ANTONY DOMINIC,J. - (1.)THEREFORE these cases were heard together and are disposed of by this common judgment.
(2.)W.P.(C).28926/2007 is filed by the Manager of 'P.Gopalan Memorial vocational Higher Secondary School' Amaravila. Petitioner in W.P.(C).9552/2008 is the Principal of the School. The School was established in 1979 as an aided School. Neyyattinkara Municipality, the respondent in these cases, issued a demand notice to the Manager of the School demanding a total amount of Rs.41,879/- towards service tax, for the period 1998 to 2002. The Manager challenged that demand in O.P.22532/2001.
The main contention raised was that in view of the provisions contained in Section 235 of the Kerala Municipalities Act (in short 'the Act'), as it stood then, the educational institutions are exempted from property tax and that the service tax is a component of the property tax and therefore, the demand for service tax is illegal. By judgment dated 15th March, 2004, this Court disposed of the Original Petition. In that judgment, insofar as the aforesaid contention is concerned, this Court held thus:-

"The petitioner submits, he is running a school and the school buildings are exempted from payment of property tax under Section 235(1)(d) of the Kerala Municipality Act, service tax, being a component of the property tax, the same cannot be demanded separately. I find considerable force in the submission of the petitioner."

On that basis, Municipality was directed to reconsider the matter adverting to the objections filed by the Manager treating the demand notice already issued as notices. Dealing with the objections thus filed, the Secretary of the Municipality issued Ext.P6. In that order, the Secretary relied on Section 235(5) of the Act as it stood then, which provided that, notwithstanding anything contained in the Act or any other law for the time being in force, in the case of properties exempted from property tax under section 235(1), the Municipality shall be entitled to claim the cost of services covered by the service tax. Referring to this provision of the Act and also explaining the services provided by the Municipality, the Secretary held the petitioner in W.P.(C). 28926/2007 liable for service tax. It was at that stage, W.P. (C).28926/2007 was filed.

(3.)DURING the pendency of that writ petition, the Municipality issued notices dated 11.6.2007 and 11.3.2008 demanding Rs.1,51,539/- and Rs.1,93,410/- towards service tax for the period upto 2006-07 and upto 2007-08 respectively, from the Principal of the School. It was on receipt of these notices from the Municipality, the Principal of the School filed W.P.(C).9552/2008.
The contention raised by the learned senior counsel for the petitioners is that under Section 235(d) of the Act as it stood then, building recognized by the Government or registered with the Municipality under the Act and owned and occupied by the Educational institutions and used only for teaching are exempted from levy of property tax. He contended that under Section 233 as it stood then, property tax under Section 233(1) may comprise of tax for general purpose and a service tax. Therefore, he contended that service tax is a component of property tax and so long as the educational institution is exempted from the property tax, service tax cannot be levied on the petitioners. Insofar as Section 235(5) is concerned, counsel contended that under this provision, the entitlement of the Municipality is to claim cost of services covered by the service tax. According to him, therefore, to recoup the cost of service from the petitioner, Municipality should have provided service to the petitioner and that in the absence of any such direct service rendered to the petitioner, service tax cannot be levied under Section 235 (5).