Charitable institutions are exempt from general tax liability under the Maharashtra Municipal Corporations Act.

The Petitioners are Public Charitable Trusts that operate educational institutions

They approached the High Court challenging the levy of General Tax by the Respondent Municipal Corporation, asserting they are exempt under Section 132(1)(b) of the Maharashtra Municipal Corporations Act ("the Act")

While the Petitioners admitted liability for Education Cess and expressed willingness to pay it with interest, they contested the General Tax

In WP 1536/2026, the Petitioner specifically disputed the imposition of Education Cess from 2020, noting that the Occupancy Certificate for the premises was only issued on March 28, 2022

1. Whether the Petitioners are entitled to an exemption from the levy of General Tax under Section 132(1)(b) of the Maharashtra Municipal Corporations Act

2. Whether the Municipal Corporation can levy Education Cess for a period prior to the issuance of the Occupancy Certificate

The Court primarily applied Section 132 of the Maharashtra Municipal Corporations Act

Section 132(1)(b) mandates that General Tax shall be levied on all buildings and lands except those "solely occupied and used for public worship or for a public charitable purpose"

This is qualified by Section 132(2), which stipulates that the exemption does not apply if (a) trade or business is carried on, or (b) rent is derived from the property, regardless of how that rent is applied

The Court also referred to the Division Bench judgment in Mohammadiya Educational and Research Society, Solapur v. State of Maharashtra (2023)

The Court noted that the eligibility for exemption under Section 132 is not automatic and depends on factual criteria, such as the absence of rental income and commercial use

The Respondent-Corporation argued that these various factors must be verified before granting any exemption

The Court reasoned that to resolve the dispute, the Petitioners must be granted the opportunity to submit a formal representation to the Municipal Corporation to demonstrate their compliance with the statutory requirements for exemption

Regarding the dispute over the commencement date of the Education Cess in WP 1536/2026, the Court held that the Petitioner must deposit the cess from the date of the Occupancy Certificate while the Corporation evaluates the claim for the preceding period as part of the overall representation

The Court held that no coercive steps shall be taken against the Petitioners until a decision is reached on the representation, and for two weeks thereafter if the order is adverse

The Petitioners were directed to deposit the Education Cess with interest by May 11, 2026

The Court clarified that it did not express any opinion on the merits of the exemption claim, leaving all contentions open for the Corporation's review