Allahabad HC Affirms exemption of process fees for approval of maps for Charitable Society

Shiv Mandir Gauri Shanker Vishvanath Vaikunth Dham Evam Shamshan Bhumi Pravandhak Sabha Vs State of U.P. and 2 Others (Allahabad High Court)

In the case of Shiv Mandir Gauri Shanker Vishvanath Vaikunth Dham Evam Shamshan Bhumi Pravandhak Sabha vs. State of U.P. and 2 Others, the Allahabad High Court dealt with a writ petition filed by the petitioner society under Article 226 of the Constitution of India. The society sought several reliefs, primarily challenging a demand notice dated 05.08.2022 and a subsequent order dated 17.08.2023 passed by the Saharanpur Development Authority (SDA). These demands pertained to process fees for the approval of maps under the Uttar Pradesh Nagar Yojana Aur Vikas (Vikas Shulk Ka Nirdharan, Udgrahan Evam Sanghran) Niyamavali, 2014 (“Niyamavali, 2014”).

Background and Arguments:

1. Petitioner’s Claim: The petitioner, a Charitable Society registered under the Societies Registration Act, 1860, maintained that it ran and maintained various facilities including a temple, cremation site, Dharamshala, and a charitable hospital. It claimed exemption from development charges under Section 53 of the Uttar Pradesh Urban Planning and Development Act, 1973, as per the provisions of Niyamavali, 2014. Additionally, the society had obtained exemptions under Sections 12A and 80G of the Income Tax Act, 1961, effective from 01.04.2014.
2. Legal Basis for Exemption: The society argued that it was entitled to exemption from development charges and process fees under the Niyamavali, 2014, which exempted buildings used for charitable, spiritual, or religious purposes from such charges.
3. Actions by Saharanpur Development Authority (SDA): The SDA had approved the petitioner’s map for construction of the temple and cremation site on 17.11.2014. However, despite this approval and the society’s claims for exemption, the SDA issued demand notices for substantial amounts, leading to the petitioner depositing Rs. 26,45,000 under protest.
4. Contentions of the Respondents: The SDA, represented by its counsel, opposed the writ petition. They contended that the exemptions claimed were not valid at the time of map sanction since the approvals under Sections 12A and 80G of the Income Tax Act were pending consideration.

Court’s Findings:

1. Exemption Validity: The High Court observed that the petitioner had indeed obtained exemptions under Sections 12A and 80G of the Income Tax Act, 1961, with effect from 01.04.2014. Therefore, at the time of the map sanction on 17.11.2014, the petitioner was eligible for exemptions under the Niyamavali, 2014.
2. Government Orders: The court referred to the relevant Government orders, including those from 1998 and 2002, which supported exemptions for charitable and religious institutions from development charges under specific conditions. The subsequent Niyamavali, 2014 and Circular dated 18.07.2016 reiterated these exemptions.
3. Legal Standing: Upholding the petitioner’s arguments, the court found that the SDA’s demand notices and subsequent orders were unsustainable. It noted that the petitioner had already deposited a significant amount under protest and had complied with all statutory requirements for obtaining exemptions.
4. Relief Granted: Consequently, the High Court allowed the writ petition and set aside the impugned orders. It directed the matter to be reconsidered by the Vice Chairman of the SDA within six weeks, with a clear directive to consider the exemptions under Niyamavali, 2014, and the Income Tax Act, 1961.

Conclusion:

The judgment of the Allahabad High Court in this case reaffirms the rights of charitable societies to claim exemptions from development charges when engaged in activities specified under relevant laws and regulations. It emphasizes adherence to statutory provisions and the necessity for development authorities to act in accordance with the exemptions granted under law.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

Heard Sri Chetan Chatterjee, learned counsel for the petitioner; Sri Pankaj Rai, learned Additional Chief Standing Counsel for the State respondent no.1 and Sri A.P. Paul, learned counsel for the respondent nos.2 and 3.

