Sriram Educational Trust vs The President, 89, Perumalpattu Panchayat Union

Chitra Venkataraman, J.—The appellant/petitioners in these batch of writ appeal/writ petitions are educational institutions. They challenge

the correctness of the demand for property tax u/s 172 of the Tamil Nadu Panchayats Act, 1994, on the ground that buildings used for educational

purpose are exempt from liability under Rule 15(c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999.

It is seen that on the issue of exemption, there are two decisions of this Court taking two different views. In the decision reported in (2006) 3

MLJ 1068 (Kamaraj College of Engineering And Technology, Managing Board, rep. by its Secretary, Virudhunagar v. President, K. Vellakulam

Panchayat, Madurai District), Justice P.Jyothimani considered the question of exemption on the assessment of house tax on the educational

institutions under Rule 15(c) of the Tamil Nadu Village Panchayats (Assessment and Collection of Taxes) Rules, 1999. The learned Judge held that

buildings used for educational purposes including hostels recognised by the State and other educational authorities, and irrespective of the fact as to

whether they are aided or unaided or run on self-financing pattern are entitled to have the benefit of exemption from the levy of house tax as per

Rule 15(c). Learned Judge held ''When once the approval is given by the competent authority or affiliation given by the Universities, then such

educational institutions, whether they are aided or not, are deemed to be the educational institutions as in the general terms that, after the law

relating to prohibition of capitation fee had been introduced by the legislation, there is no question of any commercial character in the educational

institutions at all which are recognised"".

In W.P. No. 48068 of 2002, by order dated 30.4.2003, Justice P.K.Misra,J. had an occasion to consider the very same issue of exemption on

the levy of house tax under the Tamil Nadu Panchayats Village (Assessment and Collection of Taxes) Rules, 1999 on buildings used for

educational purposes. The decision reported in (2006) 3 MLJ 1068 (Kamaraj College of Engineering And Technology, Managing Board, rep. by

its Secretary, Virudhunagar v. President, K. Vellakulam Panchayat, Madurai District), however, was not placed before the learned single Judge.

Going through Rule 15, the learned single Judge held that charitable organisations running hostels or libraries or shelter for animals alone would be

eligible for exemption. The learned Judge held, where the person using the hostels or libraries paid rent, it could not be said that taxes are not

leviable. The learned Judge pointed out that ""A reading of the entire provisions make it clear that the intention is to exempt charitable organisations

which are running such hostels or libraries or shelters for animals. Where however the persons using the hostels and libraries are paying rent, it

cannot be said that tax is not leviable. The intention seems to be for the benefit of the charitable organisation and not for organisations which are

collecting money for particular use."" Referring to the saving clause in Rule 15(c) and the old Rule under the 1958 Act, learned single Judge held

that in view of the decision reported in Nepco Schlenk Engineering College Vs. The President, Keriseri Panchayat and Others, , the benefit of

exemption would apply to institutions in spite of charging rent from the occupants for the period 1985 to 2003. The present provision after 2003,

however, restricted the exemption to institutions run on charitable basis. The said order of Justice P.K. Misra is now under challenge in W.A. No.

2080 of 2003. Considering the conflicting views, writ petitions are placed before the Division Bench for considering the claim for exemption along

with the writ appeals.

In all these writ petitions, the educational institutions are not charitable institutions. The sum and substance of the contentions of the petitioners

herein is that buildings used for educational purposes and the hostels attached thereto are entitled to the benefit of tax exemption. The charitable

character is not of any relevance to the consideration of the application of the exemption provisions. The respondents however support the order

of the learned single Judge holding that charitable educational institutions alone qualify for exemption under the provisions of Rule 15(c).

Before going into the individual contentions of the counsel appearing in different writ petitions and writ appeals, the provisions of the Act of

1994 and the Rules need to be adverted to. Section 172 of the Tamil Nadu Panchayats Act, 1994, is the charging provision to levy house tax on

all houses in every panchayat, village on the basis on which such tax was levied in the local area concerned immediately before the commencement

of this Act or on the basis of classified plinth area at the rates specified in Schedule I, as the village panchayat may adopt subject to the provisions

of Sub-section (3). Sub section (3) deals with the manner of levy. It states, by notification, the Government shall, determine in regard to any

panchayat, village or any class of panchayat villages, whether the house-tax shall be levied every half-year or year having regard to the

classification of the local areas, annual receipts of the village panchayat and as given under the various sub clauses to the Sub Section. Under Sub

Section (4), the Government is empowered to make Rules to provide for specifying the persons who shall be liable to pay the tax and the giving of

notices of transfer of houses; the circumstances in which, and the conditions subject to which, houses constructed, reconstructed or demolished, or

situated in areas included in, or excluded from the panchayat village during any half-year or year, shall be liable or cease to be liable to the whole

or any portion of the tax. Section 176 of the Act contemplates grant of exemption under the Act by the panchayat or the panchayat union in

accordance with the rules framed. The section also empowers the state to grant exemption in any particular case. In terms of Sub section (3) of

Section 173, the Tamil Nadu Village Panchayat (Assessment and Collection of Taxes) Rules, 1999 was formulated under G.O.Ms. No. 255,

Rural Development Department dated 13.12.1999. The Rules provided for the procedure for the determination of assessment of tax. Rule 6 gives

the basis of levy of house tax. It states that any village panchayat shall have the power to assess the levy and collect the house tax as the basis

referred to u/s 172 in accordance with the provisions of the Act.

