Sunil Ambwani, J.
1. Cantonment Board, Meerut has filed this writ petition challenging judgment and order dated 23.11.1998 passed by Additional District Judge, Meerut by which he has allowed an appeal under Section 84 of the Cantonments Act, 1924 (in short 'the Act') setting aside notice dated 24.3.1988 levying property tax on Bungalow No. 117 Bank Street, Meerut, occupied by St. John's School, Meerut (in short 'the School').
2. I have heard Sri Samir Sharma appearing for petitioner and Sri Vivek Chaudhary for respondent.
3. The Executive Officer, Cantonment Board issued notice dated 27.6.1987 to St. John's School, Meerut to revise assessment of tax on property No. 117, Bank Street, Meerut under Section 68 of the Act. The Principal of the school in his objection to the notice, stated that the entire building is used for educational purposes, and is thus exempt from paying any tax whatsoever. No house tax can be proposed on the said building. He further stated that no additional building has been constructed during the period and that no portion of the building has been given on hire, nor any rental income is being derived from the building or any portion thereof. A notice was issued fixing 27.10.1987 as a date for hearing. The Principal attended the office and requested to give further date. Accordingly, a notice was given to him on 17.12.1987 by the Executive Officer, calling upon him to give details and particulars of the students, as well as books relating to the income of the school. The Principal sought another date vide his letter dated 18.12.1987. On 22.12.1987 Principal appeared before Executive Officer, but did not give any details, nor any affidavit was given providing the said information. The assessment was consequently revised for the year 1989-90 increasing annual burden to the tune of Rs. 7,24,654.76 over and above the tax paid by the school. According to report of the Cantonment Engineer, the total area of the School is 1.674 acres, i.e., 72919.44 sq. ft. = 6774.21 sq. metres of which the built up area is 1973.91 sq. metres. The assessment list was authenticated by the Assessment Committee after publishing notice dated 24.3.1988 under Section 69(2) of the Act, and was confirmed by the Board vide CBR No. 13, dated 13.4.1988. An increased bill was sent to the school for payment of the aforesaid amount, annually over and above the amount paid by the school.
4. The school preferred an appeal under Section 84 of the Act, challenging assessment as authenticated on 24.3.1988 and filed a stay application along with memo of appeal. The Cantonment Board objected to the maintainability of the appeal under Section 87(b) of the Act on the ground that school has not deposited the amount due, and thus the Court has no jurisdiction to hear the appeal. By judgment and order dated 21.5.1988, IInd Additional District Judge, Meerut allowed Tax Appeal No. 3 of 1988 holding that educational institutions are exempted from assessment of tax on their property and accepted the argument that an affidavit was given before the Board that no income is being derived from the building. The Board preferred a writ petition No. 1452 (Tax) of 1988 which was allowed by this Court on 25.8,1994 directing St. John's School, Meerut to comply with the provisions contained under Section 87(b) of the Act. In other connected matters, Sophia Girls School and St. Mary's School, situated in Meerut Cantt. Civil Appeal No. 2922-24 of 1996 was filed. These civil appeals were dismissed by Hon'ble Supreme Court relying upon the decision in Shyam Kishore and Ors. v. Municipal Corporation of Delhi and Anr. : AIR1992SC2279 , wherein similar provision of appeal provided under Section 107(b) of the Delhi Municipal Corporation Act, 1957 upholding that same observation, namely, that there is no bar in entertainment of the application before deposit of tax due but the same cannot be heard unless the tax is deposited were considered. The Civil Appeals were accordingly disposed of.
5. St. Mary's School and Sophia Girls School, appellants withdrew their appeals, admitted tax liability and paid the same. St. John's School, however, chose not to pay the amount and decided to contest the appeal. The said appeal has been allowed by impugned order.
