IMPORTANT POINT
The receipt of capitation fee is prohibited and the admission and fixation of fee are regulated, it cannot be said that the self-financing colleges are owned or administered by the Government and the financial transactions are subjected to governmental scrutiny. So, such institutions are not entitled to get the privilege of the institution owned and administered by the Government. The petitioner institution is not the creation of a Statute; but the functioning of the institute alone is regulated by several Statutes, covering different field of activity and the Kerala Professional Colleges or Institutions (Prohibition of Capitation Fees, Regulation of Admission, Fixation of Non- exploitative fee and other measures to ensure equity and excellence in professional Education) Act, 2006 is one among various such Statutes and on that reason the self-financing Educational Institutions cannot be equated with the Educational Institutions owned and administered by the Government, having the privilege under Section 207 of the Kerala Panchayat Raj Act, 1994.

JUDGMENT :

A.K. JAYASANKARAN NAMBIAR, J.

1. These writ petitions bring to the fore the general and widespread aversion amongst our citizenry to taxes. Ingenious and varied are the submissions advanced before courts in their attempts to claim the benefit of exemption clauses that would insulate them from a levy. What is missed out often in these desperate attempts, is the general principle in taxation law that exemption provisions in a taxing statute, unlike the charging provisions therein, are interpreted strictly in favour of the revenue and against an assessee. A court hearing arguments challenging the constitutional validity of an exemption provision in a fiscal statute, strives to uphold its validity and it is only if it is impossible to do so that the provision is declared unconstitutional. The burden on those who assail the statutory provision is therefore quite heavy.

2. The petitioners in these writ petitions are self-financing educational institutions. They impugn the demand of property tax from them under Section 203 of the Kerala Panchayat Raj Act/Section 233 of the Kerala Municipality Act, 1994 [both Acts hereinafter together referred to as the ‘Acts’]. It is stated that as per the said provision, there is a levy of tax contemplated in respect of all buildings, save those that are exempted from the levy of tax under Section 207/Section 235 of the respective Acts. Section 207/Section 235 enumerates the classes of buildings that are exempted from the levy. In these writ petitions, the exemption clause that is challenged as discriminatory is Section 207(b)/Section 235(b) of the Acts, which reads as under:

Exemption from Tax, Cess etc. - (1) The following buildings and lands shall be exempted from property tax as may be levied under S.203/S.233 and service cess as may be levied under sub-section (2) of Section 200/sub-section (4) of S.230, namely:

(a)…..........................

(b) building exclusively used for educational purposes or allied purposes under the ownership of educational institutions owned by the Government, aided or functioning with the financial assistance of the Government and the hostel buildings wherein the students of the said institutions reside.

3. It is the case of the petitioners that inasmuch as their educational institutions are not housed in buildings owned by the Government or aided or functioning under the financial assistance from the Government, they are denied the benefit of the exemption granted under the Acts. They therefore impugn the exemption provision as discriminatory inasmuch as it discriminates between Government/aided educational institutions on the one hand, and unaided educational institutions on the other. It is pointed out that unaided educational institutions were not liable to pay tax under the Act till 7.10.2009, when the exemption provision was amended to exclude the said institutions from the ambit of the exemption. It is also pointed out that some of the educational institutions were established at a time when the buildings were exempted from the levy of property tax under the Acts.

4. Through their counter affidavit filed in these writ petitions, the State Government has justified the classification effected between the two classes of educational institutions in the following manner:

“7. It is submitted that primarily, education is the responsibility of the State Government. Kerala's unparalleled achievements in human development indicators are mainly attributed to the State's public interventions in health and education sectors. Education has always had a central role in determining Kerala's performance in social development.

8. Education is the catalytic tool that can transform the future of our children and youth and it plays a predominant role in this modern world. Education serves as the basis of a dignified life and this responsibility is shouldered by the Government in the interests of the larger public. Therein comes the validity of exemption to such institutions owned