In, Panayppilly Sree Narayana Guruswami Trust vs Corporation of Kochi & Others, the Single Bench of Kerala HC, While dismissing the Petitioner Challenge, has held that, what is exempted under section 235 of Act, 1994 is the building and not the rent received to the building, which is allegedly used for charitable purposes.
Facts
Petitioner is a trust, having allegedly registered with the office of the Sub Registry. The said trust is the owner of buildings which is within the limits of the– the 1st respondent. Admittedly two of the buildings specified above are unauthorized constructions. According to the petitioner, among the said buildings, building one building was given exemption from the payment of property tax by the Corporation .The case projected by the petitioner is that the trust is working for the betterment of the lower community (Sastra) of the society.
The petitioner's complaint was that the Corporation served the trust with a demand notice for it to pay the property tax on the said building. The petitioner challenged the demand notice in the High Court of Kerala.
Contention Made
Petitioner: That the petitioner was granted exemption from payment of property tax as is contemplated under section 235 of the Kerala Municipality Act, 1994. It is also submitted that the demands raised cannot be sustained that they are violative of the principles of natural justice since no opportunity was provided to the petitioner before a decision was taken. Hence, demand notices cannot be sustained under law.
Respondent’s: That the Buildings were found to be ‘Unauthorized Construction’, and its purpose is other than trust & charitable Purpose. Though, rent is used for charitable purpose. It was accordingly, that the tax exemption granted to the said building was cancelled.
The Counsel Further Contended; That when unauthorized constructions are made, the owner of the building is liable to pay tax as prescribed under section 242 of Act, 1994 i.e., normal property tax plus twice the amount of tax since the building is constructed illegally, till such time the unauthorized construction is removed or regularized in accordance with law.
Court Observation
The Single Bench of Kerala HC, While analyzing the provisions of section 235 of the Kerala Municipality Act, 1994 observed that, sole question emerging for consideration is; Whether the petitioner is entitled to get property tax exemption under Section 235 of Act 1994, if the building in question is given on rent and the rent received is utilized for charity purposes?
- The Bench Observed; when it is admitted that rent is received for the building which alone is being utilized for charity purpose, it is specific and clear that the building is not entitled to get any exemption.
- This question was considered by a learned single Judge of the Court in S.N.V.Sadanam Trust vs Corporation of Kochi [(2006(3), KLT 663] and held that exemption from property tax in respect of the building is used for charitable purposes as understood under the Income Tax Act.
- It is significant to note that what is exempted under section 235 of Act, 1994 is the building and not the rent received to the building, which is allegedly used for charitable purposes.
Court Judgment
The Kerala HC while dismissing the write petition has held that, the other adverse factors, petitioner has also not produced any order to show that exemption was ever granted to the building. That being the situation petitioner is not entitled to get the benefits of section 235 of Act, 1994. Hence, above factual and legal deliberation is that the petitioner has not made out a case for exercising the power of judicial review conferred under article 226 of the Constitution of India there being no arbitrariness or illegality on the part of the respondent.
Case: Panayppilly Sree Narayana Guruswami Trust vs Corporation of Kochi & Others.
Citation: 1944 WP(C) NO. 10147 OF 2014
Bench: Hon’ble Mr Shaji P. Chaly
Decided on: 29th July, 2022.
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