A. Radhakrishnan v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **MONDAY, THE 20TH DAY OF JUNE 2016/30TH JYAISHTA, 1938** **WP(C).No. 10151 of 2011 (T) ----------------------------** **PETITIONER(S): -------------** **A.RADHAKRISHNAN, AGED 82 YEARS, S/O. KARUNAKARAN NAIR, 'CHANDINI', PLOT NO.G.78,, PANAMPILLY NAGAR, ERNAKULAM.** **BY ADVS.SRI.M.RAMESH CHANDER SMT.K.A.SANJEETHA SRI.ANEESH JOSEPH** **RESPONDENT(S):** **--------------** **1. STATE OF KERALA, REPRESENTED BY THE SECRETARY, REVENUE (SPECIAL CELL) DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695 001.** **2. THE DISTRICT COLLECTOR, ERNAKULAM-682 030.** **3. THE SUB COLLECTOR, FORT KOCHI, ERNAKULAM-682 011.** **4. THE TAHSILDAR, KANAYANNUR, ERNAKULAM-682 011.** **BY GOVERNMENT PLEADER SRI.BOBBY JOHN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-06-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **msv/** ## **WP(C).No. 10151 of 2011 (T)** ## **----------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** **------------------------** ## **EXT.P1: TRUE COPY OF THE BUILDING PERMIT DTD.4.2.2005.** - **EXT.P2: TRUE COPY OF THE REGISTERED DEED OF SETTLEMENT DTD.15.7.2006.** - **EXT.P3: TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE TAHSILDAR DTD.18.8.2009.** - **EXT.P4: TRUE COPY OF THE NOTICE OF DEMAND ISSUED BY THE TAHSILDAR, KANAYANNUR DTD.18.8.2009.** - **EXT.P5: TRUE COPY OF THE ORDER IMPOSING LUXURY TAX U/S 5A OF THE ACT BY THE 4TH RESPONDENT.** **EXT.P6: TRUE COPY OF THE APPEAL FILED BEFORE THE 3RD RESPONDENT.** **EXT.P7: TRUE COPY OF THE ORDER DTD.22.3.2010.** - **EXT.P8: TRUE COPY FO THE REVISION FILED BEFORE THE DISTRICT COLLECTOR, ERNAKULAM.** - **EXT.P9: TRUE COPY OF THE ORDER DTD.24.7.2010 ISSUED BY THE 2ND RESPONDENT.** **EXT.P10: TRUE COPY OF THE ORDER OF THE GOVERNMENT ALONG WITH THE COVERING LETTER OF THE 2ND RESPONDENT.** **RESPONDENT(S)' EXHIBITS** - **-----------------------** **NIL** ## **//TRUE COPY//** **P.S.TO JUDGE** **Msv/** ## **A.M. SHAFFIQUE, J.** ## **-------------------------------------** W.P.(C) No. 10151 of 2011 -------------------------------------Dated this the 20[th] day of June, 2016 ## **JUDGMENT** Petitioner challenges Exts.P3, P4, P5, P7, P9 and P10, which are proceedings of the authorities under the Kerala Building Tax Act, 1975, by which the petitioner's building had been assessed for payment of tax and he is called upon to pay luxury tax in terms of Section 5 A of the Act from 2005 onwards. The plinth area of the building is assessed at 298.44 sq.metres and the petitioner has been asked to pay an amount of Rs.14,100/- as building tax. Petitioner submits that the petitioner had obtained a building plan for the construction of ground floor and the first floor. After construction of the ground floor, the right to construct the first floor had been settled in favour of his wife as per the registered Settlement Deed dated 17.5.2006 registered as Document No.4094 of 2006. Pursuant to the same, the first floor of the building had been constructed by the petitioner's wife and therefore the W.P.(C) No. 10151 of 2011 -2- building has separate entry, number etc. However, without taking into consideration such factual issues, the building had been assessed as a single unit. 2. Perusal of the Collector's order would indicate that no materials were produced and it is observed that the Settlement Deed had been executed to evade the payment of building tax and luxury tax. 3. Learned counsel for the petitioner placed reliance upon Ext.P8 which is the memorandum of revision petition filed before the District Collector which would show that all material particulars including the plan of the building had been produced before the District Collector. That apart, there was a specific contention that the first floor building has separate entrance, gate etc. These aspects of the matter had not been considered by the District Collector. That apart, there is no reason why the District Collector should not rely upon Ext.P2 Settlement Deed. When the right over the property and the right to construct has been transferred in favour of another W.P.(C) No. 10151 of 2011 -3- person for the purpose of building tax, it has to be assessed as separate building. 