Holding

Exemption under Section 27 is discretionary and requires a specific application meeting the conditions of the prevailing Government Orders, and the authorities correctly applied the 1983 G.O., denying the trust's claim.

Summary

The Agasthy ar Trust, a charitable trust recognized under the Income Tax Act in 1977, sought exemption from urban land tax for land held between 1965 and 1976 under the Tamil Nadu Urban Land Tax Act, 1966. The trust relied on earlier Government Orders (1976) that granted total exemption to charitable institutions, arguing that later orders, particularly the 1983 G.O. No. 1834, were not retrospective and should not affect its claim. The authorities, however, rejected the exemption, applying the conditions of the 1983 order which was in force at the time of disposal of the trust's application. The Supreme Court held that exemption under Section 27 is discretionary, requires a specific application and satisfaction of prescribed norms, and that the authorities were right to consider all existing GOs, including the 1983 order, when deciding the claim. It further ruled that the trust's recognition under the Income Tax Act could not be given retrospective effect to cover the earlier assessment years. Consequently, the trust was not entitled to exemption for the period claimed, and the appeal was dismissed.

Issues considered

Whether a charitable institution is entitled to exemption from urban land tax under Section 27 of the Tamil Nadu Urban Land Tax Act without a specific application and compliance with conditions.
Whether the 1983 Government Order (G.O. No. 1834) can be applied retrospectively to assessment years 1965-1976.
Whether the trust's recognition as a charitable entity under the Income Tax Act in 1977 can be given retrospective effect for earlier tax years.
Whether the authorities must consider all Government Orders in force at the time of disposal of an exemption application.

Legislation cited

Income Tax Act, 1961s. 12A(a)

Subjects

urban land taxexemptioncharitable trustSection 27Section 29government ordersretrospective effectTamil NaduIncome Tax Act

Judgment

A AGA STY AR TRUST
v.
COMMISSIONER AND SECRETARY TO GOVERNMENT
REVENUE DEPARTMENT AND ANR.

MARCH 15, 2005
B
[S.N. VARIAVA, DR. AR. LAKSHMANAN AND
S.H. KAPADIA, JJ.]

Tamil Nadu Urban Land Tax Act, 1966-Sections 27 and 29-Jmposition
C of Urban Land Tax-Eligibility for exemption to a Charitable lnstitution- ~

Held, a charitable institution is eligible to exemption only if it specifically I
applies under Section 27.

Circulars/Government Orders-Subsequent GOMs issued, pending
disposal ofclaim application-Consideration of-Held: Authority adjudicating
D the. claim for exemption from urban land tax 'required to consider all the
GOMs in existence at the time of disposal of claim application-GO/Ifs. 1947
dated 17.9.1976, 2056 dated 4.10.1976, 2625 dated 27.12.1976, 1834 (Rev.)
dated 29.10.1983-Tamil Nadu Urban Land Tax Act, 1966-Section 27.

State Government issued Government order GOM dated.27.12.1976
E
declaring exemption from payment of Urban Land tax in respect of
institutions recognized as Charitable Institutions. On 29.4.1977, the Income
Tax Department recognized Appellant-Trust as a. Charitable Trust.
Thereafter, Appellant claimed exemption of the land held by it for the
period 1965 .to 1976.
F
Assessing authority imposed urban land tax on the appellant holding
that it cannot claim the benefit of Order dated 29.4.1977 to their trust
since the exemption of the land was claimed only for the period 1965 to
1976. High Court allowed the Writ Petition filed by appellant allowing it
to approach the authorities for exemption under Section 27 of Tamil
G Nadu Urban Land Tax Act, 1966. Authorities rejected the claim. Appellant
again preferred Writ Petition. Meanwhile, State Government issued a
fresh G.O. dated 29.10.1983 stipulating additional norms for exemption.
Writ Petition was allowed directing fresh disp.osal keeping in view that
Charitable Institution are exempted. Appellant requested for disposal of
H 824
AGASTYAR TRUST v. COMMR. AND SECY. TO GOV. REVENUE 825

its application in terms of High Court's order. Authorities again rejected A
the application on the ground that appellant did not satisfy the additional
norms. Appellant again preferred Writ Petition which was dismissed by
Single Judge. Writ appeal was also dismissed by the Division Bench. Hence
the present appeals.

