Gujarat High Court
Ahmedabad Municipal Corporation vs Bhikhalal Jamnadas Banker P Trust ... on 4 July, 2023
Bench: Ashutosh Shastri
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 5005 of 2008
With
R/FIRST APPEAL NO. 5149 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI Sd/-
and
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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AHMEDABAD MUNICIPAL CORPORATION
Versus
BHIKHALAL JAMNADAS BANKER P TRUST P/H HIRALAXMIBEN B
BANKER
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Appearance:
MS JIRGA D JHAVERI(3471) for the Appellant(s) No. 1
MR VIBHUTI NANAVATI(513) for the Defendant(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
Date : 04/07/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE DIVYESH A. JOSHI)
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
1. Since the facts and the issue involved in both these
appeals are identical, both these appeals are heard and
decided by this common judgment.
2. As per the facts leading to filing of First Appeal No.5005
of 2008, the respondent, a Public Charitable Trust, had filed
appeal in respect of the premises situated in Sardar Patel
Stadium ward, bearing Tenement No.0517-15-1186-0001-F
against the assessment of tax for the year 2005-06 stating that
said property is used for charitable purpose and the owner of
the property is a trust. It is stated that the factors applied for
assessment of the tax in respect of the respondent-Trust are
not in accordance with law, therefore, the respondent herein
had filed appeal before the Small Causes Court. After hearing
the parties and considering the material placed on record,
learned Small Causes Court has allowed the appeal filed by the
respondent, against which present appeal is preferred.
3. Similarly, in First Appeal No.5149 of 2008, the respondent
is also a Public Charitable Trust, who preferred Municipal
Valuation Appeal No.763 of 2002 challenging the bills and
praying for exemption from levy of General Tax from 1994-95
onwards. It is contended that the Trust is running a Diagnostic
Centre for the poor and middle class people by receiving
donations and it incurs loss. Appeal filed by the Trust is also
allowed by learned Small Causes Court, Ahmedabad, by
judgment and order dated 29.5.2006 in Municipal Valuation
Appeal No.763 of 2002.
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
4. Being aggrieved and dissatisfied with the aforesaid
judgments dated 12.3.2007 and 29.5.2006 passed in Municipal
Valuation Appeal Nos.284 of 2005 and 763 of 2002
respectively by learned Small Causes Court, Ahmedabad,
present appeals are filed by Ahmedabad Municipal Corporation
by raising manifold grounds.
5. Ms.Jirga Jhaveri, learned advocate for the appellant-
Ahmedabad Municipal Corporation has submitted that the
impugned judgment and order passed by learned Small Causes
Court, Ahmedabad, is capricious, erroneous and against the
settled principles of law. Learned advocate, Ms.Jhaveri has
submitted that learned Judge has taken erroneous view by
directing the Corporation to give exemption to the public
charitable trust from the tax. As per the BPMC Act, Municipal
Corporation has got power to pass the order of exemption and
without approval of the Municipal Commissioner said
relaxation cannot be extended and the decision rendered by
learned Judge is de-hors the provisions of the BPMC Act and,
hence, required to be quashed and set aside.
5.1 Learned advocate, Ms.Jirga Jhaveri, has further submitted
that, at the time of allowing the suit of the respondent-Public
Charitable Trust, learned Small Causes Court has changed
factor assessed by the Corporation, which is not permissible as
per new Formula, therefore, said order is bad in law and
requires to be quashed and set aside. The appellant-
Corporation has issued tax assessment bill applying
appropriate factor-7 for the assessment year 2005-2006. Said
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
fixing factor was converted as fixing factor-2 instead of fixing
factor-7 by learned Small Causes Court. Said action on the part
of learned Small Causes Court is against the provisions of the
statute and, therefore, requires to be quashed and set aside,
and appropriate direction may be given to the Corporation to
issue fresh bill as per factor no.2.
5.2 Learned advocate, Ms.Jhaveri has relied upon the
decision of Honourable Apex Court in the case of Parivar
Seva Sanstha v. Ahmedabad Municipal Corporation
reported in 2022 SCC Online SC 1622 rendered in Civil
Appeal No.2273 of 2012 decided on 24.11.2022, and
submitted that the present case is squarely covered by the
observations made by the Apex Court in aforesaid decision and
therefore, this is a fit case, wherein judgment and order of the
learned Small Causes Court is required to be quashed and set
aside.
6. On the other hand, learned advocate, Mr.Vibhuti
Nanavati, who appears on behalf of respondent-Public
Charitable Trusts has submitted that the impugned judgment
and order passed by learned Small Causes Court is just, fair
and based on sound principles of law. He has submitted that
the respondents are Public Charitable Trusts doing charity
work and they have produced documentary evidence in this
regard. He has further submitted that the Trusts are not
involved in any commercial activity and, therefore, as per the
provisions of the BPMC Act, relaxation is required to be given
in the municipal tax. He has further submitted that the
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
respondent Trusts are carrying on its activities by receiving
donations from the donors and they are doing charity work
from their limited source of income and, therefore, if benefit of
relaxation is extended to the respondent, they can do some
more charitable activity utilizing the money received by them
through donations.
