Important Point
The exemption under Section 27 of the Tamil Nadu Urban Land Tax Act, is not a matter of right and does not follow as a matter of course.

Headnote:Tamil Nadu Urban Land Tax Act, 1966—Sections 27 and 29—Urban land tax—Appellant claimed exemption from paying urban land tax—Appellant Trust was established under a trust deed with charitable objects in year 1941—State of Tamil Nadu issued G.Os. stipulating that all institutions recognized as charitable institutions under the Income Tax Act will be dealt as such under the Act—Appellant Trust was recognized as a public charitable trust under Section 12A(a) of the Income Tax Act vide order 29-4-1977—Appellant claimed exemption of land held by it for the period from 1965 to 1976 from payment of urban land tax under the Act—Assessing Authority imposed urban land tax on appellant Trust—Appellant’s claim for exemption under Section 27 of the Act was rejected by the authorities—Appellant’s claim that entitlement from exemption should have been decided in accordance with law that existed in the assessment year for which exemption was sought and not in accordance with any subsequent Government Order—Whether appellant is entitled to exemption from payment of urban land tax during the period 1965-1976 as prayed for—(No).
       Held : It is seen from the above G.O. that the total exemption from payment of urban land tax be given to all educational, religious charitable and philanthropic institutions in respect of vacant land and land on which buildings have been constructed from which the institutions derive income which is being used solely for their objectives and purposes. The G.O. further stipulates that if there is violation in the use of or diversion of the income derived from the urban land, the full urban land tax is to be levied as provided for in the Act. The G.O. further states that these concessions will now be given with retrospective effect from the Faslis from which such exemption has been prayed for by the respective institutions provided there will be granted as provided for in the G.O. first cited that is G.O.Ms. No. 1947 (Rev) dated 17.9.1976 on specific application to Government and on the basis of the recommendation of the Empowered Committee. (Para 9)
       The exemption committee constituted in G.O.Ms.No. 461, Revenue dated 17.8.1983 felt that the existing norms for grant of exemption from urban land tax needed some revision, since in the existing norms there is no ceiling regarding the expenses on establishment to be deducted out of the income in respect of religious institutions and trusts. They felt that the present norms require the institution to spend 90 of the net income towards its objectives which is on the high side and, therefore, the Government on the basis of the recommendation of the Committee revised the norms and guidelines for grant of exemption to the religious charitable trust etc. (Para 12)
       We have also perused the grounds of appeal filed in W.A.No. 1190 of 1999. The appellant has not raised any ground in the writ appeal that G.O. Ms.No. 1834 dated 29.10.1983 is not at all applicable to the present case and the Government is precluded from relying on the said G.O. The said ground is taken for the first time only in this Court saying that the entitlement from exemption should have been decided in accordance with law that existed in the assessment year for which the exemption was sought and not in accordance with any subsequent Government Order. (Para 15)
       While under Section 29, the exemption is granted by the statute itself and is automatic in respect of the urban lands owned by the authorities or institutions referred to therein, the exemption under Section 27 is not so. For exemption under Section 27, power is vested with the State Government to exempt the lands or persons from payment of tax “if the Government is satisfied that the payment of urban land tax ....would cause undue hardship”. Such power can be exercised by the Government only on specific application by the person or institution seeking exemption and on placing satisfactory material for exercise of such power. The exemption under Section 27 is not a matter of right and does not follow as a matter of course. (Para 18)

Judgment

Dr. AR. Lakshmanan, J.—These appeals were filed by the appellant-Trust against the final judgment and order dated 30.7.1999 passed by the High Court of Judicature at Madras in Writ Appeal No. 1190 of 1999 and C.M.P. No. 11716 of 1999 whereby the High Court dismissed the appeal preferred by the appellant against the order of the learned single Judge of the High Court in Writ Petition No. 14745 of 1988 and W.M.P.No.22080 of 1988 denying the appellant exemption from paying urban land tax. The short facts are as follows:

2. The instant case relates to the exemption of the land held by the appellant for the period 1965 to 1976 from the payment of urban land tax under the Tamil Nadu Urban Land Tax Act, 1966 (hereinafter referred to as “the Act”). The appellant-Trust was established under a trust deed with charitable objects in the year 1941. By a deed, the appellant-Trust declared and affirmed to be a public trust with charitable or religious objects. The State of Tamil Nadu issued G.Os being G.O.Ms. No. 1947 dated 17.9.1976, 2056 dated 4.10.1976 and 2625 dated 27.12.1976 respectively declaring the norms for exemption from the payment of Urban Land Tax under the Act. The said G.O. stipulated that all institutions recognized as charitable institutions under the Indian Income Tax Act will be dealt as such under the Act. It is also stipulated that exception is to be given if the income is used solely for the objectives and purpose of the Trust.

3. It is pertinent to notice that the appellant-Trust was recognized as a public charitable trust under Section 12A(a) of the Income Tax Act vide order 29.4.1977 passed by the Income Tax Appellate Tribunal. In this context, it is pertinent to notice that the appellant claims exemption of the land held by it for the period from 1965 to 1976 from the payment of urban land tax under the Act. Since the order was passed on 29.4.1977 by the Income Tax Appellate Tribunal recognizing the appellant-Trust as a charitable Trust under Section 12A(a) of the Act, the appellant cannot claim the benefit of the order dated 29.4.1977 to their Trust since the exemption of the land from payment of urban land tax was claimed only for the period 1965 to 1976. The Assessing Authority under the Act imposed urban land tax on the appellant-Trust. The appellant preferred Writ Petition No. 4468 of 1977 which was allowed by the High Court allowing the appellant to approach the authorities under Section 27 of the Act. Pursuant to the order of the High Court, the appellant approached the authorities for exemption under Section 27 of the Act which was rejected by the authorities on 28.1.1982. The appellant preferred a writ petition being W.P.No. 1562 of 1982. The respondents issued a fresh G.O. being G.O.Ms.No. 1834 (Rev.) dated 29.10.1983 stipulating fresh and additional norms for the benefit of exemption from payment of urban land tax. The Writ Petition No. 1562 of 1982 filed by the appellant was allowed directing fresh disposal of the appellant’s application keeping in view that bodies which have been recognized as charitable institutions must be exempted by the Urban Land Tax Authorities. The appellant-Trust requested for disposal of its application in terms of the judgment and order dated 18.4.1988 passed by the High Court. While so, the respondents asked the appellant to make a fresh application along with audited statements. The appellant requested the authorities that its pending application be considered. The respondents by order dated 4.10.1988 rejected the application of the appellant vide order Lr. (Ms) No. 1896 on the ground that the appellant did not satisfy the norms stipulated in G.O.Ms.No. 1834(Rev) dated 29.10.1983. In the meanwhile, a Contempt Application was filed bringing to the notice of the High Court that the application of the appellant was decided de hors the directions of the High Court in W.P.No. 1562 of 1982 directing the authorities to dispose of the application keeping in view that bodies

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2005 Supreme(SC) 474

Important PointThe exemption under Section 27 of the Tamil Nadu Urban Land Tax Act, is not a matter of right and does not follow as a matter of course.

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Important Point
The exemption under Section 27 of the Tamil Nadu Urban Land Tax Act, is not a matter of right and does not follow as a matter of course.