Appellant contended that the subsequent G.O.Ms. No. 1834 dated B
29.10.1983 laid down additional conditions for the grant of exemption and
they will not have effect of denying the appellant the benefit as it is not
retrospectiv~ in effect and consequently it can not be applied to the
assessment years for which the exemption was sought.

Dismissing the appeals, the Court c
·HELD : 1. While construing the claim, after remand, the authorities
are under obligation to consider all the G.Os which are in existence at
the time of disposal of the application. ·Therefore, the authorities had
rightly applied the test in terms and conditions mentioned in G.O. dated
29.10.1983 to the case on hand. The Income Tax Department had D
recognized the appellant as a Charitable Trust only on 29.4.1977 and,
therefore, the said order cannot be given retrospective effect
(829-G-H; 830-A)
2.1. A perusal of GO dated 27.12.1976 shows that the total exemption
from payment of urban land tax is to be given to all educational, religious, E
charitable and philanthropic institutions in respect of certain land. The
G.O. further states that these concessions will be given with retrospective
effect from the Faslis from which such exemption has been prayed for by
the respective institutions on specific application to Government and on
the basis of the recommendation of the Empowered Committee. F
(830-H; 831-B]

2.2. The appellant based its claim only on the basis of the
Government Order and of the order passed by the Income Tax
Department and have not made any specific application to the
Government. No earlier application was ever produced either before the G
High Court or before this Court. The recommendations of the Empowered
Committee have also been not produced or placed before this Court.
[831-C-DJ

3. While under Section 29, the exemption is granted by the statute
itself and is automatic in respect of the urban lands owned by the ij.
826 SUPREME COURT REPORTS [2005] 2 S.C.R.

A institutions, the exemption under Section 27 is not so. For ex.emption under -
Section 27, power is vested with the State Government to exempt the lands
or persons from payment of tax only on specific application by the person
or institution seeking exemption and on placing satisfactory material for
exercise of such power. The exemption under Section 27 is not a matter
B of right and does not follow as a matter of course. Thus, the appellant is
not entitled to exemption from payment of urban land tax during the
period 1965 to 1976 as prayed for. [838-G-H; 839-A, BJ
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1083-
1084 of 2000.

C From the Judgment and Order dated 30.7.99 of the Madras High Court
in W.A. No. 1190/99 and C.M.P. No. 11716 of 1999.

Uday U. Lalit, Prasenjit Keswani, Joseph Pookkatt and Prashant Kumar
for the Appellant.

S. Balakrishnan, Sree Narain, R. Gopala Krishnan and Subramonium
D Prasad for the Respondents.
The Judgment of the Court was delivered by

DR. AR. LAKSHMANAN, J. These appeals were filed by the appellant-
Trust against the fmaljudgment and order dated 30.7.1999 passed by the High
E Court of Judicature at Madras in Writ Appeal No. 1190 of 1999 and C.M.P.
No. 117 I 6 of I 999 whereby the High Court dismissed the appeal preferred
by the appellant against the order of the learned single Judge of the High Court
in Writ Petition No. 14745of1988 and W.M.P. No. 22080of1988 denying

F
the appellant exemption from paying urban land tax. The short facts are as
follows:
-
The instant case relates to the exemption of the land held by the appellant
for the period I 965 to I 976 from the payment of urban land tax under the
Tamil Nadu Urban Land Tax Act, 1966 (hereinafter referred to as "the Act").
The appellant-Trust was established under a trust deed with charitable objects
G in the year I 941. By a deed, the appellant-Trust declared and affirmed to be
a public trust with charitable or religious objects. The State of Tamil Nadu
issued G.Os being G.O.Ms. No. 1947 dated 17.9.1976, 2056 dated 4.10.1976
and 2625 dated 27. l 2. l 976 respectively declaring the norms for exemption
from the payment of Urban Land Tax under the Act. The said G.O. stipulated
that all institutions recognized as charitable institutions under the Indian Income
H Tax Act will be dealt as such Under the Act. It is also stipulated that exception .
AGASTYAR TRUST v. COMMR. AND SECY. TO GOV. REVENUE [LAKSHMANAN, J.] 82 7

- is to be given if the income is used solely for the objectives and purpose of A
the Trust.

