Agastyar
Trust Vs. Commissioner & Secretary to Government Revenue Department [2005] Insc
174 (15 March 2005)
S.N.
Variava, Dr. Ar. Lakshmanan & S.H. Kapadia Dr. Ar. Lakshmanan, J.
These
appeals were filed by the appellant-Trust against the final judgment and order
dated 30.7.1999 passed by the High Court of Judicature at Madras in Writ Appeal
No. 1190 of 1999 and C.M.P. No. 11716 of 1999 whereby the High Court dismissed
the appeal preferred by the appellant against the order of the learned single
Judge of the High Court in Writ Petition No. 14745 of 1988 and W.M.P.No.22080
of 1988 denying the appellant exemption from paying urban land tax. The short
facts are as follows:
The
instant case relates to the exemption of the land held by the appellant for the
period 1965 to 1976 from the payment of urban land tax under the Tamil Nadu
Urban Land Tax Act, 1966 (hereinafter referred to as "the Act"). The
appellant-Trust was established under a trust deed with charitable objects in
the year 1941. By a deed, the appellant-Trust declared and affirmed to be a
public trust with charitable or religious objects. The State of Tamil Nadu issued G.Os being G.O.Ms. No. 1947
dated 17.9.1976, 2056 dated 4.10.1976 and 2625 dated 27.12.1976 respectively
declaring the norms for exemption from the payment of Urban Land Tax under the
Act.
The
said G.O. stipulated that all institutions recognized as charitable
institutions under the Indian Income Tax Act will be dealt as such under the
Act. It is also stipulated that exception is to be given if the income is used
solely for the objectives and purpose of the Trust.
It is
pertinent to notice that the appellant-Trust was recognized as a public
charitable trust under Section 12A(a) of the Income Tax Act vide order
29.4.1977 passed by the Income Tax Appellate Tribunal. In this context, it is
pertinent to notice that the appellant claims exemption of the land held by it
for the period from 1965 to 1976 from the payment of urban land tax under the
Act. Since the order was passed on 29.4.1977 by the Income Tax Appellate
Tribunal recognizing the appellant-Trust as a charitable Trust under Section 12A(a)
of the Act, the appellant cannot claim the benefit of the order dated 29.4.1977
to their Trust since the exemption of the land from payment of urban land tax
was claimed only for the period 1965 to 1976. The Assessing Authority under the
Act imposed urban land tax on the appellant-Trust. The appellant preferred Writ
Petition No. 4468 of 1977 which was allowed by the High Court allowing the
appellant to approach the authorities under Section 27 of the Act. Pursuant to
the order of the High Court, the appellant approached the authorities for
exemption under Section 27 of the Act which was rejected by the authorities on
28.1.1982.
The
appellant preferred a writ petition being W.P. No. 1562 of 1982. The
respondents issued a fresh G.O. being G.O. Ms. No. 1834(Rev.) dated 29.10.1983
stipulating fresh and additional norms for the benefit of exemption from
payment of urban land tax. The Writ Petition No. 1562 of 1982 filed by the
appellant was allowed directing fresh disposal of the appellant's application
keeping in view that bodies which have been recognized as charitable
institutions must be exempted by the Urban Land Tax Authorities. The
appellant-Trust requested for disposal of its application in terms of the
judgment and order dated 18.4.1988 passed by the High Court.
While
so, the respondents asked the appellant to make a fresh application along with
audited statements. The appellant requested the authorities that its pending
application be considered. The respondents by order dated 4.10.1988 rejected
the application of the appellant vide order Lr.(Ms) No.1896 on the ground that
the appellant did not satisfy the norms stipulated in G.O.Ms. No. 1834(Rev)
dated 29.10.1983. In the meanwhile, a Contempt Application was filed bringing
to the notice of the High Court that the application of the appellant was
decided de hors the directions of the High Court in W.P.No. 1562 of 1982
directing the authorities to dispose of the application keeping in view that
bodies which have been recognized as charitable institutions must be exempted
by the Urban Land Tax Authorities. The said contempt application was withdrawn
with liberty to challenge the order dated 4.10.1988 passed by the respondents.
Hence the appellant preferred W.P.No. 14745 of 1988 and C.M.P. No. 22080 of
1988 challenging the aforesaid order. The said writ petition was rejected by
the learned single Judge on 3.9.1998. The appellant preferred Writ Appeal No.
