The Dravida Munnetra KazhagamCharitable Trust by itsChairman and Managing TrusteeThiru M.Karunanidhi v. The Government of Tamilnaduby its Secretary

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED;25.9.2007CORAM;THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLAW.P.NO.17720 OF 1995 andW.M.P.No.27965 of 1995The Dravida Munnetra KazhagamCharitable Trust by itsChairman and Managing TrusteeThiru M.Karunanidhi..Petitionervs1.The Government of Tamilnaduby its Secretary, RevenueDepartment, Fort.St.GeorgeMadras 600 0092.The Assistant Commissioner(Urban Land Tax), MylaporeMadras 6000043.The Special Tahsildar (ULT)Mylapore-Triplicane TalukMadras 600 028..RespondentsWrit Petition filed under Article 226 of the Constitution ofIndia for the issue of writ of Certiorarified Mandamus to call forthe records of the Government of Tamilnadu in its G.O.Ms.No.939,Revenue, dt.12.10.1995 and to quash the same and to direct therespondents to grant to the petitioner/Trust, the exemption underSec.27(1) of the Tamilnadu Urban Lad Tax Act, 1966. (Prayer amended as per order dt.9.11.04 in W.M.P.No.38267/04)for petitioner : Mr.S.Mohamed Yousuffor respondents : Mr.Haja Nazirudin, A.G.P.(Tax) (for RR1 to 3) https://hcservices.ecourts.gov.in/hcservices/ ORDERThis writ petitioner seeks to challenge G.O.Ms.No.939,Revenue, dated 12.10.1995. The petitioner is a Charitable Trust ashas been declared for the purpose of Section 29(k) of the TamilNadu Urban Land Tax Act. The said declaration has been made by theGovernment of Tamil Nadu in G.O.Ms.No.514, Revenue, dated 3.3.1975which reads as under:"Specification of Dravida Munnetra KazhagamCharitable Trust, Madras as Charitable Institutionfor purposes of Section 29(k) of the Tamil Nadu UrbanLand Tax Act....... G.O.Ms.No.514, Revenue Dated 3.3.1975.No.II(2), Revenue/958/75 - In exercise of thepowers conferred by clause (K) of Section 29 of theTamil Nadu Urban Land Tax Act 1966 (Tamil Nadu Act 12of 1966) the Governor of Tamil Nadu hereby specifiedthe Dravida Munnetra Kazhagam Charitable Trust,Madras as a "Charitable" Institution for the purposeof the said Section. C.V.S.Mani,Secretary to Government.'2.The shorts facts which are required to be stated are thataccording to the petitioner the Trust was constituted by a deeddated 14.6.1972 which was subsequently modified by supplementarydeed dated 18.10.1972. It purchased the property under theregistered sale deed dated 2.9.1972 at R.S.No.1402 measuring about83 grounds and 862 sq.ft. in block No.28, Mylapore Village andDivision for the purpose of construction of buildings to fulfil theobject of the Trust.Simultaneously, an application was filedunder Section 29(k) of the Tamil Nadu Urban Lant Tax Act 1966 (Act12 of 1966) (hereinafter referred to as `the Act') for beingdeclared as a Charitable Institution. The first respondent byG.O.Ms.No.514, Revenue dated 3.3.1975 declared the petitioner trustas a Charitable Institution under Section 29(k) of the Act.Section 29(k) however underwent an amendment by Act 49/75. Theamended section 29(k) required compliance of certain otherrequirements in order to claim exemption under the said provision.It was under the above stated background a notice came to be issuedby the second respondent on 5.7.1978 invoking Section 11(1) of theAct calling upon the petitioner to file objections. The petitioner https://hcservices.ecourts.gov.in/hcservices/ filed its reply on 15.7.1978. An order came to be passed on3.5.1979 holding that the petitioner was liable to pay Rs.61,833/-towards Urban Land Tax for every fasli year commencing from1.7.1975. It was pointed out in the said order that while a majorportion of the property was vacant land, a small portion was beingused as a Petrol bunk and as such by virtue of the amendment ofSection 29(k) of the Act, the property was liable to be assessedunder the Act. The petitioner challenged the order dated 3.5.1979in W.P.No.3624/1979. The said Writ Petition was dismissed by thelearned single Judge by order dated 13.8.1984. The petitionerpreferred W.A.No.900/1984 which was allowed by the Division Benchby order dated 17.4.1989. In the said order, the Division Benchheld as under in the penultimate paragraph.`However, the question whether in terms of theamended section 29(k)of the Act, the appellant willbe entitled to exemption in the light ofG.O.Ms.No.514, dt.3.3.1975 has to be examinedfactually. Therefore, we quash the order ofimposition of tax and remit the matter to therespondent for fresh consideration in the light ofthe observations made above.'After the order of the Division Bench, on behalf of the petitionera petition was filed before the second respondent wherein afterreferring to the order of remand by the Division Bench thepetitioner also referred to its application filed under Section 27(1) of the Act for exemption from payment of Urban Land Tax andsought for favourable orders. Along with the said petitionnecessary application in the prescribed format claiming exemptionunder Section 27(1) of the Act was filed furnishing various detailsas well as the relevant statements of Income and Expenditure forthe years commencing from 1986-87 onwards. Subsequently, thesecond respondent in its notice dated 4.4.1995 called upon thepetitioner to produce the audited accounts for the period from1989-90 to 1992-93 in triplicate. The petitioner is stated to havefurnished the above particulars called for by the secondrespondent. Thereafter, the impugned order in G.O.Ms.No.939 dated12.10.1995 has been passed. There was also a demand notice fromthe third respondent dated 14.11.1995 claiming a sum ofRs.9,89,328/- towards Urban Land Tax from the Fasli Year 1385(1.7.75) to Fasli Year 1400 (30.6.91). 