As in any other tax enactment, Rule 15 contains the exemption provision. for the purpose of our consideration, Rule 15(c), along with the

provisos on which great reliance was placed by the respondents in understanding the scope of the exemption, is of relevance. Rule 15 (c) reads as

follows:

Rule 15 - Exemption of specified classes of houses from house-tax.-- The following buildings shall, if they fall within the meaning of house as

defined in the Act, be exempt from the house-tax --

(a) ...

(b) ...

(c) buildings used for educational purposes including hostels and libraries which are open to the public and public buildings used for charitable

purpose of sheltering the destitutes or animals.

(d) to (k) ...

Provided that nothing contained in Clauses (a) and (c) shall be deemed to exempt from house-tax, if any building for which rent is payable by the

person or persons using the same for the purposes referred to in the said clauses:

Provided further that educational institution (nor commercial in nature) exempted from levy of house-tax, immediately before the commencement of

the Act shall continue to be exempted under the said Act. Explanation. -- The exemption granted under this rule shall not extend to residential

quarters attached to schools or colleges not being the hostels or residential quarters attached to hospitals, dispensaries and libraries.

A reading of the Rule 15 shows that apart from panchayat buildings and Government maintained buildings, the various Sub Rules list out

buildings entitled to exemption subject to the qualification as to the character of use and purpose provided for therein. On a reading of the

exemption provision, it is clear that wherever the Rule contemplated a qualification to any class of houses as a condition for availing the exemption,

it is specific enough to say so. Take for instance Sub clause (a) relating to buildings set apart for public worship actually used so or used for no

other purpose; Clause (b) exempting choultries that are rent free and those that charge rent, used the same for charitable purposes; Clause (c)

libraries which are open to public, and public buildings used for charitable purpose of sheltering the destitutes or animals are exempt from tax. So

too, Charitable hospitals, dispensaries and other buildings exclusively used for charitable purposes (Sub Rule (e)). As for buildings used for

educational purposes are concerned, the Sub Rule 15(c) stops by referring to the use of the building as for educational purposes including hostels.

There are no other qualifying words to attend on to the phrase ""buildings used for educational purposes including hostels"". There are two provisios

which carve out the exceptions to the claim for the exemption -- rented buildings used for purposes referred to under Sub rule (a) and (c) are not

entitled to claim the benefit of exemption. Under the second proviso, educational institutions not commercial in nature exempted from house tax

immediately before the commencement of the Act shall continue to be exempted under the said Act.

Mr.R. Muthukumaraswamy, learned senior counsel appearing in W.P. Nos. 41399 of 2005, 12049, 12696 and 17030 of 2006 and W.P.

Nos. 1314 and 6112 of 2007, submitted that Rule 15(c) contemplated exemption of buildings used for educational purposes and the hostels

thereto are entitled to exemption. In considering the claim, the question of the charitable character or charging of fee by the educational institutions

does not enter into consideration. He referred to the decision reported in Islamic Academy of Education and Another Vs. State of Karnataka and

Others, paragraph 7 at page 700 to impress on the fact that Apex Court recognised the need for the educational institution to fix the fee structure

taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. Hence, it

is not open to the authorities concerned to create an artificial distinction among institutions run on charitable basis and those charging the fee; as

such classification is not contemplated under the Rules to deny the benefit of the exemption.

Mr.R. Muthukumaraswamy, learned senior counsel, also referred to the decision reported in The Municipal Council Vs. S. Venkatarama Aiyar,

to explain the phrase ""open to public"", apart from Tata Engineering and Locomotive Co. Ltd. Vs. The Sales Tax Officer and Regional Transport

Officer, Poona and Another, and Kehar Singh and Others Vs. State (Delhi Administration), to impress on the meaning of the term ""Public"" and

further submitted that the said phrase qualified only a library. Referring to the need for going by the language of the provisos on the aspect of

interpretation, he referred to the decision reported in Tribhovandas Haribhai Tamboli Vs. Gujarat Revenue Tribunal and others, to impress on the

submission that when the main provision is unambiguous, proviso cannot be read into the main provision to understand the same.

