Evidently, the exemption is provided for the
reason that the properties are being used for the very
object for the advancement of which the Corporation is
statutorily enjoined to make provisions. From this
standpoint, when a clear case for exemption under section
132(1)(b) is made out, the assessee cannot be non-suited
on the general premise that the Corporation cannot
function, if its revenue is blocked. In such a case, the
vary liability to pay the tax is itself in question. {Para 25}
26] I am mindful of the position that the exemptions
in the Taxing Statues are to be strictly interpreted.
However, distinction has been made in the matter of
interpretation of beneficial exemptions, which have been
provided as an encouragement or incentive for promotion
of certain activities. Such beneficial exemptions are to
be liberally interpreted.
28] In the case at hand, on facts, it appears that
the trial Court as well as the learned District Judge
have not adverted to the question as to whether the claim
of the petitioner is, prima facie, tenable. The
petitioner has placed on record a copy of trust
registration certificate. The petitioner has also placed
on record the copies of audited balance sheets. The
petitioner could have been directed to place on record
its constitution and/or bye-laws to ascertain the object
of the trust and whether the activity is carried out for
advancement of charitable causes exclusively. It would,
therefore, be appropriate to remit the matter back to the
trial Court to decide the application for temporary
injunction afresh in the light of the aforesaid
observations.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO. 8043 OF 2020
Abhinav Manav Vikas Sanstha Vs The State of Maharashtra
CORAM : N.J.JAMADAR,J.
PRONOUNCED ON : 30.04.2021
01] Rule. Rule made returnable forthwith and, with
the consent of the learned Counsels for the parties,
heard finally at the stage of admission.
02] The challenge in this petition is to a judgment
and order passed by the learned District Judge, Latur,
dated 7th March, 2020, in Misc. Civil Appeal No.108 of
2019, whereby the learned District Judge dismissed the
appeal preferred by the petitioner-appellant and affirmed
the order passed by the learned 2nd Joint Civil Judge,
Junior Division, Latur dated 4th November, 2019,
rejecting the application [Exh.5] preferred by the
petitioner seeking injunction against the respondent/
defendant – Municipal Corporation, from taking coercive
action for recovery of the tax levied upon the
petitioner/plaintiff.
03] Shorn of unnecessary details, the background
facts leading to this petition can be stated as under :-
a] The petitioner is a public charitable trust
registered under the Maharashtra Public Trusts Act, 1950.
It imparts education to the children belonging to all
strata of society. The plaintiff-trust runs Shrikishan
Somani Prathamik Madyamik Vidyalaya at property No. B-
3/366 [old property No. R-8/153/1]. The said property is
solely used for educational purpose.
b] The defendant-Municipal Corporation levied taxes
on the property of the trust and issued demand notice on
11th September, 2017. The plaintiff lodged objection to
the levy of taxes as the plaintiff, being a public
charitable trust, the property was exempt from taxes
under section 132(1)(b) of the Maharashtra Municipal
Corporations, Act, 1949 [the Act, 1949]. The plaintiff
claims that the defendant-Municipal Corporation did not
decide the said objection. Instead, the defendant issued
a fresh demand notice on 1st of September, 2018 followed
by a final demand notice dated 8th May, 2019, calling
upon the plaintiff to pay the taxes within two days
thereof, with threat of coercive action in the event of
default.
c] The plaintiff, thus, instituted the suit, being
RCS No.301 of 2019 seeking declaration that the demand
notice dated 1st September, 2018 and the final notice
dated 8th May, 2019 are illegal and without authority and
perpetual injunction restraining the defendant-Municipal
Corporation from levying and demanding the tax on the
property of the plaintiff-trust. In the suit, the
plaintiff preferred an application for temporary
injunction [Exh.5] seeking to restrain the defendant-
Corporation from attaching and selling the properties of
the plaintiff trust towards the recovery of the taxes.