6. Sri Samir Sharma has made two fold submissions. He submits that the appeal was preferred in 1988, at which time, the amount of Rs. 7,24,654.76 was due by way of house and water tax. On the date when it came up for hearing, the School was served with a notice for payment of Rs. 1,04,52,534.69 and which the school was required to pay before the appeal could be heard. Secondly, he submits that the interpretation to the exemption clause provided in Section 99(2)(b), given by the appellate authority is wholly incorrect and violative to the object of the Act and cannot be sustained. According to Samir Sharma, a building used for educational purposes can only be exempted if it is proved that no income is derived and that the burden of proving the same lies upon the person who alleges it. The Principal of the school submitted his objection but did not chose to file any material, more particularly the documents, namely, the number of students and the details of the income of the school, demanded from him and as such the view taken by appellate court cannot be sustained. He has relied upon the judgments in : [1990]183ITR624(SC) , in support of his submission that the exemption in taxing statutes must be strictly construed against those who wish to invoke its benefits, and that wherever there is any ambiguity, benefit of it must go to the State. He has also relied upon Cantonment Board, Ambala v. Pyarey Lal : 1966CriLJ93 , in submitting that tax on property can also be levied on educational institutions.
7. Sri Vivek Chaudhary appearing for St. John's School in reply submits that under Section 87(b) of the Act, the amount, if any, in dispute in the appeal, is to be deposited by the appellant in the office of the Board. The amount as such is an amount which is challenged in appeal and that if during the pendency of appeal, the amount in dispute gets increased, the appellant cannot be penalised for the same. With regard to second submission, Sri Chaudhary has relied upon a plain and simple interpretation of Section 99 of the Act providing for exemption of payment of tax on buildings falling under Chapter of special provisions relating to taxation. He submits that Clause (b) of Section 99(2) of the Act, exempts building used for educational purposes and public property. The words 'and from no income is derived' qualifies to playgrounds and dharmshalas which are open to the public. According to him these two properties namely for educational purposes, libraries and playgrounds and dharmshalas belong to different class and that a comma separates the two classes of properties. With this interpretation, he submits that building used for educational purposes and playgrounds are exempted from the property tax and that appellate court has rightly interpreted the exemption clause in allowing the appeal. He has relied upon in Samaalana Abdulla v. State of Gujarat : AIR1996SC569 ; Mohd. Shabbir v. State of Maharashtra : [1979]1SCR298 and the judgment in Municipal Council, Trichinopoly v. S. Venkatarama Aiyar AIR 1931 Mad 55, in submitting that in case of Madras Municipal Act having similar provisions Mr. Justice Madhavan Nair held that a school is exempt from property tax on the ground that it is a building used for educational purposes, even though the proprietor of it makes profit out of the school which he carries on in that building.
8. The Cantonment Act, 1924 was enacted to municipalize the governance of those cantonments which contains substantial civil population having no essential connection with or dependence upon military administration. The cantonment committees were replaced by Cantonment Board municipal in character, to be essentially a Local Self Government body. Under Section 60 of the Act, the Board may, with previous sanction of Central Government impose in any cantonment any tax which under any enactment for the time being in force, may be imposed in any municipality in the State wherein such cantonment is situated to take effect from the date of its notification in the Official Gazette. Sections 61 and 62 provides for framing of preliminary proposal to impose tax and to invite objections and their disposal under Section 62 after which the Central Government may authorise Board to impose tax under Section 63 of the Act. 'Annual Value' is defined under Section 64 and Section 65 provides for incidence of taxation which is primarily upon the actual occupier of the property. Sections 67 and 72 provides for assessment list, its revision and amendment. Section 99 and 99A, which is relevant for this case, provides for exemption in case of buildings and is quoted as below :
'99. Exemption in the case of buildings.--(1) When, in pursuance of Section 98, a Board has fixed a special rate for the cleansing of any factory, hotel, club or group of buildings, or lands, such premises shall be exempted from the payment of any conservancy or scavenging tax imposed in the cantonment.
(2) The following buildings and lands shall be exempt from any tax on property other than a tax imposed to cover the cost of specific services rendered by the Board, namely :
(a) places set apart for public worship and either actually so used or used for no other purpose ;
(b) buildings used for educational purposes and public libraries, playgrounds and dharmasalas which are open to the public and from which no income is derived ;
(c) hospitals and dispensaries maintained wholly by charitable contributions ;
(d) burning and burial-grounds not being the property of the Government or a Board, which are controlled under the provisions of this Act ;
(e) buildings or lands vested in a Board ; and
(f) any buildings or lands, or portion of such buildings or lands, which are the property of the Government.
