This issue was answered by the Hon’ble Supreme Court in the case of the GOVERNMENT OF KERALA & ANR. VS MOTHER SUPERIOR ADORATION CONVENT – 2021-VIL-43-SC by holding that residential accommodation for nuns and hostels for students would be eligible for exemption when Section 3(1)(b) of the Kerala Building Tax Act, 1975 exempted buildings that are used principally for religious, charitable or educational purposes or as factories or workshops from building tax under the Act.
It was held that first and foremost, the subject matter is “buildings” which as defined, would include a house or other structure. Secondly, the exemption is based upon user and not ownership. Third, what is important is the expression “principally”, showing thereby that the legislature decided to grant this exemption to buildings that are “principally” and not exclusively used for the purposes mentioned therein. The dominant object, therefore, is the test to be applied to see whether such a building is or is not exempt. Fourthly, religious, charitable, or educational purposes are earmarked by the legislature as qualifying for the exemption as they do not pertain to the business or commercial activity. Fifthly, what is important is that even factories or workshops which produce goods and provide services are also exempt, despite profit motive, as the legislature obviously wishes to boost production in factories and services in workshops. What is important to note is that the expression “used principally for” is wider than the expression “as” which precedes the words “factories or workshops”.
A reading of the provision would show that the object for exempting buildings that are used principally for religious, charitable, or educational purposes would be for core religious, charitable, or educational activity, as well as purposes directly connected with religious activity.
It is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect. We must first ask ourselves what is the object sought to be achieved by the provision and construe the statute in accord with such an object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favor of that which is exempted.