Mr.T.V.Ramanujun, learned senior counsel appearing for the appellant in W.A. No. 2080 of 2003, filed against the judgment of Justice

P.K.Misra, referred to the recovery proceedings originally made and contended that a civil suit was filed in O.S. Nos. 85 of 2001 and 270 of

2001 against the Tahsildar and Commissioner seeking injunction to restrain the Panchayat from collecting the property tax. The said suits were filed

contending that as educational institutions, they are entitled to be exempted vide Section 49(1)(c) of the Manual of Panchayat Administration

Volume I and Section 83 of the Tamil Nadu District Municipalities Act (Amended Act 42 of 1994). The appellant also quoted instances where the

Government had exempted institutions from payment of property tax. The appellant pointed out to the representation made as early as 17.3.1997

that on the direction from the Government, they had also made a request before the Panchayat. It is stated that both the suits are dismissed for

default. The appellant was served with a notice dated 9.12.2002 and was called upon to remit a sum of Rs. 72,16,920/- being the house tax for

the period 1985-2003. The appellant challenged the same contending that the levy of tax on buildings used for educational purposes and libraries

open to public is contrary to the Rules which does not impose any qualification on the usage.

Mr. T.V.Ramanujun, learned senior counsel, pointed out that the educational institutions run by the petitioner were exempt from property tax

even under the old Act. He submitted that no rent was payable by the students in the hostel. He pointed out that the language of the Section does

not give any room for an interpretation that exemption was available only to charitable institutions. He also pointed out that the learned single Judge

erred in reading the latter part of the Section relating to charitable institutions run for destitutes and animals into the provision relating to educational

institutions. He submitted that for the purposes of Rule 15, charitable nature of the institution is not the touchstone to decide on the issue.

Supporting the stand of the other writ petitioners, he further submitted that the students are licensees and as such, no tenancy could be attributed to

the stay in the hostel. He pointed out that the stay in the hostel is an incidence of education; therefore, part of the service.

Mr.G.Masilamani, learned senior counsel appearing for the petitioner in W.P. Nos. 12681 of 2003, 22509 and 22510 of 2006, submitted that

under Rule 15(c), once the property is used for educational purposes, there could be no levy of property tax under the provisions of the Act.

Referring to the concept of rent, learned Counsel submitted that it denotes a payment in respect of amenities and services provided by the landlord

under the terms of tenancy. In an educational institution, there is hardly any room even for suggesting the relationship of a landlord and tenant.

Educational institutions not being commercial in their character and status, the denial of the exemption by making a distinction between those aided

and unaided, or between institutions run by charitable institutions and Ors. is not warranted by the language of the Rule. He further submitted that

the charitable character of the institution is not a rider for buildings housing educational institutions to earn an exemption. Hence, for the purpose of

considering the exemption under Rule 15, charitable or commercial nature does not enter into the consideration at all. He submitted that when the

language of the provision is couched in clear, unambiguous terms and the object to exempt buildings used for educational purpose is easily

discernible from the language of the Section, the same cannot be strained to read anything more than what is written there. Mr.G.Masilamani,

learned senior counsel, pointed out to Rule 15(c) and 15(e) that whenever the legislature intended charitable character as a deciding factor for

grant of exemption, it expressly said so. The phrase ""open to public"" has its relevance to libraries and charity cannot be read into the first part of

the provision to deny the exemption. Answering the submission of the learned Advocate General that the amount charged and included as part of

the fee amounted to rent as far-fetched, he submitted that the term ""rent"" cannot be given a liberal meaning. He pointed out to Section 2(a) relating

to definition of ""Capitation Fee"" under the Tamil Nadu Educational and Prohibition of Capitation Fee Act and pointed out that the concept of rent

has no place in the fee charged. Elaborating on the term ""public"", he submitted that the same has to be read as applicable to cases where there is

no restriction to the entry. It meant in fact an extensiveness of the entry available, meaning thereby ""open to all"" in contradistinction to a restricted

entry as in the case of private charity. He further pointed out that, for understanding the width of the provision, the provisos cannot be telescoped

into the main provision. He also referred to the meaning of ""public"" as given under the Law lexicon to emphasize the fact that the exemption granted

to the buildings having educational institutions where the entry is not restricted to a particular section alone would answer the description of public

to have the benefit of exemption. Learned Counsel referred to the decision reported in Babua Ram and Others Vs. State of U.P. and Another, to

state that when the language of the statute is clear and unambiguous, it must be given effect to, even though it may be absurd.

Mr.V.Raghavachari, learned Counsel appearing for the petitioner in W.P.(MD) No. 9071 of 2005, apart from reiterating the contentions of

other Counsel, referred to the decision reported in Principal, St. Thomas College Vs. State of Kerala and Another, and the order dated

26.10.2006 in O.P. No. 9694 of 2003 and submitted that the exempted provision cannot be given a restricted meaning keeping the proviso in the

forefront.

