. Malik Zarid Khalid) for the purpose of understanding the scope of the phrase public . It may be seen that all these decisions rest on the particular provisions of the Act concerned and the definition contained therein and we do not find any assistance to support the contention of the respondent that open to public has to be read as referring to institutions not charging fee or a charitable institution. As the well-known dictum of Rowlatt,J. in cape brandy syndicate v. Inland Revenue Commission (1921) 1 KB 64 held in a taxing Act, one has to look merely at what is clearly said.... One can only look fairly at the language used. 26. He referred to the decision reported in [1975] 101 ITR 234 (SC) (Sole Trustee, Lok Shikshana Trust v. CIT) to draw our attention as to what education meant. This relates to a case of exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: Places set apart for public worship and either actually so used or used for no other purpose, choultries, buildings used for educational purposes and libraries and playgrounds which are open to the public and from which no income is derived. 29. Learned Judge held that all exemptions were grouped together in a separate Section negativing the construction put on the clause that educational institutions which are open to public and for which the income is derived to mean earning income would not qualify for exemption. Learned Judge held: In my opinion the words in Sub-section (a) which are open to the public and from which no income is derived are referable according to the natural construction of the words only to libraries and playgrounds and not to buildings used for educational purposes. 30. We find that the reliance placed on by the petitioner on this decision is fully justified and answers the question in favour of the petitioners. As stated already, the Rule does not put any condition on the educational institutions to avail the benefit of exemption. Considering the unqualified terms in which the exemption provision is couched and in contradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he educational institutions. 33. In any view of the matter, even assuming for a moment open to public is attached to an educational institution, yet, in the absence of any definition of public under the Act, going by the definition of the term under Section 3(26) of the Tamil Nadu General Clauses Act, 1891, which reads as under: Public includes any class of the public or any community , we hold that the educational institutions, even if they are open to a section of the public, would nevertheless be treated as institutions eligible for exemption. It may be noted that in the decision reported in AIR (37) 1950 TC 103 (Alleppey Municipality v. Bombay Co.), dealing with Travancore District Municipalities Act XXIII of 1116, the Kerala High Court interpreted the word public in Section 326(13) of the Act in the sense in which it was defined in Section 2(28) of the Travancore General Clauses Act and held that this would include a section of the public. Dealing with the question as to whether a canteen run by a company for the benefit of the workmen employed, not open to public would be required to take a licence from the Municipality, applying the provisions of the Travanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public is not attached to the educational institutions as a qualification for claiming exemption. In any event, open to public cannot be construed as referring to an institution imparting free education to all without restriction. for the reasons already stated above in the preceding paragraphs, the word public cannot be construed as has been contended by the respondents. The inclusion of the said phrase to the understanding of the clause, in any event, does not advance the cause of the respondents. The availability or otherwise of an exemption rests purely on the usage of the building as for educational purpose and hostels attached thereto and not restricted to charitable institutions only. 35. In the light of the discussions referred to above, following the decision of this Court reported in AIR 1931 Mad 55 (Municipal Council Trichinopoly v. S. Venkatarama Aiyar), we have no hesitation in accepting the plea of the petitioners herein. As far as the decision of P.K.Misra,J. is concerned, it is seen that the reasoning of the learned Judge proceeds on the footing that educational institutions which are charitable alone would qualify for exemption. We do not find any ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered as part of undergoing the schooling therein does not make a student a tenant as in the normal meaning of the term. In the circumstances, it is not possible for us to accept the plea of the respondents that the charges for the stay in the hostel availing a facility therein must be treated as rent. The submission made to bring the case under the first proviso which carves out an exception to the main Rule only needs to be noted for rejection, in the light of the provisions contained in the main part of the Rules. Consequently, we reject the case of the respondents. In the above circumstances we allow the writ appeals and the writ petitions holding that on a plain reading of Rule 15(c), the dominant object or the use of the building for educational purposes alone decides the claim for exemption and nothing more or less is required. Rule 15(c) is in an unqualified term. There are no words of restriction attached to the portion dealing with educational purposes. In the above circumstances, we do not agree with the view expressed by Justice P.K.Misra and affirm the view of Justice P.Jyothimani in the decision reported in (2006) 3 MLJ 1068 (Kamaraj College of Engineering And ..... X X X X Extracts X X X X X X X X Extracts X X X X
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