d] The defendant-Municipal Corporation resisted the
claim. It was denied that the plaintiff is a charitable
trust. The defendant-Corporation contended that the
property in question is not being exclusively used for
imparting education. The eligibility of the plaintiff to
get exemption under section 132 of the Act, 1949 was
contested. It was contended that the Civil Court has no
jurisdiction to entertain, try and decide the question in
controversy as there was a remedy of appeal under section
406 of the Act, 1949 and, thus, jurisdiction of the Civil
Court was impliedly barred.
e] The learned Civil Judge was persuaded to reject
the application for temporary injunction holding that the
question as to whether the plaintiff is a charitable
trust or not is a matter for trial and, at the interim
stage, the Corporation cannot be restrained from
recovering the tax as the Corporation cannot function or
meet its financial obligation, if its source of revenue
is blocked by an interim order.
f] Being aggrieved, the petitioner-plaintiff
preferred an appeal, being Misc. Appeal No.109 of 2019
before the District Court. The learned District Judge
was persuaded to uphold the order passed by the Civil
Judge. Placing reliance on a judgment of a learned
Single Judge of this Court in the case of Akola Municipal
Corporation Vs. Akola Gujarati Samaj, 2018 (5)
Mh.L.J.267, the learned District Judge held that the
question as to whether a property is exempt from levy of
tax under section 132(1)(b) of the Axt, 1949 is required
to be agitated under section 406 of the Act, 1949 and the
jurisdiction of the Civil Court is impliedly ousted.
Thus, the plaintiff has no prima facie case and is,
consequently, not entitled for grant of injunctive
relief.
g] Being further aggrieved by and dissatisfied with
the impugned judgment and order passed by the learned
District Judge, the petitioner-plaintiff has invoked writ
jurisdiction of this Court.
04] I have heard Mrs.Anjali Bajpai (Dube), learned
Counsel for the petitioner, Mr.G.O.Wattamwar, learned AGP
for the State and Mr.Hanmant V. Patil, learned Counsel
for respondent No.2-Municipal Corporation, at
considerable length. With the assistance of learned
Counsel for the parties, I have also perused the material
on record.
05] Mrs. Bajpai, learned Counsel for the petitioner
strenuously urged that the Courts below have fallen into
an error in rejecting the application for temporary
injunction. In the process, the Courts have totally
misconstrued the beneficial object of provisions
contained in Section 132(1)(b) of the Act, 1949. The
learned Counsel for the petitioner further urged that the
judgment of this Court in the case of Akola Municipal
Corporation (Supra), on which reliance has been placed by
the learned District Judge to hold that the jurisdiction
of the Civil Court is impliedly ousted, does not lay down
correct law.
06] Mrs.Bajpai, learned Counsel further urged that
the question is covered by a judgment of this Court in
the case of Saint Kanwarram Education & Social Welfare
Society & Ors. Vs. Municipal Corporation of City of
Amravati, 2009 (2) AIR Bom R 384, wherein this Court had
not only upheld the tenability of the suit, but decreed
the suit holding that the property in the said case,
which was also being used for educational purposes, was
exempt from levy of tax under section 132(1)(b) of the
Act, 1949.
07] Mr.Hanmant Patil, learned Counsel for respondent
No.2-Corporation urged with tenacity that the legal
position is well neigh settled that the remedy of a
person aggrieved by levy of tax under the Municipal
enactment is before the machinery provided in the said
Act. The jurisdiction of the Civil Court is impliedly
barred. The learned Counsel for respondent No.2 would
urge that the pronouncement of this court in the case of
Akola Municipal Corporation (Supra), which has considered
the exposition of law in the case of Dhulabhai and Ors.
Vs. State of M.P. and another, 1969 Mh.L.J.(S.C.)1, a
Constitution Bench judgment on the aspect of exclusion of
the jurisdiction of the Civil Court, and another judgment
of this Court in the case of Greaves Cotton Limited Vs.