3.Assailing the impugned order of the first respondentMr.Mohamed Yousuf, learned counsel appearing for the petitionercontended that the said order is a non-speaking order, that thefirst and second respondents failed to comply with the directionsof the Division Bench in its order dated 17.4.1989 passed inW.A.900/1984 and that in any event none of the details furnished by https://hcservices.ecourts.gov.in/hcservices/ the petitioner claiming exemption under Section 27(1) of the Actwere considered by the first respondent before passing the impugnedorder.4.I have also heard Mr.Haja Nazirudin, learned AdditionalGovernment Pleader, appearing for the respondents.5.Having heard the learned counsel for the respectiveparties and after perusing material papers placed before the Courtincluding the set of documents filed in the additional typed set ofpapers at the outset it will have to be held that the impugnedorder does not seem to have been passed in compliance with theorder of the Division Bench dated 17.4.1989 passed inW.A.No.900/1984. At the time when the said order came to be passedby the Division Bench there was no application at the instance ofthe petitioner under Section 27(1) of the Act. After the order ofremand dated 17.4.1989 the petitioner preferred its applicationseeking exemption under Section 27(1) of the Act on 25.3.1991. 6.While the scope of exemption available under Section 29(k) of the Act is statutorily provided under the Act, the exemptionto be granted under Section 27(1) of the Act will be in exercise ofpowers of the Act either to grant total exemption or partialexemption if in the opinion of the Government imposition of suchUrban Land Tax would cause undue hardship to the applicant. Whilethe exemption if any to be granted under Section 27(1) of the Actis always subject to further modification or even cancellation ofsuch exemption as provided under sub-section (2) of Section 27 ofthe Act, that is not the case when the statutory exemptionprovided under Section 29(k) of the Act is made. The stipulationscontained in Section 27(1) for granting exemption from the paymentof tax are far different from the total exemption to be grantedfrom the provisions of the Act itself as provided under Section 29(k) of the Act. The criteria varies in very many respects when itcomes to the question of grant of exemption under Section 29(k) asfrom the payment of the whole of the tax or a part of it to begranted under Section 27(1)of the Act. In either case it will haveto be held that when a party claims exemption on the premise thatsuch applicant fulfils the criteria as stipulated under Section 29(k) of the Act or in the event of such an applicant satisfying theState Government the need for grant of exemption from payment oftax as provided under Section 27(1) of the Act, it is imperativethat proper and relevant considerations are made either for grantor rejection of such exemption under either of the provisions. 7.In fact for grant of exemption from payment of tax asprovided under Section 27(1) of the Act the State Government hasissued various G.Os., ending with G.O.Ms.No.1834 dated 29.10.83. Aperusal of G.O.Ms.No.1834 discloses that in the various other https://hcservices.ecourts.gov.in/hcservices/ G.Os., referred to therein certain norms and guidelines wereprescribed for grant of total exemption from the payment of UrbanLand Tax by invoking Section 27(1) of the Act. After setting outthe abovereferred to G.Os., under G.O.Ms.No.1834 the followingthree stipulations have been set out as guidelines which reads asunder:"3.The following are the existing guidelinesand norms for considering the exemptionapplications:-1.The institutions should have been recognisedas charitable and exemption granted under section12A(a)of the Income Tax Act, 1961.2.The institutions should spend atleast 90% ofits net income towards its objectives and purposes,after deducting all the inevitable charges, likepayment of local taxes, repairsandmaintenanceetc.3.The institution should be a public Trust andnot a private trust.8.In contra distinction to such stipulations prescribed bythe State Government in exercise of the powers under Section 27(1)of the Act, Section 29(k) contemplates grant of exemption asstipulated in the provision itself which is to the followingeffect:'(k)subject to the provisions of this section,any urban land actually used for religious, charitableor philanthropic purposes by such religious,charitable or philanthropic institutions, as theGovernment may, by notification, specify, but notincluding any urban land owned by such institutionsand-(i) which is vacant, or(ii)in which buildings from which income isderived have been constructed;'9.In the background of the abovestated statutorystipulations contained in the Act and the relevant G.Os., when theimpugned order is considered, I find that in paragraph 2 