Urban land tax exemption for temple lands must follow governing exemption criteria, not a narrow hardship assessment.

The Madras HC held that a temple's request for exemption from urban land tax could not be rejected merely because the tax burden was small compared with its expenditure, where the rental income was undisputedly applied only for temple purposes and there was no diversion of funds. Once religious institutions had been recognised as a class eligible for exemption under the State's policy and governing Government Orders, the authority had to decide the claim under those criteria and the statutory power under section 27 of the Tamil Nadu Urban Land Tax Act, 1966. Section 29(c) was inapplicable because the lands were not actually used for public worship. The rejection was set aside and the matter remitted for fresh consideration.

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Issues: Whether the rejection of the temple's request for exemption from urban land tax on the ground that the tax did not cause undue hardship was sustainable, and whether the claim had to be reconsidered under the governing Government Orders and statutory framework.

Analysis: Section 27 of the Tamil Nadu Urban Land Tax Act, 1966 empowers exemption or reduction of tax where payment would cause undue hardship. The authority had accepted that the rental income from the lands was being used only for temple purposes and that there was no diversion of funds, yet rejected exemption solely because the tax component was small in comparison with the temple's expenditure. The Court held that once the State had treated religious institutions as a class eligible for exemption through its policy and earlier Government Orders, the authority could not revisit the question of undue hardship on that basis alone. Section 29(c) was also found inapplicable because the lands were not of the kind actually used for public worship contemplated by that provision. The impugned decision further failed to apply the relevant Government Order criteria governing exemption.

Conclusion: The rejection of exemption was unsustainable. The impugned order was set aside and the matter was remitted for fresh consideration under the applicable Government Order criteria.

Final Conclusion: The temple succeeded to the extent of securing reversal of the exemption rejection and a fresh decision on entitlement under the correct legal parameters.

Ratio Decidendi: Where the State has recognized a class of religious institutions for exemption from urban land tax, the authority cannot deny relief by independently reassessing undue hardship on an erroneous basis and must decide the claim in accordance with the applicable statutory power and governing exemption criteria.

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