7. Heard learned advocates appearing for the parties and
perused the material placed on record. We have also taken
into consideration the decisions cited by learned advocate,
Ms.Jirga Jhaveri. We deem it proper to reproduce following
observations made by the Honourable Apex Court in the case
of Parivar Seva Sanstha (supra) :-
"8. It may be also relevant to refer to clause (a)(iv) to sub-rule
(4) of Rule 8B, which specifically relates to educational and
specified social institutions, and reads as under:
" (a) xx xx xx
(iv) By 2.0 in respect of the buildings used as under:
Private Nursery (Bal-Mandir), Private and Govt. Schools,
Private and Govt. Colleges, University Campus, Museum,
Community halls, Social institutes run by public
charitable trust (for the welfare of women, old people,
deaf, dumb and blind, physically handicapped, mentally
retarded people) and non grantable schools.
xx xx xx"
9. It is an undisputed position that Appellant No. 2 Trust was
using portions of the property/building as a hospital or a
clinic. In view of the aforesaid position, sub-clause (i) to
clause (a) to sub-rule (4) of Rule 8B of the Taxation Rules
would be applicable and thereby, the designated rate has to
be increased by applying the multiplier of 7.0.
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
10. The contention of Appellant No. 2 Trust is that their clinic/
hospital is being used for charitable purposes as the fee
demanded from the patients and users is not the actual
market fee. Reference in this regard is made to sub-clause
(iv) to clause (a) to sub-rule (4) of Rule 8B of the Taxation
Rules, whereby a multiplier of 2.0 is to be applied in respect
of social institutes run by a public charitable trust for the
welfare of women, old people, deaf, dumb and blind,
physically handicapped and mentally retarded people. Our
attention has also been drawn to clause (b) to sub-rule 4 of
Rule 8B of the Taxation Rules, which states that the
designated rate shall neither be increased nor decreased
when the building is used as grantable schools run by public
charitable trusts, boarding-lodging- hostels run by public
charitable trusts, and religious institutions, dharma-shala,
ashram, and library.
11. As far as clause (b) to sub-rule (4) of Rule 8B of the
Taxation Rules is concerned, the same is clearly
distinguishable, and the 'use factor' enlisted thereunder is a
separate category; the category being grantable schools run
by public charitable trusts, boarding- lodging-hostels run by
public charitable trusts, and religious institutions, dharma-
shala, ashram, and library. Appellant No.2 Trust cannot claim
any parity with the aforesaid 'use factors', even though the
hospital/clinic run by them are run by public charitable trusts.
Sub-clause (i) to clause (a) to sub-rule (4) of Rule 8B of the
Taxation Rules enlists all buildings used as hospitals,
dispensaries, clinics, maternity homes, etc. They have all
been classified under one head. No distinction is made
whether they are run by public charitable trusts or not. The
legislature is entitled to club and treat the buildings as per
the 'use factor' alike without falling foul of the right to
equality, as enshrined under Article 14 of the Constitution of
India.
.............
C/FA/5005/2008 JUDGMENT DATED: 04/07/2023
20. However, we are also conscious that in some cases it is
possible that small organizations performing purely charitable
work, which meets both qualitative and quantitative criteria,
may have to curtail the charitable work in case the municipal
taxes increase or are enhanced. We would, in this context,
like to reproduce the observations of this Court in the case of
Sachchidanand Kishore Prasad Sinha (supra), which are as
under:-
"14. It is one thing to suggest that the rule-making
authority may consider making a further distinction on
the lines suggested and an altogether different thing to
strike down the rule itself on the ground of inadequate
classification..."
The aforesaid observation has been reproduced of abundant
caution and, we clarify, does not have any application in the
factual background of the present case."
8. Learned advocate, Mr.Vibhuti Nanavati, appearing for the
respondent-Trust is not in a position to dispute aforesaid
proposition of law. Considering the aforesaid observations
made by Honourable Apex Court, we find that the issue
involved in present appeals is squarely covered by the decision
in aforesaid case. Therefore, both these appeals are allowed.
Impugned judgments dated 12.3.2007 and 29.5.2006 passed
in Municipal Valuation Appeal Nos.284 of 2005 and 763 of
2002 respectively by learned Small Causes Court, Ahmedabad,
are hereby quashed and set aside. No order as to costs.
Sd/-
(ASHUTOSH SHASTRI, J)
Sd/-
(DIVYESH A. JOSHI,J)
R.S. MALEK
