Running Linguistic Minority Institution Alone Does Not Entitle Trust To Property Tax Exemption; "Education Per Se" Not A Charitable Purpose: Bombay High Court
The Court dismissed an education trust's challenge to PCMC property tax demand, and noted buildings must be solely occupied and used for a public charitable purpose, and allowed year-wise claims for future.
The Bombay High Court has held that running a linguistic minority institution does not, by itself, entitle a trust to exemption from property tax, and has declined to accept the blanket proposition that education per se is a charitable purpose. The Court held that a trust claiming exemption under Section 132(1)(b) of the Maharashtra Municipal Corporations Act, 1949 must establish, with appropriate material, that its buildings and lands are solely occupied and used for a public charitable purpose.
Dismissing the writ petition of Jai Hind Sindhu Education Trust, the Court distinguished the Supreme Court's decision in Municipal Corporation of Delhi v. Children Book Trust (1992) 3 SCC 390 on the statutory scheme, and permitted the Trust to apply for exemption for the coming years.
A Division Bench of Justice Bharati Dangre and Justice Manjusha Deshpande observed, “We do not agree with the blanket proposition set out by the Petitioners that education per se is a charitable purpose…we do not accept the contention of the Petitioners that merely because the Trust is running a linguistic minority institution, that by itself would entitle it to be exempted because education is one of the fields, which is considered as charitable purpose”.
“…we have to read the definition of 'charitable purpose' as defined in the Maharashtra Public Trusts Act and what is to be ascertained is the predominant object of running such an institution (school) by the society, which definitely do not carry the profit making motive”, the Bench further noted.
Advocate Dormaan J. Dalal appeared for the petitioners and Dr. Milind Sathe, Advocate General appeared for the respondent.
“In our view, the position that every educational institution achieves the charitable purpose no longer is the accepted norm, but it will be imperative for the society/the school which imparts education to establish that its buildings and lands or portions thereof are occupied and used for a public charitable purpose, as mere owning of land/building is not sufficient, but it must satisfy the other aspect, namely, that it is solely used for charitable purpose. Any commercial activity, being carried out in the said premises should therefore not enjoy the exemption and even if the activity of education is carried out with a profit earning motive, it would then be denuded of the cover of 'charitable purpose' under section 9 of the Maharashtra Public Trusts Act”, the Bench also observed.
The Trust, registered in 1955 under the Bombay Public Trusts Act, runs a primary school, a high school and junior college, and a commerce college in Pimpri, Pune, some aided and some unaided. It relied on a 'No Due Certificate' dated May 23, 1991. After a 1999 notice demanding tax from 1982, the Pimpri Chinchwad Municipal Corporation raised a demand of Rs. 95,78,936 with arrears. On January 10, 2012, the Assistant Commissioner rejected the Trust's objections and held it ineligible under Section 132(1)(b).
The Trust filed the petition in January 2012, and ad-interim protection granted on April 19, 2012 continued. The petition was admitted on January 23, 2013 and amended on March 14, 2023 to challenge later demands and an attachment notice. The Corporation objected on the ground of an alternative statutory remedy and said no exemption had been applied for year to year. The Advocate General assisted the Court at its request.
Reading Section 132 with Section 9 of the Maharashtra Public Trusts Act, the Court held that the exemption requires both sole occupation and use for a public charitable purpose. It held that Children Book Trust is not an absolute proposition, since the Delhi statute and rules regulated the collection and use of fees, which Section 132 does not. Income Tax Act decisions were held to be of no assistance.
Cause Title: Jai Hind Sindhu Education Trust & Anr. v. State of Maharashtra & Ors. (Neutral Citation: 2026:BHC-AS:40180-DB)
Appearances:
Petitioners: Dormaan J. Dalal, Shirley Mody, Advocates
Respondent: Dr. Milind Sathe, Advocate General, Kedar B. Dighe, Addl. G.P., Savita A. Prabhune, A.G.P., Shrikrishna Ganbavale, Shantanu Patil, Advocates.