It is pertinent to notice that the appellant-Trust was recognized as a
public charitable trust under Section 12A(a) of the Income Tax Act vide
order 29.4.1977 passed by the Income Tax Appellate Tribunal. In this context,
it is pertinent to notice that the appellant claims exemption of the land held B
by it for the period from 1965 to 1976 from the payment of urban land tax
under the Act. Since the order was passed on 29.4.1977 by the Income Tax
Appellate Tribunal recognizing the appellant-Trust as a charitable Trust under
Section 12A(a) of the Act, the appellant cannot claim the benefit of the order
dated 29.4.1977 to their Trust since the exemption of the land from payment C
of urban land tax was claimed only for the period 1965 to 1976. The Assessing
Authority under the Act imposed urban land tax on the appellant-Trust. The
appellant preferred Writ Petition No. 4468 of 1977 which was allowed by the
•
High Court allowing the appellant to approach the authorities under Section
27 of the Act. Pursuant to the order of the High Court, the appellant approached
the authorities for exemption under Section 27 of the Act which was rejected D
by the authorities on 28.1.1982. The appellant preferred a writ petition being
W.P. No. 1562of1982. The respondents issued a fresh G.O. being G.O. Ms.
No. l834(Rev.) dated 29.10.1983 stipulating fresh and additional norms for
the benefit of exemption from payment of urban land tax. The Writ Petition
No. 1562 of 1982 filed by the appellant was allowed directing fresh disposal E
of the appellant's application keeping in view that bodies which have been
recognized as charitable institutions must be exempted by "the Urban Land
Tax Authorities. The appellant-Trust requested for disposal of its application
in terms of the judgment and order dated 18.4.1988 passed by the High
Court. While so, the respondents asked the appellant to make a fresh
application along with audited statements. The appellant requested the F
authorities that its pending application be considered. The respondents by
order dated 4.10.1988 rejected the application of the appellant vide order
Lr.(Ms) No. 1896 on the ground that the appellant did not satisfy the norms
stipulated in G.O.Ms. No. 1834(Rev) dated 29.10.1983. In the meanwhile, a
Contempt Application was filed bringing to the notice of the High Court that G
the application of the appellant was decided de hors the directiom of the
High Court in W.P.No. 1562 of 1982 directing the authorities to dispose of
the application keeping in view that bodies which have been recognized as
charitable institutions must be exempted by the Urban Land Tax Authorities.
The said contempt application was withdrawn with liberty to challenge the
order dated 4.10.1988 passed by the respondents. Hence the appellant preferred H
828 SUPREME COURT REPORTS [2005) 2 S.C.R.

A W.P.No. 14745 of 1988 and C.M.P. No. 22080 of 1988 challenging the
aforesaid order. The said writ petition was rejected by the learned single
Judge on 3.9.1998. The appellant preferred Writ Appeal No. 1190 of 1999
along with C.M.P. No. 11716 of 1999 which was again dismissed by the
Division Bench on 30.7.1999. Aggrieved by that, the appellant preferred the
special leave petitions on 16.12.1999 and this Court granted leave on
B 11.2.2000.

We heard Mr. Uday U. Lalit, learned senior counsel appearing for the
appellant-Trust and Mr. S. Balakrishnan, learned senior counsel appearing
for the respondents.

c Leaned senior counsel appearing for the appellant invited our attention
to the orders passed in various writ petitions, the Government Orders and
also of the impugned orders and the orders passed by the authorities rejecting
the claim for exemption. He submitted that the appellant-Trust was entitled
to exemption from paying urban land tax as it met the criterion laid down in
D the Government Order G.O.Ms. No. 2625 (Rev) dated 27.12.1976, which
clearly stated that all institutions recognized as charitable institutions under
the Income Tax Act will be dealt as such for the purpose of concessions
under the Act. He would further submit that the High Court has failed to
appreciate that the entitlement to exemption from paying urban land tax
should have been decided in accordance with the law that existed in the
E assessment years for which the exemption was sought and not in a~cordance
with any subsequent Government Order. It was further contended that the
High Court has failed to appreciate that the G.0.Ms. No. 1834 dated
29 .10 .1983 cannot be construed as to have the effect of altering the law
applicable in the year of assessment in which the claim of exemption was
p made. It was further contended that the subsequent G.O.Ms. No. 1834 dated
29. l 0.1983 laid down additional conditions for the grant of exemption and
they will not have effect of denying the appellant the benefit as it is not
restrospective in effect and consequently it can not be applied to the assessment
years for which the exemption was sought. Learned senior counsel invited
our attention to the order passed by the High Court in Writ Petition No. 1562
G of 1982 which had directed the respondents to consider the claim of the
appellant in accordance with the terms and conditions of the Government
Order G.O. Ms. No. 2625 (Rev) dated 27.12.1976 an~ accordingly the claim
shouid have been settled in the light of the said Government Order. He would
further submit that the order passed in Writ Petition No. 1562 of 1982 has
H become final in so far as the parties were concerned since no appeal had been
AG AS TYAR TRUSTv. COMMR. AND SECY. TO GOV. REVENUE [LAKSHMANAN, J.] 829

