Facts of the Case

The petitioner, Centre for Education and Rural Development (C.E.R.D.), challenged communications dated 05.08.2025 and 06.10.2025 issued by the Madurai Corporation.

Through the impugned communications, the respondent revised the monthly rent for the community hall situated on the southern side of Anna Bus Stand, Subburaman Street, Zone IV, Madurai, from ₹54,469 plus 18% GST to ₹1,94,411 plus 18% GST, with effect from 01.04.2025.

The revision of rent was based on an inspection during which it was allegedly found that the petitioner was using 865 square metres for running an educational institution.

The respondent had earlier executed an agreement in favour of the petitioner on 03.03.2006 for a period of three years, permitting the petitioner to use the community hall for running an educational institution.

The agreement provided for an increase of 15% in the rent amount after three years of occupation, calculated from 01.03.2006. The agreement also contained a provision for termination.

The petitioner claimed that the agreement had been renewed from time to time for periods of three years and that it remained in possession of the community hall for running an educational institution.

According to the petitioner, the respondent unilaterally revised the monthly rent without issuing any notice or providing an opportunity of hearing.

Issues Involved

The principal issues involved were:

  1. Whether the Madurai Corporation could revise the monthly rent from ₹54,469 plus 18% GST to ₹1,94,411 plus 18% GST with effect from 01.04.2025 without providing an opportunity of hearing to the petitioner.
  2. Whether the impugned communications dated 05.08.2025 and 06.10.2025 could be sustained when they were issued without prior hearing.
  3. Whether the alleged use of 865 sq. metres for running an educational institution justified revision of rent without following a fair procedure.
  4. Whether the alleged additional construction and use of such building for running an educational institution could justify revision of rent without first giving the petitioner an opportunity to respond.
  5. Whether the respondent Corporation was entitled to initiate fresh proceedings for revision of monthly rent after complying with law and providing an opportunity of hearing.
  6. Whether the petitioner was entitled to quashing of the impugned communications under Article 226 of the Constitution of India.

Petitioner’s Arguments

The petitioner contended that the respondent had executed an agreement dated 03.03.2006 permitting use of the community hall for running an educational institution.

The petitioner relied upon the contractual arrangement under which the agreement provided for an increase of 15% in rent after three years of occupation, reckoned from 01.03.2006.

The petitioner claimed that the agreement had been renewed from time to time for periods of three years and that it continued in possession of the community hall for running an educational institution.

The petitioner’s central grievance was that the Madurai Corporation had unilaterally revised the monthly rent without issuing notice.

The petitioner challenged the revision from ₹54,469 plus 18% GST to ₹1,94,411 plus 18% GST and sought restoration of the earlier licence terms dated 15.03.2025, fixing rent at ₹54,469 plus 18% GST for the licence period from 01.04.2025 to 31.03.2028.

Respondent’s Arguments

The learned Additional Advocate General appearing for the respondent Corporation submitted that the rent had been revised following an inspection.

According to the respondent, the inspection revealed that the petitioner had additionally constructed a building and was using the said building for running an educational institution.

The respondent contended that these circumstances necessitated revision of the rent.

However, during the proceedings, the learned Additional Advocate General further submitted that:

  • the impugned orders would be withdrawn; and
  • fresh proceedings for revision of monthly rent would be initiated after providing an opportunity of hearing to the petitioner.

The High Court took this submission on record.

Court’s Findings

The Madras High Court found that the impugned orders had been issued without providing an opportunity of hearing to the petitioner.

This procedural deficiency was expressly noted by the Court.

At that stage, the learned Additional Advocate General appearing for the respondent submitted that the impugned orders would be withdrawn and that fresh proceedings would be initiated for revision of monthly rent after providing an opportunity of hearing to the petitioner.

The Court took the said submission on record.

In light of the submission made on behalf of the respondent Corporation, the High Court set aside the impugned orders.

Court Order / Final Directions

The High Court passed the following order:

  1. The impugned orders/communications issued by the respondent were set aside.
  2. Liberty was preserved to the respondent to initiate proceedings afresh in accordance with law.
  3. The writ petition was allowed.
  4. There was no order as to costs.
  5. The connected miscellaneous petition was closed.

Important Clarification

The High Court did not finally determine the correct monthly rent payable by the petitioner.

The Court did not decide on merits whether:

  • ₹54,469 plus 18% GST was the legally correct rent;
  • ₹1,94,411 plus 18% GST was the legally correct revised rent;
  • the alleged use of 865 sq. metres justified enhancement;
  • the petitioner had made additional construction;
  • such additional construction legally justified revision of rent; or
  • the petitioner was ultimately entitled to restoration of the earlier licence terms for the period 01.04.2025 to 31.03.2028.

The impugned orders were set aside because they had been issued without providing an opportunity of hearing, and because the respondent Corporation, through the learned Additional Advocate General, submitted that the impugned orders would be withdrawn and fresh proceedings would be initiated after giving the petitioner an opportunity of hearing.

The respondent Corporation retains liberty to initiate fresh proceedings for revision of monthly rent in accordance with law.

Therefore, the judgment should not be interpreted as permanently preventing rent revision or as finally fixing the rent at ₹54,469 plus 18% GST.

Sections / Constitutional and Legal Provisions Involved

·         Article 226 of the Constitution of India — Provision under which the writ petition was filed seeking a Writ of Certiorarified Mandamus or other appropriate writ, order or direction.

·         Principle of Opportunity of Hearing — The decisive procedural issue identified by the High Court was that the impugned orders had been issued without providing the petitioner an opportunity of hearing.

·         Agreement dated 03.03.2006 — The agreement permitted use of the community hall for running an educational institution and provided for an increase of 15% in rent after three years of occupation from 01.03.2006. It also contained a termination provision.

·         18% GST on Monthly Rent — The impugned rent revision concerned enhancement from ₹54,469 plus 18% GST to ₹1,94,411 plus 18% GST.

·         Important statutory clarification: The judgment does not cite or discuss any specific section of the CGST Act, 2017 or TNGST Act, 2017 concerning levy of 18% GST on the rent. Therefore, no GST statutory section should be attributed to the Court beyond the actual contents of the judgment

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783504999_1480compressed.pdf

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