State cannot refuse to Grant Exemption to Education Institutions covered u/s 29 of Tamil Nadu Urban Land Tax Act: HC [Read Judgment]

The Madras High Court recently ruled that exemption provided under section 29 of the Tamil Nadu Urban Land Tax Act, 1966 is mandatory and the State cannot refuse to grant such exemption to educational institutions which are properly covered by section 29(h) of the Act.

In the instant case, the petitioner society was running various educational institutions in Tamil Nadu. Being a society engaged in educational activities, the petitioner has obtained registration under section 12A of the Income Tax Act.

The petitioners’ claim for urban land tax was rejected by the State Government. Aggrieved by the order, they approached the High Court.

Allowing the petition, Justice T.S Sivagnanam noted the fact that the substantial extent of the property is utilised by the Police Department. Admittedly, the State authorities does not dispute or deny the activities done by the petitioner. The Court, thus, found that this is a fit case where the unconditional exemption from payment of Urban Land Tax should be granted to the petitioner.

It further noted that under Section 27, the Government has the power to exempt an entity from paying urban land tax if it is 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.

Further, section 29(h) of the Act which deals with “exemption” to any urban land used by schools or colleges or universities for purposes directly connected with education, but not including any urban land owned by such educational institutions and which is vacant or in which buildings from which income is derived have been constructed.

Accepting the contentions of the petitioner, the Court pointed out that “there being no dispute that the institution was an educational institution, it would falls under Section 29(h) of the Act and hence entitled to be completely exempted from the purview of the Act.”

“When once an institution is either notified or is shown to be covered under section 29, the exemption is complete and unconditional and the Revenue has no discretion to ignore or to refuse the exemption or to pass any order of assessment,” the Court said.