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Kerala High Court
Alexander K. Thomas vs District Collector, Kollam on 21 May, 2024
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE EASWARAN S.
TUESDAY, THE 21ST DAY OF MAY 2024 / 31ST VAISAKHA, 1946
WP(C) NO. 10989 OF 2018
PETITIONER/S:
ALEXANDER K. THOMAS, AGED 30 YEARS
S/O. P.K.THOMAS, K. P. T. SUDHIN BHAVAN,
IVARKALA WEST NORTH, PUTHANAMBALAM P.O.,
KOLLAM DISTRICT-691001.
BY ADVS.
SMT.M.R.JAYALATHA
SRI.R.RENJITH
RESPONDENT/S:
1 DISTRICT COLLECTOR, KOLLAM
CIVIL STATION KOLLAM, KOLLAM-691001.
2 THE REVENUE DIVISIONAL OFFICER
KOLLAM-691001.
3 TAHSILDAR
KUNNATHUR TALUK, KUNNATHUR P.O., KOLLAM-690540.
4 THE VILLAGE OFFICER
KUNNATHUR P.O., KOLLAM-690540.
OTHER PRESENT:
SPL. GP (TAXES) SRI MUHAMMED RAFIQ
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 09.04.2024, THE COURT ON 21.05.2024 DELIVERED THE
FOLLOWING:
WP(C) 10989/2018
2
JUDGMENT
The proceedings for imposition of luxury tax on the building of the petitioner is under challenge.
2. The petitioner claims that he is the absolute owner of 1.9 Ares of property comprised in survey Nos.218/17, 218/18-2, 218/16 and 218/4 of Kunnathur village. The petitioner claims that he got title over the property by settlement deed No.3203/2013 of Sasthamcotta SRO. Having constructed a building having plinth area of 165.46 sq.m., a certificate was issued by the Kunnathur Grama Panchayat assessing the building and imposing building tax.
3. While so, the Tahsildar, Kunnathur, who is the 3 rd respondent, initiated proceeding for assessment under the Kerala Building Tax Act, 1975 (hereinafter referred to as the "Act", for short) assessing the building of the petitioner and Ext.P2 notice dated 3.5.2016 was issued. Thereafter, Ext.P3 order of assessment was issued and Ext.P4 demand WP(C) 10989/2018 3 was raised for an amount of Rs.8,000/- towards luxury tax. According to the petitioner, the proceedings of the Tahsildar shows that the assessment was done for the entire plinth area of 292.07 sq.m. The appeal filed by the petitioner against Ext.P4 has been rejected by the 2 nd respondent vide Ext.P6 order dated 21.10.2016 on the ground that it was filed beyond the period prescribed for filing the same and hence barred by limitation. Petitioner thereafter approached the 1st respondent by way of revision under Section 13 of the Kerala Building Tax Act 1975. Petitioner's revision against the appellate order also has been rejected by the 1st respondent-District Collector vide Ext.P7 order dated 21.12.2017. Thus, the petitioner impugns Exts.P4, P6 and P7 orders in the present writ petition.
4. The respondents have filed a counter affidavit, in which the orders impugned are sought to be sustained by placing reliance on the decision of this Court in Rasheed v. Tahsildar [2004 (3) KLT 945]. According to the respondents, though it is true that the petitioner produced WP(C) 10989/2018 4 separate tax receipts and electricity bills in the names of himself and his father, on inspection of the said building it is seen that the building is a single unit and have a common plinth area. Therefore, according to the respondents, the upper portion of the building have a common entrance which leads to the rooms of each building and not separated each other and therefore, liable to be assessed as a whole.
5. I have heard Smt.M.R Jayalatha, learned counsel appearing for the petitioner, and Sri.Mohammed Rafiq, learned Special Government Pleader (Taxes), appearing for the respondents.
6. Before proceeding to assess the rival submissions raised across the bar, it requires to be noted that despite the appeal filed by the petitioner against the assessment order being rejected on the ground of the limitation, the 1 st respondent entertained the revision petition and decided the issue on merits. No argument was advanced before this Court on behalf of the respondents on the ground of WP(C) 10989/2018 5 maintainability of appeal before the 2nd respondent and further that since the 1st respondent decided to entertain the revision petition and proceeded to decide the case on merits, this Court proceeds to consider the validity of the order impugned on merits.
