w w w . L a w y e r S e r v i c e s . i n

Indian Institute of Management, Bangalore v/s State of Karnataka, Dept. of Housing & Urban Development, Bangalore & Another

Company & Directors' Information:- KARNATAKA URBAN DEVELOPMENT CORPORATION LIMITED [Active] CIN = U45202KA1970ULL001975

Company & Directors' Information:- S S M HOUSING (KARNATAKA) PRIVATE LIMITED [Active] CIN = U45201KA2006PTC038284

Company & Directors' Information:- H S MANAGEMENT INSTITUTE PRIVATE LIMITED [Active] CIN = U74140DL2005PTC141500

Company & Directors' Information:- A S INSTITUTE OF MANAGEMENT PRIVATE LIMITED [Strike Off] CIN = U80302DL2005PTC140941

    Writ Petition No. 18195 of 2013 (LB-BMP)

    Decided On, 15 March 2016

    At, High Court of Karnataka


    For the Petitioner: T.R. Subbanna, Senior Counsel a/w Divya Krishna, Advocate. For the Respondents: R1, V.G. Bhanuprakash, AGA, R2, N. Prashanth Chandra, Advocate.

Judgment Text

(Prayer: This Writ Petition is filed under Articles 226 & 227 of the Constitution of India praying to quash the order dated 25.02.2013 of the 2ND respondent vide Annexure-P and direct the 2ND respondent to receive only service charges as paid by the petitioner under the SAS Scheme.)

1. Petitioner is before this court to issue a writ of certiorari or any other similar writ or direction to quash the order bearing number Jam. As (Bo)/PR/77/12-13 dated 25.02.2013 passed by the 2nd respondent vide Annexure-P and to issue a writ of mandamus directing the 2nd respondent – Corporation to receive only service charges as per SAS Scheme.

2. Sri. K.N.Subba Rao, learned Senior Counsel appearing for the petitioner submits that petitioner is a public institution imparting education in Management Studies and Research and is wholly controlled and managed by the Ministry of Human Resource and Development, Government of India. The petitioner – institution was established in the year 1973 entirely with the budgetary support of the Government of India, and since then it is one of the world class premier institutes for Management education and Research, promoting Managerial Excellence in the country. It falls under the general exemptions under Section 110 (i) of the Karnataka Municipal Corporations Act, 1976 (‘Act’ for short) which provides for exemption. Firstly since the petitioner is providing student hostels which are not established or conducted for profit. Secondly, the institution is meant for educational purposes by recognized educational institutions. Therefore, the entire institutions and establishments within the campus of the petitioner-institution are to be treated for the purpose of general exemption under Section 110 of the Act.

3. Further he submits that notwithstanding the same, the 2nd respondent-Corporation without authority has issued demand notice dated 10.01.2012 directing the petitioner-institution to pay the service charges vide Annexure-J amounting to Rs.7,63,478/- within thirty days to the office of the 2nd respondent –Corporation. Since the petitioner-institution comes under exemption clause, a letter was addressed to the 2nd respondent-Corporation on 14.02.2012 and brought to the notice of the 2nd respondent-Corporation that it falls under exemption clause and it is applicable to the petitioner-institution and it cannot be charged with service charges. One more representation was also made on 02.02.2013 requesting for exemption from paying property tax and the same has been acknowledged by the respondent. On acknowledging the representation of the petitioner-institution, an enquiry notice was issued by the 2nd respondent-Corporation dated 15.02.2013 directing the petitioner to appear on 22.02.2013 at 3.00 P.M. Though the petitioner appeared before the 2nd respondent-Corporation, but has not been provided any opportunity and Annexure-P has been issued rejecting the claim of the petitioner for exemption and confirming the demand notice for payment of service charges vide Annexure-P.

4. It is the further submission of the learned Senior counsel that Annexure-Q, a certificate dated 19.03.2013 was placed before the 2nd respondent-Corporation issued by the Deputy Secretary, Government of India, wherein, it has been referred to as follows:-

'the petitioner-institution comes under the administrative control of Ministry of Human Resource Development and governed by its board of Governors. IIM Bangalore is a registered Society under Karnataka Societies’ Registration Act, 1960, which imparts management education research and research. The buildings and vacant lands used by IMB belongs to the Central Government and is used exclusively for the purposes of the Government and not used for or intended to be used for residential purpose based on the rent collection or commercial purposes.'

Hence, he submits that therefore, the petitioner-institution belongs to the Central Government and to allow this petition.

