- Madhya Pradesh Jesuits Vs State of Chhattisgarh (Chhattisgarh High Court)
- Challenge to Property Tax Demand
- Petitioner’s Claim of Property Tax Exemption
- Respondents’ Submissions
- Section 136 of Chhattisgarh Municipal Corporation Act
- Certificate Relied Upon by Petitioner
- Court’s Findings
- Final Decision
Madhya Pradesh Jesuits Vs State of Chhattisgarh (Chhattisgarh High Court)
Summary: The petitioner, Madhya Pradesh Jesuits, a charitable trust bearing Registration No. 77-1959-60, established Loyola Higher Secondary School at Rajiv Vihar, Seepat Road, Bilaspur in 2005. It challenged demand notices dated 06/08/2021 and 02/09/2021 issued by the respondent Municipal Corporation for property tax of approximately Rs. 19.75 lakh for financial year 2020-21. The petitioner claimed exemption under Section 136(c) and (e) of the Chhattisgarh Municipal Corporation Act, 1961, relying upon a certificate stated to have been issued under Section 12(A) of the Income Tax Act, 1961 on 10.7.1974.
Learned counsel for the petitioner submitted that the institution was a charitable and minority institution registered under Section 12(A) of the Income Tax Act and that the certificate entitled it to exemption from property tax. The respondents, however, submitted that the Section 12(A) registration certificate was issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.” and not in favour of the petitioner-institution situated at Rajiv Vihar, Seepat Road, Bilaspur.
The Court considered Section 136(c) of the Chhattisgarh Municipal Corporation Act, 1961, which provides that property tax shall not be leviable in respect of specified educational institutions, including educational institutions registered under Section 12A of the Income Tax Act, while other educational institutions may be given a rebate of up to fifty percent of the property tax as assessed by the Corporation in accordance with prescribed norms.
The Court noted that the petitioner had annexed a certificate with its rejoinder, but the certificate was issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.” dated 10.7.1974. The Court found that the two institutions were not one and the same and held that the petitioner-institution at Seepat Road, Bilaspur could not take the benefit of that registration certificate. Consequently, the demand notice was considered reasonable and no case was made out for interference. The writ petition was dismissed.
Challenge to Property Tax Demand
The petitioner sought, among other reliefs, quashing and setting aside of the demand notices dated 06/08/2021 and 02/09/2021 raised by the Respondent Municipal Corporation for payment of property tax amounting to Rs. 19,75,745.
The petitioner also sought costs and expenses of the petition and any other relief considered appropriate by the Court.
Petitioner’s Claim of Property Tax Exemption
Madhya Pradesh Jesuits was stated to be a charitable trust bearing Registration No. 77-1959-60. It established Loyola Higher Secondary School at Rajiv Vihar, Seepat Road, Bilaspur in 2005.
According to the petitioner, the institution was entitled to exemption from property tax under Section 136(c) and (e) of the Chhattisgarh Municipal Corporation Act, 1961. The petitioner relied upon a certificate issued on 10.7.1974 by the Office of the Income Tax Commissioner, Madhya Pradesh, Bhopal.
The petitioner’s counsel submitted that the petitioner was a charitable and minority institution registered under Section 12(A) of the Income Tax Act, 1961. On that basis, it was submitted that the demand notices issued by the respondent Municipal Corporation were bad in law and the writ petition should be allowed.
Respondents’ Submissions
The respondents disputed the petitioner’s reliance on the Section 12(A) registration certificate. Their counsel submitted that the certificate had been issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.” and that no such certificate had been issued in favour of the petitioner-institution situated at Rajiv Vihar, Seepat Road, Bilaspur.
It was further submitted on behalf of the respondents that the petitioner-institution was not registered under Section 12(A) of the Income Tax Act and, therefore, the respondent No. 2 had rightly issued the demand notices. On this basis, dismissal of the petition was sought.
Section 136 of Chhattisgarh Municipal Corporation Act
The Court considered Section 136 of the Chhattisgarh Municipal Corporation Act, 1961, concerning exemptions from property tax. The relevant portion of Section 136(c), as reproduced in the supplied material, provides that property tax shall not be leviable in respect of specified properties, including educational institutions of the Government of India, State Government, Municipal Corporations, registered Charitable Trusts and educational institutions registered under Section 12A of the Income Tax Act, 1961.
The provision further states that other educational institutions may be given a rebate of up to fifty percent of the property tax as assessed by the Corporation in accordance with norms that may be prescribed by the State Government.
The Court observed that a bare reading of the provision made it clear that exemption of property tax could be extended to an educational institution having registration under Section 12(A) of the Income Tax Act and, in its absence, the institution might be given a rebate of up to 50% of property tax.
