THE PANCHAYAT DEVELOPMENT OFFICER vs STATE OF KARNATAKA

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 14 DAY OF OCTOBER, 2026

PRESENT

THE HON'BLE MRS. JUSTICE ANU SIVARAMAN

AND

THE HON'BLE MR. JUSTICE K.S.BHARATH KUMAR

WRIT APPEAL NO.317 OF 2024 (LB-TAX)


BETWEEN:

1. THE PANCHAYAT DEVELOPMENT OFFICER
NEERUMARGA VILLAGE PANCHAYAT,
PADAMALE POST, NEERUMARGA,
MANGALURU TALUK,
D.K. DISTRICT - 575 029.

2. NEERUMARGA VILLAGE PANCHAYAT
BELTHANGADI TALUK,
PADAMALE POST, NEERUMARGA,
MANGALURU TALUK,
D.K. DISTRICT - 575 029.
REPRESENTED BY ITS PRESIDENT.

…APPELLANTS
(BY SRI. K.N. NITISH, ADVOCATE)










Digitally
signed by
RAKSHA
Location:
high
court of
karnataka

AND:

1. STATE OF KARNATAKA
VIDHANA SOUDHA,
DR. B.R. AMBEDKAR VEEDHI,
BENGALURU - 560 001.
REPRESENTED BY ITS CHIEF SECRETARY.

2. THE PRINCIPAL SECRETARY,
DEPARTMENT OF RURAL DEVELOPMENT AND

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PANCHAYAT RAJ,
M.S.BUILDING,
DR. B.R. AMBEDKAR VEEDHI,
BENGALURU - 560 001.

3. THE APPELLATE AUTHORITY AND CHIEF EXECUTIVE
OFFICER,
DAKSHINA KANNADA ZILLA PANCHAYAT,
OFFICE OF THE DAKSHINA KANNADA ZILLA
PANCHAYAT, ASHOKNAGAR,
KOTTARA POST, MANGALORE,
D.K. DISTRICT - 575 006.

4. MANGALA CHARITABLE TRUST,
HAVING ITS REGISTERED OFFICE AT
MANGALA NURSING HOME,
VAJRA HILLS, KADRI ROAD, MALLIKATTE,
MANGALURU, D.K.DIST. - 575 003.
REP. BY ITS MANAGING TRUSTEE
DR. P. GANAPATHI
S/O LATE ESHWAR BHAT,
AGED ABOUT 62 YEARS,
(REGISTERED UNDER TRUST ACT)

…RESPONDENTS
(BY SRI. BYREGOWDA N., AGA FOR R1 & R2,
SRI. S. RAJASHEKAR, ADVOCATE FOR R4,
R3 SERVED)

THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE
HIGH COURTS ACT, PRAYING TO ALLOW THIS APPEAL AND SET
ASIDE THE ORDER OF THE LEARNED SINGLE JUDGE PASSED
IN WP No.14214/2023 (LB-TAX) DT.30/08/2023 AND ETC.,

THIS APPEAL, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE K.S.BHARATH KUMAR

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ORAL JUDGMENT

(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN)


1. This appeal is preferred against the order dated
30.08.2023 passed by the learned Single Judge in
WP No.14214/2023.

2. The writ petition had been filed by the respondents
herein challenging Annexure-A - impugned order and
Annexure-B - demand notice issued by the Grama
Panchayath. Learned Single Judge relying on the decision
rendered in Navodaya Education Trust Vs. The
Commissioner, City Municipal Council,
WP No.103010/2013 had allowed the writ petition
quashing Annexure-A - the impugned order and
Annexure-B - the demand notice.

3. Learned counsel appearing for the appellants would
contend that the question decided in the case of Navodaya
Education Trust (supra) was in terms of the provision of
Section 94 of the Karnataka Municipalities Act, 1964 and

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that the provisions of the Karnataka Grama Swaraj and
Panchayath Raj Act, 1993 as well as the Karnataka
Panchayat Raj (Grama Panchayat Taxes and fees) Rules,
1994 (for short 'Rules, 1994') is different and distinct and
therefore, the judgment in the case of Navodaya Education
Trust (supra), would have no application in the instant
case.

4. Learned counsel would place reliance on Rules 3 and
6 of Rules, 1994 would contend that the exemption
granted is specifically in respect of buildings or lands used
solely for charitable or public religious purposes and not
let out for rent. The provisions of Rules 3 and 6 of the
Rules, 1994 are relied on which reads as follows;
"3. Procedure for levying taxes on Buildings and
Lands.- (1) Every Grama Panchayat shall, before
levying the taxes on buildings and lands under sub-
section (1) of the Section 199.-
(a) Pass a resolution to levy the taxes;