1190 of 1999 along with C.M.P. No. 11716 of 1999 which was again dismissed by
the Division Bench on 30.7.1999. Aggrieved by that, the appellant preferred the
special leave petitions on 16.12.1999 and this Court granted leave on
11.2.2000.
We
heard Mr. Uday U. Lalit, learned senior counsel appearing for the
appellant-Trust and Mr. S. Balakrishnan, learned senior counsel appearing for
the respondents.
Leaned
senior counsel appearing for the appellant invited our attention to the orders
passed in various writ petitions, the Government Orders and also of the
impugned orders and the orders passed by the authorities rejecting the claim
for exemption. He submitted that the appellant-Trust was entitled to exemption
from paying urban land tax as it met the criterion laid down in the Government
Order G.O.Ms. No. 2625 (Rev) dated 27.12.1976, which clearly stated that all
institutions recognized as charitable institutions under the Income Tax Act
will be dealt as such for the purpose of concessions under the Act. He would
further submit that the High Court has failed to appreciate that the
entitlement to exemption from paying urban land tax should have been decided in
accordance with the law that existed in the assessment years for which the
exemption was sought and not in accordance with any subsequent Government
Order. It was further contended that the High Court has failed to appreciate
that the G.O. Ms. No. 1834 dated 29.10.1983 cannot be construed as to have the
effect of altering the law applicable in the year of assessment in which the
claim of exemption was made. It was further contended that the subsequent G.O.Ms.
No. 1834 dated 29.10.1983 laid down additional conditions for the grant of
exemption and they will not have effect of denying the appellant the benefit as
it is not restrospective in effect and consequently it can not be applied to
the assessment years for which the exemption was sought. Learned senior counsel
invited our attention to the order passed by the High Court in Writ Petition
No. 1562 of 1982 which had directed the respondents to consider the claim of
the appellant in accordance with the terms and conditions of the Government
Order G.O. Ms. No. 2625 (Rev) dated 27.12.1976 and accordingly the claim should
have been settled in the light of the said Government Order.
He
would further submit that the order passed in Writ Petition No. 1562 of 1982
has become final in so far as the parties were concerned since no appeal had
been filed against it and the principle of res judicata under Section 11 Explanation
4 of the C.P.C. is applicable to the present case and the Government is
precluded from relying on the basis of the G.O. Ms. No. 1834 dated 29.10.1983
which it did not bring to the notice of the Court during the pendency of the
writ petition.
Mr. S.
Balakrishnan, learned senior counsel appearing for the respondents, reiterated
the contentions raised before the authorities and also of the High Court and
submitted that the appellant is not entitled to claim exemption from payment of
urban land tax on the basis of the order passed by the Income Tax Authorities
since the exemption claim made by the appellant was only for the period 1965 to
1976 from payment of urban land tax and whereas the Income Tax Department
recognized the appellant as a public charitable trust under Section 12A(a) of
the Income Tax Act vide Order dated 29.4.1977 passed by the Income Tax
Appellate Tribunal. He would further submit that G.O.Ms. Nos. 1947, 2056 and
2625 were subsequently modified by the respondents and that the appellant-Trust
itself requested for the disposal of its application in terms of the judgment
and order dated 18.4.1988 passed by the learned single Judge of the High Court
and thereafter the respondents asked the appellant to make the fresh
application along with audited statements.
Unfortunately,
the subsequent G.O. Ms. No. 1834(Rev) dated 29.10.1983 was not brought to the
notice of the learned single Judge while disposing of writ Petition No. 1562 of
1982. The authorities while considering the claim for exemption as per the
orders of the Court considered all the earlier G.Os and G.O.Ms. No. 1834(Rev)
dated 29.10.1983 and rejected the claim for exemption made by the appellant.
G.O. Ms. No. 1834(Rev) dated 29.10.1983 was already in existence when the
authorities considered the application on 4.10.1988 for claim for exemption and
rejected the same by a detailed order.
