1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JULY, 2025 BEFORE THE HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM WRIT PETITION NO. 1649 OF 2024 (LB-BMP) BETWEEN: VIJAYKIRAN EDUCATIONAL TRUST NO. 314/2, 7TH CROSS DOMLUR LAYOUT, BANGALORE-560071. REP BY ITS TRUSTEE N. VIJAYKUMAR S/O D.R. NEELAPPA REDDY AGED ABOUT 63 YEARS ...PETITIONER (BY SRI. GOUTHAM A.R., ADVOCATE) AND: 1 . THE STATE OF KARNATAKA REP BY ITS PRINCIPAL SECRETARY DEPARTMENT OF URBAN DEVELOPMENT M S BUILDNG, DR AMBEKDAR ROAD BANGALORE-560001. 2 . BRUHAT BENGALURU MAHANAGARA PALIKE REP BY ITS COMMISSIONER NR SQUARE, BENGALURU KARNATAKA-560002. 3 . ASSISTANT REVENUE OFFICER C V RAMAN NAGAR BRANCH BBMP, BANGALORE-560093. 2 4 . SPECIAL REVENUE COMMISSIONER BBMP, N R SQUARE BANGALORE-560002. …RESPONDENTS (BY SRI. RUEBEN JACOB, AAG FOR SRI. BOPANNA, AGA FOR R1; SRI. PRAVEEN KUMAR RAIKOTE, ADVOCATE FOR R2 TO R4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING FOR DIRECTION TO DECLARE THAT THE PRIVATE EDUCATIONAL INSTITUTIONS ESTABLISHED AND ADMINISTERED WITHIN BRUHAT BANGALORE MAHANAGARA PALIKE AREA ARE NOT LIABLE TO PAY PROPERTY TAX UNDER THE BRUHAT BANGALORE MAHANAGARA PALIKE ACT 2020 AND ETC. THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 21.07.2025, THIS DAY ORDER WAS PRONOUNCED THEREIN, AS UNDER: CORAM: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CAV ORDER In the captioned petition, petitioner is seeking for the following reliefs: "i) Declare that the private educational institutions established and administered within Bruhat Bangalore Mahanagara Palike area are not liable to pay property tax under the Bruhat Bangalore Mahanagara Palike Act 2020; In the alternate 3 ii) Declaring that Sections 144 and 152 of the Bruhat Bangalore Mahanagara Palike Act 2020 in so far as it imposes property tax on the private educational institutions established and administered within BBMP Area is unconstitutional and violative of Article 14 of the Constitution of India. iii) Quash the endorsement dated 12.09.2023 bearing No.D.A.W.57/PR/13/23-24 issued by the 3rd respondent at Annexure-G. iv) Quash the circular dated 26.12.2023 bearing No.Ve.Aa(Kum)P.R/1351/2023-2024 insofar as it imposes property tax on the private educational institutions issued by the 4th respondent produced at Annexure-H. v) Pass such and further relief/s as this Hon'ble Court may deem just and necessary in the facts and circumstances of the case in the interest of justice and equity." 2. The petitioner being an educational institution is aggrieved by the endorsement issued by the respondent No.3 as per Annexure-G thereby rejecting the exemption sought by the petitioner/educational institution in regard to payment of 4 property tax for the year 2021-22 and 2022-23. Petitioner is also assailing a Circular bearing No.Ve.Aa(Kum)P.R/1351/2023-2024 dated 26.12.2023. 3. Heard learned counsel appearing for the petitioner, learned AAG and learned counsel appearing for the respondent Nos.2 to 4. 4. Before this Court delves into the matter, this Court deems it fit to draw a comparable table in regard to the general exemptions provided under the provisions of the Karnataka Municipal Corporation Act, 1976 (KMC Act) and the introduction of Bruhat Bengaluru Mahanagara Palike Act, 2020 (BBMP Act) on 11.01.2021 thereby creating a class of buildings held by the Government agencies or local authority and excluding the private educational institutions and the consequent amendment to Section 152 wherein, by way of substitution, the exclusion of educational institution is reintroduced by way of substitution. The table is as under: 5 KARNATAKA MUNICIPAL CORPORATION ACT BBMP ACT BEFORE AMENDMENT OF SECTION 152 BBMP ACT AFTER AMENDMENT OF SECTION 152 BY WAY OF SUBSTITUTION Section 110. General exemptions.- (1) The following buildings and lands shall be exempted from the property tax:- (i) building or lands exclusively used for:- (b) educational purposes by recognized educational institutions; Section 152. General exemptions. (1) The following buildings and lands shall be exempted from the property tax:- (i) building or lands exclusively used for,- (b) educational purposes BY Government educational institutions; or Local Authority. Amendment of Section 152.