filed against it and the principle of res judicata under Section 11 Explanation A
4 of the C.P.C. is applicable to the present case and the Government is
precluded from relying on the basis of the G.O. Ms. No. 1834 dated 29.10.1983
which it did not bring to the notice of the Court during the pendency of tile
writ petition.

Mr. S. Balakrishnan, learned senior counsel appearing for the B
respondents, reiterated the contentions raised before the authorities and also
of the High Court and submitted that the appellant is not entitled to claim
exemption from payment of urban land tax on the basis of the order passed
by the Income Tax Authorities since the exemption claim made by the appellant
was only for the period 1965 to 1976 from payment of urban land tax and C
whereas the Income Tax Department recognized the appellant as a public
charitable trust under Section l2A(a) of the Income Tax Act vide Order dated
29.4.1977 passed by the Income Tax Appellate Tribunal. He would further
submit that G.O.Ms. Nos. 1947, 2056 and 2625 were subsequently modified
by the respondents and that the appellant-Trust itself requested for the disposal
of its application in tenns of the judgment and order dated 18.4.1988 passed D
by the learned single Judge of the High Court and thereafter the respondents
asked the appellant to make the fresh application along with audited statements.
Unfortunately, the subsequent G.O. Ms. No. l834(Rev) dated 29.10.1983
was not brought to the notice of the learned single Judge while disposing of
writ Petition No. 1562 of 1982. The authorities while considering the claim E
for exemption as per the orders of the Court considered all the earlier G.Os
and G.O.Ms. No. 1834(Rev) dated 29.10.1983 and rejected the claim for
exemption made by the appellant. G.O. Ms. No. 1834(Rev) dated 29.10.1983
was already in existence when the authorities considered the application on
4.10.1988 for claim for exemption and rejected the same by a detailed order.
F
The contention of the learned senior counsel appearing for the appellant
that the criteria laid down in G.O. Ms. No. 2625 (Rev) dated 27.12.1976
alone should have been taken into consideration and not the other G.Os has
no force since while construing the claim, after remand, the authorities are
under obligation to consider all the G.Os which are in existence at the time
of disposal of the application. Therefore, we hold that the auth0rities had G
rightly applied the test in terms and conditions mentioned in G.O.Ms. No.
1834 dated 29.10.1983 to the case on hand. The only contention which was
urged by the learned senior counsel appearing for the appellant was that since
the appellant-Trust was recognized as a public charitable trust under Section
12A(a) of the Income Tax Act, the appellant-Trust should have been granted H
830 SUPREME COURT REPORTS [2005) 2 S.C.R.

A exemption from payment of urban land tax for the period 1965-1976. As -
already noticed the said claim has no force since the income Tax Department
has recognized the appellant-Trust as a charitable Trust under Section 12A(a)
of the Income Tax Act only on 29 .4 .1977 and, therefore, the said order
cannot be given retrospective effect.