of thesaid order the first respondent by referring to G.O.Ms.No.1834dated 29.10.1983 rejected the request of the petitioner for grantof exemption from the payment of Urban Land Tax on the ground thatthe petitioner did not fulfil the requirements of spending 90% ofits net income towards its charitable objectives and purpose fromthe year 1989-90 to 1992-93 and that for the year 1993-94 which hasbeen only 44% of its net income. While examining the correctnessof the said order it will have to be stated that while the https://hcservices.ecourts.gov.in/hcservices/ petitioner's claim was for the grant of exemption primarily underSection 29(k) of the Act as per the order of the Division Benchdated 17.4.1989 in W.A.No.900/1984 the petitioner appeared to havealso claimed for exemption from the payment of tax under Section 27(1) of the Act by filing an independent application on 25.3.1991. 10.In such circumstances, if the first respondent were toconsider the petitioner's abovereferred to claims, in my consideredopinion, there should have been a full-fledged enquiry inasmuch asthe consideration would certainly involve very many relevantfactors such as the fulfilment of the stipulations contained inSection 29(k) under which the petitioner will have to satisfy thatit is a charitable institution, that where any buildings arelocated in its land no income is derived or that no part of it iskept vacant. 11.Similarly, if it comes to the question of claim forexemption from the payment of tax under Section 27(1) of the Acthaving regard to the various G.Os., issued by the State Governmentcommencing with G.O.Ms.1834 dated 29.10.83 it should be establishedthat the institution has been recognised as a CharitableInstitution and has been granted exemption under Section 12K(k) ofthe Income Tax Act, 1961, that it is a public trust and that itspends atleast 90% of its net income towards its objectives andpurpose after deducting all the inevitable charges like the paymentof local taxes, repairs and maintenance. If such stipulationsprovided under either of the Sections are to be examinednecessarily the petitioner ought to have been extended anopportunity to convince the authorities concerned that it isentitled for the grant of exemption either under Section 27(1) fromthe payment of tax either fully or partially or for the exemptionfrom the provisions of the Act itself as provided under Section 29(k) of the Act. 12.When the impugned order is analysed in the abovesaidrequirement of law to be examined, I am of the view the order doesnot contain very many details in order to state that suchrequirements to be examined under the provisions of the Act waseven considered, inasmuch as in the first place, there is noreference to the claim for exemption made under Section 29(k) ofthe Act. On that score itself the impugned order cannot besustained. In that context it is relevant to state that when theDivision Bench passed orders on 17.4.1989 in W.A.No.900/1984 therewas a specific direction to the effect that the second respondentshould make a fresh consideration in the light of the observationsmade in the order of the Division Bench. Therefore, it wasincumbent upon the second respondent or for the first respondent,if the first respondent is the competent authority to haveexercised its authority as expected of under the abovereferred to https://hcservices.ecourts.gov.in/hcservices/ provision, namely Section 29(k) of the Act. Inasmuch as the 1st andsecond respondents have failed to comply with the direction ascontained in the order of the Division Bench dated 17.4.1989 inW.A.No.900/84 as also its failure to pass appropriate order as isexpected under Section 27(1) of the Act, the impugned order isliable to be set aside. As consideration of the above factors wouldinvolve a detailed examination of facts and figures, it isimperative that the petitioner is given an opportunity of personalhearing to substantiate its claim with necessary materials. Sincethe issue was hanging fire right from the year 1978 onwards it isjust and necessary that the 1st and 2nd respondents shall passappropriate orders after giving due opportunity to the petitionerexpeditiously. With that view while setting aside the orderimpugned in the writ petition, the 1st and second respondents aredirected to consider the claim of the petitioner for exemptioneither under Section 27(1) or under Section 29(k) of the Act bygiving an opportunity of hearing to the petitioner to enable thepetitioner to place all the supporting materials and pass orders inaccordance with law expeditiously preferably within six months fromthe date of receipt of the copy of this order.13.The writ petition is allowed. No costs. Consequently,connected pending W.M.P.No.26965/1995 is also disposed of.salSd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1.The Secretary,The Government of TamilnaduRevenue Department, Fort.St.GeorgeMadras 600 0092.The Assistant Commissioner(Urban Land Tax), MylaporeMadras 600004 https://hcservices.ecourts.gov.in/hcservices/

3.The Special Tahsildar (ULT)Mylapore-Triplicane TalukMadras 600 028+ 1 cc to Mr. S. Mohamed Yousuf, Advocate SR No. 59615+ 1 cc to the Special Government Pleader (Taxes), Chennai 104 SR No.59728LA(CO)SR/15.10.2007W.P.NO.17720/1995 & W.M.P.No.27965/1995