2. “Shri Shiv Mandir Gauri Shanker Vishvanath Vaikunth Dham Evam Shamshan Bhumi Pravandhak Sabha, Baba Lal Das Road, Saharanpur” through its Manger (in short the Society) has preferred the present writ petition under Article 226 of Constitution of India seeking following reliefs:-

“a. Issue a writ order or direction in the nature of certiorari quashing the demand notice dated 05.08.2022 (Annexure No.9 to the writ petition) and consequential order dated 17.08.2023 (Annexure No.11 to the writ petition) passed by the respondent no.3.

b. Issue a writ, order or direction in the nature of mandamus directing the respondent nos.2 and 3 not to demand any charge and the interest thereupon from the petitioner in pursuance of process fee for approval of map etc. and refund the amount deposited by the petitioner under protest on 10.11.2014 and 05.05.2017, in pursuance of ‘Uttar Pradesh Nagar Yojana Aur Vikas (Vikas Shulk Ka Nirdharan, Udgrahan Evam Sanghran) Niyamavali, 2014’ dated 17.11.2014 (Annexure No.3 to the writ petition) and consequential Circular dated 18.07.2016 (Annexure No.4 to the writ petition) issued by the respondent no.1.

c. Issue any other suitable writ order or direction as this Hon’ble Court may deem fit and proper to direct considering the facts and circumstances of the case.

d. Award cost of the petition.”

3. The petitioner claims to be a Charitable Society registered by the Registrar of Societies, Uttar Pradesh under the Societies Registration Act, 1860 vide Registration Certificate No.719/1990-1991 dated 07.08.1990, which is renewed from time to time. For conducting the affairs of the Society it had also framed Bye-laws of the Society, wherein it is provided that the Society would run and maintain the funeral site (Shamshan Ghat), temple, Dharamshala, Charitable Hospital, Orphanage and library. The exemption is claimed by the petitioner under Section 53 of Urban Planning and Development Act, 1973 (in short, Act, 1973), which provides that “notwithstanding anything contained in this Act, the State Government may by notification in the Gazette exempt, subject to such conditions and restrictions, if any, as may be specified in such notification any land or building or class of lands or buildings from all or any of the provisions of this Act or rules or regulations made thereunder”.

4. Under the said provision, the State of Uttar Pradesh had framed the Niyamavali known as “Nagar Yojana aur Vikas (Vikas Shulk Ka Nirdharan, Upgrahan Evam Sangrahan) Niyamavali, 2014” (in short, Niyamavali, 2014), which was gazetted and notified on 17.11.2014. In view of the Niyamavali, 2014, a circular/notification was issued on 18.07.2016, which provides that in view of Niyamavali, 2014, the buildings, which are used for the purpose of charitable, spiritual/religious institution, charitable institutions for the benefit of general public, which have been specified in the Circular, would be exempted from development charge, which is normally charged by the Development Authorities under the Act, 1973. The petitioner Society applied for construction of temple and cremation site before the Saharanpur Development Authority (in short, SDA) and the same was approved by the SDA on 17.11.2014. The petitioner had also applied for exemption under Section 80-G of the Income Tax Act, 1961 (in short, Act, 1961) and the same was accorded/registered under Section 12-A-A (1) (b) (i) of the Act, 1961 with effect from 01.04.2014 vide order dated 29.03.2016 passed by the Commissioner of Income Tax (Exemption), Lucknow. Thereafter, a separate order was passed by the Commissioner of Income Tax (Exemption) Lucknow on 02.06.2017 and both the orders have been brought on record collectively as Annexure No.6 to the writ petition. It is also claimed that at the time of moving an application for sanction of plan, the applications for registration under Section 12-A and 80-G of the Act, 1961 were pending for approval. Finally, the registration was also accorded under the Act, 1961 w.e.f. 01.04.2014.

5. Learned counsel for the petitioner vehemently submitted that even though the Society is registered as charitable Society since 07.08.1990 and as per bye-laws of the Society, it is running and maintaining the funeral sites, temple and Dharamshala. Admittedly, the State Government had framed the Niyamavali, 2014 for providing exemption from realisation of process fee, development charges and in view of the Niyamavali, 2014, the Society is eligible for an exemption of process fee, development charges etc. More so, the said relief has also been pressed on the ground that the Society has already got benefits under Section 12A and 80G of the Act, 1961. Even at the time of moving an application for sanction of plan, even on the said stage the application for exemption under the Act, 1961 was pending consideration. Later on, the same was accorded by the Income Tax Department on 29.03.2016 but the same was effective w.e.f. 01.04.2014. He further apprised to the Court that the authority had restrained the petitioner Society not to raise any construction, even though the map was sanctioned. In most arbitrary manner, they have issued the demand notice and in protest the petitioner Society had initially deposited an amount of Rs.21,45,000/- on 10.11.2014 and further it had deposited Rs.5,00,000/- on 05.05.2017 (total Rs.26,45,000/-). He has also placed reliance on the Government order dated 21.05.1998 and the subsequent Government order dated 19.10.2002, which contains the foundation for laying down number of exemptions and the same is also reflected from the subsequent Circular dated 19.11.2014. It is pressed that the Circular dated 21.5.1998 is still in vogue, which is also available on the official website i.e. ‘www.awasbandhu.in’ .