Pimpri Chinchwad Municipal Corporation and Others,
2014(1) Mh.L.J.655, correctly enunciates the legal
position, in the context of the statutory remedy under
section 406 of the Act, 1949. Thus, no fault can be
found with the impugned judgment which places reliance on
the judgment in the case of Akola Municipal Corporation
(Supra) and holds that the jurisdiction of the civil
Court is impliedly ousted.
08] On a careful consideration of the submissions,
it appears that there is a cleavage of judicial opinion
as regards the tenability of the suit before the civil
Court, where the legality of the impost is challenged on
the basis of clause (b) of section 132(1) of the Act,
1949.
09] Section 132 enumerates the premises on which tax
can be levied. Section 132 reads as under :-
“132. General Tax on what premises to be levied.
(1) The general tax shall be levied in respect of all
buildings and lands is the City except.-
(a) buildings and lands solely used for purposes,
connected with the disposal of the dead;
(b) buildings and lands or portions thereof solely
occupied and used for public worship or for a public
charitable purpose;
(c) buildings and lands vesting in the Government used
solely for public purposes and not used or intended to
be used for purposes of trade or profit or vesting in
the Corporation, in respect of which the said tax, if
levied, would under the provisions hereinafter contained
be primarily leviable from the Government or the
Corporation, respectively.”
(2) The following buildings and lands or portions thereof
shall not be deemed to be solely occupied and used for public
worship or for a public charitable purpose within the meaning
of clause (b) of sub-section (1), namely -
(a) buildings or lands or portions thereof in which
any trade or business is carried on; and
(b) buildings or lands or portions thereof in respect
of which rent is derived whether such rent is or is not
applied solely on religious or charitable purposes.
(3) Where any portion of any building or land is exempt from
the general tax by reason of its being solely occupied and
used for public worship or for a public charitable purpose
such portion shall be deemed to be a separate property for the
purpose of municipal taxation.”
10] On a plain reading of section 132, it becomes
clear that the Corporation is empowered to impose general
tax on all buildings and lands in the city except three
categories of properties. First; buildings and lands
solely used for purposes connected with the disposal of
the dead, Second; buildings and lands or portions thereof
solely occupied and used for public worship or for a
public charitable purpose and Third; buildings and lands
vesting in the Government used solely for public
purposes. The controversy in hand revolves around second
category, covered by clause (b), namely, “buildings and
lands or portions thereof solely occupied and used for
public worship or for a public charitable purpose”.
11] Sub-section (2) of Section 132 carves out
further exceptions to the said exemption. It provides
that the buildings and lands or portions thereof shall
not be deemed to be solely occupied and used for public
worship or for a charitable purpose, within the meaning
of clause (b), if in such premises any trade or business
is carried on and in respect of which rent is derived,
whether such rent is or is not applied solely to
religious or charitable purpose.
12] It becomes evident that the emphasis under
clause (b) of section 132(1) is on the user of the
premises and not its ownership. The fact that the
property belongs to a public charitable trust is of no
consequence. The property is exempt from levy of tax
only when it is solely occupied and used for a public
charitable purpose. The Legislature has taken care to
use the expression “portions thereof” in clause (b). The
Legislature has addressed the contingency of a portion of
the premises being put to commercial use or to generate
rental income. Thus, under sub-section (3) of section
132, it is specifically provided that where any portion
of any building or land is exempt from the general tax by
reason of its being solely occupied and used for public
worship or for a public charitable purpose, such portion
shall be deemed to be a separate property for the purpose
of municipal taxation. This implies that a part of the
building in the occupation of a public charitable trust
may not be entitled to exemption though other part is
eligible for such exemption.
13] In the aforesaid backdrop, it may be now
apposite to consider the pronouncement of this Court in
the case of Akola Municipal Corporation (Supra). In the
said case, the question which arose for consideration was
whether the suit filed by the respondent-trust seeking
declaration and permanent injunction against the
appellant-Municipal Corporation in respect of dues
towards municipal taxes was maintainable. It was the
case of the respondent-trust that the building in
question was being used for charitable and educational
purposes. The appellant-municipal corporation assailed
the tenability of the suit on the premise that in view of
the provisions of section 406 of the Act, 1949, the Civil
Court had no jurisdiction to entertain and try the suit.