99A. General power of exemption.--The Central Government may, by notification in the Official Gazette, exempt, either wholly or in part from the payment of any tax imposed under this Act, any person or class of persons or any property or goods or class of property or goods.'
9. Section 99(2)(b) exempts buildings used for educational purposes and public libraries, playgrounds and dharamasalas which are open to the public and from which no income is derived. Each of the categories of building exempt has acondition attached to it. Buildings and lands set apart for public worship are qualified by the words that they are actually so used, or used for no other purposes. In case of hospitals and dispensaries the condition is that they must be maintained wholly by charitable contribution. Burning and Burial-grounds not being property of the Government or a Board, are exempt only if they are controlled under the provisions of the Act and that buildings or lands vested in a Board and buildings or lands or a portion of such buildings or lands, which are the property of the Government. The question to be decided in this case is whether buildings or lands open to public purposes and from which no income is derived is applicable to the buildings used for educational purposes and public libraries.
10. The counsel for the petitioner has challenged the interpretation given to the provisions by the appellate court. He submits that only those buildings used for educational purposes are exempt from which no income is derived, and that the exemption clause has to be strictly construed. No evidence was produced or material submitted in support of particula given by the school and as such, it cannot claim exemption from tax on property. Reliance has been placed on following decisions.
11. In Collector of Central Excise, Bombay-I and Anr. v. Parle Exports (P.) Ltd. : [1990]183ITR624(SC) , Supreme Court held that the expression in the schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expression occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by those people who ordinarily deal with it. The notification must be read as a whole in the context of the other relevant provisions. When two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment. Though in a taxing Act provision enacting an exemption to the general rule of taxation has to be construed strictly against those who invoke its benefit, but while interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises. However, absurd results of construction should be avoided. In Hindustan Alumunium Corporation Ltd. v. State of Uttar Pradesh, Supreme Court emphasised that the notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context.
12. In Novopan India Ltd., Hyderabad v, Collector of Central Excise and Customs, Hyderabad : 1994(73)ELT769(SC) , while interpreting Notification No. 55 of 1979 under Rule 8 (1) of Central Excise Rules, 1944 exempting plywood and boards, the Court while holding that the words unveneered particle boards, cannot and do not take any melamine faced particle board and emphasised the principle that in case of ambiguity, a taxing statute should be construed in favour of a assessee does not apply to the construction of an exception or an exempting provision and that these are to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity benefit of it must go to the State.
13. In Union of India and Ors. v. Wood Papers Ltd. and Anr. : 1991ECR235(SC) , while interpreting exemption Notification No. 163 of 1965 issued under Rule 8 (1) of the Central Excise Rules, 1944. exempting paper, Supreme Court held that the notification has to be read in its entirety and construed as a whole. A close reading of both the parts together makes it clear that it wasintended to be exhaustive granting exemption to all factories producing, packing and wrapping paper. It held that an exemption provision is like any exemption and on normal principle of construction or interpretation of statute it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment revenue. But strict or liberal construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception if applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction.
14. Section 99(2)(b) exempts buildings used for educational purposes and public libraries, playgrounds and dharmasalas. The exemption clause is as such applicable to buildings used for educational purposes. A plain grammatical construction of Sub-clause (b) goes to show that this clause divides two categories of building by a comma. The building used for educational purposes and public library have been put in one category, whereas, the playgrounds and dharamasalas have been put in a different category with a comma intervening these two class of buildings. The question to be considered is whether the words from which no income is derived is applicable to both categories of buildings, or is qualified only to the later category playgrounds and dharamasalas which are open to the public.
