Sh. Mohta Dharamshala Trust Vs. State of Rajasthan and anr. - Court Judgment

SooperKanoon Citationsooperkanoon.com/770998
SubjectMunicipal Tax
CourtRajasthan High Court
Decided OnMar-07-2003
Case NumberD.B. Civil Writ Petition No. 4972 of 2002
Judge Rajesh Balia and; H.R. Panwar, JJ.
Reported in2003WLC(Raj)UC630; 2003(3)WLN611
AppellantSh. Mohta Dharamshala Trust
RespondentState of Rajasthan and anr.
Excerpt:
rajasthan high court ordinance, 1949 - sections 6(f) and 18--rajasthan lands and buildings tax act, 1984--section 21--notification dated 31.3.1998 withdrawing exemption from tax--petitioner a religious and charitable trust--no opportunity given to make representation--hence writ--held, section 21(2) of the act of 1984 enables the govt. or authority to cancel or modify the notification issued under sub-section (1) of section 21 only after, reasonable opportunity is extended to affected tax pay for making representation--impugned notification cancelling the exemption of tax is made in breach of provisions of section 21 of act of 1984 hence cannot be sustained--thus assessment order and demand notice cannot survive--impugned notification and demand notice quashed and set-aside--petitioner is exempted from payment of tax.;writ petition allowed - rajesh balia, j.1. the petitioner trust through its trustee shashi kumar mohta has filed this writ petition challenging the assessment and demand of tax under the rajasthan lands and buildings tax act, 1984 (hereinafter called the act of 1984) assessed vide order dated 25.9.2002 (annex.10) dated 26.9.2002 (annex.11) and consequential demand notice dated 19.10.2002 (annex.12).2. this challenge has been made on several grounds including challenge to vires of proviso to sub-section (f) of section 6 and the validity of notifications dated 30.3.2000 (annex.13) as amended vide notification dated 28.6.2000 (annex.14) being ultra vires provisions of the act which relate to fixing flat rate at which the market value is to be determined for determining the amount of tax payable under the act of 1984. apart from the aforesaid grounds, it has also been urged that the notification dated 31.3.1998 (annex.16) by which uninhibited exemption from payment of tax in respect of land and buildings subject of religious and charitable purpose was cancelled and the exemption was confined to property used for non-commercial purpose to be invalid.3. the facts of the case giving rise to this writ petition are that in the year 1891 bikaner city was connected through railway line first time. to provide facility and convenience to the travelling public at large passing through bikaner, m/s. moti lal mohta, laxmichand and goverdhans constructed a temple and dharmshala near the railway station which was completed on 19.4.1893. since then the dharmshala is being administered by the mohta dharmshala trust which is a public religious and charitable trust for public purposes and registered as such in 1935. the dharmshala building as a property of the religious and charitable trust was exempted from payment of land and building tax as a result of notification dated 23.7.1981 published in rajpatra volume iv(g) dated 6.8.1981. according to the aforesaid notification, the class of land or building owned in the name of any religious and charitable trust was exempted from the tax payable in respect of such building. the state govt. in exercise of its power under section 21(2) of the act of 1984 withdrew the notification dated 26.7.1981 vide notification dated 31.3.1998 and notified that the exemption granted in favour of the land and building owned by a religious charitable trust shall be confined to non-commercial land and building. thus, the exemption in respect of commercial building owned by any religious charitable trust was cancelled.4. pursuant to this notification the assessment proceedings in respect of shops attached with the aforesaid dharmshala were initiated which ultimately resulted in the impugned assessment orders and demand notice.5. it was also urged by learned counsel that being a religious and charitable trust, for its maintenance some of its shops were let out and such income was used for trust purposes only. letting out property by a religious and charitable trust does not amount to use of such building for commercial purposes by the owner. use of the let out property by the lessee for commercial purpose cannot convert such trust property's nature as commercial building qua the owner.6. the validity of notification dated 31.3.1998, which became effective w.e.f. 1.4.1998 has been challenged inter alia on the ground amongst others that it was mandatory statutory requirement that the government, before cancelling or modifying the uninhibited exemption in respect of land and building used by any religious charitable purposes as extended vide notification 26.7.1981, affected parties are provided an opportunity of making representation against such cancellation or withdrawal of exemption to such properties and are considered.section 21 reads as under:21. power of government to exempt, reduce or remit tax.--(1) the state government or such other authority or officer authorised by the state government in this behalf, may if it considers it necessary in the public interest, by notification in the official gazette, exempt reduce or remit, whether prospectively or retrospectively, the tax payable in respect of any class of lands or buildings or by any class of persons.(2) the government or the authority or officer referred to in sub-section (1) may at any time cancel or modify any order issued under sub-section (1) and upon such cancellation the tax shall be payable in respect of the land or building concerned with effect from the time when such cancellation is made.(3) provided that no such cancellation shall be made unless the party likely to be affected by such cancellation has had a reasonable opportunity of making such representations:7. the scheme of section 21 is apparent. it enables the state government to exempt, reduce or remit prospectively or retrospectively, the tax payable in respect of any class of lands or buildings or by any class of persons. sub-section (1) of section 21 thus, envisages exemption in respect of any land and building or by any class or any tax payer as a class but not individual.8. after any exemption is notified under sub-section (1), sub-section (2) of section 21 enables the government or the authority or officer authorised by the state government in that behalf at any time to cancel or modify any order issued under sub-section (1). therefore, power to cancel or modify the notification issued under sub-section (1) very much exist, with the state government or authority or officer empowered on that behalf by the state government.9. however, before such power is exercised and any exemption of tax under sub-section (1) of section 21 to any class of land and building or any class of persons is cancelled or modified, the legislation envisaged that a reasonable opportunity of making representation for such cancellation is extended to the affected tax payers.10. the impugned notification dated 31.3.1998 withdrawing the notification dated 23.7.1981 to the extent it related to class of land and building of religious and charitable trusts used for commercial purposes, amounted to cancelling the exemption granted under section 21(1) to land and buildings belonging to religious and charitable purposes and used for commercial purposes. such cancellation adversely affeced the petitioner. it has been specifically averred by the petitioners that no such opportunity of making representation was afforded to them whereas they were affected by the impugned notice annex.16. this assertion has not been denied specifically by the respondents by stating that such opportunity was afforded. the respondents have rest contended by stating that legal formalities of considering question were completed and it was considered that such cancellation of exemption in respect of commercial building belonging to religious and charitable trust shall be in public interest.11. apparently, the notification of cancellation of exemption of tax to the class of land and building falling in the category of commercial land and building has been made in breach of provisions of section 21 and cannot be sustained. consequently the assessment orders and notice of demand following the aforesaid notification also cannot survive.12. in view of the aforesaid conclusion, it is not necessary to consider merits of order contention relating to vires of proviso to clause (f) of sub-section 6 and the notification prescribing flat rate for determining the market value of properties for subjecting the same to tax under the act of 1984, and merits of assessment order and demand notice in pursuance thereof, in the present petition.13. accordingly, the petition is allowed. the notification dated 31.3.1998 (annex.16) is quashed as a result of which notification dated 26.7.1982 shall remain in force in its original form. consequently, the assessment of the land and building belonging to the petitioner trust which is undisputedly a religious and charitable trust is exempted from payment of tax and the assessment order in respect thereof raising a demand cannot be sustained. accordingly, the impugned assessment orders annexs. 10 and 11 and demand notice annex.12 are also quashed.there shall be no orders as to costs.
Judgment:

