The Punjab and Haryana high court has said that dharamshalas allowing marriage functions on nominal rates do not amount to commercial activity and are not liable to pay property tax in Haryana.
“..There are private institutes which are made only for marriage purposes which are very expensive and they are the institutes which can taken to be as commercial activity for conducting marriage ceremonies. If dharamshala is provided on a nominal rent for conducting marriages, it will not amount to commercial purpose,” the bench of justice Ritu Bahri and justice Manisha Batra observed while quashing an order passed by Faridabad municipal corporation for auction of the property of Khan Daulat Dharamshala, which had failed to pay property tax. The matter was pending in the high court since 2007.
The dharamshala had moved the high court challenging MC’s action and arguing that as per the 2003 notification of the Haryana Urban Development Department, the building is eligible for exemption from house tax.
As per the notification, all religious buildings and lands are exempted from the property tax, it had argued.
{{/usCountry}}As per the notification, all religious buildings and lands are exempted from the property tax, it had argued.
{{/usCountry}}The provisions of the 2003 notification provided that exemption can’t be claimed from house tax to any property if any portion of the same has been constructed or used for commercial purposes, it was further submitted.
The property tax by the local municipal corporation was assessed at ₹2.25 lakh per annum and a demand notice was sent in 2005 of ₹10 lakh as arrears. As the petitioner did not pay, the MC came out with an auction notice of the property in March 2007. Acting on the plea, the court had stayed the auction in April 2007. The plea remained admitted before the court since then.
The MC had argued that the ground for not extending the benefit of exemption was that the petitioner dharamshala was charging money for marriage purposes. It was also stated by the state that dharamshala has not undertaken any type of charitable activity and profit was being made by way of renting the building for marriage parties and other commercial functions.
“….The fact is that this institution is registered as a dharamshala and is covered by sub-clause (1) of the notification (2003 notification). With respect to conducting marriages, dharamshala is registered for the use of the community as such and conducting marriages amounts to extending further service to the community and this will not amount to any commercial activity as such,” the bench held allowing the plea of dharamshala.