Supreme Court allows Property Tax exemption on Hostels for Students and Residential Accommodation for Nuns [Read Judgment]

Supreme Court - property tax exemption- hostels for students - residential accommodation - nuns - Taxscan

The Supreme Court while rejecting the Kerala Government’s view allowed the property tax exemption on hostels for students and residential accommodation for nuns.

The Kerala government had moved the Supreme Court stating that no exemption should be granted as residential accommodation for nuns and hostels for students would be for residential as apart from religious or educational purposes and would not, therefore, be covered by the exemption contained in Section 3(1)(b) of the Kerala Building Tax Act, 1975.

Mr. Jaideep Gupta, senior advocate appearing on behalf of the State of Kerala argued that the term “building” has been defined in Section 2(e) of the Act as meaning a separate house, out-house, etc. and that in the present case as no religious/educational activities are carried on at all in the buildings which house nuns and hostel accommodation which houses students, such buildings, not being principally used for religious purposes, cannot possibly be exempt under the Act.

Section 3(1)(b) of the Kerala Building Tax Act, 1975 exempts payment of tax for premises used “principally” for religious, charitable or educational purposes or as factories or workshops.

The Division Bench headed by Justice Rohinton Nariman said that residential accommodation for nuns and hostels for students which are attached to various educational institutions can claim property tax exemption under Kerala Building Tax Act, 1975.

The court further said that religious, charitable or educational purposes are earmarked by the legislature as qualifying for the exemption as they do not pertain to business or commercial activity.

“Nuns are living in a neighbouring building to a convent only so that they may receive religious instruction there, or if students are living in a hostel close to the school or college in which they are imparted instruction, it is obvious that the purpose of such residence is not to earn profit but residence that is integrally connected with the religious or educational activity,” the court said.

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