Mr.R.Viduthalai, learned Advocate General, appearing for the State in all these writ petitions, drawing his inspiration from the judgment of

P.K.Misra,J., referred to the decision reported in Nepco Schlenk Engineering College Vs. The President, Keriseri Panchayat and Others, to point

out the difference in the language of the provision as they stand now and as it stood prior to the amendment that, under the original provision, even

if the institution charged rent from the occupants for the occupation of the hostels, the buildings were exempt from property tax, which is not so

under the present provision. Learned Advocate General referred to the decisions reported in Islamic Academy of Education and Another Vs.

State of Karnataka and Others, , and (2005) 6 SCC 537 (P.A. Inamdar v. State of Maharashtra), the decisions of the Apex Court on the issue of

institutions running educational institution only to contend that institutions charging fee cannot have the benefit of exemption. He referred to the

decisions in Indian Red Cross Society Vs. New Delhi Municipal Committee and Others, , Karnani Properties Ltd. Vs. Augustin, , Puspa Sen

Gupta Vs. Susma Ghose, 2007 (3) CTC 273 (Southern Petrochemicals Industries Co. Ltd. v. Electricity Inspector, E.T.I.O. and Ors.), A.P. Steel

Re-Rolling Mill Ltd. Vs. State of Kerala and Others, and Tata Iron and Steel Co. Ltd. Vs. State of Jharkhand and Others, to impress on the legal

proposition that exemption provision must be strictly construed and unless and until the petitioners show that they fall within the purview of the

provision, exemption could not be granted. He emphasized that if rent is charged in the institutions which are not open to public, even though used

for educational purpose, the buildings will not have the benefit of exemption. He submitted that the avowed object of the granting of exemption to

educational institutions must be kept in mind. by exempting, institutions which are charitable in character, are not made to suffer financially by

taxation and hence institutions charging fee are not eligible to gain an unintended benefit. Learned Advocate General submitted that the power to

levy tax is referable to Section 171 of the Tamil Nadu Panchayats Act, 1994. Section 176 and Rule 15(c) touch on exemption from payment of

tax on buildings used for purposes as stated in the provisions. He submitted that Rule 15(c) granted exemption to three classes (i) buildings used

for education and hostel (ii) buildings used for library for public and (iii) public buildings for charitable purposes. As per the first proviso, if rent is

charged on the buildings used for educational purposes, then the exemption for the building stands inapplicable. Hence, if rent is charged for the

hostels, irrespective of it being shown separately as rented out and included in the fee as an integral part of it, then the exemption provision fails in

these cases. Therefore, the exemption under Rule 15(c) is not an absolute one, but a qualified one. In short, the payment on the facility provided

activates the deeming fiction for the purpose of the proviso. In the circumstances, supporting the order of P.K.Misra,J, he prayed for dismissal of

the writ appeal and the writ petitions.

Mr. Gomathinayagam, appearing for respondents-1 and 2 in W.P. No. 35138 of 2003, referred to the decisions reported in Tata Engineering

and Locomotive Co. Ltd. Vs. The Sales Tax Officer and Regional Transport Officer, Poona and Another, at paragraph 10 AIR 1968 SC 1638 at

paragraph 23, (Tilkayal Shri Govindlalji Maharaja v. State of Rajasthan) and State of U.P. and Another Vs. Malik Zarid Khalid, to explain what

could be the interpretation of the word ""public"" in the context of the exemption provision. He submitted that the intention in granting exemption to

buildings running educational institutions is clear enough to show that institutions offering free education are not over-burdened by taxation and

hence, those alone would qualify for exemption. He submitted that even though the word ""charitable purpose"" is not used, yet, read with the

proviso, the intention of Section 15(3) is clear that exemption is available only to those organisations run without commercial character. He referred

to The Sole Trustee, Lok Shikshana Trust Vs. The Commissioner of Income Tax, Mysore, and Tilkayat Shri Govindlalji Maharaj Vs. The State of

Rajasthan and Others, and submitted that the word ""public"" has to be understood as institutions open for all not restricted by any aspect by reason

of it being run as a commercial institution. In the circumstances, the counsel for respondents pleaded that the order of the learned single Judge,

Justice P.K.Misra, gives the correct approach to the exemption provision, and hence called for no interference.

Heard counsel for the parties.

Before going into the various contentions, we need to advert to few principles on the construction of statutes, particularly with reference to the

taxing enactment and on the scope of the exemption provision.

