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Judgment
Judgment pronounced by K.P. Sivasubramaniam, J.—The following facts would be sufficient for the disposal of the above writ appeal. The
appellant is an educational trust which is registered under the Societies Registration Act, owning an extent of 253 grounds and 1162 sq, ft. with
land and buildings. The object of the society are interalia, to promote education of all types and grades, to take steps to disseminate knowledge,
scientific, technical, religious and cultural, to secure the welfare of minority muslims, to establish and maintain schools and colleges and the other
educational, charitable and religious institutions etc. In the year 1981, the society was assessed to urban land tax and a sum of Rs.1,02,396 was
levied for each fasli commencing from 1971. On appeal filed by the society, the commissioner of Land Reforms, by his order dated 26.9.1981, set
aside the order of the Assistant Commissioner and directed fresh assessment after excluding portions of the land and buildings occupied for
educational purposes. Fresh assessment was made after excluding purposes. Fresh assessment was made after excluding 239 grounds and 599
sq.ft. u/s 29(h) of he Tamil Nadu Urban Land Tax Act, 1966, (herein after referred to as ''the Act''). The said extent was excluded on the ground
that the same was being used for the purpose of education. Tax was levied on the remaining extent of 14 grounds and 563 sq.ft. as the assessing
authority found that the extent was not utilised for the purpose of education and in fact was used for commercial purposes. The assistant
Commissioner, Urban Land Tax by his order dated 14.8.1992 sought to levy tax on the appellant. Subsequently the order was revised on
10.2.1983 adopting a reduced market rate.
Thereafter the society appears to have approached the Government by its representation dated 12.1.1983, seeking exemption u/s 27(1) of the
Act. Its request was rejected by order dated 7.4.1988 on two grounds viz., (1) the society was not registered as a charitable institution u/s 12 of
the Income Tax Act and that (2) the society had not shown that it had spent atleast 90% of its net income towards its charitable objectives and
purposes. It may be immediately mentioned here that the said two grounds of rejection were based on the Government Order (miscellaneous)
No.1834. Revenue Department, dated 29-10-1983, wherein certain guidelines were issued for the purposes of granting exemption u/s 27 of the
Act. The said order dated 7-4-1988 was questioned by the appellant in W.P.No.11284 of 1988. P. Sathasivam, J while rejection the writ petition
held that the impugned order was in consonance with the guidelines and justified in the circumstances of the case. Hence the present appeal.
Mr. Ibrahim Kalifulla, learned counsel for the appellant contends that there being no dispute that the institution was an educational Institution, it
would fail aquarely u/s 29(h) of the Act and hence entitled to be completely exempted from the purview of the Act. It is further represented that the
learned counsel judge had wrongly assumed that G.OMs.No.1834, dated 29.10.1983 therein after referred to as, G.O), would apply to
exemption u/s 29(h) of the Act and thus erroneously upheld the grounds on which the claim of the appellant was rejected.
It is true that the G.O. had been issued only in the context of exemption contemplated u/s 27 of the Act and not for the exemption u/s 29 of the
Act. Nonetheless, the ultimate conclusions arrived at by the learned judge are justified for the following reasons to appreciate the issue which arises
for consideration in this appeal, it is relevant to notice that two types for exemptions contemplated under the Act. A reading of both the provisions
would disclose that while section 29 deals with a total and mandatory exemption, section 27 of the Act contemplates discretionary exemption
which the Government is entitled to grant subject to the assessee satisfying the required criteria. In other words, the exemption u/s 29 of the Act is
automatic, mandatory and total and there is no discretion left with the Government to refuse the grant of exemption, if the assessee fails within any
one of the categories enumerated thereunder. When once an institution is either notified or is shown to be covered u/s 29, the exemption is
complete and unconditional and the Revenue has no discretion to ignore or to refuse the exemption or to pass any order of assessment: The
provisions of the Act themselves are held inapplicable. Section 29(h) of the Act reads as follows:-
Exemption:- Nothing in this Act shall apply to-
(h) any urban land used schools, colleges or universities for purposes directly connected with education, but not including any urban land owned by
such educational institutions and-
(i) which is vacant, or
(ii) in which buildings from which income is derived have been constructed.
