Gujarat High Court

Ahmedabad Municipal Corporation ... vs Sadkarya Seva Sangh on 14 September, 2023

Bench: Umesh A. Trivedi

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     C/FA/1323/2010                             JUDGMENT DATED: 14/09/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                      R/FIRST APPEAL NO. 1323 of 2010

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE UMESH A. TRIVEDI

and
HONOURABLE MRS. JUSTICE M. K. THAKKER
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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 THROUGH
                              Versus
                      SADKARYA SEVA SANGH
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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
==========================================================

CORAM:HONOURABLE MR. JUSTICE UMESH A. TRIVEDI
      and
      HONOURABLE MRS. JUSTICE M. K. THAKKER

                            Date : 14/09/2023

                    ORAL JUDGMENT

(PER : HONOURABLE MRS. JUSTICE M. K. THAKKER)

1. Being aggrieved by and dissatisfied with the judgment

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and order dated 02.03.2007 passed by the learned Small

Causes Court, Ahmedabad in Municipal Valuation Appeal

No.1163 of 2001, the appellant i.e. Ahmedabad Municipal

Corporation has preferred this appeal.

2. Facts arising from the case are as under:-

2.1 The appeal came to be preferred by the present

opponent being M.V.A. No.1163 of 2001 before the learned

Small Causes Court No.7, Ahmedabad in respect of the

premises bearing Survey/ F.P. No.179, Tenement No.0526-

050-4510001-F situated in Ward- Naranpura Gam against the

factors and classification considered at 7 for the assessment

year 2001-2002. It is contended by the present opponent

before the learned court below that the opponent being the

registered Public Charitable Trust and running diagnostic

centre, rendering the medical services on the basis of 'no

profit no loss'. Therefore, the tax be assessed as per Col.

No.F3 at the rate of Rs.1/- per sq.mtrs.

2.2 Considering the arguments and the evidence led before

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the learned Small Causes Court, the appeal came to be partly

allowed and the Municipal Tax Appeal No.838 dated

09.10.2001 for the assessment year 2001-2002 was set aside

and the Corporation was directed to issue fresh bill for the

appeal premises taking Col. F3 at the rate of Rs.2/- per

sq.mtrs. for the assessment year 2001-2002. It is further

directed that if any tax is recovered, the same may be

refunded to the appellant. The aforesaid order is subject

matter of the present appeal.

3. Ms. Jirga Jhaveri, learned advocate for the appellant -

original respondent - Corporation submitted that in the year

1999, the State Government vide Gujarat Act 3 of 1999

inserted Section-141B in Bombay Provincial Municipal

Corporation Act for recovery of the property tax as per carpet

area base formula and the Gujarat Government vide its

Resolution dated 25.09.2001 issued by the Urban

Development and Urban Housing Department issued Taxation

Rules Amendment 2001 under the provisions of Section-454 of

the Act, which came into force from 01.04.2001. and the

assessment year, which was disputed in the present appeal is

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2001-2002. Therefore, assessment for the rate of the property

tax was to be considered as per Sub-section-4 of Section-

141B. However, without considering the same, the learned

court below in impugned judgment change the factor assessed

by the Corporation, which is de-horse the law and the

provisions of the Act and the learned court below had directed

to assess the municipal tax as per Col. F3 at the rate of Rs.2/-

instead of F7 for the assessment year 2001-2002.

4. Ms. Jirga Jhaveri, learned advocate further relied upon

the decision of the Hon'ble Apex Court in the case of Parivar

Seva Sanstha Vs. Ahmedabad Municipal Corporation reported

in 2022 (16) Scale 888 rendered in Civil Appeal No.2273 of

2012, decided on 24.11.2022, and submitted that the present

case is squarely covered by the aforesaid decision, wherein

the Hon'ble Apex Court has held that even if in the case of

charitable trust, they are not entitled for the exemption under

Section-132(1)(b) of the Act and also held that legislature is

entitled to club the entry as per the 'use factor' alike without

falling foul of the right to equality, as enshrined under Article

14 of the Constitution and it is held that Rule-8B(4)(a)(i) of

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the Taxation Rules is not discriminatory and violative under

Article 14 of the Constitution. Ms. Jirga Jhaveri, learned

advocate at the end submitted that in view of the law laid

down by the Hon'ble Apex Court, the appeal is required to be

allowed and the judgment passed by the learned Small Causes

Court is required to be quashed and set aside.

5. On the other hand, learned advocate Mr. Vibhuti

Nanavati appearing for the respondent - Public Charitable

Trust has submitted that after considering the evidence led

before the learned court below, the judgment was passed,

which is just and proper. Mr. Nanavati further submitted that

the trust is rendering its medical services on the basis of 'no

profit no loss' and therefore, learned court below had rightly

directed to considered Col. F3 assess the tax at the rate of

Rs.2/- per sq.mtrs for the assessment year 2001-2002.

Therefore, no interference is required.

6. 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,

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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.

10. The contention of Appellant No. 2 Trust is that their

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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, dharmashala, 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

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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.

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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."

7. Considering the law laid down by the Hon'ble Apex

Court in the case of Parivar Seva Sanstha (supra) , this Court

is of the view that the Hon'ble Apex Court had held that in the

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case of Public Charitable Trust also no discretion is required

to be made. Therefore, this Court find that present appeal is

squarely covered by the aforesaid decision and therefore, the

same is required to be allowed. Resultantly, the First Appeal

is allowed. The impugned judgment dated 02.03.2007 passed

by the learned Small Causes Court, Ahmedabad in Municipal