LAHORE: The Lahore High Court has set aside property tax demands raised by the Military Lands and Cantonments Department against the Lahore University of Management Sciences, ruling that the university is exempt from the levy for the period before a 2023 amendment to the Cantonments Act.
A division bench of Justice Hassan Nawaz Makhdoom and Justice Khalid Ishaq allowed a petition filed by LUMS and the National Management Foundation, the non-profit society under which the university was established. The petition challenged orders of the Director General, Military Lands and Cantonments, Rawalpindi.
The Cantonment Board first issued a tax notice on the university’s buildings in 2007, 14 years after LUMS began operating from its Lahore campus in 1993. LUMS claimed exemption under Section 99(2)(b) of the Cantonments Act, 1924. Its appeal was dismissed in 2011, and a revision petition in 2017.
The university told the court it has over 5,000 students across five schools and has provided about Rs13.3 billion in financial aid since its founding. The respondents argued that LUMS earns substantial income from fees and investments and lets out some buildings and halls, which they said amounted to commercial activity.
In the judgment, Justice Ishaq held that the 2023 amendment made a substantive change that cannot be applied to earlier assessment periods. He ruled that charging fees and retaining a surplus does not establish a profit-making purpose, provided no funds are distributed to promoters, trustees or controllers.
The court declared the 2011 and 2017 orders void and barred recovery of any pre-amendment demand. For the later period, it said the amended law gives the Cantonment Board discretion to grant or refuse exemption. Any future assessment must be made through a reasoned order examining the use, income and public access of each building concerned.
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