- In the Principal Act, in section 152, in sub-section (1), in clause (i), for sub- clause(b) the, following shall be substituted, namely:- "(b) the educational institutions established for the purpose of education, recognized by the Government or Local Authority." 5. Upon examining the comparative table extracted above, it becomes evident that under sub-section (1) of Section 110 of the KMC Act, buildings or lands exclusively used for educational purposes by recognized educational institutions were expressly exempted from payment of property tax. Thus, under the earlier statutory regime, private educational institutions, if recognized and exclusively used for educational purposes, were eligible for such exemption. 6 6. With the enactment of the Bruhat Bengaluru Mahanagara Palike Act, 2020 (BBMP Act), which came into effect from 11.01.2021, the exemption criteria under Section 152(1) underwent a significant change. The said provision limited the exemption to buildings and lands exclusively used for educational purposes only by Government educational institutions or institutions run by local authorities. Consequently, private educational institutions were excluded from the benefit of exemption under the BBMP Act, 2020. 7. Following the implementation of the BBMP Act, a spate of litigations emerged before this Court challenging the exclusion of private educational institutions from the exemption. In this context, the BBMP issued a Circular dated 29.03.2021, categorically stating that private educational institutions were not entitled to exemption from payment of property tax. The said circular became the subject matter of challenge in W.P.No.12954/2021 filed by the Management Association of Schools Karnataka. During the pendency of the writ petition, the State Government amended Section 152 of 7 the BBMP Act by way of substitution, vide Amendment dated 10.03.2023, thereby restoring the exemption in favour of all educational institutions established for the purpose of imparting education, including private institutions. In view of the amendment, this Court allowed the writ petition and quashed the BBMP Circular dated 29.03.2021. 8. In the present case, notwithstanding the amendment to Section 152 of the BBMP Act brought into effect on 10.03.2023, respondent No.2, Special Commissioner of the Corporation, issued a subsequent Circular dated 26.12.2023, reiterating that private educational institutions are liable to pay property tax for the year 2021–22. This Circular is impugned in the present writ petition. This Court deems it appropriate to extract the relevant portion of the Circular dated 26.12.2023, which reads as under: " XXXX XXXX ಎಂ ಾ 2020, ಪ ಕರಣ 152(1)(ಐ)() ರ ಅನಯ 2021-22 ೇ ಾೆ ೈಕ ಉೇಶಗ!ಾ" ಉಪ#ೕ"ಸು&'ರುವ ಸಾ)* ಅಥ,ಾ ಸ-!ೕಯ .ಾ /ಾರದ ೈಕ 8 ಸಂೆ-ಯ ಸತು'ಗಳನು3 4ಾತ 5ಾ6&ೆ ಅವಾಶ5ದು, 7ಾಸ" ೈಕ ಸಂೆ-ಗ!ೆ ಆ9':ೆ*ೆ .ಾವ&6ಂದ 5ಾ6& ;ೕಡಲು ಅವಾಶ ಕ>9ರುವ?@ಲA. ಆದುದ*ಂದ ಸದ* ಸತು'ಗ!ೆ 2021- 2022 ೇ ಾೆ ಎBಾA 7ಾಸ" ೈಕ ಸಂೆ-ಗಳC ಪDಣ) ಪ 4ಾಣದ ಆ9':ೆ*ೆಯನು3 5/9 ಸಂಗ EಸತಕFದು. 2021-2022 ೇ ಾೆ ಪDಣ) ಪ 4ಾಣದ ಆ9':ೆ*ೆ .ಾವ&ಸೇ ಇರುವ ಎBಾA ಪ ಕರಣಗಳA (ಾHIಾಲಯದ ಪ ಕರಣಗಳA ಾ,ೆಯ ಅಂ&ಮ ಆೇಶೆF ಒಳಪಟMಂ:ೆ) ವH:ಾHಸದ Nತ'ವನು3 ಬPQಯನು3 5/9 ವಸೂBಾ& 4ಾಡತಕFದು." 9. The crucial question that arises for consideration in the present writ petition is whether the impugned Circular dated 26.12.2023, issued by the respondent-Corporation and produced at Annexure-H, is arbitrary, irrational, and legally unsustainable in light of the amendment brought to Section 152 of the BBMP Act. 10. The petitioner contends that the Circular fails to take into account the legislative intent behind the said amendment, which expressly reintroduced the exemption for private educational institutions. In this regard, it is relevant to refer to the text of the amended provision. The State 9 Legislature, by way of substitution, amended clause (i), sub- clause (b) of sub-section (1) of Section 152 of the BBMP Act, and the amended provision now reads as follows: “Amendment of Section 152.—In the Principal Act, in Section 152, in sub-section (1), in clause (i), for sub-clause (b), the following shall be substituted, namely: ‘(b) the educational institutions established for the purpose of education, recognized by the Government or Local Authority.'" 