SYED SHAH MOHAMMED QUADRI, J.

( 1 ) THE petitioner in these two writ petitions is a residential educational institution. Itchallenges the validity of the demand notice claiming property tax in respect of the building in which the school isbeing run. The demand in W. P. 14122/89 relates to the assessment years 1984-85 to 1988-89 and the demand notice for the assessment years 1994-95 and 1995-96 is the subject matter of w. P. No. 3282/96.

( 2 ) AS the questions of fact and law in these two writ petitions are common they are heard together and are being disposed of by a common order.

( 3 ) THE petitioner educational institution is run by a trust called vasishta educational Trust which is a registered trust. It is stated that the building was constructed by contribution from the trustees and by raising funds and obtaining loan. The school started functioning in the year 1981. It is affiliated to the Indian Council of Secondary School Examination, New Delhi; Courses prescribed by the said Council are taught in the school. The petitioner contends that the building is within the limits of the Gram Panchayat, Basinikonda in pamarahgaripalle. Basinikonda Gram Panchayat demanded house tax from the petitioner which is contrary to Rule 5 (c) of the A. P. Gram Panchayat Rules issued in G. O. Ms. No. 282 dt 12-3-1965. As under the said rule the building is exempt from house tax, the demand is said to be illegal and unsustainable in law.

( 4 ) THE Sarpanch of the Gram Panchayat filed counter-affidavit stating that during the year 1984-85 general revision of house tax assessment was conducted in Basinikonda Gram Panchayat and accordingly house tax was fixed for the building of the petitioner in question which the petitioner was due. The petitioner institute is due a sum of Rs. 8,442-20 for the years 1984-85 to 1988- 89 and therefore the demand notice was issued. It is stated that the institute is not a publicinstitute catering to the needs of common men and children. It is run on commercial lines and is serving the needs of wealthy people. According to the fee structure appearing in the prospectus, the children seeking admission from I to X standard have to pay annual fee of Rs. 7,500/- per year which includes Boarding and Lodging, tuition and care taking of child. The day- boarders have to pay Rs. 4,000/- per year. In addition to that an admission fee of Rs. 1,000/- is collected. A student will have also to make a deposit of rs. 5,000/- interest free, at the time of admission which is liable to be refunded at the time of the child leaving the institution. Other amounts representing cash deposit of Rs. 1,000/- and a further sum of Rs. 500/- for child s requirement of stationery, text-books etc. will also be recovered. In these circumstances, it is contended that Rule 5 (c) has no application to the facts of the case.

( 5 ) SRI K. V. Reddy, learned counsel for the petitioner, submits that in view of clause (c) of Rule 5 of the A. P. Gram Panchayat Rules, the educational institutions are exempt from house tax and therefore the demands are illegal and are liable to be quashed.

( 6 ) SRI Bathula Venkateswara Rao, learned Standing Counsel for the respondent, on the other hand submits that the petitioner can claim exemption only when it is imparting free education and catering to the needs of the common men; Where the educational institute is run on commercial lines rule 5 (c) has no application.

( 7 ) THE short question that arises for consideration is whether the buildings occupied by educational institutions are exempt from payment of tax under rule 5 (c) of the Rules relating to levy of house tax. The A. P. Gram Panchayats act provides for levy of house tax under Section 70 of the Act. In exercise of the powers conferred under Section 70 the Governor framed rules relating to levy of house tax. They were issued in G. O. Ms. 282, PR dt. 12-3-65 (hereinafter referred to as the House Tax Rules ). By Section 276 of the A. P. Panchayat Raj act, 19

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