The Chhattisgarh High Court has dismissed a writ petition challenging a property tax demand of approximately ₹19.75 lakh raised against Loyola Higher Secondary School, Bilaspur. The Court held that the educational institution could not claim exemption from property tax on the basis of a Section 12A registration certificate issued in the name of another entity.
Justice Rakesh Mohan Pandey delivered the decision in Madhya Pradesh Jesuits v. State of Chhattisgarh, WPT No. 12 of 2022, and declined to interfere with the property tax demand raised by the municipal authorities.
Background of the Case
Madhya Pradesh Jesuits, a charitable trust, established Loyola Higher Secondary School at Rajiv Vihar, Seepat Road, Bilaspur, in 2005. The institution claimed to be a charitable and minority educational institution and sought exemption from property tax under Section 136(c) of the Chhattisgarh Municipal Corporation Act, 1961.
The dispute arose after the municipal authorities issued property tax demand notices dated August 6, 2021, and September 2, 2021, concerning the financial year 2020-21. The total demand was stated to be around ₹19.75 lakh.
Aggrieved by the demand, Madhya Pradesh Jesuits approached the High Court seeking judicial intervention and cancellation of the property tax liability.
Trust’s Claim for Property Tax Exemption
The petitioner argued that Loyola Higher Secondary School was operated as a charitable and minority educational institution and was therefore entitled to the benefit of the exemption provided under Section 136(c) of the Chhattisgarh Municipal Corporation Act.
The petitioner relied upon a registration certificate under Section 12A of the Income Tax Act to establish its eligibility for the exemption.
The municipal authorities, however, disputed the claim. According to them, the Section 12A certificate relied upon by the petitioner was not issued specifically in favour of the Bilaspur school or the institution owning and operating it.
The certificate was issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.”
High Court Examines the Section 12A Certificate
The High Court examined the statutory framework governing property tax exemptions under Section 136(c).
The Court noted that the provision provides complete exemption from property tax to specified categories of institutions, including eligible educational institutions registered under Section 12A of the Income Tax Act.
The Court also noted that where an educational institution does not satisfy the conditions for complete exemption, the statutory framework may provide for a rebate of up to 50% of the property tax.
The crucial question before the Court was therefore whether the Section 12A registration certificate relied upon by the petitioner could legally be treated as applicable to Loyola Higher Secondary School at Bilaspur.
Certificate Not Applicable to Bilaspur School
The Court observed that the petitioner was repeatedly asked to produce the relevant Section 12A registration certificate applicable to the Bilaspur institution. However, despite repeated reminders, the petitioner failed to produce such a certificate.
The petitioner subsequently produced a certificate along with its rejoinder. However, the Court found that the certificate was issued in favour of “The President, Madhya Pradesh Jesuits, Kunkuri P.O., Raigarh Distt.”
The Court concluded that the entity named in the certificate and the Bilaspur school could not automatically be treated as the same institution for the purpose of claiming statutory property tax exemption.
According to the Court, the petitioner could not rely upon a registration certificate belonging to a different entity to avoid its municipal tax liability.
Property Tax Demand Held Reasonable
After examining the pleadings and documents, the High Court found no sufficient ground to interfere with the municipal corporation’s demand.
The Court specifically observed that the two institutions were not one and the same and that the institution situated at Seepat Road, Bilaspur, could not claim the benefit of the Section 12A registration certificate produced with the rejoinder.
Consequently, the Court held that the property tax demand was reasonable and that the petitioner had failed to establish a case warranting interference under its writ jurisdiction.
The writ petition was therefore dismissed.
Key Legal Takeaway
The judgment highlights an important principle concerning property tax exemption for educational and charitable institutions. Merely establishing that an institution is associated with a charitable trust or organisation having Section 12A registration may not, by itself, be sufficient to claim a statutory tax exemption.
The relevant registration must be demonstrably applicable to the institution seeking the exemption, particularly where the municipal statute makes registration under the Income Tax Act a condition for claiming complete property tax exemption.
For educational institutions and charitable organisations, the decision underscores the importance of maintaining clear documentation establishing the legal identity, ownership, registration status and relationship between the registered entity and the institution claiming tax benefits.
Case Details
Case Title: Madhya Pradesh Jesuits v. State of Chhattisgarh
Court: Chhattisgarh High Court
Judge: Justice Rakesh Mohan Pandey
Property Tax Demand: Approximately ₹19.75 lakh
Relevant Provision: Section 136(c), Chhattisgarh Municipal Corporation Act, 1961
Issue: Eligibility for property tax exemption based on Section 12A registration
For the Petitioner: Advocate Dr. Veena Nair
For the Respondents: Advocate Ajay Kumarani, P.L., and Mr. Sandeep Dubey
Conclusion
The Chhattisgarh High Court’s ruling makes it clear that a statutory tax exemption cannot be claimed merely by producing a registration certificate issued in the name of a different entity. Where the exemption depends upon Section 12A registration, the institution seeking the benefit must establish its direct eligibility and demonstrate that the registration relied upon actually covers it.
By refusing to interfere with the ₹19.75 lakh property tax demand against Loyola Higher Secondary School, the Court has reinforced the requirement of strict compliance with the statutory conditions governing tax exemptions.