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2015 (11) TMI 1794 - HC - Indian LawsGrant of exemption from property tax - Vires of Article 14 of Constitution of India - whether the grant of exemption from property tax under Sec.207 of the Kerala Panchayat Raj Act, 1994, to the buildings, used for educational purpose or allied purpose and its hostel buildings owned by the Government, aided or functioning with the financial assistance of the Government alone, in exclusion of similar buildings and hostels owned by other private management of self-financing Educational Institutions, is discriminatory and violative of Art.14 of the Constitution of India? HELD THAT:- The matter in issue involved in the instant case falls exclusively in the domain of taxation and has no connection with the academic affairs. Therefore, the extent of enquiry is confined to the fiscal status of institutions only. What is the basis of the classification? This classification is made, by granting exemption to the buildings owned or financed by the Government, on the basis that public money is utilised for the construction and maintenance of such buildings; whereas in the case of the buildings and hostels owned and maintained by private management of self-financing institutions, the public money has not been involved. Put it differently, this exemption is a privilege granted to the public money and it can be said that buildings and hostels constructed and maintained by using public money is exempted from payment of property tax and the people, as a whole, is the beneficiary of this exemption. If property tax is imposed on buildings and hostels owned by the Government, that amount also will be taken from the public fund. More importantly, exemption is given to the institutions, functioning under the administrative control of the Government and to which Governmental auditing of funds and expenditure is made compulsory; whereas , the case of self-financing institutions, such control and auditing of funds are absent. Secondly, the expression 'self financing' itself shows that such institutions are having their own fee structure, which cannot be compared with fees of a Government College. Though, it is regulated and controlled by the above referred statute, it is much higher than that of Government Colleges, wherein a nominal fee alone is collected from the students and certain rooms are reserved for students from socially and economically backward classes, in the hostels owned by the Government - Self-financing Educational Institutions form a separate class, different from the Educational Institutions owned and financed or aided by the Government and the discrimination made under Sec.207(b) of the Panchayat Raj Act is marked by intelligible differentia. Thirdly, it is the case of the petitioner that the petitioner's institution is also governed and regulated by the 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 - 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 Sec.207 of the Kerala Panchayat Raj Act, 1994. The concept of 'sovereign immunity' is the basis of this privilege of tax exemption granted to the institutions owned or aided and administered by the Government. The case put forward by the petitioner fails in the test proposed by the petitioner himself - Petition dismissed.
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