11. A plain reading of the amended clause makes it abundantly clear that the scope of exemption from property tax has been broadened to include all educational institutions established for the purpose of education, provided they are recognized either by the Government or by the Local Authority. This substitution has the effect of undoing the earlier restrictive classification under the original text of the BBMP Act, 2020, which limited the exemption only to government-run or local authority-run educational institutions. 10 12. Therefore, the amended provision unequivocally includes private educational institutions within the ambit of exemption, so long as they fulfill the condition of recognition by the competent authority. In light of this statutory amendment, any contrary interpretation or administrative action that seeks to deny such institutions the benefit of exemption for the assessment years following the amendment is prima facie inconsistent with the legislative mandate. The validity of the impugned Circular dated 26.12.2023, which seeks to fasten property tax liability on private educational institutions even after the amendment, must therefore be examined in this context. 13. The question as to whether an amendment introduced by way of substitution operates prospectively or retrospectively has been the subject matter of judicial interpretation by the Hon’ble Apex Court in catena of decisions. Of particular relevance is the decision in Government of India and Others vs. Indian Tobacco 11 Association1, wherein the Hon’ble Supreme Court, while interpreting an amendment effected by substitution, held that such a legislative exercise results in the repeal of the earlier provision and its replacement by the new one. The Court observed that the very use of the term “substitute” signifies the legislative intent to treat the newly inserted provision as having retrospective effect, unless expressly stated otherwise. 14. In this regard, the Hon'ble Apex Court, placing reliance on Black’s Law Dictionary, 5th Edition, explained that the term “substitute” means “to put in place of another person or thing,” or “to replace". Therefore, where the legislature has consciously chosen to amend a provision by substitution, it is ordinarily indicative of its intent to have the substituted provision operate retrospectively, especially where such an interpretation would serve the object and purpose of the amendment. 15. In the present case, the amendment to Section 152 of the BBMP Act was brought into force with effect from 1 (2005) 7 SCC 396 12 10.03.2023. The amendment was introduced by way of substitution, thereby replacing the earlier clause (b) of Section 152(1)(i) with a new provision that expressly includes “educational institutions established for the purpose of education, recognized by the Government or Local Authority.” This Court is of the considered view that such substitution has the effect of replacing the earlier restrictive provision in toto, and the legal consequence is that the amended provision shall be deemed to have always existed in place of the earlier one. Hence, the amended Section 152 must be construed as operating with retrospective effect. 16. In this backdrop, it is of particular concern that the Circular dated 26.12.2023, issued by the office of the Special Commissioner of the BBMP and produced at Annexure-H, has been issued after the statutory amendment came into force. Despite the clear legislative mandate introduced through the substitution of Section 152 with effect from 10.03.2023, the said Circular proceeds to assert that private educational institutions are liable to pay property tax for the assessment 13 year 2021–22. This assertion is not only legally untenable but is a blatant disregard of the amended provision, which now unequivocally exempts recognized private educational institutions from such liability. 