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2012 DIGILAW 827 (PAT)

Notre Dame Academy, Munger v. State of Bihar

2012-06-18

RAVI RANJAN

body2012
ORDER Petitioner seeks quashing of the order dated 11.08.2004 passed by the Secretary, Urban Development Department, Government of Bihar, Patna (respondent no.2), whereby he has rejected its application for exemption from tax on holding and further, seeks direction to the respondent-authorities to declare that the petitioner’s holding is being used for charitable educational purpose and, as such, is eligible for exemption under Sub-Section 3 of Section 84 of the Bihar Municipal Act, 1922. 2. This is the third time the petitioner has moved this Court. On the first occasion, the petitioner had approached this Court by filing C.W.J.C. No.5964 of 2000 (Notre Dome Academy and anr. Vs. State of Bihar & others) claiming to be a charitable educational institution and eligible for grant of exemption in payment of municipal charges as per provision as contained in Section 84 (3) of the Bihar Municipal Act, 1922, Act. In fact, it is stated in the writ petition that on 03.09.1981, the Principal of the institution applied to the Executive Officer, Munger for exempting the petitioner’s holding from payment of Municipal tax under the aforesaid provision. The concerned Municipality stood superseded at that point of time and the powers were vested in the Special officer appointed by the State Government who, vide letter dated 4.2.1991 as contained in Annexure-5, had forwarded the application of the petitioner to the Government for consideration of such exemption. However, the matter remained pending for long time which had compelled the petitioner to prefer the aforesaid writ application. The aforesaid writ application was disposed of on 14.07.2000 directing the appropriate authority of the State Government to consider the application of petitioner no.1 (the sole petitioner herein) for grant of exemption from payment of Municipal taxes and pass a reasoned order within a period of three months. The respondent no.2 disposed of the matter rejecting the claim of the petitioner vide an order dated 15.12.2000, as contained in Annexure-7, on the ground that altogether about one thousand students are studying in the School and the petitioner is charging Rs.300/- to Rs.500/- from each of the students. Thus, the Special officer of the Munger Municipality had come to the conclusion that the petitioner’s claim of being a charitable institution was not tenable. The aforesaid order was again challenged by the petitioner along with the Society by filing C.W.J.C. No.522 of 2001 (Notre Dame Academy and Anr. Vs. Thus, the Special officer of the Munger Municipality had come to the conclusion that the petitioner’s claim of being a charitable institution was not tenable. The aforesaid order was again challenged by the petitioner along with the Society by filing C.W.J.C. No.522 of 2001 (Notre Dame Academy and Anr. Vs. State of Bihar & ors) which was disposed of on 16.12.2003. In the aforesaid case this Court had opined that respondent no.2 had erred in rejecting the prayer of the petitioner only on the ground that the institution was charging tuition fee from the students as, even if tuition fee was being charged, an institution could be a charitable one if such income was being utilized for its maintenance. However, if the fee was being charged for earning profit that could not be termed as a charitable purpose. This Court has observed that the Secretary, vide the impugned order, had rejected the prayer without going into the aforesaid question, which was the main issue to be decided. The matter was remitted back to respondent no.2 for examining as to whether the purpose of the School was to earn profit or not and then to take a decision in accordance with law within six months from the date of receipt/production of a copy of this order. The respondent no.2 vide order dated 11.08.2004, as contained in Annexure-9, has again rejected the petitioner’s claim on the ground that the Executive Engineer has informed that on 15.07.2004 the meeting of the Board of Nagar Parishad was convened and a proposal was passed that the concerned institution does not come under the purview of Section 84(3) of the Act for the purpose of granting exemption from payment of holding tax. Thus, after observing that unless such recommendation is made by the concerned Municipality, the State Government would not be able to grant exemption. The order rejecting the claim of the petitioner is under challenge in this writ application. 3. Mr. K.M. Joseph, learned counsel appearing for the petitioner, submitted that from the Memorandum of Association of the Patna Notre Dame Sisters’ Society, which has been appended as Annexure-1 to this writ application, it would be apparent that the purpose of the Patna Notre Dame Sisters’ Society, which is running this Notre Dame Academy at Munger, is to establish educational and charitable institution. It has further been pointed out that the Income Tax Authorities, as would be apparent from Annexure-2, has considered it to be a charitable trust. Mr. Jospeh has further submitted that the issue which had been noticed and discussed by this Court while passing the order dated 16.12.2003 in C.W.J.C. No.522 of 2001 (Notre Dame Academy and anr. Vs. State of Bihar & ors) has not been answered. Again exactly same view has been taken by the authority concerned that was earlier considered and set aside by this Court while remitting back the matter to respondent no.2. This Court had opined that charging tuition fee was not enough