The Trial Court held that the Civil Court had no
jurisdiction. In appeal, the District Court held that
when the respondent-public trust has challenged the very
legality of the tax to be recovered by the municipal
corporation, such question could be decided by the Civil
Court.
14] In the backdrop of aforesaid facts, this Court
after adverting to the provisions contained in section
132 and 406 to 413 of the Act, 1949, framed the question
as to whether the mechanism provided under the Act, 1949
covers the dispute and the questions sought to be raised
by the respondent-public trust? After placing reliance
upon the judgment of the Constitution Bench of the
Supreme Court in the case of Dhulabhai (Supra) and
subsequent pronouncement of the Supreme Court in the
cases of Mafatlal Industries Ltd. and Ors. Vs. Union of
India and Ors., 1997(5) SCC 536 and Devinder Singh and
ors. Vs. State of Haryana and Anr., 2006(5) SCC 720, the
learned Single Judge held that the exemption claimed by a
public trust under section 132(1)(b) of the Act, 1949 is
a matter that can be agitated in appeal under section 406
of the Act, 1949. The contention that the property is
not subject to levy of tax was held to be covered by the
expression “appeals against rateable value or capital
value as the case may be or the tax fixed or charged
under this Act” used in section 406 of the said Act. It
was thus ruled that the jurisdiction of the Civil Court
is impliedly ousted by the provisions contained in
section 406 of the Act, 1949.
15] The observations of the Court in para Nos.14 to
17 are material. They read as under :-
“14. In the present case, it is the contention of the
appellant/ Municipal Corporation that Section 406 of the said
Act is a sufficient remedy for the respondent/Public Trust to
air its grievance as sought to be raised in the suit filed by
it before the Civil Court. A perusal of the aforesaid
provision shows that an appeal shall be heard and determined
by the Judge on questions pertaining to rateable value or
capital value or tax fixed or charged under the said Act. In
this case, it is the contention of the respondent/Public Trust
that the notice and bills issued by the appellant/ Municipal
Corporation charging a certain amount of tax on its building
is not sustainable because under Section 132(1)(b) of the said
Act, because such building is exempt from payment of tax for
the reason that it is being used for public charitable
purposes. In other words, the contention of the
respondent/Public Trust is that being exempt from payment of
tax the rate of such tax would be nil or that the fixing and
charging of such tax by the appellant/Municipal Corporation
ought to be nil.
15. This contention of the respondent/Public Trust can be
certainly raised in an appeal under Section 406 of the said
Act. The exemption claimed by it, is under Section 132(1)(b)
of the said Act, which is a ground that can be agitated in the
appeal. It is not as if the respondent/Public Trust is
prohibited from raising such a ground in the 17 ao34.17 appeal
or that the "Judge" does not have the authority to deal with
such a ground of challenge while exercising appellate power
under Section 406 of the said Act. The said contention of the
respondent/Public Trust is covered under the expression
"appeals against rateable value or the capital value as the
case may be or tax fixed or charged under this Act" used in
Section 406 of the said Act.
16. A perusal of the other relevant provisions of the said Act
show that under Section 410 thereof, if on hearing of an
appeal a question of law or construction of a document arises,
the Judge may draw a statement of the facts of the case and
refer such questions with his own opinion on the point for a
decision of the District Court. Under Section 411 of the said
Act, an appeal shall lie to the District Court from any
decision of the Judge in an appeal under Section 406 thereof,
by which a rateable value or capital value as the case may be
is fixed or upon a question of law or usage or the
construction of a document. The question whether tax is to be
fixed at the rate at which the Municipal Corporation claims or
it has to be nil as claimed by the respondent based on Section
132(1)(b) of the Act, can also be a subject matter of such
appeal under Section 411 of the Act. Further Section 413 of
the said Act provides that the decision of the District Court
in an appeal under Section 411 of the Act shall be final.