17. A careful reading of the impugned Circular reveals that it is a deliberate attempt to retrospectively impose tax liability for the interregnum period between 11.01.2021 (i.e., date of commencement of the BBMP Act) and 10.03.2023 (i.e., date of amendment to Section 152). Such an attempt is wholly unsustainable in law. Once the legislature, by way of substitution, has included private educational institutions within the exemption framework under Section 152, any administrative instruction contrary to this statutory mandate is without jurisdiction and ultra vires. The impugned Circular is, therefore, patently arbitrary, ex facie illegal, and clearly in contravention of the amended statutory provision. It has been issued nearly nine months after the amendment came into effect and is in direct conflict with the legislative intent to 14 extend exemption to all recognized educational institutions, including private ones. 18. On this count alone, the Circular dated 26.12.2023 deserves to be quashed as one issued without authority of law and in contradiction to the amended Section 152 of the BBMP Act, 2020. 19. It is significant to note that even prior to the enactment of the Bruhat Bengaluru Mahanagara Palike Act, 2020, the statutory regime governing property tax exemptions under the Karnataka Municipal Corporations Act, 1976, specifically recognized the right of private educational institutions to claim exemption. Section 110(1)(b) of the KMC Act categorically provided that any building or land exclusively used for educational purposes by a recognized educational institution shall be exempted from the levy of property tax. This provision remained on the statute book for several decades and formed the legal basis for exempting both government and private educational institutions from tax 15 liability, provided the use of the property was exclusively for educational purposes. Therefore, the exemption enjoyed by private educational institutions was not a mere concession but a right conferred by the Statute. 20. Following the enactment of the BBMP Act, 2020, which came into force on 11.01.2021, a shift in the language of Section 152 gave rise to ambiguity regarding the continued entitlement of private institutions to the exemption. This led to the issuance of a Circular dated 29.03.2021 by the BBMP, which interpreted Section 152 restrictively and declared that private educational institutions were no longer entitled to exemption. This administrative action, however, was challenged by the Management Association of Schools Karnataka, in W.P.No.12954/2021. Notably, even though there was no specific prayer challenging the 2021 circular per se, this Court, while allowing the writ petition, categorically held that the 2021 circular was arbitrary and contrary to law, particularly in view of the substitution brought into Section 152 through the amendment dated 10.03.2023. The Court 16 recognized that the legislative intent behind the amendment was to restore the exemption previously available under the KMC Act and extend it to private institutions as well. Therefore, the issuance of the present Circular dated 26.12.2023 despite the earlier judicial pronouncement striking down an identical circular on similar grounds amounts to a reiteration of a position already declared untenable by this Court and is a clear instance of administrative overreach. 21. For the foregoing reasons, this Court proceeds to pass the following: ORDER (i) The writ petition is allowed; (ii) The impugned Circular dated 26.12.2023, produced at Annexure-H, is hereby quashed. This Court holds that the said Circular is arbitrary and contrary to the amended provisions of Section 152 of the BBMP Act, 2020, which was introduced by way of substitution with effect from 10.03.2023, and is therefore unsustainable in law; 17 (iii) Consequently, the impugned endorsement dated 12.09.2023 issued by respondent No.3, as evidenced at Annexure-G, is also quashed; (iv) In light of the amendment to Section 152 of the Principal Act by way of substitution with effect from 10.03.2023, the declaratory relief sought in prayer (i) does not survive for further consideration and is accordingly disposed of as having been rendered academic; (v) Similarly, the alternate relief sought in prayer (ii) stands rendered infructuous in view of the legislative amendment and the consequential quashing of the impugned Circular and endorsement. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE CA