to term the institution as a profit making body and not a charitable one unless it is established that tuition fee was being charged for the purpose of earning profit and not for maintenance of the institution. This Court had noticed that the Secretary had rejected the request without going into the main issue as aforesaid. Thus, the order impugned was set aside and the matter was remitted back for fresh consideration specially to answer the specific question as to whether the purpose of this School was to earn profit or not. Mr. Jospeh has contended that the answer of the aforesaid issue/question is still elusive in the impugned order dated 11.08.2004 and the earlier order does not appear to have been complied in its letter and spirit. Learned counsel has placed strong reliance upon a decision of this Court dated 23.8.2002 rendered in C.W.J.C. No.1101 of 2002 (Bettiah Holy Cross Sisters’ Society & Another vs. the State of Bihar and others) which, according to Mr. Jospeh, has been passed in a case of similar nature. Mr. Jospeh has further urged that once a particular view has been taken by the concerned Municipality on the earlier occasion, which would be apparent from the order dated 15.12.2000 (Annexure-7), it became functus officio for the purpose and decision was to be taken by the State Government under Section 84(3) of the Act. There was absolutely no requirement for respondent no.2 to seek another view of the concerned Municipality for reaching to a conclusion as only the respondent no.2 himself was directed to proceed to examine as to whether the purpose of the School is to earn profit or not and take a decision in accordance with law. There was absolutely no requirement for respondent no.2 to seek another view of the concerned Municipality for reaching to a conclusion as only the respondent no.2 himself was directed to proceed to examine as to whether the purpose of the School is to earn profit or not and take a decision in accordance with law. Secondly, even if it is assumed that it could have been done by respondent concerned, the question does not appear to have been answered by respondent no.2. He has simply brushed aside the claim of the petitioner taking shelter of further recommendation by the concerned Municipality without answering the aforesaid legal issue involved in the case. 4. Counter affidavit as well as supplementary counter affidavit has been filed on behalf of respondent no.4, Executive Officer, Munger Municipality, Munger taking a stand that in a meeting of Ward Commissioner held on 15.07.2004, a proposal has been passed on the issue of exemption of the petitioner from payment of holding tax. However, from the resolution quoted in Hindi in paragraph-9, it does not appear as to whether the claim has been rejected or not and if the same has been rejected then on what ground. The supplementary counter affidavit has also been filed appending therewith the order dated 21.06.2011 passed by the Executive Officer of the Munger Municipality Corporation directing the petitioner to pay arrears of the holding tax, whereas, respondent nos. 1 and 2 has taken a stand in paragraph 8 of the counter affidavit that the Board of the Municipal Council, Munger in its special meeting held on 15.07.2004 has unanimously held that the Notre Dame Academy, Munger is not a charitable institution rather a commercial education institution and hence it is not fit for exemption from the Municipal Taxes under Section 84(3) of the Act. Copy of the resolution proceeding of the meeting dated 15.07.2004 has been appended as Annexure-A/A to the supplementary counter affidavit filed on 30.01.2012 on behalf of respondent no.4, Executive Officer, Munger Municipality, Munger. From the perusal of Annexure-A/A it is not clear as to whether the claim of the petitioner has actually been rejected by the concerned Municipality and if the same has been rejected then on what ground. At least, what has been noted regarding the resolution dated 15.07.2004 in the impugned order passed by respondent no.2, does not appear to have been reflected in the resolution. 5. At least, what has been noted regarding the resolution dated 15.07.2004 in the impugned order passed by respondent no.2, does not appear to have been reflected in the resolution. 5. Mr. Lalit Kishore, learned Additional Advocate General I, appearing on behalf of respondent nos. 1 and 2 has submitted that the Secretary has passed the order after such information regarding resolution of the concerned Municipality was supplied to him. However, he was neither in a position to demonstrate the same from the resolution that has been appended as Annexure-A/A to the supplementary counter affidavit by respondent no.4 nor was he in a position to say that the direction of the Court, for examining and passing reasoned order on the issue as to whether the concerned School was earning profit by taking tuition fee or was utilizing the same for the benefit of the institution, has been complied with. This Court in its order dated 23.08.2002 passed in C.W.J.C. No.1101 of 2002 (Bettiah Holy Cross Sisters’ Society & Another Vs. the State of Bihar & others) has examined this issue in detail and has also considered the earlier decision and remitted back the matter for fresh consideration to the Secretary, Department of Revenue after setting aside the impugned order. This Court has quoted the relevant passage from the order dated 24.09.1998 passed in C.W.J.C. No.4527 of 1997 and other analogous matters which is again reproduced as under:– “8. In rejecting the claim of the petitioner society on the ground that tuition fees were