17. Thus, the provisions of the aforesaid Act provide a scheme
18 ao34.17 wherein the grievance of the respondent/Public
Trust can be fully taken care of and, therefore, the
jurisdiction of the Civil Court is impliedly ousted. Applying
the propositions culled out by the Constitution Bench judgment
of the Hon'ble Supreme Court in the case of Dhulabhai (supra),
it becomes evident that the aforesaid Act, with which we are
concerned in the present case, is covered under proposition
Nos.2 and 6. In the present case, there is no question of a
challenge to the vires of any provision of the aforesaid Act
and the claim of the respondent/Public Trust that the notice
and bills issued by the appellant/Municipal Corporation are
illegal because the respondent is entitled for exemption from
payment of property tax, is a question that can very well be
decided in the mechanism provided as per the aforesaid
provisions of the said Act.”
16] Mrs. Bajpai, learned Counsel for the petitioner
stoutly submitted that the aforesaid enunciation is in
conflict with the judgment of this Court in the case of
Sant Kanwarram (Supra). In the said case, the plaintiff
had challenged the levy of property tax by instituting a
suit on the ground that the property being used for
educational and charitable purposes was exempt under
section 132(1)(b) of the Act, 1949. The defendant –
Corporation resisted the claim and contended that the
suit was not maintainable in view of provisions contained
in section 406 of the Act, 1949. The Trial Court decreed
the suit. In appeal, the District Judge set aside the
decree and dismissed the suit. In the second appeal,
this Court framed the following substantial question of
law :-
“Whether the plaintiff-trust is exempted under section
132(1)(b) of Bombay Provincial Municipal Corporation Act
from payment of property tax or is it liable under
section 132(2)(b) to pay the tax?”
17] This Court, after considering the provisions of
Section 132(1), observed as under :-
“In fact there cannot be any doubt that the plaintiff is
covered by section 132(1)(b). In fact to my mind every
charitable institution or trust would be covered by section
132(1)(b). The question is whether certain property or
charitable trust falls out of the exemption clause. It it
does not fall under section 132(2)(b) it is certainly exempt.”
. Placing reliance on the judgment of the Supreme
Court in the case of Municipal Corporation of Delhi Vs.
Children Book Trust, 1992(3) SCC 390 and a Division Bench
judgment of this Court in the case of Balkrishna Vora Vs.
Poona Municipal Corporation, 1963 Mh.L.J.325, this Court
concurred with the findings recorded by the Trial Court
and held that the building in question was exempt from
property tax.
18] In the case of Balkrishna Vora (Supra), the
Division Bench of this Court was confronted with the
question as to whether a suit wherein the legality of the
levy of the tax was questioned was competent. The
municipal corporation, based on the provisions contained
in section 406 of the Act, 1949, raised a contention that
the proper machinery was provided for ventilating the
grievances against levy of tax under section 406 of the
Act and, therefore, a Civil Court would have no
jurisdiction to entertain the suit.
19] After considering the provisions of the Act,
1949 and Taxation Rules, the Division Bench held that it
is always open for the Civil Court to entertain a suit
where the question is one of the legality of the taxation
or the liability of the assessee to pay taxes. The words
used in section 406 of the Act do not cover vires of the
tax or the legality of the tax which is sought to be
levied. The following observations of Division Bench are
material and hence extracted below :-
“2. xxxxxxxxx Sub-section (1) of Section 406 of the Bombay
Provincial Municipal Corporations Act, 1949, provides for an
appeal against rateable value or tax fixed or charged under
this Act. Section 413 of the Act provides that every rateable
value fixed under the Act against which no complaint is made
as provided, and the amount of every sum claimed from any
person under the Act on account of any tax, if no appeal
therefrom is made as hereinbefore provided, and the decision
of the Judge aforesaid upon any appeal against any such value
or tax if no appeal is made therefrom under Section 411 and if
such appeal is made the decision of the District Court in such
appeal shall be final.
