Delay In Filing Certificate Not Ground To Deny Property Tax Exemption To School: Chhattisgarh High Court

The Chhattisgarh High Court on 31 July held that a municipal authority cannot reject a property tax exemption claim merely because a school did not submit its Section 12AA registration certificate under the Income Tax Act, 1961 (which grants tax exemption to charitable institutions) along with its initial self assessment or representation.

Justice Parth Prateem Sahu disposed of the writ petition filed by Riverdale World School, which challenged a demand notice seeking recovery of Rs. 30,808 towards property tax for the financial year 2020 to 2021. He held:

“The stand taken by Respondent No.2 that, since the order of registration under Section 12AA of the Act of 1961 was not submitted along with the self-assessment and representation, no exemption can be granted, is not sustainable. The relevant consideration would be whether, for the period in respect of which the property tax has been levied, the petitioner was registered under Section 12AA of the Act of 1961 or not.”

Riverdale World School challenged the demand notice dated 23 January 2021, contending that it is run by a charitable foundation registered under Section 12AA of the Income Tax Act, 1961 and is therefore entitled to exemption from property tax under the Chhattisgarh Municipalities Act.

It submitted that although the Municipal Council admitted that the school had obtained registration under Section 12AA and had furnished the registration order on 9 September 2020, it nevertheless refused the exemption on the ground that the document had not accompanied the original self assessment and representation.

The Municipal Council accepted that the school possessed registration under Section 12AA but maintained that the exemption could not be granted because the registration order was not furnished at the time of filing the self assessment.

Rejecting this stand, the High Court held that the decisive factor was whether the school was registered under Section 12AA during the period for which property tax had been levied, and not whether the registration certificate had been attached to the original self assessment or representation. It observed:

“From perusal of the reply of Respondent No.2 is it apparent that though the order of registration of the petitioner under Section 12AA is accepted, however, the benefit of exemption has not been extended to the petitioner only on the ground that the said document is not submitted along with the self-assessment and representation of the petitioner.”

Accordingly, the High Court directed the school to submit a fresh representation along with all relevant documents within three weeks. It further directed the Municipal Council to decide the representation in accordance with law within four weeks thereafter, keeping in view the petitioner's registration under Section 12AA. It also clarified that if the authority finds the petitioner eligible, it shall grant the exemption.

Pending disposal of the representation, the High Court ordered that no coercive action shall be taken against the petitioner pursuant to the impugned recovery notice.

For the Petitioner: Soumitra Kesharwani, Advocate

For the State: Malay Jain, Panel Lawyer