Case Law Details
Indian Institute of Technology Vs State of U.P. and Another (Allahabad High Court)
In a significant development, the Allahabad High Court has stayed a substantial demand of Rs. 47.06 crores in service charges imposed on the Indian Institute of Technology (IIT) Roorkee by the Municipal Corporation, Saharanpur. The demand, based on a decades-old office memorandum from the Government of India, was challenged by IIT Roorkee on several grounds, leading to this interim relief. The case raises important questions about the applicability of municipal service charges on educational institutions and the interpretation of central government guidelines.
Background of the Case
The dispute centers around a demand notice issued on May 10, 2024, by the Municipal Corporation of Saharanpur, asking IIT Roorkee to pay Rs. 47,06,67,775 as service charges. This sum includes Rs. 3.26 crores as current dues and Rs. 43.80 crores as arrears with interest. The demand was primarily based on an office memorandum dated March 29, 1967, issued by the Ministry of Finance, Government of India, which outlines the liability of institutions to pay service charges to municipal bodies, even if they are exempt from municipal taxes.
Arguments by IIT Roorkee
IIT Roorkee, represented by Shri Rohan Gupta, challenged the demand on multiple grounds:
- Exemption from Taxes: The petitioner argued that as a central government institution, IIT Roorkee is exempt from municipal taxes, and by extension, should not be liable for service charges.
- Judicial Precedent: The petitioner cited a previous ruling by the Allahabad High Court in the case of Banaras Hindu University v. State of U.P. (2010), where a similar office memorandum was scrutinized. In that case, the court held that statutory corporations and societies, even if established by the Union Government, are not covered by the memorandum, implying that such institutions should not be liable for service charges.
- Non-usage of Municipal Services: It was also contended that IIT Roorkee does not utilize the services provided by the Municipal Corporation, thereby making the demand for service charges unwarranted.
Arguments by the Respondents
On the other hand, the counsel for the Municipal Corporation, Mr. Jai Bahadur Singh, presented a letter dated November 23, 2001, from the Head of the Department, Institute of Paper Technology, IIT Roorkee. This letter acknowledged that the property of the Institute is the property of the Central Government and requested corrections in the tax bills issued. The respondents argued that this admission estops IIT Roorkee from denying the liability for service charges.
Court’s Interim Order
After hearing the arguments, the Allahabad High Court found that the matter warranted detailed consideration. The court directed the respondents to file a detailed counter-affidavit within two weeks, with IIT Roorkee given a week thereafter to file a rejoinder. Importantly, the court stayed the recovery of the demanded amount until further orders, providing temporary relief to the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Rohan Gupta, for the petitioner and Mr. Jai Bahadur Singh, learned counsel for the Municipal Corporation, Saharanpur.
2. Challenge in the writ petition is to a demand notice dated 10.05.2024, issued by the second respondent, calling upon the petitioner to deposit a sum of Rs. 47,06,67,775/- as service charges, out of which Rs. 3,26,43,795/- are the current dues payable, while the remaining 43,80,23,980/- is the balance of earlier arrears along with interest payable thereon.
3. Learned counsel for the petitioner has submitted that the demand has been raised on the basis of an office memorandum dated 29.03.1967 issued by the Government of India, Ministry of Finance, Department of Coordination.
4. It is sought to be contended that a Division Bench of this Court in Banaras Hindu University v. State of U.P. and others 2010 (10) ADJ 231 has held a similar office memorandum dated 26.04.1994 stating that though buildings of the Union are exempted from Municipal taxes, they are, however, liable to pay service charges as contemplated therein.
5. It has been held in this judgment that the statutory corporations as well as the societies are not of the Union Government even if they are established by the Union Government and therefore, they are not covered by the office memorandum.
6. The contention, therefore, is that the main demand is covered by the ratio of the decision of this Court is Banaras Hindu University (supra).
7. It is also stated in the writ petition that education institutions are not liable to be taxed by the municipal corporations nor any services of the municipal corporation are being availed by the petitioner-Institute and therefore, also the demand is unwarranted.
8. Learned counsel appearing for the respondents has produced a letter of the Head of the Department, Institute of Paper Technology, IIT Roorkee, dated 23.11.2001, which admits that the entire property of the Indian Institute of Paper Technology, both movable and immovable property, is property of Central Government.
9. A prayer has been made in this letter to furnish corrected and revised bills from the period 01.04.2001 to 20.09.2001 demanding only house tax.
10. On the strength of the above, it is contended that the petitioner is estopped from claiming to the contrary to what is admitted in the letter aforesaid.
11. Matter requires consideration.
12. Learned counsel appearing for the respondents may file a detailed counter-affidavit within two weeks. Petitioner will have a week’s time thereafter, to file rejoinder-affidavit.
13. List thereafter.
14. In the meantime, no recovery shall be made from the petitioner consequent to the impugned demand notice.
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