M.P. Lawn Tennis Association ... vs Indore Municipal Corporation ...
2023 Latest Caselaw 2757 MP

                                                              1
                                        IN THE HIGH COURT OF MADHYA PRADESH
                                                      AT INDORE
                                                      WP No. 23492 of 2021
                             (M.P. LAWN TENNIS ASSOCIATION TENNIS COMPLEX TRUST INDORE AND OTHERS Vs INDORE
                                                MUNICIPAL CORPORATION INDORE AND OTHERS)



                          Dated : 15-02-2023


                                Shri Vishal Baheti, learned counsel for the Petitioner.
                                Shri Aniket Naik, learned counsel for the Respondent nos.1 to 3.

Shri Abhisek Bhargava, learned P.L. appeared for Respondent no.4/State.

Heard on the question of admission.

The petition is admitted for final hearing.

Newly added respondent no.4 is directed to file reply within six weeks. Also heard on the question of interim relief.

By way of interim relief, the petitioner seeking stay of impugned order dated 11.10.2021 Annexure P/17 whereby the representation of the petitoner has been rejected and demand to the tune of Rs.11.37,655/- has been uphold.

The petitioner is a trust registered under the MP Public Trust Act, 1951.

According to the petitioner, no business or commercial activities are being performed in the sports club run by the trust. Hence, the Municipal Corporation granted the exemption from payment of property tax. The petitioner has constructed Indore Tennis Club at plot no.120/1/1 & 120/1/2 ad-measruing 3.00 acre which was given on lease by the State Government for a period of 30 years which will be up to 2044. According to the petitioner, a large part of the property is open space and the construction of second floor was completed on 05.01.2020. In the financial year 2019-20, on the basis of self assessment return, Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM

the Municipal Corporation, Indore demanded Rs.2,02,283/- which was duly paid by the petitioner. All of a sudden, a demand of Rs.8,99,605.07/- has been raised under the head of property tax and other taxes. The petitioner submitted objection by way of a representation dated 25.11.2020 which has been rejected by the respondents vide the impugned order.

The petitioner has raised an issue that the land owned by the State Government and the petitioner is only a lease holder, therefore, the same is exempted from payment of property tax under Section 135 of Municipal Corporation Act and by virtue of Section 136 of the Municipal Corporation Act.

In support of his contention, counsel for the petitioner has placed reliance over the judgment of Hon'ble Apex Court passed in the case of Delhi gold Club Ltd. vs. NDMC [AIR 2001 SC 615] wherein it has been held that the lease property is not liable to pay property tax. However, counsel for the petitioner submits that the petitioner is ready to deposit 50% amount of the total demand.

Counsel for the respondent/IMC submitted that initially the petitioner was given the exemption wrongly from payment of property tax. Now, the Municipal Corporation has examined and found that the property tax and other taxes are levyable on the petitioner. Hence, the demand has been raised. The petitioner is having remedy under Section 149 of the Municipal Corporation Act.

The petitioner is doing commercial activities by providing sports facilities to its members on a fees on higher side, therefore it is not the case of the petitioner that the petitioner is not financially capable to deposit the taxes which is only source of income of the Municipal Corporation to provide basic amenities in the city and if the petitioner succeed, the entire amount shall be Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM

refunded.

Section 135 and 136 of the Municipal Corporation reads as under:

135. Imposition of Property Tax.- (1) Notwithstanding anything contained in this Act, the tax under clause (a) of sub-section (1) of section 132 shall be charged, levied and paid, at the rate not less than six percent and not more than ten percent of the annual letting value, as may be determined by the Corporation for each financial year. Provided that if the Corporation fails to determine the rate of the property tax by 31st March the rate as prevailing during the previous financial year shall be deemed to be the rate for current financial year.

136. Exemptions The property tax levied under section 135 shall not be leviable in respect of the following properties, namely:-

(a) buildings and lands owned by or vesting in- (i) the Union Government; (ii) the State Government; (iii) the Corporation; (b) buildings and lands the annual value of which does not exceed six thousand rupees in case of Municipal area having population of one lac or above and four thousand eight hundred rupees in case of Municipal area having population below on lac. Provided that if any such building or land is in the ownership of a person who owns any

other building or land in then same city, the annual value of such building or land shall for the purposes of this clause, be deemed to be the aggregate annual value of all buildings or lands, owned by him in the city; (c) buildings and lands or portions there of used exclusively for educational purposes including schools, boarding Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM

houses, hostels and libraries if such buildings and lands or portions thereof are either owned by the educational institutions concerned or have been placed at the disposal of such educational institutions without payment of any rent; (d) public parks and play grounds which are open to the public and building and land attached thereto if the rent derived there from is exclusively spent for the administration of parks and playgrounds to which they are attached; (e) buildings and land or portions thereof used exclusively for public worship or public charity such as mosques, temples, churches, dharmashalas, gurudwaras, hospitals, dispensaries, orphanages, alms houses, drinking water fountains, infirmaries for the treatment and care of animals and public burial grounds, or other places for the disposal of the dead: Provided that the following buildings and lands or portions thereof shall not be deemed to be used exclusively for public worship or for public charity within the meaning of this Section, namely:- (i) building in or lands on which any trade or business is carried on unless the rent derived from such buildings or lands is applied exclusively to religious purposes or to public charitable institutions aforesaid; (ii) buildings or lands in respect of which rent is derived and such rent is not applied exclusively to religious purposes or public charitable institutions aforesaid. Madhya Pradesh Municipal Corporation Act, (f) buildings or lands owned by widows or minors or persons subject to physical disability or mental infirmity owing to which they are incapable of earning their livelihood, where the main source of maintenance of such widows or minors or persons is the rent derived form such buildings and lands: Provided Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM

that such exemption shall, relate only to the first twelve thousand rupees or the annual value of such buildings and lands. (g) buildings and lands owned by freedom fighters, retired members of Defense Services and their widows during their life time if they are exempted from income tax. (h) building and lands owned by blind persons, abandoned women and mentally incapacitated persons if sufficient proof is produced in this behalf and if the main source of their maintenance is he rent derived from such buildings and lands. (i) buildings and lands in occupation of owner or his residence shall be exempted from property tax to the extent of fifty per cent. (j) the electric pole erected by the Madhya Pradesh Electric Board. (k) property owned by such political party in the State which has been recognized by the Election Commission of India.

Prima facie, it is the case of the petitioner that the land owned by the State Government and therefore, the State Government enjoys the exemption under Section 136 of the Municipal Corporation Act. In this case, even if the land is owned by the State Government and the petitioner is lease holder, but the building is belongs to the petitioner and Section 136-A of the Act says that the property tax levied under Section 135 of the Municipal Corporation Act shall not be levyable in respect of the building and land owned by or vesting it to the Union, State Government and the Municipal Corporation..

As per Section 132(1)(a) of the Act, the tax is payable by the owner of building or land unless exemption is granted by the Municipal Corporation under Section 135, 136 and 138 of the Act. As on today, there is no exemption from payment of property tax. It is not the case of the petitioner that this tennis Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM

club is falling under any other sub-section B to K to enjoy the exemption and it is not the case of the petitioner that there is no financial capacity of the club to pay the taxes, hence, the application is rejected.

Other issues are liable to be decided after filing the reply. The aforesaid observations are only for deciding the interim relief in the petition.

List thereafter.

(VIVEK RUSIA) JUDGE

amit

Signature Not Verified Signed by: AMIT KUMAR Signing time: 2/20/2023 7:24:56 PM