3. It is clear from all these provisions read together that
the intention of the Legislature in providing for this
machinery is only to enable matters of rateable value and the
fixation of the taxes on the basis of such rateable value to
be decided by the machinery provided in the Act, and if this
is the only machinery that is provided under the Act, the
case, would clearly fall within the principles of the decision
in Ankleshwar Municipality v. Chhotalal (1954) 57 Bom. L.R.
547 and Gopal Mills Co. Ltd. v. Broach Bor. Mun (1955) 58 Bom.
L.R. 300. In both these cases, it has been held that the
jurisdiction of the civil Court is excluded only to the extent
to which machinery is provided under the Act for ventilating
the grievances of the tax-payers. In the first case it was
held that it is not within the competence of a Magistrate who
hears appeals against the taxes to enter into the question as
to whether or not the tax levied was within or without the
powers of the municipality. In the second case, a right of
filing a suit in a case where the plaintiff alleged that the
tax levied or sought to be recovered was ultra vires or beyond
the powers of municipality was held to be competent; in both
the cases the principle followed being the same as mentioned
above.
4. Mr. Rane, however, relied as we stated, on Rule 16 saying
that the scope of appeal under Section 405 of the Bombay
Provincial Municipal Corporations Act, 1949, must be decided
by reference to what the Commissioner can decide, as was done
in Ankleshwar Municipality v. Chhotalal. It is indeed true
that we must also take the powers of the Commissioner into
account while deciding the scope of the appeal under the Act.
However, the words used in Section 406(1) of the Act, in our
view, do not cover the vires of the tax or the legality of the
tax which is sought to be levied. It provides for appeals
against rateable value or tax fixed or charged, and, in our
view, looking to the general scheme of the Act, by the words
"tax fixed or charged" what was meant was the amount or
quantum of tax and not the legality of the same. This view is
further strengthened by Section 413 which gives finality to
the rateable value fixed under the Act and the amount or the
sum claimed and nothing else. Exclusion of the jurisdiction of
the civil Court is not to be lightly inferred. There is no
express provision by which the jurisdiction of the civil Court
is excluded in all matters that the Commissioner may be able
to decide. Moreover, finality is given only to decisions
regarding the rateable value and the amount of tax and not to
any other matter that the Commissioner may incidentally
decide. It seems that the scope of the disputes that fall to
be decided, under the rules of assessment and in appeals under
Sections 406 and 411 was intended to be limited and for a good
reason. There is no scope for testing the decision in any
superior Courts with the result that the parties may in
complicated cases suffer substantially. It seems to us,
therefore, that it is always open for the civil Court to
entertain a suit where the question is one of legality of the
taxation or the liability of the assessee to pay the tax.
20] The aforesaid judgment of the Division Bench was
brought to the notice of this Court in the case of Akola
Municipal Corporation (Supra) to lend support to the
contention that a suit questioning the legality of levy
of tax was tenable. The Court distinguished the
aforesaid judgment in the case of Balkrishna Vora (Supra)
by observing that in the said case, the Court was
concerned with the question as to whether the tax levied
or sought to be recovered was ultra vires the powers of
the Corporation, and observed as under :-
“19. In the present case, the learned Counsel for the
respondent/Public Trust has heavily relied upon the judgment
of this Court in the case of Balkrishna Vora Vs. Poona
Municipal Corporation (cited supra). In the aforesaid case,
the Court was concerned with the question that the tax levied
or sought to be recovered was ultra vires the powers of the
Corporation. In such a situation, it was held by this Court
that the machinery provided under the aforesaid Act would not
be sufficient for the assessee to air his grievance and
thereupon, the Court held that the jurisdiction of the Civil
Court could not be said to have been ousted and that the suit
was maintainable. But, in the instant case, the nature of the
grievance of the respondent/Public Trust is not such that it
cannot be redressed under the machinery of the aforesaid Act.