The
contention of the learned senior counsel appearing for the appellant that the
criteria laid down in G.O. Ms. No. 2625 (Rev) dated 27.12.1976 alone should
have been taken into consideration and not the other G.Os has no force since
while construing the claim, after remand, the authorities are under obligation
to consider all the G.Os which are in existence at the time of disposal of the
application. Therefore, we hold that the authorities had rightly applied the
test in terms and conditions mentioned in G.O. Ms. No. 1834 dated 29.10.1983 to
the case on hand. The only contention which was urged by the learned senior
counsel appearing for the appellant was that since the appellant- Trust was
recognized as a public charitable trust under Section 12A(a) of the Income Tax
Act, the appellant-Trust should have been granted exemption from payment of
urban land tax for the period 1965-1976. As already noticed the said claim has
no force since the income Tax Department has recognized the appellant-Trust as
a charitable Trust under Section 12A(a) of the Income Tax Act only on 29.4.1977
and, therefore, the said order cannot be given retrospective effect.
We have
perused G.O.Ms. No. 2625 (Rev) dated 27.12.1976 passed by the Government of
Tamil Nadu which in turn refers to earlier G.O. Ms. 1947 Dated 17.9.1976 and
G.O. Ms. No. 2056 (Rev) dated 4.10.1976. Clause (vi) of the said G.O. is
reproduced hereunder:
"In
the G.O. first cited, Government have directed that total exemption from
payment of urban land tax be given to all educational, religious, charitable
and philanthropic institutions in respect of vacant land and land on which
buildings have been constructed from which the institutions derive income which
is being used solely for their objectives and purposes, they have also directed
that urban land tax be reduced to 50% in respect of both vacant land and land
on which buildings have been constructed which belong to community recreation centres,
clubs and cine studios. These concessions are operative with retrospective
effect from 01.07.1975 and will be available only so long as the urban land is
specifically used for the purposes of the institutions concerned. If there is
violation in the use of or diversion of the income derived from the urban land,
the full urban land tax is to be levied as provided for in the Act. If the
institution concerned disposes of urban land by sale, gift, etc. it has to pay
the Government the entire amount of urban land tax payable upto the date of
such alienation. In the same G.O. the Government have constituted an 'Empowered
Committee' for the purpose of examining and making recommendations to the
Government regarding cases eligible for the above concessions.
These
concessions will now be given with retrospective effect from the Faslis from
which such exemption has been prayed for by the respective institutions
provided that there will be granted as provided for in the G.O. first cited on
specific application to Government and on the basis of the recommendation of
the Empowered Committee." It is seen from the above G.O. that the total
exemption from payment of urban land tax be given to all educational, religious
charitable and philanthropic institutions in respect of vacant land and land on
which buildings have been constructed from which the institutions derive income
which is being used solely for their objectives and purposes. The G.O. further
stipulates that if there is violation in the use of or diversion of the income
derived from the urban land, the full urban land tax is to be levied as
provided for in the Act. The G.O. further states that these concessions will
now be given with retrospective effect from the Faslis from which such
exemption has been prayed for by the respective institutions provided there
will be granted as provided for in the G.O. first cited that is G.O. Ms. No.
1947 (Rev) dated 17.9.1976 on specific application to Government and on the
basis of the recommendation of the Empowered Committee.
Learned
counsel appearing for the appellant fairly conceded that the appellant-Trust
have based their claim only on the basis of the Government Order and of the
order passed by the Income Tax Department and have not made any specific
application to the government before 29.9.1980. No earlier application was ever
produced either before the High Court or before this Court. The recommendations
of the Empowered Committee have also not produced or placed before us. It is thus
clear that the appellant-Trust is not entitled to claim exemption from payment
of Urban land Tax in the absence of any prayer for such exemption by a specific
application to the Government and on the basis of the recommendation of the
Empowered Committee.
As
already noticed, the respondents while considering G.O. Ms. No. 1834 dated
29.10.1983 which was already in existence, the said G.O. in turn, refers to
five other Government Orders which are as follows:
1.
G.O. Ms. No. 1947, Revenue dated 17.9.1976
2.
G.O. Ms. No. 2625, Revenue dated 27.12.1976
3.
G.O. Ms. No. 1803 Revenue dated 1.8.1978
4.
Government letter No. 78025(a)/Ui/78-13 Revenue Dated 24.9.1980
5.