Rajesh Balia, J.

1. The petitioner trust through its trustee Shashi Kumar Mohta has filed this writ petition challenging the assessment and demand of tax under the Rajasthan Lands and Buildings Tax Act, 1984 (hereinafter called the Act of 1984) assessed vide order dated 25.9.2002 (Annex.10) dated 26.9.2002 (Annex.11) and consequential demand notice dated 19.10.2002 (Annex.12).

2. This challenge has been made on several grounds including challenge to vires of proviso to Sub-section (f) of Section 6 and the validity of notifications dated 30.3.2000 (Annex.13) as amended vide notification dated 28.6.2000 (Annex.14) being ultra vires provisions of the Act which relate to fixing flat rate at which the market value is to be determined for determining the amount of tax payable under the Act of 1984. Apart from the aforesaid grounds, it has also been urged that the notification dated 31.3.1998 (Annex.16) by which uninhibited exemption from payment of tax in respect of land and buildings subject of religious and charitable purpose was cancelled and the exemption was confined to property used for non-commercial purpose to be invalid.

3. The facts of the case giving rise to this writ petition are that in the year 1891 Bikaner city was connected through Railway line first time. To provide facility and convenience to the travelling public at large passing through Bikaner, M/s. Moti Lal Mohta, Laxmichand and Goverdhans constructed a temple and Dharmshala near the Railway Station which was completed on 19.4.1893. Since then the Dharmshala is being administered by the Mohta Dharmshala Trust which is a public religious and charitable trust for public purposes and registered as such in 1935. The Dharmshala building as a property of the religious and charitable trust was exempted from payment of land and building tax as a result of notification dated 23.7.1981 published in Rajpatra Volume IV(g) dated 6.8.1981. According to the aforesaid notification, the class of land or building owned in the name of any religious and charitable trust was exempted from the tax payable in respect of such building. The State Govt. in exercise of its power under Section 21(2) of the Act of 1984 withdrew the notification dated 26.7.1981 vide notification dated 31.3.1998 and notified that the exemption granted in favour of the land and building owned by a religious charitable trust shall be confined to non-commercial land and building. Thus, the exemption in respect of commercial building owned by any religious charitable trust was cancelled.

