Allahabad High Court Stays Demand Of Rs. 47 Crores Service Charge Against IIT Rorkee

Recently, the Allahabad High Court has granted interim relief to Indian Institute of Technology, Roorkee against the demand of service charge amounting to Rs. Rs. 47,06,67,775/- raised by the Municipal Corporation, Saharanpur.

The Municipal Commissioner, Municipal Corporation, Saharanpur, raised certain demand notices against IIT Rorkee imposing service charge of Rs. 3,26,43,795/- per annum retrospectively with effect from the year 2012 till the year 2024-2025, amounting to a total sum of Rs. 47,06,67,775/-.

Counsel for petitioner argued that the demand notices were issued based on an Office Memorandum of Government of India, Ministry of Finance Letter No. 4(7)-P/65 dated 29.03.1967 where levy of service charges was provided for 'properties of the Union' which were exempted from State taxation under Article 285 of the Constitution.

Reliance was placed on Banaras Hindu University v. State of U.P. and others where the division bench of the Allahabad High Court in a similar controversy held that office memorandum only applied to the Union and its properties while the Indian Institute of Technology, Kanpur and other Universities being statutory bodies under the Central Government Act have a different identity and cannot be treated as Union. It was held that though service charge cannot be levied on such institutions, but municipal taxes can be imposed under the enactments of specific municipal corporations.

Further, it was stated that “education institutions are not liable to be taxed by the municipal corporations nor any services of the municipal corporation are being availed by the petitioner-Institute and therefore, also the demand is unwarranted.”

While directing the parties to exchange affidavits, the bench comprising of Justice Anjani Kumar Mishra and Justice Jayant Banerji directed that no recovery shall be made from the institution pursuant to the impugned notice.

Case Title: The Indian Institute Of Technology v. State of U.P. and Another [WRIT - C No. - 22611 of 2024]

Counsel for Petitioner: Rohan Gupta

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