G.O. Ms. No. 461, Revenue dated 17.3.1983
The
existing guidelines as per the above G.O. are as under:
1. The
institutions should have been recognized as charitable and exemption granted
under Section 12A(a) of the Income Tax Act, 1961.
2. The
institutions should spend at least 90% of its net income towards its objectives
and purposes, after deducting all the inevitable charges like payment of local
taxes, repairs and maintenance etc.
3. The
institution should be a public trust and not a private trust.
The
exemption committee constituted in G.O. Ms. No. 461, Revenue dated 17.8.1983
felt that the existing norms for grant of exemption from urban land tax needed
some revision, since in the existing norms there is no ceiling regarding the
expenses on establishment to be deducted out of the income in respect of
religious institutions and trusts. They felt that the present norms require the
institution to spend 90% of the net income towards its objectives which is on
the high side and, therefore, the Government on the basis of the recommendation
of the Committee revised the norms and guidelines for grant of exemption to the
religious charitable trust etc.
In
this context, it is useful to see the order dated 4.10.1988 passed by the
Commissioner and Secretary to the Government, Revenue Department. A detailed
order was passed by the Commissioner and Secretary to the Government of T.N. It
is useful to reproduce paragraph 3 of the said order which reads as under:
"Section
29(k) of the Tamil Nadu Urban Land Tax Act, 1966 provides for grant of
exemption to any Urban land actually used for religious, charitable or
philanthropic purposes by such religious, charitable or philanthropic
institutions but not including any Urban Land owned by such institutions and
(i) which
is vacant or
(ii) in
which buildings, from which income is derived, have been constructed.
While
examining the instant case with reference to above Section, it is seen that the
trust owns 62 grounds and 2243 sq. ft. of Urban lands in Tondiarpet, T. Nagar
and Thiruvottiyur Villages. The whole extent is assessed to Urban Land tax, for which it has sought exemption. The Urban lands in Tondiarpet Village are used for running cinema theatre, saw mill, godown etc.
and the lands in T.Nagar and Thiruvottiyur villages are used as residential
buildings. The objectives of the Trust, according to the trust deed, are as
follows:
i) to
establish, conduct and maintain residential and non- residential schools,
colleges and other institutions for imparting general, technical, vocational,
professional and/other kinds of education and training for the welfare of the
general public.
ii) to
provide scholarships for the benefits of students and to make donations and
grants to other institutions for the benefit of students and scholars and in
furtherance of education and iii) such other things.
It is
obvious from the above, that the buildings are not used for the objective of
the trust. The trust is not running any educational institution in accordance
with its objectives. It has not also furnished any evidence to show that it is
providing scholarships for the benefits of students. In view of this, the lands
which are used as Cinema theatre, saw mill, godowns, let out for residential
and commercial purposes do not deserve exemption under Section 29(k) of the
Act." It was further observed, "The grant of exemption under section
27(1) is obligatory and not mandatory, and it is a matter of Governmental
discretion governed by reasonable guidelines issued by the Government.
Accordingly, the Government have issued executive instructions in G.O.(Ms)
No.1947, Revenue dated 17.9.1976 and in G.O.(Ms) No. 2625, Revenue dated
27.12.1976 for the grant of exemption under section 27(1) of the Act in respect
of the vacant lands and the lands on which buildings have been constructed from
which the Charities, philanthropic and Educational Institutions derive income
which is being used solely for the objectives of and purposes of such
institutions but subject to the conditions that such concessions will be
granted on specific application to Government. The Government in
G.O.Ms.No.1834, Revenue, dated 29-10-1983,
have also prescribed certain norms and conditions for grant of exemption under
Section 27(1) of the Act." The paragraphs 5 & 6 of the order read as
under:
"While
examining the case, with the available particulars already furnished by the
Trust, it is considered that the trust is not eligible for grant of exemption
for the following reasons:-
i) The
trust has not satisfied the main norms that it has to spend 90% of its income
for its objectives and purposes during the years 1976-77, 1977-78 and 1978-79
it has spent only 9.9%, 49.5% its net income for its objectives.
ii)
The whole extent of the lands are used for commercial and residential purposes.