15. In Municipal Council, Trichinopoly v. S. Venkatarama Aiyer AIR 1931 Mad 55, same expression occurring in Clause (a) of Section 83 of the Act came up for interpretation. The said clause is quoted as below :
'Coming now to the propriety of the collection of the tax of Rs. 58-14-2 under Act 5 of 1920, we have to construe Clause (a). Section 83, of that Act which says that the following buildings and lands shall be exempt from property tax :
'Places set apart for public worship and either actually so used or used for no other purposes choulties, buildings, used for educational purposes, and libraries and playgrounds which are open to the public and from which no income is derived.' Justice Madhavan Nair did not agree to construe the clause by applying the words 'which are open to public and from which no income is derived' to the buildings used for educational purposes and library. He found that there can be no justification for the use of the word 'and' between 'purposes' and 'libraries' and held that if the Legislature wanted said interpretation, then the first 'and' between 'purposes and libraries' would have been dropped retaining only the 'and' between 'libraries and playgrounds'. But that has not been done, and so he found that the words which are open to the public, and from which no income is derived, are referable according to the natural construction of the words only to 'libraries and playgrounds' and not to buildings used for educational purposes.
16. In Mohd. Shabbir v. State of Maharashtra : [1979]1SCR298 , Section 27 of the Drugs and Cosmetics Act, 1940 came for interpretation. Paragraphs 3 and 4 are relevant and are quoted as below :
'3. Section 27 is the penal section under which the offence is punishable and this section runs thus :
'Whoever himself or by any other person on his behalf manufactures for sale, sells, stocks or exhibits for sale or distributes :
(a) any drug :
(i) deemed to be misbranded under Clause (a), Clause (b). Clause (c), Clause (d). Clause (f) or Clause (g) off Section 17 or adulterated under Section 17B ; or
(ii) without a valid licence as required under Clause (c) of Section 18.'
shall be punishable with imprisonment for a term which, shall not be less than one year but which may extend to ten years and shall also be liable to fine :
Provided that the Court may, for any special reasons to be recorded tn writing, impose a sentence of imprisonment of less than one year.'
'4. It was contended by Mr. Singh that in order to fall within the ambit of this section the accused must manufacture the drugs for sale or stock or exhibit for sale or distribute the same. There is no evidence in this case to show that the appellant had any shop or that he was a distributing agent. All that has been shown is that the tablets concerned were recovered from his possession. It was urged that possession simpliciter of the tablets of any quantity whatsoever would not fall within the mischief of Section 27 of the Act. On an interpretation of Section 27, it seems to us that the argument of Mr. Singh is well founded and must prevail. The words used in Section 27, namely, 'manufacture for sale, sells.' have a. comma after the clause 'stocks or exhibits for sale'. Thus the section postulates three separate categories of cases and no other. (1) manufacture for sale ; (2) actual sale ; (3) stocking or exhibiting for sale or distribution of any drugs. The absence of any comma after the word 'stocks' clearly indicates that the clause 'stocks or exhibits for sale' is one individual whole and it contemplates not merely stocking the drugs but stocking the drugs for the purpose of sale and unless all the ingredients of this category are satisfied, Section 27 of the Act would not be attracted. In the present case there is no evidence to show that the appellant had either got these tablets for sale or was selling them or had stocked them for sale. Mr. Khanna appearing for the State, however, contended that the word stock used in section is wide enough to include the possession of a person with the tablets and where such a person is in the possession of tablets of a very huge quantity, a presumption should be drawn that they were meant for sale or for distribution. In our opinion, the contention is wholly untenable and must be rejected. The interpretation sought to be placed by Shri Khanna does not flow from a true and proper interpretation of Section 27. We, therefore, hold that before a person can be liable for prosecution or conviction under Section 27(a)(i)(ii) read with Section 18(c) of the Act, it must be proved by the prosecution affirmatively that he was manufacturing the drugs for sale or was selling the same or had stocked them or exhibited the articles for sale. The possession simpliclter of the articles does not appear to be punishable under any of the provisions of the Act. If, therefore, the essential ingredients of Section 27 are not satisfied the plea of guilty cannot lead the Court to convict the appellant.'