The cardinal rule of construction of any statute is that the statute must be understood according to its plain language. Unless there are adequate

grounds to justify the inference of what the legislature clearly so intended, nothing be added or subtracted therefrom. Dealing with the interpretation

of the provisions of the statute in the decision reported in Prakash Nath Khanna and Another Vs. Commissioner of Income Tax and Another, , the

Apex Court held, the choice between a strict construction and a liberal construction arises only in case of doubt as regards the intention of the

legislature manifest on the statutory language. The need to resort to any interpretative process arises only where the meaning is not manifest on the

plain words of the statute. If the words are clear to convey the meaning, there is no need for any interpretation.

Touching on the various aspects on the construction of statutes, in the decision reported in Prakash Nath Khanna and Another Vs.

Commissioner of Income Tax and Another, , the Apex Court held:

It is a well settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict

of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is

that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has

been intended but what has been said. ''Statutes should be construed, not as theorems of Euclid''. Judge Learned Hand said, ''but words must be

construed with some imagination of the purposes which lie behind them''. (see Lenigh Valley Coal Co. v. Yensavage 218 FR 547. The view was

reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama AIR 1990 SC 981 and Padmasundara Rao and Others Vs. State

of Tamil Nadu and Others, ).

In D.R. Venkatachalam and Others Vs. Dy. Transport Commissioner and Others, it was observed that courts must avoid the danger of a priori

determination of the meaning of a provision based on their own preconceived notions of ideological structure or scheme into which the provision to

be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation.

There are sound principles which underlie the interpretative process on the exemption provision vide the decision reported in Commissioner of

Income Tax, West Bengal, Calcutta Vs. Raja Benoy Kumar Sahas Roy, at 475 Commissioner of Income Tax, Amritsar Vs. Straw Board

Manufacturing Co. Ltd., Central Board of Direct Taxes and Others Vs. Aditya V. Birla, . These decisions give us the guiding principle on the

understanding of an exemption provision to declare that exemption from tax is an exception to the general chargeability to tax under the provisions

of the taxing enactment. Hence, those who claim an exception from liability must bring themselves within the terms of the exemption provision.

Secondly, tax being the source by which the State gets its revenue, any claim of exemption from payment of tax must be clearly defined and

founded on plain language. Where one is concerned with the interpretation of an exemption claim in a taxing statute, once the assessee proves that

his case falls within the ambit of the proviso for exemption, then, that claim must, as far as possible, be liberally construed provided no violence is

done to the language used.

In the decision reported in Union of India and others Vs. M/s. Wood Papers Ltd. and another, , the Apex Court held that liberal and strict

construction of an exemption provision are to be invoked at different stages of interpreting it. The Supreme Court held:

...Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. for instance

tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its

construction, unlike charging provision, has to be tested on different touchstone. In fact an exemption provision is like an exception and on normal

principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of

inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes

applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict 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 is to be construed strictly and against the subject but once ambiguity or doubt about 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. Therefore, the first exercise that has to be

undertaken is if the production of packing and wrapping material in the factory as it existed prior to 1964 is covered in the notification.

From the Table extracted above it is clear that it is in two parts and exemption is allowable in the first part to the factory commencing production

on or after March 31, 1964, and in the second part to the existing factory to extent of enlarged capacity. If the first part is read in isolation it is

susceptible of construction as was adopted by the High Court.

The aforesaid principles are emphasized in a number of decisions of the Apex Court that if the wording of the Section is clear, then benefits

which are not available cannot be denied or conferred as the case may be ignoring or misinterpreting the words in the Section, haunted by a

supposed intention of the provision.

we have already seen Rule 15 on exemption on specified classes of houses for house tax. We are concerned with Clause (c) of Rule 15 and

the proviso to Section 15. A reading of the Rule indicates the plain language as to the intention that the exemption on buildings used for educational

purposes including hostels rests on the user aspect of the building simpliciter. There are no conditions annexed to the user or the dominant purpose

to exempt from tax. So long as the provision is plain and makes the reference to usage as ""for educational purposes"" as without any qualification to

suggest that the exemption as conditioned as in other instances to say that it is available only to those charitable institutions or those which are

imparting free education, we do not find any ground to go for any interpretative process to strain the language of the Rule to accept the submission

of the respondents as suggested by the learned Advocate General or by the Counsel appearing for the respondents. The scope of the exemption

contemplated has to be understood by the plain language of the Rule rather than by what is believed as its implied meaning or the supposed

intention. The language in the Rule carries no uncertainty to search for an implied meaning. The generality of the purpose stated as ''for the purpose

of education "" clearly supports the case of the petitioner that irrespective of the character of the institution as aided or unaided, free or restricted,

recognised or otherwise, the purpose for which the building is used alone qualifies the claim for exemption. In understanding the provision it is

totally unnecessary for us to get into the proviso As had been held in many a decision , normally a proviso is enacted to carve out something

special out of the general or to qualify what is in the enactment. Comparing this provision with the one that existed in 1988, it is seen that under the