realized from the students of the schools the Secretary not only over looked the relevant provision of the Patna Municipal Corporation Act but also paid no heed to the express observation made by this Court in its decision. Section 2(4) of the Act defines charitable purpose as follows: “Charitable purpose” includes the maintenance of an educational institution and the hostels attached thereto, which, though wholly or partly self-supporting is maintained without the purpose of profit.” (emphasis added) 6. This Court while passing the earlier order dated 16.12.2003 in C.W.J.C. No.522 of 2001 had also taken notice of the earlier decision dated 23.08.2002 passed in C.W.J.C. No.1101 of 2002. For better appreciation of the issue which was directed to be examined, the relevant passage of the aforesaid order is reproduced as under:– “xxxxxx Mr. This Court while passing the earlier order dated 16.12.2003 in C.W.J.C. No.522 of 2001 had also taken notice of the earlier decision dated 23.08.2002 passed in C.W.J.C. No.1101 of 2002. For better appreciation of the issue which was directed to be examined, the relevant passage of the aforesaid order is reproduced as under:– “xxxxxx Mr. K.M. Joseph, appearing on behalf of the petitioners submits that merely the fact that the institution is charging tuition fee, that itself shall not mean that the institution is not conducting the activities meant for charitable purpose. In support of his submission he has placed reliance on a decision of this Court dated 23.8.2002, passed in C.W.J.C. No.1101 of 2002 (Bettiah Holy Cros Convent Vs. The State of Bihar and ors). Mr. V. N. Sinha appearing on behalf of respondents submits that what requires to be examined is as to whether the purpose of the petitioner is to earn profit or not. He submits that as the institution is earning profit exemption sought for was rightly not granted. Having appreciated the rival submission, I am of the opinion that the respondent no.2 erred in rejecting the prayer of the petitioner only on the ground that the institution is charging tuition fee from the students. In my opinion if the tuition fee is charged for maintenance of the educational institution, it may be a charitable purpose, but if the same is charged for the purpose of profit it may not be a charitable purpose. The Secretary by the impugned order has rejected the prayer without going into this question, which has rendered his order illegal. The Secretary shall now proceed to examine as to whether the purpose of the school is to earn profit or not and then take a decision in accordance with law within six months from the date of receipt/production of a copy of this order. In the result the application is allowed and the impugned order is set aside with the direction aforesaid. No cost.” (emphasis added) 7. It is apparent from the aforesaid order that the Secretary was directed to examine the specific issue as to whether the School was earning profit or not i.e, whether the tuition fee collected was being used for maintenance of institution or for the purpose of earning profit. 8. No cost.” (emphasis added) 7. It is apparent from the aforesaid order that the Secretary was directed to examine the specific issue as to whether the School was earning profit or not i.e, whether the tuition fee collected was being used for maintenance of institution or for the purpose of earning profit. 8. Before coming to the conclusion, it would also be appropriate to examine relevant provision of Bihar Municipal Act, 1922. 9. The charitable purpose has been defined under Section 3(3) of the Act which is quoted below:– “3(3) “Charitable purpose” includes the maintenance of an educational institution and the hostels attached thereto, which, though wholly or partly self-supporting is maintained without the purpose of profit.” It is, thus, clear that the charitable purpose includes the maintenance of an educational institution and the hostels attached thereto. In this regard, the relevant provision for the purpose of exemption under the Bihar Municipal Act, 1922, Section 84(3) is also quoted as under:– “84(3) The [State] Government may on the recommendation of the Commissioners at a meeting exempt any holding or part of a holding which is used exclusively for any charitable purpose.” This Court in its previous decision has expressly observed that if the tuition fee is being charged for maintenance of the educational institution, it may be a charitable purpose but that would not be so if it is done for the purpose of earning profit. Therefore, the aforesaid specific issue was directed to be determined by the respondent no.2 by passing a speaking or reasoned order. It is very unfortunate that the same mistake, as was committed in its earlier decision as contained in Annexure-6 which has been set aside by this Court while passing the order dated 16.12.2003 passed in C.W.J.C. No.522 of 2001, has again been committed by respondent no.2. It appears that the Secretary has considered the matter in such a cavalliar manner that it has not only completely overlooked the express observations of this Court but apart from that the only relevant provision in the Act, i.e., Section 3(3) has also not been considered and, thus, the impugned order is liable to be set aside on this score alone. 