In Samaalana Abdulla v. State of Gujarat : AIR1996SC569 , Section 3(1)(c) and 3(2) of the Official Secrets Act, 1923 came for interpretation on which Supreme Court held in paras 7 and 8 as follows :
'7. It was next contended that the High Court has misinterpreted Section 3(1)(c) and erroneously held that the sketch, plan, model, article or note or other document or Information need not be secret for establtshing an offence under that section. In order to appreciate this contention, it is necessary to refer to Section 3 which reads as follows :
'3. Penalties for spying,--(1) If any person for any purpose prejudicial to the safety or interests of the State :
(a) approaches, inspects, passes over or is in the vicinity of. or enters, any prohibited places ; or
(b) makes any sketch, plan model or note which is calculated to be or might be or is extended to be, directly or indirectly, useful to an enemy ; or
(c) obtains, collects,records or publishesor communicates toany other person anysecret official code orpassword, or anysketch, plan, model,article or note or otherdocument orinformation which iscalculated to be ormight be or isintended to be directlyor indirectly, useful toan enemy or whichrelates to a matter thedisclosure of which islikely to affect thesovereignty andintegrity of India, thesecurity of the State orfriendly relations withforeign States.'
The High Court held that the word 'secret' in Clause (c) qualifies only the words 'official code or password' and not 'any sketch, plan, model, article or note or other document or information'. The reason given by the High Court is that after the phrase 'any secret official code or password', there is a comma and what follows is thus not intended to be qualified by the word 'secret'. The Calcutta High Court in Sunil Ranjan v. State, has also taken the same view. It has held that the word 'secret' in the said section qualifies official code or password and not any sketch, plan, model, article or note or other document or information. This is clear from the comma and the word 'or' which comes after the word 'password'.
8. In our opinion, the view taken by the Gujarat High Court in this case and by the Calcutta High Court in the case of Sunil Ranjan Das is correct. We find that the said interpretation also receives support from Sub-section (2) of Section 3. While providing for a presumption to be raised in prosecution for the offence punishable under that section the phraseology used by the Legislature is 'if any sketch, plan, model, article, note, document or information relating to or used in any prohibited place, or relating to anything in such a place, or any secret official code or password is made, obtained, collected, recorded, published or communicated'. From the way the said sub-section is worded it becomes apparent that the qualifying word 'secret' has been used only with respect to or in relation to official code or password and the Legislature did not intend that the sketch, plan, model, article, note, document or information should also be secret. As we do not find any substance in the second contention raised on behalf of the appellant it is also rejected. In the result the appeal fails and is dismissed.'
17. Plain grammatical interpretation, in the light of the decisions cited above as such supports the interpretation given by appellate court. Section 99(2) divides into twocategories of building by use of comma between buildings used for educational purposes and public libraries in one category and for playgrounds and dharamshalas which are open to public and that the qualifying words, 'from which no income is derived' as applicable only to the later categories of properties.
18. The aforesaid interpretation is further supported by the reasons that ordinarily buildings, used for educational purposes and public libraries are not used for deriving income whereas playgrounds and dharamsalas can be put to both kind of user, namely, for purposes which may derive income or may not derive any income. In the year 1924 when the Act was enacted the buildings used for educational purposes and public libraries could not be conceived to be erected for the purpose of income and profit and public libraries are not known to derive any income other than membership fee for their subscriptions and maintenance. Secondly, the averment made in the petition that the school building, which is fifteen years old and was never subjected to the property tax and further that this was the first assessment, has not been denied. There is no assertion on behalf of petitioner that the building or any portion thereof was let out for hire, or that any rental income was derived. By notice issued to the school, the Executive Officer demanded production of documents relating to details and particulars of the students as well as books relating to the income of the school. The Board did not have any material either from any inspection report or otherwise that any part of the building was let out for hire, and further there was nothing on record to show that Municipalities in the State levy property tax on the buildings used for educational purposes, to give the Board's jurisdiction to impose tax under Section 60 of the Act, which provides that the Board may, with the previous sanction of Central Government, impose in any cantonment any tax which under any enactment for the time being in force, may be imposed in any municipality in the State wherein such cantonment is situated.