7. On the basis of the pleadings on record, the point to be decided is whether the building owned by the petitioner is to be assessed as separately or along with existing building for payment of building tax under the provisions of the Act. Before delving into the said contention, it would be advantageous to extract the definition of the term "building" under the Act. Section 2(e) of the Act defines "building", as under:
(e) "building" means a house, out-house, garage, or any other structure, or part thereof, whether of masonry, bricks, wood, metal or other material, but does not include any portable shelter or any shed constructed principally of mud, bamboos, leaves, grass or thatch or a WP(C) 10989/2018 6 latrine which is not attached to the main structure.
Explanation 1.―In the case of buildings constructed for providing housing accommodation for workers and their families residing in plantations, in pursuance of section 15 of the Plantations Labour Act, 1951 (Central Act 69 of 1951) or buildings constructed under the Government of India Subsidised Housing Scheme for industrial workers, each part of a building providing or intended to provide accommodation for a worker or a worker and his family shall be deemed to be a separate building.
Explanation 2.―Where a building consists of different apartments or flats owned by different persons, and the cost of construction of the building was met by all such persons jointly, each such apartment or flat shall be deemed to be a separate building;"
Explanation-2 to Section 2(e) of the Act forms the crux of WP(C) 10989/2018 7 the dispute in the present writ petition. The Section provides that where a building consists of different apartments or flats owned by different persons, and the cost of construction of the building was met by all such persons jointly, each such apartment or flat shall be deemed to be a separate building. Therefore, it is the contention of the learned counsel for the petitioner that her client's portion of the building is liable to be assessed separately and not as a single unit. She places reliance on the decision of this Court in Ananthapadmanabhan Nair A.B. and another v. District Collector, Ekm. and Others [2016 (1) KHC 388].
8. The point that arose for consideration in Ananthapadmanabhan Nair A.B (supra) was similar to the one on hand in this writ petition. While considering the parameters which the assessing authority should follow while assessing the buildings to which Explanation-2 to Section 2(e) applies, this Court categorically held that the assessing authority has to examine whether the ownership WP(C) 10989/2018 8 in the apartments that were constructed vested in different persons and the said persons had contributed to the cost of construction of the building, etc. Therefore, this Court was of definite view that to arrive at a finding on the issue, the authority had to consider documents that would suggest an ownership of the various persons in the different portions of the building that are stated to have been assigned in their favour. Therefore, the learned counsel for the petitioner submitted that a similar exercise also may be directed to be done on the facts of this case also.
9. On the other hand, Sri.Mohammed Rafiq, learned Special Government Pleader (Taxes), appearing on behalf of the respondents would oppose the said request made by the petitioner's counsel. He placed reliance on a Full Bench decision of this Court in District Collector v. Sreekumari Kunjamma [2011 (1) KLT 248 (F.B)], wherein a specific question was considered by the Full Bench of this Court as to whether a single building consisting of two separate flats constructed by same owner must be assessed as a single WP(C) 10989/2018 9 building, if it does not fall within Explanation-1 or 2 to Section 2(e) of the Act. He would specifically refer to the findings rendered in paragraph No.3 of the said judgment and would pray for the dismissal of the writ petition.
10. The question whether the petitioner is entitled to succeed or not will depend on the analysis of the facts on hand and the provisions of the Kerala Building Tax Act, 1975.
11. Ext.P1 is the building ownership certificate given by Kunnathur Panchayat and Ext.P1(b) is the plan which shows the plinth area of the building. It is the specific case of the petitioner that the building was constructed out of the own funds of the petitioner by treating as a single unit, whereas the petitioner is not liable for the luxury tax/building tax on the property owned by her father. A perusal of Ext.P7, which is the order on revision, shows that the Tahsildar has reported that the two buildings are having the same plinth area and does not have any separation on the basement. Since, according to the Tahsildar, the WP(C) 10989/2018 10 building does not have a separate differentiation in the areas and it is being used as a single unit, it is liable to be assessed. These reports were placed before the revisional authority. One must certainly remember that the revisional authority which discharges the quasi-judicial function was bound to consider the facts pleaded before him and independently arrive at a finding and thereafter apply the facts to the law pleaded. The pertinent question is as to whether the revisional authority, namely, the 1 st respondent, had discharged its statutory obligation.