6. In this backdrop, learned counsel for the petitioner submits that the Government order dated 19.10.2002 provides that the religious institutions, which work for public and charitable purpose without earning any profit or loss and do not indulge in any business activity, are exempted from development charge etc. It is also claimed that the subsequent Government order dated 19.10.2002 had amended the previous Government order dated 21.05.1998 and in view of the Niyamavali, 2014 and the successive Government orders, the petitioner Society is entitled for the benefit in the light of the exemption so accorded by the Income Tax Department. In support of his submission, he has placed reliance on the judgement passed by the High Court of Punjab and Haryana at Chandigarh in Commissioner of Income Tax, Jalndhar-I, Jalandhar vs. Gulab Devi Memorial Hospital Trust, Jalandhar reported in 2016 0 Supreme (P&H) 2552.

7. Per contra, Sri A.P. Paul, learned counsel for the SDA has vehemently opposed the writ petition and reiterated the counter affidavit. He submits that at the time of sanction of plan, admittedly no exemption was accorded by the Income Tax Department and therefore, no exemption is to be accorded to the petitioner. Moreover, the Society had accepted the demand raised by the SDA at the time of sanction of plan on 17.11.2014 and therefore, no benefit is to be extended in favour of the Society. At the relevant point of time, no such exemption was available to the Society. Even from time to time notices were sent to the Society but till date no satisfactory response has been filed and rightly the impugned notices have been issued, which are fully sustainable in the eyes of law and are liable to be upheld by this Court.

8. Heard rival submissions and perused the record.

9. We find that the petitioner, which is a charitable society, applied for sanction of map for construction of temple and cremation site, which was so accorded by the SDA vide order dated 17.11.2014. Thereafter, the petitioner Society had constructed the building in question for charitable purposes and claimed concession for payment of process fee, development fee etc. as provided under Section 53 of the Act, 1973. It had also applied for exemption under Section 80-G of the Act, 1961 and the same was accorded with effect from 01.04.2014 vide order dated 29.03.2016 passed by the Commissioner of Income Tax (Exemption) Lucknow under Section 12AA (1) (b) (i) of the Act, 1961. Meanwhile, the petitioner Society had deposited a sum of Rs.26,45,000/- under protest with the SDA. Again, the respondent no.3 had sent a demand notice to the petitioner on 05.08.2022 for an amount of Rs.59,33,374/- alongwith interest of Rs.84,71,925/-, (total Rs.1,44,05,299/-). The petitioner society submitted its objection on 14.08.2022 categorically stating that the petitioner is exempted as per Niyamavali, 2014 and consequential Circular dated 18.07.2016 and it is also accorded exemption under the Section 12AA (1) (b) (i) of the Act, 1961 w.e.f. 01.04.2014. Finally, the respondent no.3 vide impugned order dated 17.08.2023 has refused to grant exemption to the petitioner Society on the ground that from time to time notices were sent to the petitioner and at the time of sanction of map, the petitioner Society was not accorded exemption under Section 12A and 80G of the Act, 1961.

10. It is not in dispute that at the time of sanction of map, the applications of the petitioner Society for registration under Section 12-A and 80-G of the Act, 1961 were pending for approval and the same was approved by the SDA on 17.11.2014. Thereafter, the Commissioner of Income Tax (Exemption), Lucknow had accorded exemption to the petitioner Society under Sections 12-A and 80G of the Act, 1961 on 29.03.2016 with effect from 01.04.2014. The Government order dated 19.10.2002 provides that the religious institutions, which work for public and charitable purpose without earning any profit or loss and do not indulge in any business activity, are exempted from development charge etc.

The subsequent Government order dated 19.10.2002 had amended the previous Government order dated dated 21.05.1998. In view of the Niyamavali, 2014 and the successive Government orders, the petitioner Society is entitled for concession for payment of process fee, development fee etc. as provided under Section 53 of the Act, 1973 in the light of the exemptions so accorded by the Income Tax Department on 29.03.2016 w.e.f. 01.04.2014.

11. In the aforesaid facts and circumstances, the impugned orders cannot sustain and the same are accordingly set aside.

12. Consequently, the writ petition is allowed and the matter is relegated to the Vice Chairman, SDA to take a fresh decision within a period of six weeks from the date of production of certified copy of this order but certainly considering the Niyamavali, 2014 and the exemption under Section 12A and 80G of the Act, 1961.