Tamil Nadu - Madurai   

Dispute over tax referred to court

MADURAI: The row over payment of “house tax” by self-financing educational institutions situated in village panchayats has been referred to a Division Bench in the Madurai Bench of the Madras High Court.

Passing orders on a writ petition filed by a self-financing engineering college in Tiruchi against collection of house tax, Justice K. Chandru said that educational institutions which were “commercial in nature” could not be exempted from paying tax thereby depriving the panchayats of considerable revenue. Nevertheless, he referred the matter to a Division Bench as the petitioner’s counsel relied upon a judgement passed by another single judge who had held otherwise in a similar case in 2006. The Registry was directed to place the writ petition before the Chief Justice for appropriate orders.

The judge disagreed with the counsel’s contention that Rule 15 (c) of the Tamil Nadu Village Panchayats (assessment and collection of taxes) Rules, 1999 exempts all kinds of buildings used for educational purposes irrespective of the fact whether they belonged to an aided or self-financing institution.

It could not have been the intention of the legislators because a careful reading of the Section showed that buildings, including hostels and laboratories, were exempted from tax only if they were open to public.

One of the provisos to the Section also stated that the exemption would not apply to rented buildings even if they were open to public.

“Therefore, a conjoint reading of the rule as well as the provisos makes it clear that it was the intention of the rule making authorities to exempt only educational institutions which are not commercial in nature.”

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