Therefore, the reliance placed on the said judgment of this
Court is misplaced.”
21] The aforesaid observations, in my considered
view, do not bring out the full import of the judgment of
the Division Bench in the case of Balkrishna Vora
(Supra). The Division Bench has approved the earlier
judgments in the cases of Ankleshwar Municipality Vs.
Chhotalal and Gopal Mills Co. Ltd. Vs. Broach Bor. Mun.,
wherein it has been held that the jurisdiction of the
civil Court is excluded only to the extent to which
machinery is provided under the Act for ventilating the
grievances of the tax payers. The Division Bench went on
to observe in clear and explicit terms “the words used
in section 406(1) of the Act, in our view, do not cover
the vires of the tax or the legality of the tax which is
sought to be levied. It provides for appeals against
rateable value or tax fixed or charged, and in our view,
looking to the general scheme of the Act, by the words
“tax fixed or charged” what was meant was the amount or
quantum of tax and not the legality of the same.”
22] In view of the clear and explicit enunciation by
the Division Bench that the expression “tax fixed or
charged” implies the amount or quantum of tax and not the
legality of the same, it may not be in consonance with
law to hold that the jurisdiction of the Civil Court is
impliedly ousted as appeal under section 406 is tenable
against “tax fixed or charged” under the Act, 1949”. In
any event, in the case of Akola Municipal Corporation
(Supra), the aforesaid Division Bench judgment in the
case of Balkrishna Vora (Supra) was sought to be
distinguished on facts, as is evident from the
observations in para No.19, extracted above.
23] In view of the pronouncement of the Division
Bench in the case of Balkrishna Vora (Supra) that the
words used in Section 406(1) of the Act do not cover the
vires of the tax or the legality of the tax, which is
sought to be levied, I find it rather difficult to accede
to the submissions on behalf of respondent No.2 –
Municipal Corporation, which found favour with the
learned District Judge, that the jurisdiction of the
Civil Court is ousted where the legality of the impost is
assailed on the basis of exemption, from levy of tax,
claimed under the provisions of Section 132(1)(b) of the
Act, 1949.
24] The matter can be looked at from a slightly
different perspective. As indicated above, under section
132(1) of the Act, only those properties which are put to
specified use are exempt from levy of tax. The
Legislative intent to exempt the properties which are
solely used for specified purposes has a nexus with the
obligatory and discretionary duties of the Corporation.
To illustrate, under clause (a) of sub-section (1) of
Section 132, the buildings and lands used solely for the
purposes connected with the disposal of the dead are
exempt from tax. Section 63(11) of the Act, 1949 casts
an obligatory duty on the Corporation as regards the
disposal of the dead as under :-
“(11) the maintenance, change and regulation of places for the
disposal of the dead and the provision of new places for the
said purpose and disposing of unclaimed dead bodies;”
. In the context of the exemption for lands and
buildings solely occupied for educational purposes,
clause (15) of Section 63 again casts an obligatory duty
on the corporation to maintain, aid and suitably
accommodate schools for primary education; whereas under
section 66(21), the Corporation may provide for the
furtherance of educational objects other than those
mentioned in clause (15) of section 63 and make grants to
educational institutions within or without the City.
25] Evidently, the exemption is provided for the
reason that the properties are being used for the very
object for the advancement of which the Corporation is
statutorily enjoined to make provisions. From this
standpoint, when a clear case for exemption under section
132(1)(b) is made out, the assessee cannot be non-suited
on the general premise that the Corporation cannot
function, if its revenue is blocked. In such a case, the
vary liability to pay the tax is itself in question.
26] I am mindful of the position that the exemptions
in the Taxing Statues are to be strictly interpreted.