old provision, originally, buildings used for educational purposes including hostels and libraries open to public were exempted from house tax. The

old provision also contained 2nd proviso. It read that even if the educational institutions charged rent for the occupation of the buildings used for

educational purpose and hostels from the occupants, the buildings are exempt from property tax. Reading these provisions, the respondents

pointed out that the intention on grant of exemption remaining the same, institutions which charged fee are outside the scope of Rule 15. We do not

agree with this submission. The scope of the provision has to be understood as they appear at the point of time relevant to the year under

consideration and not by process of comparison with the old provision. Considering the marked difference in the language of the provision, in the

face of the clear language, we do not find any support to the respondents getting into the old enactment to understand the scope of the present

provisions.

Much arguments were placed before us on the question of the availability of exemption to educational institutions, particularly in the context of

the phrase ""open to the public"". Mr.R.Muthukumaraswamy, learned senior counsel, submitted that the said phrase has no relevance to the

educational institutions; in any event as held in the decision reported in Islamic Academy of Education and Another Vs. State of Karnataka and

Others, with the prohibition on charging capitation fee, the phrase ""open to the public"" has to be understood as institutions without any restriction as

to admission. Per contra, the argument of the respondents is that an institution which has a restricted admission and not free for all is not an

institution open to public.

Mr.Gomathinayagam, appearing for respondents-1 & 2 in W.P. No. 35138 of 2003, referred to the decisions reported in Tata Engineering

and Locomotive Co. Ltd. Vs. The Sales Tax Officer and Regional Transport Officer, Poona and Another, AIR 1968 SC 1638 Paragraph 23

(Tilkayal Shri Govindlalji Maharaja v. State of Rajasthan) and State of U.P. and Another Vs. Malik Zarid Khalid, for the purpose of understanding

the scope of the phrase ""public"". It may be seen that all these decisions rest on the particular provisions of the Act concerned and the definition

contained therein and we do not find any assistance to support the contention of the respondent that ""open to public"" has to be read as referring to

institutions not charging fee or a charitable institution. As the well-known dictum of Rowlatt,J. in cape brandy syndicate v. Inland Revenue

Commission (1921) 1 KB 64 held ""in a taxing Act, one has to look merely at what is clearly said.... One can only look fairly at the language used.

He referred to the decision reported in The Sole Trustee, Lok Shikshana Trust Vs. The Commissioner of Income Tax, Mysore, to draw our

attention as to what ""education"" meant. This relates to a case of exemption under the Income Tax Act, 1961. Dealing with the issue as to whether

the Trust, engaged in the business of printing and publishing newspapers and journals, is entitled to exemption as not one carrying on any activity of

profit to fall under the definition of ""charitable purpose"" as given u/s 2(15), the Apex Court referred to the deed to hold that mere publication of

news or views could not be said to serve a purely or even a predominately educational purpose in its ordinary sense and that the Trust''s object did

not satisfy the requirement of ""not involving the carrying on of any activity of profit"". We do not find anything in the decision to advance the case of

the respondents.

Mr.R.Muthukumaraswamy, learned senior counsel, referred to the decision reported in The Municipal Council Vs. S. Venkatarama Aiyar,

wherein, the phrase ""public purpose"" with reference to the exemption from assessment to property tax under the Madras District Municipalities Act

came up for consideration. The question whether secondary schools open to public run by a proprietary concern which was entitled to appropriate

all the profit to itself qualify for exemption u/s 63(1)(a) of the Old Municipal Act (IV of 1884) and 83(a) of the Municipal Act (V of 1920), came

up for consideration. It was noted by this Court therein that the phrase ""public purpose"" had not been defined in the Act and held:

It does not seem to me that the Legislature, when it intended to exempt from rateability buildings used for imparting education which is admitted to

be a public purpose, intended to exclude only those institutions from which the headmaster derived no profits for himself. If that was the intention of

the Legislature that would have been explicitly so stated. Under the present Act, Act V of 1920, as I shall presently show, when I deal with

Section 83 of that Act, it is clear to my mind that the Legislature exempts from rateability all educational institutions irrespective of the question

whether the proprietor makes out of those institutions any private profit for himself or not. In the same way, I think all buildings used for

educational purposes were intended to be exempted from payment of the Municipal tax u/s 63 (1) (a) also.

The learned Judge pointed out to the language used in Section 83(a) as follows:

Places set apart for public worship and either actually so used or used for no other purpose, choultries, buildings used for educational purposes

and libraries and playgrounds which are open to the public and from which no income is derived.

Learned Judge held that all exemptions were grouped together in a separate Section negativing the construction put on the clause that

educational institutions ""which are open to public"" and for which the income is derived to mean earning income would not qualify for exemption.