No piece of land is used for the charitable purpose. Further it has not
produced any evidence to show that the income is spent for the objectives and
purposes of the Trust.
iii)
Though the Trust has satisfied one of the norms that it has been recognized as
a charitable institution under Section 12a(a) of the Income Tax Act, 1961 it
has no binding force to exempt the lands owned by the Trust from the provisions
of the Urban Land Tax Act also.
iv)
Further the lands owned by the Trust are not eligible for grant of exemption
under Section 29(K) of the Act since the buildings are used as Cinema Theatre,
Saw Mills, Godowns and let out for commercial/residential purposes.
v) The
Trust is also not eligible for grant of exemption Under Section 27(1) (Hardship
clause) of the Act, because the lands are used for running cinema theatre, saw
mill, godowns and let out for commercial/residential purposes and it derives a
large income from the lands. Hence it has no undue hardship to pay the tax.
In the
circumstances stated above, the Government have decided that the Agasthyar
Trust is not eligible for grant of exemption from the payment of urban land tax
in accordance with the Tamil Nadu Urban Land Tax Act, 1966, and the existing
executive orders. Your exemption petitioner is accordingly rejected."
Aggrieved
by the above order, the appellant preferred writ petition before the High Court
to quash the above order dated 4.10.1988 and to direct the respondents herein
to grant exemption from payment under Section 27 of the Act in respect of the
urban land held by the Trust. The said writ petition was dismissed by a
detailed order passed by the learned single Judge which was affirmed by the
Division Bench of the High Court in W.A.No. 1190 of 1999. The order passed by
the Division Bench of the High Court reads as under:
"Heard
both sides. In an enquiry initiated at the instance of the appellant, who has
claimed exemption from payment of Urban Land Tax it has been found that the
appellant does not satisfy the guidelines mentioned in G.O.Ms.No.1843 Revenue
dated 29-10-1983 for claiming exemption as prayed for. It has been found that
the appellant trust does not satisfy the claim that it has to spend 90% of its
income for charitable purposes. It has only spent 9.9% and 49.5% of its net
income for the said objectives. Inter alia it has further been found that the
whole extent of the lands of the appellant are used for running cinema theatre,
saw mill, godowns the same are let out for commercialized residential purposes
and they truly derives a large income from the lands and no piece of land is
used for charitable purposes. Moreover no evidence has been produced by the
appellant to show that the income of the trust is spent for the charitable
purposes. The aforesaid finding of the 1st respondent has been affirmed by the
learned single Judge in the writ petition. We do not find any irregularity or
illegality in the finding of the learned single Judge and the same does not
call for any interference in the present appeal. Present appeal, in the
circumstances, is dismissed.
Consequently,
C.M.P. No. 11716/99 is also dismissed." We have also perused the grounds
of appeal filed in W.A. No. 1190 of 1999. The appellant has not raised any
ground in the writ appeal that G.O. Ms. No. 1834 dated 29.10.1983 is not at all
applicable to the present case and the Government is precluded from relying on
the said G.O. The said ground is taken for the first time only in this Court
saying that the entitlement from exemption should have been decided in
accordance with law that existed in the assessment year for which the exemption
was sought and not in accordance with any subsequent Government Order.
Ground
No. 12 taken in the writ appeal needs special mention in this context which
reads as follows:
"In
any event, the learned judge ought to have permitted the appellant to satisfy
the requirements of G.O. Ms. 1834 Revenue dated 29.10.1983 as submitted as an
alternative prayer by the appellant's counsel during the course of his
arguments." In the matter of exemption, under the provisions of Tamil Nadu
Land Tax Act, there is a marked difference between Sections 27 and 29 of the
Act.
Sections
27 and 29 of the Act read as under:
27.
Power of Government to exempt or reduce urban land tax.-
(1)
The Government, if satisfied that the payment of urban land tax in respect of
any class of urban lands or by any class of persons will cause undue hardship,
they may, subject to such rules as may be made in this behalf, by order-
(a) exempt
such lands or persons from the payment of the urban land tax; or
(b) reduce
the amount of such urban land tax whether prospectively or retrospectively.
(2)
The Government may at any time cancel or modify any order issued under
sub-section (1) and upon such cancellation or modification, the entire amount
of urban land tax, or the amount of urban land tax due under the modified
order, as the case may, shall be payable in respect of the land concerned with
effect from the fasli year in which such cancellation or modification is made:
Provided
that no such cancellation or modification shall be made unless the party likely
to be affected by such cancellation or modification has had a reasonable
opportunity of making his representations.