Certificate Relied Upon by Petitioner
The respondent No. 2 had issued the demand notice against the petitioner-institution situated at Rajiv Vihar, Seepat Road, Bilaspur for Rs. 19,75,745. The Court noted that despite repeated reminders, the petitioner had failed to submit a registration certificate under Section 12(A) of the Income Tax Act.
Although the petitioner subsequently annexed a certificate with its rejoinder, the Court noted that the certificate was issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.” dated 10.7.1974.
For background on registration under Section 12A, TaxGuru has also published material discussing registration under Section 12A of the Income Tax Act.
Court’s Findings
In view of the discussion, the Court was of the opinion that the two institutions were not one and the same. It therefore held that the petitioner-institution situated at Seepat Road, Bilaspur could not take the benefit of the registration certificate annexed with the rejoinder.
The Court consequently found that the demand notice appeared to be reasonable and that no case was made out for interference.
Final Decision
The writ petition filed by Madhya Pradesh Jesuits was dismissed. The Court did not interfere with the demand notice raised by the respondent Municipal Corporation for property tax.
FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT
1) By way of this petition, the petitioner has sought following reliefs:-
10.1 Call for the records from the Municipal Corporation for its kind perusal.
10.2 Quash and set aside the demand notice dated 06/08/2021 & 02/09/2021 (P/1) raised by the Respondent Municipal Corporation for payment of property tax amounting to tune of Rs. 19,75,745.
10.3. This Hon’ble may be pleased to grant cost and expenses of the present petition and any other relief that this Hon’ble Court may deem fit and proper in the interest of justice.
2) Facts of the present case are that Madhya Pradesh Jesuits is a charitable trust bearing Registration No. 77-1959-60, which established Loyola Higher Secondary School at Rajiv Vihar, Seepat Road, Bilaspur in the year 2005. It is pleaded that petitioner-institution is entitled for exemption from property tax according to the provisions of Section 136 (c) and (e) of the Chhattisgarh Municipal Corporation Act, 1961 [hereinafter to be referred as ‘Act of 1961’] and the respondent No. 2 has issued demand notice for payment of property tax to the tune of Rs.19,75,742/- for the financial year 2020-21 on 2.9.2021. 3)Learned counsel for the petitioner submits that petitioner is a charitable and minority institution registered under Section 12(A) of Income Tax Act, 1961 [hereinafter to be referred as ‘Income Tax Act’] and certificate in this regard was issued in its favor on 10.7.1974 by O/o Income Tax Commissioner, Madhya Pradesh, Bhopal. She further submits that since the petitioner-institution is in possession of the aforestated certificate which provides exemption from the payment of property tax, the impugned demand notices issued by the respondent No. 2 are bad in law. She prays to allow this writ petition.
4) On the other hand, learned counsel appearing for the respective respondents submit that the registration certificate under Section 12 (A) of Income Tax Act was issued in favor of The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt. and no such certificate has been issued in favor of petitioner-institution situated at Rajiv Vihar, Seepat Road, Bilaspur. They further submit that since the petitioner-institution is not registered u/s 12(A) of Income Tax Act, therefore respondent No. 2 rightly issued demand notices and this petition deserves to be dismissed.
5) Heard.
6) The Sub-section (C) of Section 136 of Act of 1961 reads as under:-
136. Exemptions.- The property tax levied under section 135 shall not be leviable in respect of the following properties, namely:-
(a) ****
(I) ***
(ii) ***
(iii) ***
(b) ****
(c) educational institution of Government of India, State Government, Municipal Corporations, registered Charitable Trusts, educational institutions registered under Section 12A of the Income Tax Act, 1961, shall be wholly exempted and other educational institutions may be given a rebate of upto fifty percent of the property tax as assessed by the Corporation in accordance with norms that may be prescribed by the State Government;
Bare reading of the above-quoted provision would makes it clear that exemption of property tax can be extended to an educational institution having registration u/s 12(A) of Income Tax Act and in absence of the same, the institution may be given a rebate of up to 50% of property tax.
7) In the present case, respondent No. 2 issued demand notice against the petitioner-institution situated at Rajiv Vihar, Seepat Road, Bilaspur to the tune of Rs.19,75,745/- and despite repeated reminders, petitioner failed to submit registration certificate u/s 12(A) of Income Tax Act. Although, petitioner has annexed a certificate along with rejoinder but it appears that same is a registration certificate issued in favor of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.” dated 10.7.1974.
8) In view of the discussion made herein-above, in my opinion, the two institutions are not one and the same and the petitioner- institution situated at Seepat Road, Bilaspur cannot take benefit of registration certificate annexed along with the rejoinder. Therefore, the demand notice appears to be reasonable and no case is made out for interference. 9)Consequently, this writ petition fails and is hereby dismissed.