Learned Judge held:

In my opinion the words in Sub-section (a) ""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.

We find that the reliance placed on by the petitioner on this decision is fully justified and answers the question in favour of the petitioners. As

stated already, the Rule does not put any condition on the educational institutions to avail the benefit of exemption. Considering the unqualified

terms in which the exemption provision is couched and in contradistinction to those clauses which qualifies the grant of exemption, all buildings run

for educational purposes are entitled to have the benefit of exemption. As already stated, the decision of this Court reported in The Municipal

Council Vs. S. Venkatarama Aiyar, fully covers the issue in the matter of understanding of the scope of the provision.

Mr.V.Raghavachari referred to the decision reported in Principal, St. Thomas College Vs. State of Kerala and Another, . This relates to the

Kerala Building Tax Act, 1975 where, u/s 3(1)(b), buildings used principally for educational purpose are entitled for exemption. The scheme is

more or less similar to the present provisions. Pointing out to the fact that the Section granting exemption does not restrict recognised educational

institution or regular colleges collecting fees or run with a profit motive, the Kerala High Court held that absence of recognition is not a ground for

rejecting exemption. Mr.V.Raghavachari also referred to the order in O.P. No. 9694 of 2003 dated 26.10.2006 reported in Sree Gokulam Ednl.

and Medical Trust Vs. Tahsildar, Vadakara Taluk and Others, . This related to a case of Students Hostel. Referring to the decisions reported in

1981 KLT 80 (S.R. Mariatta v. State of Kerala) 1984 KLT 310 (M. Mathew v. Executive Officer) and 1995 (2) KLT 588 (Chackravarthy

Hostel v. Municipal Commissioner), the Kerala High Court held that the hostels where the students stay and study is essentially used for

educational purposes entitled to exemption u/s 3(1)(b) of the Act. The decision of the Karnataka High Court go on similar lines as that of the

Madras High Court referred to above.

for the purpose of understanding the term ""public"" references were also made to the dictionary meaning, from Ramanatha Iyer - The Advanced

Law Lexicon. The reading of the Rule does not contain according to us, any such requirement as ""open to public"" as in the case of library. After

the word ""hostels"" in Rule 15(c), there is a conjunction to refer to libraries which are open to public, as an independent item of exemption. We hold

that the requirement as open to public relates only to a library and not with reference to an educational institution. Hence ""open to public"" is not a

qualification or an eligibility to confer a benefit of exemption on the educational institutions.

In any view of the matter, even assuming for a moment ""open to public"" is attached to an educational institution, yet, in the absence of any

definition of ""public"" under the Act, going by the definition of the term u/s 3(26) of the Tamil Nadu General Clauses Act, 1891, which reads as

under:

Public includes any class of the public or any community "", we hold that the educational institutions, even if they are open to a section of the public,

would nevertheless be treated as institutions eligible for exemption. It may be noted that in the decision reported in AIR (37) 1950 TC 103

(Alleppey Municipality v. Bombay Co.), dealing with Travancore District Municipalities Act XXIII of 1116, the Kerala High Court interpreted the

word ""public"" in Section 326(13) of the Act in the sense in which it was defined in Section 2(28) of the Travancore General Clauses Act and held

that this would include a section of the public. Dealing with the question as to whether a canteen run by a company for the benefit of the workmen

employed, not open to public would be required to take a licence from the Municipality, applying the provisions of the Travancore General

Clauses Act, the Court held, the word ""public"" meant as open to a section of the public and that the provisions of the Travancore General Clauses

Act applied to the Travancore District Municipalities Act. In that context, the company was required to get the licence from the municipal

authorities.

It is no doubt true that in the decision reported in Tata Engineering and Locomotive Co. Ltd. Vs. The Sales Tax Officer and Regional

Transport Officer, Poona and Another, , while considering the liability under the Bombay Motor Vehicles (Taxation of Passengers) Act (67 of

1958), the Apex Court held that where a nominal charge is realised from the employees of a company as regards the transport facilities, that would

not make the transport a public service vehicle carrying passengers so as to attract the provisions of Section 3. The Apex Court held that the word

public"" has got well-known connotation and means a carriage to which any member of the public can have free access on payment of the usual

charges. The employees for whom the bus service was run form a separate class and could not be said to be ""public"" as contemplated u/s 2(i) of

the Bombay Motor Vehicles (Taxation of Passengers) Act. The difference in the approach between the two aforesaid decisions need to be noted.