29.
Exemptions.- Nothing in this Act shall apply to-
(a) any
urban land owned by the State or the Central Government;
(b) any
urban land owned by
(i) the
Corporation of Madras;
(ii) a
Municipal Council constituted under the Tamil Nadu District Municipalities Act,
1920 (Tamil Nadu Act V of 1920);
(iii)
A Township Committee constituted under the Mettur Township Act, 1940, (Tamil Nadu
Act XI of 1940) the Courtallam Township Act, 1954 (Tamil Nadu Act XVI of 1954),
the Bhavanisagar Township Act, 1954, (Tamil Nadu Act XXV of 1954) or section 4
of the Tamil Nadu Panchayats Act, 1958 (Tamil Nadu Act XXXV of 1958) or under
any other law for the time being in force.
(iv) a
Panchayat or Panchayat Union Council constituted under any law for the time
being in force;
(c)
any urban land owned by a religious institution, which is set apart for public
worship and is actually so used, including any urban land owned by such
institution and which is appurtenant thereto but not including any urban land
owned by such institution and
(i) which
is vacant, or
(ii) in
which buildings from which income is derived have been constructed;
(d) (i)
any urban land on which hospitals maintained by
(a) the
Government, any local authority or such other authority specified by the
Government in this behalf; or
(b) by
any private institution which is in receipt of grant either from the Central
Government or from the State Government;
have
been constructed and any urban land appurtenant to such hospitals; or
(ii) any
urban land used for purposes directly connected with such hospitals, but not
including any urban land
(a) which
is vacant, or
(b) in
which buildings, from which income is derived have been constructed.
Explanation.- For the removal of doubts, it is
hereby declared that the urban land on which staff quarters including nurses
quarters or any other buildings directly connected with the purposes of the
said hospitals have been constructed shall be deemed to be urban land used for
purposes directly connected with the said hospitals;
(e) any
urban land solely used for purposes connected with the disposal of the dead;
(f) roads
or urban lands used for communal purposes;
(g) any
urban land used for public purposes, provided that no rent is charged for, or
no remuneration is derived from, such user;
(h)
any urban land used by schools, colleges or universities for purposes directly
connected with education, but not including any urban land owned by such
educational institutions and
(i) which
is vacant, or
(ii) in
which buildings from which income is derived have been constructed.
Explanation I.- For the purposes of this clause,
schools or colleges shall mean only such schools or colleges which are
educational institutions recognized either by the Government or by any
University, as the case may be.
Explanation
II.- For the
removal of doubts, it is hereby declared that the urban land on which schools,
colleges or universities or staff quarters or hostels or other buildings used
for the welfare of the students, have been constructed, or used as playgrounds
attached to such schools, colleges or universities, shall be deemed to be urban
land used for the purposes directly connected with education;
(i) any
urban land used for public parks, public libraries and public museums;
(j) any
urban land used
(i) for
charitable purposes of sheltering destitute persons or animals;
(ii) for
orphanages, homes and schools for the deaf and dumb and for the infirm and
diseased;
(iii) for
asylum for the aged and for fallen women;
(k)
subject to the provisions of this section, any urban land actually used for
religious, charitable or philanthropic purposes by such religious, charitable
or philanthropic institutions, as the Government may, by notification, specify,
but not including any urban land owned by such institutions and
(i) which
is vacant, or
(ii) in
which buildings from which income is derived have been constructed;
(l)
any urban land used for the preservation of ancient monuments." While
under Section 29, the exemption is granted by the statute itself and is
automatic in respect of the urban lands owned by the authorities or
institutions referred to therein, the exemption under Section 27 is not so. For
exemption under Section 27, power is vested with the State Government to exempt
the lands or persons from payment of tax "if the Government is satisfied
that the payment of urban land tax would cause undue hardship".
Such
power can be exercised by the Government only on specific application by the
person or institution seeking exemption and on placing satisfactory material
for exercise of such power. The exemption under Section 27 is not a matter of
right and does not follow as a matter of course.
No
other contention was raised. There is absolutely no merit in the civil appeals.
The appellant is not entitled to exemption from payment of urban land tax
during the period 1965-1976 as prayed for.
The
appeals are accordingly dismissed. No costs.
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