The Karnataka High Court recently held that there is no requirement for educational institutions to obtain yearly certificate to claim property tax exemption under the Karnataka Municipalities Act, 1964.
The petitioner, City Municipal Council (CMC) is aggrieved by the order passed by the Additional Sessions Judge, Bijapur. The petitioner, the erstwhile City Municipal Council is now upgraded to a Municipal Corporation. At the relevant point of time, it was a City Municipal Council operating under the provisions of the Karnataka Municipalities Act, 1964.
The petitioner had issued a demand notice under Section 142(1)(v) of the Karnataka Municipalities Act calling upon the respondent to make payment of arrears of municipal tax of Rs.38,79,674/- for the period commencing from 01.04.2002 to 31.03.2012.
The Additional Sessions Judge, Bijapur, held that in terms of Section 94(1-A) (i) of the Karnataka Municipalities Act, the respondent who is an educational institution is exempted from payment of property taxes. Being aggrieved by the same, the City Municipal Council is before the Court seeking for the aforesaid reliefs.
Amresh S.Roja, the counsel for the petitioner submitted that there is no blanket exemption which is available to an educational institution in terms of Section 94(1-A)(i) of the Karnataka Municipalities Act and it was required that necessary application is made by an assessee to the CMC for grant of such exemption on a year to year basis which has to be considered by the CMC and if found satisfying the relevant criteria, exemption certificate could be issued by the CMC.
Ameet Kumar Deshpande, Senior Counsel for the respondent submitted that in terms of Section 94(1-A)(i) of the Karnataka Municipalities Act , exemption is provided for all educational institutions. This exemption being absolute, the question of applying for any exemption certificate would not at all arise and as such, he submits that there being no dispute as regards the respondent running an educational institution, there is an automatic exemption under Section 94(1-A)(i) of the Karnataka Municipalities Act.
A Single Bench Justice Suraj Govindaraj comprising of observed that “There being no requirement for seeking for an exemption certificate, I am of the considered opinion that this exemption is absolute and apply to all buildings which are used for the purpose of running educational institution and/or incidental activity.”
“The exemption to an educational institution as regards payment of property tax being provided under Section 94(1-A)(i) of the Karnataka Municipalities Act, the Revisional Court has rightly applied the same” the Court concluded.
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