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2025 Supreme(Kar) 2913
IN THE HIGH COURT OF KARNATAKA,AT DHARWAD
ANANT RAMANATH HEGDE, J.
Sidramappa Danigond Memorial Trust Terdal, Represented By Its Chairman, Dr. Mahaveer S/o. sidramappa danigond – Appellant
Versus
The State Of Karnataka, Represented By Its Secretary, Department Of Urban Development – Respondent
Writ Petition No. 101312 Of 2024 (LB-RES)
Decided On : 17-11-2025
For the Appellant : Smt. Lakshmy Iyengar, Senior Counsel Adv. For Sri. Sunil S. Desai, Adv.
For the Respondent: Sri. Ashok T. Kattimani, Aga, Sri. Mahantesh R. Patil, Adv.
Educational institutions and attached hospitals are exempt from property tax under Section 94(1-A) of the Karnataka Municipalities Act when not conducted for profit.
Headnote:(A) Karnataka Municipalities Act, 1964 - Section 94(1-A)(i)(ii) - Exemption from property tax - Petition filed against demand notices for property tax from municipal council regarding buildings of educational institutions and a hospital - Claim for exemption based on usage for educational and non-profit purposes - Court held that if used for educational institutions and not for profit, exemption applies. (Paras 7, 23, 34)
(B) Statutory interpretation - The definition of 'attached teaching hospital' under the Indian Medicine Central Council Act, 1970 and the Regulations, 2024 indicates that hospitals attached to educational institutions are considered part of educational entities - Consequently, tax exemptions extend to buildings and vacant lands utilized for such purposes. (Paras 25, 28)
(C) Judicial precedents - Court referred to previous judgments indicating similar exemptions for charitable and educational institutions - Dismissed arguments against exemption on commercial basis, affirming educational purpose is paramount. (Paras 12, 15, 35)
Facts of the case:
The petitioner is a Trust managing multiple educational institutions including an Ayurvedic Medical College, claiming exemption from property tax based on usage for educational purposes. Respondent issued demand notices for substantial tax amounts.
Findings of Court:
Buildings and land used exclusively for educational institutions and associated facilities are exempt from property tax as per Section 94(1-A) of the Act.
Issues: Whether the petitioner is entitled to property tax exemption under the Act for buildings associated with educational and medical institutions.
Ratio Decidendi: Court found that hospitals attached to medical colleges serve educational purposes and thus come under the exemption provisions, regardless of fee collection.
Result: Writ Petition is allowed; demands quashed.
| Table of Content |
|---|
| 1. petitioner challenges property tax communications. (Para 2 , 3 , 4 , 5 , 6) |
| 2. claim of tax exemption based on education. (Para 7 , 8 , 11 , 12) |
| 3. counterargument on charitable status for tax. (Para 13 , 14 , 15) |
| 4. court examines tax exemption criteria. (Para 16 , 18 , 20 , 22 , 23) |
| 5. holds hospital part of educational institution. (Para 24 , 30) |
| 6. previous case law referenced for decision. (Para 32 , 34 , 35) |
| 7. petition allowed, communications quashed. (Para 40 , 41) |
ORDER :
ANANT RAMANATH HEGDE, J.
1. Heard the learned Senior counsel appearing for the petitioner as well as the learned counsel appearing for respondent No.4.
2. This petition is filed assailing the communication dated 17.02.2024 marked at Annexures-F and F1 and also the demand notice dated 07.02.2024 marked at Annexures-G to G12. Petitioner has also sought to quash the communication dated 07.08.2025 marked at Annexure–H. All these communications/ notices are issued by respondent No.4, the Town Municipal Council, Terdal.
3. In terms of the communication at Annexures-F and F1, respondent No.4 demanded Rs. 2,45,10,538/- towards arrears of property tax, and in terms of the communication dated 07.02.2024 respondent No.4 demanded property tax of Rs. 1,11,00,645. These two notices/communications pertain to buildings built by the petitioner, in two different survey numbers.
4. Annexure-G series notices are issued mentioning the break-up of the property tax payable by the petitioner. Notice at Annexure G-12 is said to be the property tax demanded in respect of an vacant space. Rest of the notices at Annexures-G to G-11 are issued demanding property tax in respect of the buildings. Annexure-H - endorsement is issued by the Chief Officer, Terdal Municipality during the pendency of the present petition.
5. Petitioner is a Trust registered under the Indian Trusts Act, 1882. Petitioner claims that it is running the following educational institutions:
1) B.A.M.S. Ayurved medical college
2) Para medical course
3) College of commerce
4) Primary school
5) B.Ed College
6) ITI College etc.
7) Danigond College of Commerce B.com, Terdal
8) Dr.Sidhant Danigond Central School-CBSE Terdal
9) Danigond P.U science College, Terdal
10) Danigond Post Graduation Centre M.D/M.S, Terdal
11) Danigond College of Pharmacy, Terdal
12) Danigond college of Nursing, Terdal
13) Danigond College of Physiotherapy, Terdal
14) Padma Hospital, Terdal
15) SDM Trust Padma Ayurvedic Hospital and research Centre, Terdal, further, the petitioner trust property also comprises of Hostel, Mess, Auditorium, Canteen, Sport building both indoor and outdoor, staff quarters, pharmacy building, central store, departmental store, recreation hall, Temples and other buildings exclusively for the use of the petitioner trust.
6. The petitioner states that the vacant space as well as the buildings are used to effectively run the educational institutions referred to above. Certain buildings and vacant space are used for hostel, mess, auditorium, canteen, sport both indoor and outdoor, staff quarters, pharmacy, central store, departmental store, recreation hall, Temple.
7. Learned Senior counsel appearing for the petitioner would submit that since the premises is used essentially for running educational institutions, the petitioner/institution is exempt from paying property tax under Section 94 (1-A)(i)(ii) of Karnataka Municipalities Act, 1964 (‘Act, 1964’).
8. Learned Senior Counsel would urge that, to run an Ayurvedic Medical College, there has to be a hospital attached to the college. This is the mandate under the Indian Medicine Central Council Act, 1970 and the Rules framed thereunder and also under the National Commission for Indian System of Medicine (Minimum Essential standards, assessment and rating for undergraduate Ayurveda colleges and attached teaching hospitals) Regulations, 2024 (‘Regulations, 2024’) which are framed under Section 55 of National Commission for Indian System of Medicine Act, 2020 (for short ‘Act, 2020’