12. Before considering the issue as to whether the 1 st respondent had discharged its statutory obligations as a revisional authority under the provisions of the Act or not, it would be advantageous to refer to the decision cited by the parties across the bar. According to Sri. Mohammed Rafiq, learned Special Government Pleader (Taxes), the point raised in the writ petition is squarely covered by the decision of the Full Bench of this Court in Sreekumari Kunjamma (supra). While this Court has given an anxious WP(C) 10989/2018 11 consideration to the judgment cited by Sri.Mohammed Rafiq, learned Special Government Pleader (Taxes), one must necessarily find that the said decision does not support the cause projected by the State. Before the Full Bench of this Court, two questions were raised.
(1) Whether a single building consisting of two separate flats constructed by the same owner has to be assessed as a single building, if it does not fall within Explanations (1) and (2)?
(2) Whether separate assessments of each and every flat is called for only in respect of constructions covered by Explanations (1) and (2).
13. The Full Bench in Sreekumari Kunjamma (supra) considered the issue and came into the conclusion as under:
"4. What is clear from the above provision is that a building irrespective of the number of flats or apartments contained therein, should be assessed as a single unit and the exceptions are only those stated in Explanations 1 and 2 stated WP(C) 10989/2018 12 above. A Division Bench of this court in SHENOY REAL ESTATES (P) LTD. VS. TAHSILDAR reported in 2004(1) KLT 133 held that sale of flats by a builder after completion of construction of apartment building to different owners will not justify separate assessment of each flat under Explanation (2) to Section 2(e) of the Act. What is to be noted from this judgment is that unless apartment building is constructed by the joint owners by sharing the cost, each and every apartment cannot be assessed as a separate building, no matter the building after construction was sold by the owner to different persons. In this case different ownership for the building happens after completion of construction of the building and, the sale made thereafter to different owners is immaterial for the purpose of assessment. In fact, the incidence of tax is on completion of construction of the building and it is immaterial as to whether the owner retains the building or transfers the same in full or in part or in pieces after completion of construction. Separate assessment of each and every flat is called for only in respect of the constructions covered by Explanations (1) and (2) of Section 2(e)."
14. Later, the same issue came up for consideration WP(C) 10989/2018 13 of the Hon'ble Supreme court in State of Kerala and Others v. A.P.Mammikutty [2015 (3) KLT 138]. The Hon'ble Apex Court went on to analyse what is meant by "residential building". Section 2(l) of the Act was thereafter quoted and it was held that the expression "residential building" cannot be interpreted without reference to the term "building" and Explanation-2 to Section 2(e) of the Act. The Apex Court also held that the determination of the annual luxury tax on all residential buildings having a plinth area of 278.7 sq.m or more which have been completed as on 1.4.1999 are liable to be assessed. In the considered view of the Hon'ble Apex Court, the cost of construction of the building is to be met by all such persons jointly and the Explanation as quoted before is required to be appositely understood. Therefore, the assessment orders were set aside and the matter was remanded to the revenue authorities to compute the luxury tax in the manner which was clarified therein under paragraph No.14.
15. Following the principles expounded by the Apex WP(C) 10989/2018 14 Court, this Court in Ananthapadmanabhan Nair A.B. (supra) had adopted the same manner.
16. In the considered view of this Court, the facts of the present case squarely come within the ambit of the principles laid down by the Apex Court in A.P.Mammikutty (supra) as well as the course of action adopted by this Court in Ananthapadmanabhan Nair A.B (supra).
17. Now to answer the question whether the statutory authorities has discharged its obligation or not, it is necessary to keep in mind the principles governing the consideration of a statutory appeal under a taxing statute. It is trite principle of law that the quasi judicial authority vested with power to decide an issue judicially is expected to discharge its function applying its mind independently. When the exercise of such power is found to be ex facie arbitrary and without application of mind, certainly this Court would be justified in exercise of its power of Judicial Review. Applying the above test, if the impugned orders in the writ petition are scrutinised within the permissible limits WP(C) 10989/2018 15 of exercise of judicial review under Article 226 of the Constitution of India, it is explicitly clear that the 1 st respondent had miserably failed to apply its mind on the various intrinsic facts and law raised before it. A reading of Ext.P7 order makes it evidently clear that the report dated 5.10.2017 of the Tahsildar, the assessing authority under the Act, was blindly followed by the appellate authority without any independent application of mind. In other words, in exercise of the quasi-judicial power, the 1 st respondent failed to discharge the obligation conferred on him and merely decided to accept the report of the Tahsildar while deciding to reject the revision. Such exercise of power is certainly arbitrary and vitiated by non- application of mind and definitely failure of exercise of power vested under the statute and hence qualifies for interference in exercise of the power vested in this Court under Article 226 of the Constitution of India.
