Chennai: Madras High Court has ordered notice to the state government on a petition seeking exemption from payment of property tax by unaided educational institutions.
The first Bench comprising Chief Justice Indira Banerjee and Justice PT Asha, when a petition filed by Monfort Academy Matriculation Higher Secondary School came up for hearing, has ordered notice to the state government pleader T.N. Rajagopalan and directed the government to file reply within two weeks.
In the petition, Monfort Academy School has challenged cancelling the exemption granted to buildings used for unaided educational institutions under the Tamil Nadu Municipal Laws (second Amendment) Act 2018 in respect of the Amendment to section 101(c) of the Chennai City Municipal Corporation Act, 1919.
The school has been administered by Christian Religious Community and it is a minority Educational Institution under Article 30(1) of the Constitution. The section 101 of Chennai City Municipal Corporation Act, 1919 and under section 83(c) of the Tamil Nadu District Municipalities Act,1920 granted exemption to all the buildings and lands of educational institutions from payment of property tax.
While so on the basis of the recommendation of the third State Finance Commission the state government had decided to cancel the exemption for buildings used for educational purpose except for the schools run by the government or aided by the government.
Subsequently, the Chennai City Municipal Corporation on in an order dated February 21, 2018 had decided to levy property tax to the unaided educational institutions from the financial year 2017-18 and in addition it had also decided to levy 60 per cent surcharge over above the property tax. A gazette notification was also issued on March 7, 2018. A notice was served to the school despite opposition and a demand notice was served seeking for an amount of Rs 1,85,232 for two half year period and directing the school to pay the amount within a week.
The counsel for the school, Xavier Arul Raj submitted that the school had already remitted an amount of Rs 57,885 without surcharge for period from 2017-2018. A petition as to whether the educational institutions are entitled to pay property tax has been pending before the Apex Court and petitions also pending before Madras High Court.
The school sought to declare the Tamil Nadu Municipal Laws (Second Amendment) and the amendment to Section 101 (c) of the Chennai City Municipal Corporation Act, canceling the exemption granted to the buildings used for unaided educational institutions as ultra-vires of the Constitution and illegal.