5. On the other hand, learned counsel for the 2nd respondent-Corporation submits to dismiss this writ petition. He submits that the case of the petitioner squarely comes under the provisions of Section of Section 110 (i) and (j) of the Act. Hence the service charges has to be paid to the Corporation and certificate referred to by the petitioner-institution at Annexure-Q dated 19.03.2013 issued by the Deputy Secretary, Government of India is no0t applicable to the facts and circumstances of the case. Therefore, it cannot be considered for the purpose of exemption from levying service charges, as it is stated in the certificate. Only if the said land belongs to the Government of India, if it is granted under Article 285 of the Constitution of India or by the Parliament that too there should have been a law/enactment is pass din the Parliament providing exemption from all the taxes imposed by the State or by any authority within the state. Since no such law has been passed by the Parliament exempting the petitioner-institution, it is liable to pay the service charges as provided under Section 110(i) and (j) of the Act.

6. Learned Government Advocate for the first respondent also supports the submission of the learned counsel for the second respondent Corporation. He submits that since the exemption is not placed before the Corporation as is provided by the Constitution of India they cannot seek exemption.

7. Heard Sri. K.N.Subba Rao, learned Senior Counsel for the petitioner-institution, Sri S.N.Prashanth Chandra, for the 2nd respondent Corporation and also Sri. BhanuPrakash, learned Government Advocate for the 1st respondent-State and perused the records.

8. On receipt of notice dated 10.01.2012 the petitioner-institution was directed to pay the service charges for about 7 items to the tune of 7,63,478/-. Thereafter, a representation has been made to the Corporation seeking exemption under Section 110(j) in provision No.2. The entire structures, buildings, hostels etc., situated within the campus of the petitioner institution, has to be treated as educational institution for the purpose of sub-clause 110-(a) and (b) of Section 110 of the Act which reads thus:-

'Section 110-building or lands exclusively used for:-

(a) students hostels which are not established or conducted for profit;

(b) educational purposes by recognized educational institutions.'

Therefore, petitioner should have been exempted and rejecting the case of the petitioner is arbitrary and contrary to Section 10 (i) and (j). As per the notice dated 15.02.2013, the petitioner appeared before the authorized officer on 22.02.2013 and he was not heard. But toe and submissions cannot be accepted since in the representation made pursuant to the enquiry noticed dated 10.01.2012 they have not stated as to what are the establishments/buildings/lands which fall under exemption clause, sub clause (i) (a) and (b) which provides exemption for educational institutions. In view of the same, item No. 4) – M.D.C. phase-I and item No.5) – M.D.C Phase-II, Item No.6) – Hostel Blocks, Item No. 7) Executive Block, and Item No.8) – New Hostel (KPAL) may be considered for exemption under educational institutions for the purpose of exemption. Those particulars were not place din the representation. Rightly, there was not occasion for the 2nd respondent-Corporation to consider the same. Annexure-Q, certificate relied upon by the petitioner issued on 19.02.2012 addressed by the Deputy Secretary to the Government of India, it is not an exemption for the purpose of Article 285 of the Constitution of India. Second proviso to Section 110 which would have been applicable if it were a certificate issued for the purpose of sub-clause (j) of Section 110 of the Act in case if it is exclusively used by the Government. In this case the service charges demanded from the petitioner and to claim that the property belongs to the petitioners, no title deeds or exemption certificates are produced for that purpose. In Annexure-Q, it is stated that petitioner is a society registered under Karnataka Societies Registration Act, 1960. Therefore, it has to be understood that it is a part of Government of Karnataka. It further states that buildings and lands used by petitioner-institution belongs to the Central Government and used exclusively for the purpose of Government that is also not fortified by producing any document. If the property of the petitioner exclusively belongs to the Central Government, it is appropriate to obtain an order or an enactment by the Parliament under Article 285 of the Constitution of India. In the circumstances, the certificate dated 19.02.2013 will not help the petitioner. However, the exemption of educational institution for the purpose of sub-clause (i) (a) (b) of Section 110 it is for the petitioner-institution to place the materials before the 2nd respondent

Please Login To View The Full Judgment!

Corporation. 9. Therefore, for the above said purpose, the case of the petitioner is remitted to the 2nd respondent-Corporation for reconsideration reserving liberty to the petitioner to place all materials before the Corporation for claiming exemption. In order to facilitate, the 2nd respondent to issue notice to the petitioner for the said purpose. Therefore, Annexure-P dated 25-2-2013 passed by the 2nd respondent – Corporation is hereby quashed. The 2nd respondent-Corporation is directed to pass fresh order/demand notice on considering the representation made by the petitioner. Respondent is reserved liberty to consider the case of the petitioner and pass appropriate orders in accordance with law, subject to payment of 25% of the total demand made by the Corporation within a period of four weeks from the date of receipt of certified copy of this order. Contentions of all the parties are kept open. Petition stands disposed of accordingly.