Property tax exemption classification upheld for aided institutions, while self-financing educational institutions were treated as a distinct class.

Exemption from property tax under Section 207 of the Kerala Panchayat Raj Act, 1994, was upheld as validly confined to buildings and hostels owned or aided by the Government or aided institutions. The classification was based on the source of construction and maintenance, use of public funds, administrative control, and governmental auditing. Self-financing educational institutions were treated as a separate class because they were privately managed, maintained from their own resources, charged higher fees, and were not subject to the same financial control. The Article 14 challenge therefore failed because the distinction had intelligible differentia and a rational basis.

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Issues: Whether the exemption from property tax under Section 207 of the Kerala Panchayat Raj Act, 1994, granted to buildings and hostels owned by the Government or aided institutions, while denying the same to similar properties of self-financing educational institutions, is discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The classification was examined on the basis of the source of construction and maintenance, the use of public funds, administrative control, and governmental auditing. Buildings and hostels owned or financed by the Government were treated as a separate class because public money was involved and the exemption operated as a privilege attached to public expenditure. Self-financing institutions, by contrast, were treated as a distinct class because they were privately managed, maintained from their own resources, had higher fee structures, and were not subject to the same governmental financial control. The regulatory regime applicable to such institutions did not make them comparable to Government-owned or aided institutions for the purpose of tax exemption.

Conclusion: The classification was held to be reasonable and supported by intelligible differentia, and the challenge under Article 14 failed.

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