18. Normally, if on finding that exercise of the appellate power was improper, this Court would be inclined WP(C) 10989/2018 16 to remand the matter back to the appellate authority to decide the appeal afresh. But that will not resolve the issue. The notice of assessment proceeded merely on the presumption that the building constructed exceeded permissible plinth area and hence was liable for assessment. The 3rd respondent even failed to address the basic question before it, whether he had jurisdiction to assess the portion of the building constructed before 1.4.1999 or even it was constructed after 1.4.1999 does it satisfy the requirement of explanation to Section 2(e) of the Act and in terms of parameters laid down by the Apex Court in Para 14 of A.P.Mamikutty (supra). Therefore, this Court finds that the entire issue requires reconsideration at the hands of the assessing authority.
19. Hence, the writ petition is allowed. Exts.P3, P4, P6 and P7 are set aside. The matter is remanded back to the Tahsildar, who is the 3rd respondent, to reconsider the issue in the light of the direction issued in paragraph No.14 of the judgment of the Apex Court in A.P.Mammikutty WP(C) 10989/2018 17 (supra) with regard to the requirement of meeting the total cost of construction of the building for the purpose of Explanation-2 to Section 2(e) of the Act. Further, the 3 rd respondent also shall consider the specific plea raised by the petitioner in this writ petition that the area which was constructed before 1.4.1999 cannot be assessed under the Kerala Building Tax Act, 1975. The petitioner will be free to substantiate his case with such evidence as required under law. The said exercise shall be undertaken by the 3 rd respondent within a period of four months from the date of receipt of copy of this judgment. To enable the 3 rd respondent to reconsider the matter as above, all proceedings initiated to recover the demand as per Ext.P2 shall be kept in abeyance.
Writ petition ordered accordingly. No order as to costs.
Sd/-
EASWARAN S. JUDGE jg WP(C) 10989/2018 18 APPENDIX OF WP(C) 10989/2018 PETITIONER EXHIBITS EXHIBIT P1 A TRUE COPY OF THE CERTIFICATE ISSUED BY THE KUNNATHUR GRAMA PANCHAYAT DATED 24.6.2016. EXHIBIT P1A A TRUE COPY OF THE TAX RECEIPT ISSUED FROM KUNNATHUR GRAMA PANCHAYATH, DTD. 14.11.2017 BY NO. D2031281.
EXHIBIT P1B A TRUE COPY OF THE PLAN OF THE BUILDING. EXHIBIT P2 A TRUE COPY OF THE NOTICE OF DEMAND DATED 3.5.2016 ISSUED BY THE TAHSILDAR KUNNATHUR. EXHIBIT P3 A TRUE COPY OF THE ORDER OF ASSESSMENT DATED 3.5.2016.
EXHIBIT P4 A TRUE COPY OF THE PROCEEDINGS OF TAHSILDAR KUNNATHUR DATED 4.5.2016.
EXHIBIT P5 A TRUE COPY OF THE RECEIPT DATED 21.7.2016. EXHIBIT P6 A TRUE COPY OF THE PROCEEDINGS OF THE REVENUE DIVISIONAL OFFICER DATED 21.10.2016. EXHIBIT P7 A TRUE COPY OF THE PROCEEDINGS OF THE DISTRICT COLLECTOR KOLLAM DATED 21.12.2017. EXHIBIT P8 A TRUE COPY OF THE TAX RECEIPT ISSUED BY THE KUNNATHUR GRAMA PANCHAYAT DT. 20.11.2017. EXHIBIT P9 A TRUE COPY OF THE BILL ISSUED BY THE KERALA ELECTRICITY BOARD FOR CONSUMER NO. 23801 IN THE NAME OF THE PETITIONER.
EXHIBIT P10 A TRUE COPY OF THE RECEIPT ISSUED BY THE KERALA ELECTRICITY BOARD FOR CONSUMER IN THE NAME OF THE FATHER OF THE PETITIONER.
EXHIBIT P11 A TRUE COPY OF THE CERTIFICATE ISSUED BY THE STATE BANK OF INDIA DATED 17.11.2017.
EXHIBIT P12 A TRUE COPY OF THE PHOTOGRAPH SHOWING THE LIE AND NATURE OF THE BUILDING OF THE PETITIONER.