19. Coming to the last submission of the counsel for petitioner that tax due was not deposited, and thus the appeal was incompetent, I find that Section 87(b) provides that amount, if any. in dispute in the appeal, has to be deposited by the appellant in the office of the Board. In the present case, the amount in dispute in the appeal was the amount given in the notice against which the appeal was filed and the said amount was deposited by the school. During the period of pendency of appeal, in case any further amount fell due, the appellant was not required to deposit the same as a condition for hearing of the appeal. The matter with regard to amount due as a pre-condition of hearing of appeal, in case of St. Marry School which was connected with writ petitions filed by Saint John's School went up to Supreme Court in which the Apex Court relied upon Shyam Kishore v. Municipal Corporation, Delhi : AIR1992SC2279 , and disposed of the civil appeal in terms of the observations made in the said judgment. In the said case, Supreme Court was interpreting the provisions of Section 170(b) of the Delhi Municipal Corporation Act, 1957 in which same words are used to the effect that no appeal shall be heard or determined under this Chapter unless the amount, if any, in dispute, in the appeal, has been deposited by the appellant in the office of the Corporation. Supreme Court upheld the condition for hearing and determination of the appeal, and Court did not agree to the challenge against the condition being ultra vires of Article 14 of the Constitution of India on the ground that such provisions have been upheld by Supreme Court in Ganga Bai v. Vijay Kumar : [1974]3SCR882 ; Anant Mills Company Limited v. State of Gujarat : [1975]3SCR220 ; Vijay Prakash Mehta v. Collector of Bombay : [1989]175ITR540(SC) , and other decisions. In para 38 of the judgment, Supreme Court held that aforesaid cases had no occasion to consider what the decision would be, if the condition placed on the right of appeal were unduly onerous or such as to render the right of appeal totally illusory. In Wire Netting Stores, Delhi v. Regional Provident Funds Commissioner, New Delhi, 1981 Lab IC 1015, Delhi High Court held the provision in Employees' Provident Fund Act to this effect as violative 'of the provisions against which appeal was pending. Supreme Court, however, took another route, in the facts of the said case, to construe the provisions of Section 170(b) for saving its constitutionally. It held firstly, that the words 'heard and determined', under Section 170(b) are capable of broader interpretation and that the payment of disputed tax is not a condition precedent to the entertainment or admission of the appeal and that such an interpretation will provide some much needed relief for the harshness of the provision. The assessee may not be able to deposit tax while filing the appeal but may be able to pay it up within a short time or at any rate before appeal comes on for hearing in the normal course. Some times to compel the assessee to pay the demanded tax for several years in succession might very well cripple him, or, the hearing of the appeal may be adjourned to give him a chance to pay up the tax and thus Clause (b) of Section 170 was read down as precondition to the hearing of the appeal at its disposal and not to as a condition to entertainment of the appeal itself. A careful reading of the report shows that Supreme Court tried to save its validity by softening its rigour of deposit of tax due only as a condition of hearing and its disposal on merit and made observations against compulsion to pay demanded tax of several years or tax alleged to have accrued during pendency of appeal.
20. Applying the same principle, ! hold that the amount, if any, in dispute in the appeal under Section 87(b) of the Act means the amount which was in dispute when the appeal was filed. Any other interpretation will bring harshness into the provision and will make the right of appeal illusory. For example, in the present case, whereas the amount challenged in the notice was Rs. 7,24,654.76, the amount claimed to be due by the Board at the time of hearing of the appeal was Rs. 1,04,52,534.69 with interest upto March, 1999. For a school having about 800 students, a payment of such a huge amount as a pre-condition of hearing the appeal was virtually impossible and thus the hearing of appeal, would have become totally illusory. In the circumstances, in order to save Clause (b) of Section 87 from the vice of invalidity and by taking the same escape route of statutory interpretation provided by Supreme Court in Shyam Kishore's case (supra), I take the liberty in extending the same reason a little further, in holding that the amount sought to be deposited is the amount alleged to be due with accruals, which was in dispute at the time of filing of the appeal, and not the amount at the time of hearing or determination of appeal. The objection of the counsel for petitioner is as such over-ruled.
21. For the reasons, detailed and discussed above, the order of appellate court is upheld and the writ petition is dismissed. Costs on parties.