B We have perused G.O.Ms. No. 2625 (Rev) dated 27.12.1976 passed by
the Government of Tamil Nadu which in turn refers to earlier G.O. Ms. 1947
Dated 17.9.1976 and G.O. Ms. No. 2056 (Rev) dated 4.10.1976. Clause (vi)
of the said G.O. is reproduced hereunder :

"In the G.O. first cited, Government have directed that total exemption
c from payment of urban land tax be given to all educational, religious,
charitable and philanthropic institutions in respect of vacant land and
land on which buildings have been constructed from which the
institutions derive income which is being used. solely for their
objectives and purposes, they have also directed that urban land tax
D be reduced to 50% in respect of both vacant land and.land on which
buildings have been constructed which belong to community recreation
centres, clubs and cine studios. These concessions are operative with
retrospective effect from 01.07.1975 .md will be available qnly so
long as the urban land is specifically used for the purposes of the
institutions concerned. If there is violation in the use of or diversion
E of the income derived from the urban land, the full urban land tax is
to be levied as provided for in the Act. If the institution concerned
disposes of urban land by sale, gift, etc. it has to pay the Government
the entire amount of urban land tax payable upto the date of such
alienation. In the same G.O. the Government have constituted an
F 'Empowered Committee' for the purpose of examining and making
recommendations to the Government regarding cases eligible for the
above concessions. These concessions will now be given with
retrospective effect from the Faslis from which such exemption has
been prayed for by the respective institutions provided that there will
be granted as provided for in the G.O. first cited on specific application
G to Government and on the basis of the recommendation of the
Empowered Committee.''

It is seen from the above G.O. that the total exemption from payment
of urban land tax be given to all educational, religious charitable and
philanthropic institutions in respect of vacant land and land on which buildings
H
AGASTYAR TRUSTv. COMMR. AND SECY. TO GOV. REVENUE [LAKSHMANAN ,J.] 831

have been constructed from which the institutions derive income which is .A
being used solely for their objectives and purposes. The G.O. further stipulates
that if there is violation in the use of or diversion of the income derived from
the urban land, the full urban land tax is to be levied as provided for in the
Act. The G.O. further states that these concessions will now be given with
retrospective effect from the Faslis from which such exemption has been
prayed for by the respective institutions provided there will be granted as B
provided for in the G.O. first cited that is G.O. Ms. No. 1947 (Rev) dated
17.9.1976 on specific application to Government ,md on the basis of the
recommendation of the Empowered Committee.

Learned counsel appearing for the appellant fairly conceded that the C
appellant-Trust have based their claim only on the basis of the Government
Order and of the order passed by the Income Tax Department and have not
made any specific application to the government before 29.9.1980. No earlier
application was ever produced either before the High Court or before this
Court. The recommendations of the Empowered Committee have also not
produced or placed before us. It is thus clear that the appellant-Trust is not D ·
entitled to claim exemption from payment of Urban land Tax in the absence
of any prayer for such exemption by a specific application to the Government
and on the basis of the recommendation of the Empowered Committee.

- As already noticed, the respondents while considering G.O. Ms. No.
1834 dated 29.10.1983 which was already in existence, the said G.O. in tum,
refers to five other Government Orders which are as follows :
E

1. G.O. Ms. No. 1947, Revenue dated 17.9.1976
2. G.O. Ms. No. 2625, Revenue dated 27.12.1976
3. G.O. Ms. No. 1803 Revenue dated 1.8.1978 F
4. Government letter No. 78025(a)/Ui/78- l 3 Revenue Dated
24.9.1980
5. G.O. Ms. No. 461, Revenue dated 17.3.1983

The existing guidelines as per the•above G.O. are as under: G
...·i
1. The institutions shoJ.!Ui have been recognized as charitable and
exemption granted under Section 12A(a) of the Income Tax Act,
1961.

2. The institutions should spend at least 90% of its net income towards H
832 SUPREME COURT REPORTS [2005] 2.S.C.R.

A its objectives and purposes, after deducting, all the inevitable
.charges like payment of local taxes, repairs and maintenance etc.

3. The institution should be a public trust and not a private trust.

The exemption committee constituted in G.O. Ms. No. 461, Revenue
B dated 17.8.1983 felt that the existing nonns for grant of exemption from
urban land tax needed some revision, since in the existing nonns there is no
ceiling regarding the expenses on establishment to be deducted out of the
income in respect of religious institutions and trusts. They felt that the present
norms require the institution to spend 90% of the net income towards its
objectives which is on the high side and, therefore, the Government on the
~ basis of the recommendation of the Committee revised the norms and
guidelines for grant of exemption to the religious charitable trust etc.

