Educational Institutions Not Required To Obtain Yearly Certificate For Claiming Property Tax Exemption Under Karnataka Municipalities Act: High Court

The Karnataka High Court has held that under Section 94(1-A)(i) of the Karnataka Municipalities Act, an Educational Institution is exempted from payment of property taxes and the institute is not required to obtain an exemption certificate, every year. It said the exemption applies to all the buildings which are used for the purpose of running educational institutions and/or incidental activity.

A single judge bench of Justice Suraj Govindaraj sitting at Kalaburagi bench dismissed the petition filed by erstwhile City Municipal Council, Bijapur, challenging an order of the appellate court which held that the respondent who is an educational institution is exempted from payment of property taxes.

Thus the demand notice issued by the Council to the respondent under Section 142(1)(v) of the Act, calling upon them to make payment of arrears of municipal tax was negated.

The Council argued that there is no blanket exemption which is available to an educational institution in terms of Section 94(1-A)(i) of the Act, and it is required that necessary application is made by an assessee to the CMC for grant of such exemption on a year to year basis which has to be considered by the CMC and if found satisfying the relevant criteria, exemption certificate could be issued.

It was contended that without such an exemption certificate, the assessee cannot on its own claim exemption from making payment of property tax.

The respondent contended that under Section 94(1-A)(i) exemption is provided for all educational institutions. This exemption being absolute, the question of applying for any exemption certificate would not at all arise. There is an automatic exemption under Section 94(1-A)(i) of the Act, it was argued.

On referring to Section 94 (1-A) (i) the bench said “A perusal of the said provision does not indicate the requirement of any certificate as contended by learned counsel for the petitioner insofar as the exemption claimed is under Section 94(1-A)(i) of the Act of 1964.”

It said “As regards the exemption contained under Section 94(1-A)(a, c and d) of the Act of 1964 that certain conditions are to be satisfied and insofar as the exemption under Section 94(1-A)(j) of the Act of 1964, a certificate is required to be issued by the Government or any officer duly authorized by the Government that a building or vacant lands belonging to the Central Government or any State Government is used for the purposes of the State Government and not used for any residential or commercial purposes. Section 94 (1) or Section 94(1-A) of the Act of 1964, does not require any certificate to be issued by any authority.”

Following which it dismissed the petition and held “The exemption to an educational institution as regards payment of property tax being provided under Section 94(1-A)(i) of the Act of 1964, the Revisional Court has rightly applied the same and revised the order passed by the JMFC-I, Bijapur exempting the payment of property tax by the respondent.”

Case Title: The City Municipal Council And Akbar Patel

Case NO: WRIT PETITION NO. 87922 OF 2012

Citation No: 2023 LiveLaw (Kar) 230

Date of Order: 23-05-2023

Appearance: Advocate Amresh S Roja for Petitioner.

Senior Advocate Ameet Kumar Deshpande for Advocate Ganesh S Kalburagi for respondent.

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