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2013 DIGILAW 1269 (KAR)

J. G. College of Commerce v. State of Karnataka

2013-11-05

L.NARAYANA SWAMY

body2013
ORDER : L. Narayana Swamy, J. 1. Though the matter is listed in preliminary hearing 'B' group, with the consent of the learned counsel appearing for the parties, the matter is taken up for final hearing and is disposed of by this order. The constitutional validity of sub-section (2) of Section 110 of the Karnataka Municipal Corporations Act, 1976 (hereinafter referred to as 'the Act' for short) is in challenge in this petition. The grounds taken by the learned counsel appearing for the petitioners in challenging the constitutional validity are, that when an exemption is provided under Section 110 of the Act to the Educational Institutions for rendering educational activities, there should not have been any tax on service charge, etc. What has been exempted by one hand cannot be snatched away or deprived by the other. The meaning of granting exemption to the petitioners' Educational Institutions, would be meaningless if the respondents are permitted to collect service charge under sub-section (2) of Section 110 of the Act. The learned counsel also submits that sub-section (2) is opposed to provisions of sub-section (1) of Section 110 of the Act. The subsection cannot disqualify the main section and demand cannot be contrary to the principal or main Section. Imposition of service charge is beyond the legislative competency and hence sub-section (2) is to be set aside as unconstitutional. Collecting service charge in lieu of property tax is impermissible in law. As like exemption given to the property belonging to the Railways or Union of India, on similar lines there shall be an exemption to the petitioners also, and the respondents are not supposed even to collect service charges. It is further submitted that the procedure as provided under Section 104 of the Act is not followed. Consequently, the petitioners challenge the demand notice issued and seek for setting aside of the same. 2. The learned counsel appearing for the second respondent submitted that sub-section (2) is not unconstitutional and is also not in contravention of Section 110 of the Act. He submits that the main Section provides exemption to the institutions and buildings listed therein and the petitioners also comes under the same list and as per the said Section, no doubt, they have been exempted from levying property tax. He submits that the main Section provides exemption to the institutions and buildings listed therein and the petitioners also comes under the same list and as per the said Section, no doubt, they have been exempted from levying property tax. But what sub-section (2) provides is only levying of service charge which is provided to the society as a whole; and the same is levied. The petitioners are also using these amenities provided to the society as a whole and have to shoulder smaller burden, which is very small in extent and is levied for providing amenities to the society. As regards the ground taken by the learned counsel for the petitioner that Sub-section (2) of Section 110 of the Act is not supported by legislative competence is concerned, the learned counsel submits that the same is unwarranted for the purpose of examination. By Act No. 31 of 2001 which came into effect from 19th November, 2001 vide Notification No. UDD/89/AHD/2000 in which sub-section (2) came to be inserted and with effect from that date it became the part and parcel of the statute having legislative force. The learned counsel referred to the procedure adopted in Section 104 of the Act, which is not available for the academic purpose since the said section has been omitted by Act 32 of 2003 dated 20th August 2003. Hence, he submits that the said ground is also not available to the petitioners. He further submits that, petitioners themselves constitute a separate class and it cannot be compared with Departments of Union of India or the Railways for the purpose of exemption as per the decision of the Apex Court. 3. The learned counsel for the first respondent also adopted the submissions of the counsel for the second respondent and submitted to dismiss the petition. 4. After hearing the learned counsel appearing for the parties, in my considered opinion, the petitioners cannot challenge the service charge levied under sub-section (2) of Section 110 of the Act on the ground of legislative incompetence. What is to be looked into are facilities or services provided to the society as a whole in which the institutions establish. The amenities or services, viz. street-lights, public road, hospital, canteen, park, drainage system, etc. What is to be looked into are facilities or services provided to the society as a whole in which the institutions establish. The amenities or services, viz. street-lights, public road, hospital, canteen, park, drainage system, etc. are provided and the petitioners are also users of the amenity or a facility, they cannot challenge when a part of service charge is levied on them. 5. The petition has to be dismissed for the reason that while challenging the constitutional validity of sub-section (2) of Section 110 of the Act, the petitioners have not stated or have taken a ground as to which provision of the Constitution is violated. A statute provides exemption from property tax and if the same statute provides or enables the authority to collect the service charge, the same cannot be said as unconstitutional. The public institutions, viz. Municipalities, Corporations, Electricity Supply Companies, Public Health Engineering Department, etc., which have been established to render or do service to the public in aspects of safety, security, health, etc. and in order to meet all expenditure to provide these facilities, every individual, more particularly the institutions like petitioners, have to contribute by way of nominal tax as service charge under sub-section (2) of Section 110 of the Act. Here, the petitioners cannot challenge the service tax on the ground the petitioners alone have not received such facility from the society or the State. Want the petitioners have to look at is what should be their contribution to provide facilities or amenities to the society as a whole. These institutions are part of the society; they are the establishment, which impart education. But, at the same time, they are also getting huge chunk of benefit from the society by of way of service and amenities. Under the circumstance, I have not been convinced to consider the case of the petitioners in challenging the validity of sub-section (2) of Section 110 of the Act. The petition fails and is accordingly dismissed.