Tax on institutional land, buildings valid, says HC

Tribune News Service
Chandigarh, August 9

Nine years after a Single Judge of the Punjab and Haryana High Court quashed a notification on the imposition of property tax on unaided private schools in the city, a Division Bench today ordered its setting aside.

“It is held that the levy of tax on institutional land and buildings is duly authorised by the Municipal Corporation and is legal and valid,” observed the Bench of Justice Rajiv Sharma and Justice Harinder Singh Sidhu.

The order came 15 years after the UT Administration came out with a notification specifying tax on commercial, industrial and institutional lands and buildings in Chandigarh. 

The importance of the judgment is that property tax would now be imposed on unaided private schools as well. The matter was placed before the Bench after the MC filed appeals through Pankaj Jain and Deepali Puri challenging the judgment dated September 24, 2010, vide which the Single Judge allowed a bunch of writ petitions by unaided private schools against the imposition of property tax on them. 

The Bench was told that the notification issued under the provisions of the Punjab Municipal Corporation Act, extended to Chandigarh was quashed. The bylaws and self-assessment scheme were also quashed.

The Bench asserted that the counsel for the respondent-schools was not able to point out any provision in the relevant Act, under which they were entitled to exemption from the tax being an educational institution.

The Bench added it did not find infirmity in the framing and notification of the bylaws. Clearly, the procedure as contemplated was complied with. The draft bylaws were framed by the House Tax Assessment Committee of the corporation. These were approved by the General House of the MC on January 29, 2003. Thereafter, these were sent to the government for approval and notification. 

“The UT Administrator approved it with amendments. Before the final notification, the draft bylaws as approved by the Administrator were published inviting objections. Later, they were notified,” the Bench added.

The Bench asserted that the Single Judge judgment quashing the notification fixing property tax was set aside.

WHAT SCHOOLS HAD PLEADED

The petitioners’ case was that the schools were managed by societies registered under the Societies Registration Act. The school land was owned by the Central Government, but allotted to them on leasehold basis. They survived financially solely on the fee collected from the students and were not having other source of income in the absence of funds or aid from the government. The schools served an essential public purpose and were not into a profit-making business.