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(b) Publish a notice of such resolution by affixing
copies thereof on the notice board of the office of the
Grama Panchayat and at other conspicuous places in
the Panchayat area, specifying therein the rate of tax
and the date not earlier than thirty days from the
date of such publication with effect from which the
said taxes shall be levied and also announce by beat
of drum in the Panchayat area the fact of such
publication.
(2) The taxes under sub-rule (1) shall be levied for
any year or part thereof and shall be paid for every
quarter commencing from the 1st day of April, 1st
day of July, 1st day of October and 1st day of
January of the year.
6. Exemption.- The following buildings and lands
shall be exempted from the levy of tax under sub-
section (1) of Section 199 namely.-
(a) buildings and lands belonging to the Zilla
Panchayats, Taluk Panchayats and Grama
Panchayats;
(b) buildings and lands belonging to Central
Government or any State Government and used for
the purposes of such Government and not used for
intended to be used for residential or commercial
purposes;

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(c) buildings and lands, used solely for charitable or
public religious purposes and not let out for rent; and
(d) lands measuring less than one hundred square
metre and buildings having an annual letting value of
less than rupees twenty-five."
(emphasis supplied)


5. It is submitted that in the instant case, the writ
petitioner did not have a contention that the buildings and
the lands are used solely for charitable or public religious
purposes and had not produced any material before the
Panchayath or the Appellate Authority in support of any
such contention. It is contended that the only contention
raised by the writ petitioner was that the building in
question was used for educational purposes and that the
educational institutions had all required exemptions. It is
therefore contended by the finding of the learned Single
Judge that the matter stands covered by the judgment in
Navodaya Education Trust (supra), is incorrect. It is
submitted that in the case of Municipalities and Municipal
Corporations, the provision specifically grants exemption

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to educational institutions and that therefore the same
cannot apply in the instant case.

6. Learned counsel appearing for the respondents would
on the other hand, contend that the buildings in question
are being used only for educational purposes and that
there is no contention raised that they are profit making
institutions or are being run for the purpose of profit. It is
further contended that the education is a public purpose
and that the benefit even under the Rules, 1994 ought to
have been extended to the buildings in question.

7. Learned counsel would also rely on the judgment of
learned Single Judge of this Court in Indus Trust and
Others Vs. State of Karnataka, to contend that even
after consideration of the provisions of the Panchayat Raj
Act, the learned Single Judge had come to the conclusion
that the buildings which are used only for educational
purposes will be entitled to exemption. Learned counsel
would also rely on the judgment of the Hon'ble Apex Court

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in T.M.A Pai Foundation and Others Vs. State of
Karnataka and Others reported in (2002) 8 SCC 481 .

8. We have heard learned counsel appearing on either
side and considered the contentions advanced. We have
also perused the documents placed on record. It is clear
that the provisions of the Municipalities Act, Municipal
Corporation Act and the Panchayat Raj Act with regard to
exemption of building from property tax are different and
distinct. In the case of Municipalities Act and Municipals
Corporation Act, exemption is specifically granted to
educational institutions. However, in the case of the
Panchayat Raj Act and the Rules made thereunder, the
exemption is specifically extended only to the buildings
and lands used solely for charitable or public religious
purposes and not let out for rent. The order of the
Appellate Authority would make it clear that the
respondent had not placed any material on record even
before the Appellate Authority to show that the building

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was being used only for the purposes as provided in the
Rule and that it was not the profit making organization.

9. Learned counsel for the respondent today placed on
record a memo to show that the property tax for the year
2020-21 onwards has been paid and it is contended that
there are adjustments made in the later years towards the
tax payable.

10. In view of the distinct language of Rule 6 of the 1994
Rules we are of the opinion that the finding of the learned
Civil Judge as the matter stands covered by the judgment
in Navodaya Education Trust (supra), may not be the
correct proposition. We are of the opinion that the issue
requires a consideration in terms of the relevant Rules.
The judgment of the learned Single Judge therefore stands
set aside .

11. Learned counsel for the appellants submits that
Annexure-B - demand notice issued can be considered to

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be a show cause notice and the contentions raised by the
respondents can be considered in accordance with law.

12. In the result:-
(i) The appeal is allowed in part .
(ii) The order dated 30.08.2023 passed by the
learned Single Judge in WP No.14214/2023 is
modified to the following extent:-
(iii) Annexure-A - order is set-aside.
(iv) Annexure-B - demand notice shall be
treated as a show cause notice.
(v) The concerned respondent is permitted to
submit its reply with relevant documents before
the Grama Panchayath. The Grama Panchayath
shall consider the issue as to whether the
respondents are entitled for exemption under
the 1994 Rules.
(vi) The representative of the respondents shall
also be heard in person before the orders are
passed.

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(vii) Appropriate orders shall be passed after
considering the contentions in accordance with
law, within a period of three months from the
date of receipt of a certified copy of this order.
(viii) In case an amount is seem to have been
paid in excess, the same shall be adjusted
appropriately.



Sd/-
(ANU SIVARAMAN)
JUDGE



Sd/-
(K.S.BHARATH KUMAR)
JUDGE








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