Explanation I, for the purposes of this clause, schools or colleges shall mean only such schools or colleges which are educational institutions
recognised either by the Government or by any university, as the case may be.
Explanation II - for the removal of doubts, it is hereby declared that the urban land on which schools, colleges or universities or staff quarters or
hostels or other buildings used for the welfare of the students, have been constructed, or used as play grounds attached to such schools, colleges
or universities, shall be deemed to be urban land used for the purpose directly connected with education;)
In contrast under, section 27 of the Act the exemption is discretionary subject to the qualification as may be prescribed by the Government. The
exemption could be granted fully or partially subject to conditions or be even modified or cancelled subsequently. Section 27 of the Act reads as
follows:-
Power of Government to exempt or reduce urban land tax.--
(1) The Government, if satisfied that the payment of urban land tax in respect of any clause of any clause of urban lands or by any class of persons
will cause undue hardships, they may, subject to such rules as may be made in this behalf, by order,-
(a) exempt such lands or persons from the payment of the urban land tax, or
(b) reduce the amount of such urban land tax whether prospectively or retrospectively.
(2) The Government may at anytime cancel or modify any other issue under sub-section (1) and upon such cancellation or modification, the entire
amount of urban land tax due under the modified order, as the case may be, shall be payable in respect of the land concerned with effect from the
fasli year in which such cancellation or modification is made:
Provided that no such cancellation or modification shall be made unless the party likely to be affected by such cancellation nor modification has had
a reasonable opportunity of making his representations.
It is only in the context of Section 27, the Government had issued certain guidelines under G.O.Ms.No.1834, dated 29.10.1983 prescribing
conditions for the entitlement of exemption u/s 27 of the Act.
Now turning to the facts of the present case, exemption was granted u/s 29 of the Act with reference to 239 grounds and only an extent of 14
grounds were assessed to tax since the authorities found that the said extent was not utilised for educational purposes. According to the learned
counsel for the appellant, since the entire income of the trust was utilised only for educational and charitable purposes, the exemption ought to have
been granted u/s 29(h) of the Act itself. We are unable to uphold the said contention. Explanation n to section 29 (h) of the Act is pertinent in this
context. It is only such of those properties and buildings which are directly concerned with the educational purposes, such as play grounds, hostels,
buildings used for colleges; schools, staff quarters etc., which are qualified to be exempted and not properties which are unconnected with the
educational purposes. The entitlement for exemption u/s 29(h) of the Act does not depend only upon the nomenclature or the avowed objectives
of the institution. But the actual purpose for which the properties are utilised or put to use, has to prevail. It is not disputed that the properties
assessed for tax are properties let out for commercial purposes, totally unconnected with educational purposes. The said properties were therefore
rightly excluded from the applicability of section 29(h) of the Act and infact the appellant himself had applied for exemption only u/s 27 of the Act
as could be seen from the impugned order. It is true that there can be no estoppel against the statute and the assessee would be entitled to
exemption u/s 29 of the Act if the properties would fall under that provision. But there being no dispute over the fact that the portion of the
property which was assessed for tax has nothing to do with educational purposes, it follows that the exemption sought for would fall only u/s 27
and not u/s 29(h) of the Act.
Therefore, the guidelines prescribed under the G.O. were rightly invoked. The two grounds stated in the impugned order for rejecting the
request for exemption are not factually disputed, viz., that the institution was not registered as a charitable institution under Income Tax Act and it
was not shown that atleast 90% of the net income had been spent for the charitable and educational objects and purposes. Hence, the refusal to
grant exemption u/s 27 of the Act is justified.
In the result, the writ appeal is dismissed. CMP. is also dismissed. No costs.