In this context, it is useful to see the order dated 4.10.1988 passed by
the Commissioner and Secretary to the Government, Revenue Department: A
detailed order was passed by the Commissioner and Secretary to the
D Government of T.N. It is useful to reproduce paragraph 3 of the said order
which reads as under :

"Section 29(k) of the Tamil Nadu Urban Land Tax Act, 1966 provides
for grant of exemption to any Urban land actually used for religious,
charitable or philanthropic purposes by such religious, charitable or
E philanthropic institutions but not including any Urban Land owned
by such institutions and (i) which is vacant or (ii) in which buildings,
from which income is derived, have been constructed. While
examining the instant case with reference to above Section, ii is seen
that the trust owns 62 grounds and 2243 sq. ft. of Urban lands in
F Tondiarpet, T. Nagar and Thiruvottiyur Villages. The whole extent is
assessed to Urban Land tax, for which it has sought exemption. The
Urban lands in Tondiarpet Village are used for running cinema theatre,
saw mill, godown etc. and the lands in T.Nagar and Thiruvottiyur
villages are used as residential buildings. The objectives of the Trust,
according to the trust deed, are as follows :
G
(i) to establish, conduct and maintain residential and non-residential
schools, colleges and other institutions for imparting general,
technical, vocational, professional and/other kinds of education
and training for the welfare of the general public.

H (ii) to provide scholarships for the benefits of .students and to make
AGASTYAR TRUST v. COMMR. AND SECY. TO GOV. REVENUE [LAKSHMANAN, J.] 833

donations and grants to other institutions for the benefit of students A
and scholars and in furtherance of education and

(iii) such other things.

It is obvious from the above, that the buildings are not used for the
objective of the trust. The trust is not running any educational
institution in accordance with its objectives. It has not also furnished B
any evidence to show that it is providing scholarships for the benefits
of students. In view of this, the lands which are used as Cinema
theatre, saw mill, godowns, let out for residential and commercial
purposes do not deserve exemption under Section 29(k) of the Act."

It was further observed,
c
"The grant of exemption under section 27(1) is obligatory and not
mandatory, and it is a matter of Governmental discretion governed by
reasonable guidelines issued by the Government. Accordingly, the
Government have issued executive instructions in G.0.(Ms) No. 1947, D
Revenue dated 17.9.1976 and in G.O.(Ms) No. 2625, Revenue dated
27.12.1976 for the grant of exemption under section 27(1) of the Act
in respect of the vacant lands and the lands on which buildings have
been constructed from which the Charities, philanthropic and
Educational Institutions derive income which is being used solely for
the objectives of and purposes of such institutions but subject to the E
conditions that such concessions will be granted on specific application
to Government The Government in G.0.Ms. No. 1834, Revenue,
dated 29-10-1983, have also prescribed certain norms and conditions
for grant of exemption under Section 27(1) of the Act."

The paragraphs 5 & 6 of the order read as under : F
"While examining the case, with the available particulars already
furnished by the Trust, it is considered that the trust is not eligible for
grant of exemption for the following reasons : -

(i) The trust has not satisfied the main norms that it has to spend G
90% of its income for its objectives and purposes during the
years 1976-77, 1977-78 and 1978-79 it has spent only 9.9%,
_49.5% its net income for its objectives.

(ii) The whole extent of the lands are used for commercial and
residential purposes. No piece of land is used for the charitable H
834 SUPREME COURT REPORTS [2005] 2 S.C.R.

A purpos~. Further it has not produced any evidence to show that
the income is spent for the objectives and purposes of the Trust.
(iii) Though the Trust has satisfied one of the norms that it has been
recognized as a charitable institution under Section 12a(a) of the
Income Tax Act, 1961 it has no binding force to exempt the lands
B owned by the Trust from the provisions of the Urban Land Tax
Act also.
(Iv) Further the lands owned by the Trust are not eligible for grant of
exemption under Section 29(K) of the Act since the buildings are
used as Cinell_la Theatre, Saw Mills, Godowns and let out for
C commercial/residential purposes.
(v) The Trust is also not eligible for grant of exemption Under Section
27(1) (Hardship Clause) of the Act, because the lands are used for
running cinema theatre, saw mill, godowns and let out for
commercial/residential purposes and it derives a large income
from the lands. Hence it has no undue hardship to pay the tax.
D
In the circumstances stated above, the Government have decided that
the Agasthyar Trust is not eligible for grant of exemption from the
payment of urban land tax in accordance with the Tamil Nadu Urban
Land Tax Act, 1966, and the existing executive orders. Your exemption
E petitioner is accordingly rejected.''