However, distinction has been made in the matter of
interpretation of beneficial exemptions, which have been
provided as an encouragement or incentive for promotion
of certain activities. Such beneficial exemptions are to
be liberally interpreted.
27] A profitable reference, in this context, can be
made to a judgment of the Supreme Court in the case of
Commissioner of Customs (Preventive), Mumbai Vs. M.
Ambalal and Company, (2011) 2 SCC 74, wherein a
distinction is made between exemptions which are to be
strictly interpreted and the beneficial exemptions. The
observations in para No.16 are instructive and thus
extracted below :-
“16. It is settled law that the notification has to be read
as a whole. If any of the conditions laid down in the
notification is not fulfilled, the party is not entitled to
the benefit of that notification. The rule regarding
exemptions is that exemptions should generally be strictly
interpreted but beneficial exemptions having their purpose as
encouragement or promotion of certain activities should be
liberally interpreted. This composite rule is not stated in
any particular judgment in so many words. In fact, majority
of judgments emphasise that exemptions are to be strictly
interpreted while some of them insist that exemptions in
fiscal statues are to be liberally interpreted giving an
apparent impression that they are contradictory to each other.
But this is only apparent. A close scrutiny will reveal that
there is no real contradiction amongst the judgment at all.
The synthesis of the views is quite clearly that the general
rule is strict interpretation while special rule in the case
of beneficial and promotional exemption is liberal
interpretation. The two go very well with each other because
they relate to two different sets of circumstances.”
[emphasis supplied]
28] In the case at hand, on facts, it appears that
the trial Court as well as the learned District Judge
have not adverted to the question as to whether the claim
of the petitioner is, prima facie, tenable. The
petitioner has placed on record a copy of trust
registration certificate. The petitioner has also placed
on record the copies of audited balance sheets. The
petitioner could have been directed to place on record
its constitution and/or bye-laws to ascertain the object
of the trust and whether the activity is carried out for
advancement of charitable causes exclusively. It would,
therefore, be appropriate to remit the matter back to the
trial Court to decide the application for temporary
injunction afresh in the light of the aforesaid
observations.
29] The petitioner shall file the copies of the
constitution and/or bye-laws and the respondent No.2-
defendant would be at liberty to file an additional
say/affidavit to deal with the material to be placed on
record by the plaintiff-petitioner.
30] In the exigency of the prevailing situation,
where the expeditious hearing of the application for
temporary injunction may not be possible, it would be in
the fitness of things to direct the defendant No.2-
Municipal Corporation not to take coercive action to
recover the amount of tax till decision of the
application for temporary injunction, subject to the
petitioner depositing a sum of Rs.40,000/- before the
Civil Court within a period of four weeks from today. The
said deposit would abide the order which may be
eventually passed by the trial Court.
31] The upshot of the aforesaid consideration is
that the petition deserves to be partly allowed.
32] Hence, the following order :-
O R D E R
The petition stands partly allowed.
The impugned order passed by the learned
District Judge in Misc. Civil Appeal No.108 of
2019 and the order passed by the learned Civil
Judge dated 4th November, 2019 rejecting the
application for temporary injunction [Exh.5]
stand quashed and set aside.
The application for temporary injunction [Exh.5]
stands restored to the file of learned Civil
Judge.
The Civil Court shall decide the application for
temporary injunction [Exh.5] afresh after
providing an opportunity of hearing to the
petitioner and respondent No.2.
The Civil Court shall make an endeavour to
decide the application for temporary injunction
[Exh.5], as expeditiously as possible.
The respondent No.2-defendant shall not take
coercive action to recover the amount of tax
against the petitioner till the decision on the
application for temporary injunction [Exh.5],
subject to the petitioner/plaintiff depositing a
sum of Rs.40,000/- [Rupees Forty Thousand]
before the Civil Court, within a period of four
weeks from today.
The said deposit shall abide the order, which
may be eventually passed by the Civil Court.
Rule made absolute in aforesaid terms.
No costs.
[N.J.JAMADAR,J.]
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