While in the latter case, the decision rested on the definition of ""private service vehicle"" under the Bombay Motor Vehicles Rules, 1959, and having

regard to the preamble of the Act, the Apex Court held that the tax could be levied only in the case of a public service vehicle in contradistinction

to a private service vehicle., the decision relied on under the Travancore General Clauses Act rested on the meaning of the word ""public"" as drawn

from the General Clauses Act, when there was no meaning assigned to the said term under the Travancore District Municipalities Act. As already

seen, even in the Tamil Nadu enactment with which we are concerned and going by the definition of ""public"" under the Tamil Nadu General

Clauses Act, we express our inability to go by the submission made by the respondents placing reliance on the decision of the Apex Court in the

decision reported in Tata Engineering and Locomotive Co. Ltd. Vs. The Sales Tax Officer and Regional Transport Officer, Poona and Another, .

As already noted, the decision cited by the respondents rested on the definitions contained in those enactments. In the circumstances, we hold that

for the purpose of understanding the exemption as regards educational institutions, the term ""public"" is not attached to the educational institutions as

a qualification for claiming exemption. In any event, ""open to public"" cannot be construed as referring to an institution imparting free education to all

without restriction. for the reasons already stated above in the preceding paragraphs, the word ""public"" cannot be construed as has been

contended by the respondents. The inclusion of the said phrase to the understanding of the clause, in any event, does not advance the cause of the

respondents. The availability or otherwise of an exemption rests purely on the usage of the building as for educational purpose and hostels attached

thereto and not restricted to charitable institutions only.

In the light of the discussions referred to above, following the decision of this Court reported in The Municipal Council Vs. S. Venkatarama

Aiyar, , we have no hesitation in accepting the plea of the petitioners herein. As far as the decision of P.K.Misra,J. is concerned, it is seen that the

reasoning of the learned Judge proceeds on the footing that educational institutions which are charitable alone would qualify for exemption. We do

not find any ground to read such a requirement as a condition to qualify the granting of an exemption. As already seen, when the language of the

Rule is simple and does not contain any doubtful phrase for understanding, it is not possible for us to introduce a requirement even as an exercise

of interpretative process. for the purpose of understanding, the main part of the Rule relating to educational institutions, it is not necessary for us to

look at the provisos which merely carves out an exception in the main part. Consequently, reading the Rule as it is, we hold buildings used for

educational purposes and the hostels thereto are entitled to the claim for exemption.

As far as the decision of Jyothimani,J. in the decision reported in (2006) 3 MLJ 1068 (Kamaraj College of Engineering And Technology,

Managing Board, rep. by its Secretary, Virudhunagar v. President, K. Vellakulam Panchayat, Madurai District), is concerned, while we agree with

the conclusion of the learned Judge in paragraph 15 of the judgment, we however, do not share the view of the learned Judge that the benefit of

exemption goes for affiliated institutions only. Recognition or affiliation of an institution has nothing to do with tax exemption under Rule 15(c). The

claim for exemption to educational institutions is not to be decided by inference or support drawn from requirements of the statutes which are

regulatory in character. Unless the exemption provision contemplates such a condition or makes a reference to those enactments, we do not find

any reason to read such restrictions into the Rule.

Mr. G.Masilamani, learned senior counsel, referred to the concept of rent as not applicable to the students paying the fee. However,

Mr.R.Viduthalai, learned Advocate General however, submitted that the rent aspect is an in-built one in the fee structure. Hence, the institutions

which collect fee are to be treated as collecting rent for the stay in the hostel. It is not denied by the respondents that the facilities of the hostel given

to the students are an incidence of the schooling in the particular educational institutions. As Mr.G.Masilamani rightly submitted, in the students

availing of the facility therein for continuing their education in the institutions, there does not arise a relationship of landlord and tenant to bring the

case under the proviso. The overall fee charged for the facilities offered as part of undergoing the schooling therein does not make a student a

tenant as in the normal meaning of the term. In the circumstances, it is not possible for us to accept the plea of the respondents that the charges for

the stay in the hostel availing a facility therein must be treated as rent. The submission made to bring the case under the first proviso which carves

out an exception to the main Rule only needs to be noted for rejection, in the light of the provisions contained in the main part of the Rules.

Consequently, we reject the case of the respondents.

In the above circumstances we allow the writ appeals and the writ petitions holding that on a plain reading of Rule 15(c), the dominant object or

the use of the building for educational purposes alone decides the claim for exemption and nothing more or less is required. Rule 15(c) is in an

unqualified term. There are no words of restriction attached to the portion dealing with educational purposes. In the above circumstances, we do

not agree with the view expressed by Justice P.K.Misra and affirm the view of Justice P.Jyothimani in the decision reported in (2006) 3 MLJ 1068

(Kamaraj College of Engineering And Technology, Managing Board, rep. by its Secretary, Virudhunagar v. President, K.Vellakulam Panchayat,

Madurai District), as stated in the preceding paragraph. Hence, we set aside the orders impugned herein dated 30.4.2003 thereby allow the writ

appeal and the writ petitions. Connected Miscellaneous Petitions are also dismissed. No costs.