Aggrieved by the above order, the appellant preferred writ petition
before the High Court to quash the above order dated 4.10.1988 and to direct
the respondents herein to grant exemption from payment under Section ?.7 of
the Act in respect of the urban land held by the T!:lJst. The said writ petition
F was dismissed by a detailed order passed by the learned single Judge which
was affirmed by the Division Bench of the High Court in W.A.No. 1190 of
1999. The order passed by the Division Bench of the High Court reads as
under:

"Heard both sides. In an enquiry initiated at the instance of the
G appellant, who has claimed exemption from payment of Urban Land
Tax it has been found that the appellant does not satisfy the guidelines
mentioned in G.O. Ms. No. 1843 Revenue dated 29;10-1983 for
claiming exemption as prayed for. It has been found that the appellant
trust does not satisfy the claim that it has to spend 90% of its income
for charitable purposes. It has only spent 9.9% and 49.5% of its net
H
AGASTYAR TRUSTv. COMMR. AND SECY.10GOV. REVENUE [LAKSHMANAN, J.] 835

income for the said objectives. Inter alia it has further been found A
that the whole extent of the lands of the appellant are used for running
cinema theatre, saw mill, godowns the same are Jet out for
commercialized residential purposes and they truly derives a large
income from the lands and no piece of land is used for charitable
purposes. Moreover no evidence has been produced by the appellant
to show that the income of the trust is spent for the charitable purposes. B
The aforesaid finding of the 1st respondent has been affirmed by the
learned single Judge in the writ petition. We do not find any irregularity
or illegality in the finding of the learned single Judge and the same
does not call for any interference in the present appeal. Present appeal,
in the circumstances, is dismissed. Consequently, C.M.P. No. 11716/ C
99 is also dismissed.''

We have also perused the grounds of appeal filed in W.A. No. 1190 of
1999. The appellant has not raised any ground in the writ appeal that G.O.
Ms. No. 1834 dated 29.10.1983 is not at all applicable to the present case and
the Government is precluded from relying on the said G.O. The said ground D
is taken for the first time only in this Court saying that the entitlement from
exemption should have been decided in accordance with law that existed in
the assessment year for which the exemption was sought and not in accordance
with any subsequent Government Order.

Ground No. 12 taken in the writ appeal needs special mention in this E
context which reads as follows :

"In any event, the learned judge ought to have permitted the appellant
to satisfy the requirements of G.O. Ms. 1834 Revenue dated
29.10.1983 as submitted as an alternative prayer by the appellant's
counsel during the course of his arguments." F
In the matter of exemption, under the provisions of Tamil Nadu Land
Tax Act, there is a marked difference between Sections 27 and 29 of the Act.
Sections 27 and 29 of the Act read as under :

27. Power of Government to exempt or reduce urban land tax.- (l) G
The Government, if satisfied that the payment of urban land tax in
respect of any class of urban lands or by any class of persons will
cause undue hardship, they may, subject to such rules as may be
made in this behalf, by order-

H
836 SUPREME COURT REPORTS (2005) 2 S.C.R.

A (a) exempt such lands or persons from the payment of the urban land
tax; or

(b) reduce the amount of such urban land tax whether prospectively
or retrospectively.

(2) The Government may at any time cancel or modify any order
B
issued under sub-section (1) and upon such cancellation or
modification, the entire amount of urban land tax, or the amount of
urban land tax due under the modified order, as the case may, shall
be payable in respect of the land concerned with effect from the fasli
year in which such cancellation or modification is made :
c Provided that no such cancellation or modification shall be made
unless the party likely to be affected by such cancellation or
modification has had a reasonable opportunity of making his
representations.