10. However, Mr. 10. However, Mr. Lalit Kishore, next contended that a new statute, v.i.z, Bihar Municipal Act, 2007, has been enacted during the pendency of this writ petition to consolidate and amend the laws relating to the municipalities in the State of Bihar in conformity with the provision of the Constitution of India as amended by the Constitution (Seventy-fourth Amendment) Act, 1992 which has been published in the Bihar Gazette (Ext. Ord.) dated 5.4.2007. He has drawn attention of this Court to Section 1(3) of the Act which discloses that the statute shall come into force at once. It has been contended that under Section 488 of the aforesaid Act, which is the provision for repeal and savings, it is apparent that all the Municipal laws including the Bihar Municipal Act, 1922 stand repealed from the date of enforcement of the Act and since in the new Act, the provision for grant of exemption to charitable institution has been omitted, the earlier provision impliedly stands deleted. Thus, in the present facts and circumstances of the case, the petitioner cannot be held to be eligible for grant of any exemption. 11. On this issue, it has been urged on behalf of the petitioner that though, after enforcement of new statute, the petitioner cannot claim exemption, however, since the matter is being contested by the petitioner since long as it has approached this Court thrice for the relief, the institution concerned cannot be ousted on the aforesaid ground from the benefit that could have accrued to it in case a proper order in compliance of the direction of this Court would have been passed by the authority concerned under the earlier statute before being replaced by the Bihar Municipal Act, 2007. Learned counsel fairly submits that now he would not be raising grievance for exemption for the period commencing after enforcement of the Bihar Municipal Act, 2007 rather he would limit his prayer for relief which could be available to him for the period prior to the enforcement of the new statute for which a demand has been raised by the concerned municipal corporation. 12. I find force in the aforesaid submission raised on behalf of the petitioner. Though it is clear from Section 488 that the Bihar Municipal Act, 1922 stood repealed from the date of enforcement of the Bihar Municipal Act, 2007. 12. I find force in the aforesaid submission raised on behalf of the petitioner. Though it is clear from Section 488 that the Bihar Municipal Act, 1922 stood repealed from the date of enforcement of the Bihar Municipal Act, 2007. However, from sub-section 4(b) of Section 488 it would be clear that any thing done or any action taken under various Acts listed in sub-section(1)(3) of this section would continue to be in force and deemed to have been done or taken under the provisions of this Act unless it is expressly superseded or modified/altered. Similarly sub-section 4(e) of Section 488 of the Act provides that all the suits, prosecution and other legal proceedings instituted or which might have been instituted by, for, or against the authorities under old statutes listed under sub-section(1)(3) of this section may be continued or instituted by, for or against the Municipality. 13. Thus, in my considered opinion, though the petitioner cannot claim exemption for the period after enforcement of the Bihar Municipal Act, 2007, however, since the matter of exemption for the earlier period has remained pending before this Court and the order passed by the authority concerned has been challenged and found to be not in consonance with the direction of this Court, the petitioner would be entitled to ventilate its grievance before the concerned authorities for exemption from the holding tax for the period prior to enforcement of the new Act as per the direction of this Court as the earlier proceeding and action that ought to have been taken by the authorities have been saved under the aforesaid provision of Section 488 of the Act. 14. Thus, as expressed above since it does not appear from the impugned order that respondent no.2 has complied express direction given by this Court in its earlier decision, this Court is left with no option than to set aside the order dated 11.08.2004 (Anenxure-9). 15. As a result, the order dated 11.08.2004 (Anenxure-9) is set aside and the matter is remitted back to respondent no.2, Secretary, Urban Development Department, Government of Bihar, Patna for fresh consideration of the petitioner’s claim in light of this order. 16. 15. As a result, the order dated 11.08.2004 (Anenxure-9) is set aside and the matter is remitted back to respondent no.2, Secretary, Urban Development Department, Government of Bihar, Patna for fresh consideration of the petitioner’s claim in light of this order. 16. However, it is made clear that the petitioner would not be entitled to make a claim for any exemption after enforcement of the Bihar Municipal Act, 2007 as it has been unable to point out any provision of exemption from holding taxes for charitable institution under the new statute and, thus, has limited its prayer for earlier period as indicated above. As a result, it would only be entitled for raising a claim for exemption for the period prior to the enforcement of the aforesaid Act. In order to facilitate an early disposal of the matter, the petitioner may appear before the respondent no.2, Secretary, Department of Urban Development along with a copy of this order. On such step having been taken by the petitioner, the Secretary would be obliged to accord opportunity of hearing to the petitioner after fixing a date for hearing and after such hearing he will pass an appropriate order, in accordance with law, expeditiously. 17. Accordingly, this writ application stands allowed to the extent as indicated above, however, in view of the fact that the express direction of this Court, as discussed above, has not been followed by the State authority, a cost of Rs.2000/- is imposed.