4. Pursuant to this notification the assessment proceedings in respect of shops attached with the aforesaid Dharmshala were initiated which ultimately resulted in the impugned assessment orders and demand notice.

5. It was also urged by learned counsel that being a religious and charitable trust, for its maintenance some of its shops were let out and such income was used for trust purposes only. Letting out property by a religious and charitable trust does not amount to use of such building for commercial purposes by the owner. Use of the let out property by the lessee for commercial purpose cannot convert such trust property's nature as commercial building qua the owner.

6. The validity of notification dated 31.3.1998, which became effective w.e.f. 1.4.1998 has been challenged inter alia on the ground amongst others that it was mandatory statutory requirement that the Government, before cancelling or modifying the uninhibited exemption in respect of land and building used by any religious charitable purposes as extended vide notification 26.7.1981, affected parties are provided an opportunity of making representation against such cancellation or withdrawal of exemption to such properties and are considered.

Section 21 reads as under:

21. Power of Government to exempt, reduce or remit tax.--(1) The State Government or such other authority or officer authorised by the State Government in this behalf, may if it considers it necessary in the public interest, by Notification in the Official Gazette, exempt reduce or remit, whether prospectively or retrospectively, the tax payable in respect of any class of lands or buildings or by any class of persons.

(2) The Government or the authority or officer referred to in Sub-section (1) may at any time cancel or modify any order issued under Sub-section (1) and upon such cancellation the tax shall be payable in respect of the land or building concerned with effect from the time when such cancellation is made.

(3) Provided that no such cancellation shall be made unless the party likely to be affected by such cancellation has had a reasonable opportunity of making such representations:

7. The Scheme of Section 21 is apparent. It enables the State Government to exempt, reduce or remit prospectively or retrospectively, the tax payable in respect of any class of lands or buildings or by any class of persons. Sub-Section (1) of Section 21 thus, envisages exemption in respect of any land and building or by any class or any tax payer as a class but not individual.

8. After any exemption is notified under Sub-section (1), Sub-section (2) of Section 21 enables the Government or the authority or officer authorised by the State Government in that behalf at any time to cancel or modify any order issued under Sub-section (1). Therefore, power to cancel or modify the notification issued under Sub-section (1) very much exist, with the State Government or authority or officer empowered on that behalf by the State Government.

9. However, before such power is exercised and any exemption of tax under Sub-section (1) of Section 21 to any class of land and building or any class of persons is cancelled or modified, the legislation envisaged that a reasonable opportunity of making representation for such cancellation is extended to the affected tax payers.

10. The impugned notification dated 31.3.1998 withdrawing the notification dated 23.7.1981 to the extent it related to class of land and building of religious and charitable trusts used for commercial purposes, amounted to cancelling the exemption granted under Section 21(1) to land and buildings belonging to religious and charitable purposes and used for commercial purposes. Such cancellation adversely affeced the petitioner. it has been specifically averred by the petitioners that no such opportunity of making representation was afforded to them whereas they were affected by the impugned notice Annex.16. This assertion has not been denied specifically by the respondents by stating that such opportunity was afforded. The respondents have rest contended by stating that legal formalities of considering question were completed and it was considered that such cancellation of exemption in respect of commercial building belonging to religious and charitable trust shall be in public interest.

11. Apparently, the notification of cancellation of exemption of tax to the class of land and building falling in the category of commercial land and building has been made in breach of provisions of Section 21 and cannot be sustained. Consequently the assessment orders and notice of demand following the aforesaid notification also cannot survive.

12. In view of the aforesaid conclusion, it is not necessary to consider merits of order contention relating to vires of proviso to Clause (f) of Sub-section 6 and the notification prescribing flat rate for determining the market value of properties for subjecting the same to tax under the Act of 1984, and merits of assessment order and demand notice in pursuance thereof, in the present petition.

13. Accordingly, the petition is allowed. The notification dated 31.3.1998 (Annex.16) is quashed as a result of which notification dated 26.7.1982 shall remain in force in its original form. Consequently, the assessment of the land and building belonging to the petitioner trust which is undisputedly a religious and charitable trust is exempted from payment of tax and the assessment order in respect thereof raising a demand cannot be sustained. Accordingly, the impugned assessment orders Annexs. 10 and 11 and demand notice Annex.12 are also quashed.

There shall be no orders as to costs.