D 29. Exemptions.- Nothing in this Act shall apply to-

(a) any urban land owned by the State or the Central Government;

(b) any urban land owned by -

(i) the Corporation of Madras;
E
(ii) a Municipal Council constituted under the Tamil Nadu District
Municipalities Act, 1920 (Tamil Nadu Act V of 1920);

(iii) A Township Committee constituted under the Mettur Township
Act, 1940, (Tamil Nadu Act XI of 1940) the Courtallam Township
F · Act, 1954 (Tamil Nadu Act XVI of 1954), the Bhavanisagar Township
Act, 1954, (Tamil Nadu Act XXV of 1954) or section 4 of the Tamil
Nadu Panchayats Act, 1958 (Tamil Nadu Act XXXV of 1958) or
under any other law for the time being in force.

(iv) a Panchayat or Panchayat Union Council constituted under any
G law for the time being in force;

(c) any urban land owned by a religious institution, which is set apart
for public worship and is actually so used, including any urban land
owned by such institution and which is appurtenant thereto but not
including any urban land owned by such institution and -
H
AGASTYAR TRUST1·. COMMR. AND SECY. TO GOV. REVENUE[LAKSHMANAN ,J.] 837

(i) which is vacant, or A
(ii) in which buildings from which income is derived have been
constructed;

(d) (i) any urban land on which hospitals maintained by -

(a) the Government, any local authority or such other authority B.
specified by the Government in this behalf; or

(b) by any private institution which is in receipt of grant either from
the Central Government or from the State Government;

have been constructed and any urban land appurtenant to such C
hospitals; or

(ii) any urban land used for purposes directly connected with such
hospitals, but not including any urban land -

(a) which is vacant, or
D
(b) in which buildings, from which income is derived have been
constructed.

Explanation.- For the removal of doubts, it is hereoy declared that the
urban land on which staff quarters including nurses quarters or any
other buildings directly connected with the purposes of the said E
hospitals have been constructed shall be deemed to be urban land
used for purposes directly connected with the said hospitals;

(e) any urban land solely used for purposes connected with the disposal
of the dead;

(t) roads or urban lands used for communal purposes; F
(g) any urban land used for public purposes, provided that no rent is
charged for, or no remuneration is erived from, such user;

(h) any urban land used by schools, colleges or universities for
purposes directly connected with education, but not including any G
urban land owned by such educational institutions and -

(i) which is vacant, or

(ii) in which buildings from which income is derived have been
constructed.
H
838 SUPREME COURT REPORTS [2005) 2 S.C.R.

A Explanation !.- For the purposes of thi5 clause, schools or colleges - )

shall mean only such schools or colleges which are educational
institutions recognized either by the Government or by any University,
as the case may be.

Explanation II.- For the removal of doubts, it is hereby declared that
B the urban land on which schools, colleges or universities or staff
quarters or hostels or other buildings used for the welfare of the
students, have been constructed, or used as piaygrounds attached to
such schools, colleges or universities, shall be deemed to be urban
land used for the purposes directly connected with education;

c (i) any urban land used for public parks, public libraries and public
museums;

U) ari.y urban land used -

(i) for charitable purposes of sheltering destitute persons or animals;
D (ii) for orphanages, homes and schools for the deaf and dumb and for
the infirm and diseased;

(iii) for asylum for the aged and for fallen women;

(k) subject to the provisions of this section, any urban land actually
E used for religious, charitable or philanthropic purposes by such
religious, charitable or philanthropic institutions, as the Government
may, by notification, specify, but not including any urban land owned
by such institutions and -

(i) which is vacant, or
F
(ii) in which buildings from which income is derived have been
constructed;

(I) any urban land used for the preservation of ancient monuments."

While under Section 29, the exemption is. granted by the statute itself
G and is automatic in respect of the urban lands owned by the authorities or
institutions referred to therein, the exemption under Section 27 is not so. For
exemption under Section 27, power is vested with the State Government to
exempt the lands or persons from payment of tax "if the Government is
satisfied that the payment of urban land tax ..... would cause undue hardship".
H Such power can be exercised by the Government only on specific application
AGASTYAR TRUSTv. COMMR. AND SECY. TO GOV. REVENUE [LAKSHMANAN ,J.) 839

by the person or institution seeking exemption and on placing satisfactory A
material for exercise of such power. The exemption under Section 27 is not
a matter of right and does not follow as a matter of course.

No other contention was raised. There is absolutely no merit in the civil
appeals. The appellant is not entitled to exemption from payment of urban
land tax during the period 1965-1976 as prayed for. B
The appeals are accordingly dismissed. No costs.

D.G. Appeal dismissed.

L_