Writ Petition No. 5695 of 2025 · The High Court
Case Details
- 1 - NC: 2025:KHC:15951 WP No. 5695 of 2025 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 5695 OF 2025 (LB-TAX) BETWEEN: 1. M/S. H. R. EDUCATIONAL TRUST A TRUST REGISTERED UNDER THE INDIAN TRUST ACT 1881 HAVING ITS REGISTERED OFFICE AT NO.8, APPAJAPPA ARGRAHARA, CHAMARAJAPET, BENGALURU-560 018 REPRESENTED BY ITS MANAGING TRUSTEE MR. SHASHANK SRINIVAS (BY SRI. S KALYAN BASAVARAJ., ADVOCATE) AND: 1. STATE OF KARNATAKA DEPARTMENT OF GRAM PANCHAYAT M.S. BUILDING, DR. B.R.AMBEDKAR ROAD BENGALURU - 560 001 REPRESENTED BY ITS PRINCIPAL SECRETARY 2. THE PANCHAYAT DEVELOPMENT OFFICER SULIKERE GRAMA PANCHAYATI, SULIKERE POST - 560 060 Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA … PETITIONER - 2 - NC: 2025:KHC:15951 WP No. 5695 of 2025 KENGERI HOBLI BENGALURU SOUTH TALUK
Legal Reasoning
(BY SRI. BOPANNA, AGA FOR R1; SRI M.S. DEVARAJ, ADVOCATE FOR R2) *** … RESPONDENTS THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE DEMAND NOTICE DATED 18.02.2025 BEARING NO. 03/2024-25 ISSUED BY THE R-2 PRODUCED AT ANNEXURE-A AND ETC. THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV ORAL ORDER Petitioners have called in question the correctness of the demand notice at Annexure-A issued by the Sulikere Grama Panchayat dated 18.02.2025. 2. In terms of the demand at Annexure-A, the arrears of tax for the year 2006-07 to 2013-14 has been calculated as Rs.26,01,840/- and for the further period of 2014-15 to 2024-25, the demand notice stipulates the arrears of tax. The total demand of Rs.51,39,626/- has been raised. - 3 - NC: 2025:KHC:15951 WP No. 5695 of 2025 3. The petitioners have raised various contentions and submit that before such demand was raised, there was no inspection of the property in their presence nor any notice served. Petitioners at the time of arguments have also submitted that they are entitled for exemption in terms of the Rules applicable as on the date. 4. However, for the relevant period, Sri. M. S. Devaraj, learned counsel appearing for respondent No.2 submits that insofar as the liability to pay tax, at an earlier point of time, under the Karnataka Gram Swaraj and Panchayat Raj Act, 1993 (for short 'the Act'), there were specific Rules, viz., Karnataka Panchayat Raj (Grama Panchayat Taxes and Fees) Rules, 1994 (for short 'Rules, 1994) and in terms of Rule 6(c) of the Rules, 1994, the exemption as available in terms of Section 199(1) of the Act would be subject to a determination that the building and land are used solely for charitable or public religious purposes and not let out for rent. It is submitted that - 4 - NC: 2025:KHC:15951 WP No. 5695 of 2025 there was change of the regime insofar as the Taxation Rules are concerned post 2021. 5. It is submitted that in terms of new Rules i.e., Karnataka Grama Swaraj and Panchayat Raj (Taxes, Rates and Fees of Grama Panchayats) Rules, 2021 (for short 'Rules, 2021') which has come into effect from 31.03.2022, a separate procedure is provided insofar as tax exemption is concerned and it is submitted that in terms of Rule 16(h) of Rules, 2021, there is an exemption of 5% given to properties of educational institutions having self-governing separate civic *facilities and tax exemption shall be given to the greening land. It is further submitted that as against any demand raised, there are provisions for appeal under Rule 37 of Rules, 2021 and under Rule 39 of Rules, 1994, and an appeal under Section 201 of the Karnataka Panchayat Raj Act, 1994 shall lie to the Chief Executive Officer, Zilla Panchayat. 6. Heard both sides. * Corrected vide chamber order dated 23.04.2025. - 5 - NC: 2025:KHC:15951 WP No. 5695 of 2025 7. In terms of Section 199 of the Act under Chapter-XIII, levy of taxes has been provided for. Section 199 of the Act reads as follows: "199. Levy of taxes, rates, etc., by Grama Panchayats.