Chhattisgarh High Court Rejects Property Tax Exemption Claim of Loyola School — Section 12A Certificate Belonging to a Distinct Entity Cannot Be Borrowed
Background and Overview
A significant ruling has emerged from the Chhattisgarh High Court concerning the eligibility of an educational institution to claim property tax exemption on the basis of a Section 12A registration certificate that was originally issued in favour of an entirely different entity. The case of Madhya Pradesh Jesuits Vs State of Chhattisgarh brought into sharp focus the question of whether a Section 12A certificate under the Income Tax Act, 1961, issued in favour of one institution at a specific location, could be extended to another institution operating under a related trust but at a geographically distinct address.
The High Court, after carefully examining the facts and the relevant statutory provisions, dismissed the writ petition, holding that the certificate relied upon by the petitioner institution did not belong to it and therefore could not serve as the basis for claiming exemption from property tax.
Facts of the Case
Madhya Pradesh Jesuits, a charitable trust bearing Registration No. 77-1959-60, established Loyola Higher Secondary School at Rajiv Vihar, Seepat Road, Bilaspur in the year 2005. The trust, while operating the school, received demand notices dated 06/08/2021 and 02/09/2021 from the respondent Municipal Corporation, raising a property tax demand of approximately Rs. 19,75,745 for the financial year 2020-21.
Aggrieved by these demand notices, the petitioner approached the Chhattisgarh High Court by way of a writ petition. The reliefs sought included:
- Calling for records from the Municipal Corporation for judicial perusal
- Quashing and setting aside the demand notices dated 06/08/2021 and 02/09/2021 raising property tax to the tune of Rs. 19,75,745
- Grant of costs and expenses of the petition, along with any other relief deemed fit in the interest of justice
Petitioner's Submissions
Counsel appearing on behalf of the petitioner argued that Madhya Pradesh Jesuits was a charitable and minority institution duly registered under Section 12(A) of the Income Tax Act, 1961. It was submitted that a certificate to this effect had been issued on 10.7.1974 by the Office of the Income Tax Commissioner, Madhya Pradesh, Bhopal.
The petitioner's primary contention was that, by virtue of being in possession of this certificate, the institution qualified for a complete exemption from property tax under Section 136(c) and (e) of the Chhattisgarh Municipal Corporation Act, 1961. It was argued that the demand notices issued by the Municipal Corporation were, therefore, bad in law and deserved to be quashed.
Key Argument of the Petitioner: Possession of a
Section 12Aregistration certificate under the Income Tax Act, 1961 automatically entitles the educational institution to full exemption from property tax under the Chhattisgarh Municipal Corporation Act, 1961.