- (1) Every Grama Panchayat shall in such manner and subject to such exemptions as may be prescribed and not exceeding the maximum rate specified in Schedule IV levy tax upon buildings and lands based on capital value of the property which are not subject to agricultural assessment, within the limits of the panchayat area." 8. Various contentions have been raised with respect to the demand raised at Annexure-A including that the petitioners have not been afforded an opportunity of hearing nor the petitioners were present at the time of inspection made. Insofar as the demand prior to 31.03.2022, the applicable Rules are 1994 Rules. In terms of Section 199 of the Act, exemption would be extended as may be prescribed under Rule 6(c) of the Rules, 1994. Rule 6(c) of Rules, 1994 reads as follows: - 6 - NC: 2025:KHC:15951 WP No. 5695 of 2025 "(c) buildings and lands, used solely for charitable or public religious purposes and not let out for rent" 9. Insofar as the demand at Annexure-A prior to 31.03.2022, the demand will have to *be raised in terms of Rules, 1994 for which purpose, the panchayat to hear the petitioners after affording them an opportunity as regards the entitlement of exemption under Rule 6(c) of Rules, 1994. It is for the petitioners to demonstrate that the petitioners come within the exemption as provided for buildings and lands as contemplated under Rule 6(c) of Rules, 1994. 10. Insofar as the demand of tax after 31.03.2022, it must be noticed that Rule 16(h) of Rules, 2021 would be applicable. Rule 16(h) reads as follows: "(h) 5 per cent exemption shall be given to the properties of educational institutions having self- governing separate civic facilities and tax exemption shall be given to the greening land." * Corrected vide chamber order dated 23.04.2025. - 7 - NC: 2025:KHC:15951 WP No. 5695 of 2025 11. Accordingly, there should be finding by the Authority on the basis of the contentions made by the petitioners insofar as petitioners' eligibility for tax exemption upto 5%. The starting of the procedure for assessment of tax is in terms of Rule 32 of Rules, 2021. Rule 32 reads as follows: "32. Inspection of immovable property.- For the purpose of determination, demand and collection of tax, rates or fees under Section 80 of the Act, within the premises of any immovable property subject to taxation within the limits of the Grama Panchayat area, after giving due notice, the officer/employee of the Grama Panchayat within the period between sunrise and sunset to enter, obtain and inspect building and vacant lot documents from the owner. (2) such area shall not be restricted by the owner of any immovable property for the purpose of taxation. If he is found to be restricting such entry, legal action will be taken against him." 12. Accordingly, post 31.03.2022, the demand to be raised must be preceded by an inspection with due notice to the petitioners. Accordingly, the demand for tax - 8 - NC: 2025:KHC:15951 WP No. 5695 of 2025 pre 31.03.2022 and post 31.03.2022 which is the subject matter of Annexure-A requires to be reworked in terms of the observations made above. 13. Accordingly, the demand notice at Annexure-A is set aside. The respondent - Panchayath is at liberty to raise demand after following the procedure adverted to above with respect to pre 31.03.2022 and post 31.03.2022. Insofar as the procedure to be followed post 31.03.2022, it is the Rules, 2021 that would be applicable and procedure to be followed while with respect to the demand prior to 31.03.2022, it is the Rules, 1994 that have to be followed. Liberty is reserved to the respondent - Panchayat to proceed with the matter in terms of the observations made above. 14. Petitioners to be present before the Panchayat Development Officer on 05.05.2025 at 11.30 a.m. and the respondent to start the process in terms of inspection as contemplated under Rule 32 of Rules, 2021. Needless to state the petitioners to be present with all documents to - 9 - NC: 2025:KHC:15951 WP No. 5695 of 2025 enable the Panchayat to conduct proceedings in terms of Rule 6(c) of Rules, 1994 as well as Rule 16(h) of Rules, 2021 for different periods. 15. With the above observations, petition is
Decision
disposed off. All contentions of both parties are kept open. Sd/- (S SUNIL DUTT YADAV) JUDGE VP