4. The definition of “plinth area”, means 'the area included in the floor of a building and where a building has more than one floor, the aggregate area included in all the floors together'. But there is an exemption as provided under Explanation 2 to Section 2 (e), which reads as under: “2(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 latrine which is not attached to the main structure.” xxxxx “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.” Section 5 A relates to charging of luxury tax. The Apex Court in **State of Kerala v. Mammikutty [2015 (3) KLT 138** W.P.(C) No. 10151 of 2011 -4- ## **(SC)]** had occasioned to consider the fact of Section 5A and it is held in Paragraph 14 as under: “14. In this context, it is imperative to analyse what is meant by “residential building”. The definition in clause 2(l), means a building or any other structure or part thereof used for residential purpose and house or out-house or garage appurtenant to a building for more beneficial enjoyment. It excludes hotels, boarding places, lodges and the like. Thus, the expression “residential building” cannot be interpreted without reference to the term “building” and Explanation II to S.2(e) of the Act. Therefore, each residential building owned by single owner would be subjected to luxury tax, if it has the plinth area which exceeds 278.7 sq.mts. It makes no difference whether the residential building consists of one floor or it is two-storied or three-storied or consists of multiple flats or apartments. The entire plinth area in the residential building owned by a singular owner is required to be aggregated. It is noticeable that S.5A does not refer to aggregate plinth area of all the floors. The intention of the legislature is apparent that if a person is the owner of the plinth area of 278.7 sq.mts or more in one building, even if it consists of separate or distinct apartments, he would be liable to pay the luxury tax W.P.(C) No. 10151 of 2011 -5- under S.5A of the Act. It also becomes further clear when the definition of “plinth area” in S.2(k) is properly appreciated. It clearly postulates that “plinth area” means the area included in the floor of the building and where building has more than one floor aggregate area included in all the floors are taken together. The proviso to the said definition lays down that in case of a building referred to in the Explanation II to clause (e), the “plinth area” shall be calculated separately. Thus, S.2(k) has an insegragable nexus with the definition of “building”. Explanation II to S.2(e) which defines “residential building” only conveys about the building meant for residential purpose and what it includes. S.5A is the charging Section and as has been stated earlier, it commences with a _non-obstante_ clause. It determines the annual luxury tax on all residential buildings having a plinth area of 278.7 sq. mts. or more. It provides a date for completion that is 1st April 1999. Though, it does not provide for aggregate it refers to residential building definition of which refers to a building. S.2(k) defines “plinth area” of the building. S.5A also includes “plinth area”. Though the term “aggregate” is not mentioned but the words therein are buildings having plinth area and in that context one is required to scan and analyse the meaning of the term “building” and the “plinth area” W.P.(C) No. 10151 of 2011 -6- as defined under S.2(e) and 2(k) respectively. “Plinth area” as defined clearly provides that when one building has more than one floor, the aggregate area includes all the floors. To give an example, a building consisting of four storeys belongs to a single owner, the aggregate of all the floors are to be included for calculation of the plinth area and thereby the computation of the luxury tax has to be determined as provided under Section 5A. Be it noted, the proviso to S.2(k) clearly stipulates that if a building as referred falls under Explanation II to S.2(e), the plinth area shall be calculated separately. The Explanation II refers to different apartments or flats owned by different persons. It also states that the cost of the construction of the building is to be met by all such persons jointly. This Explanation, as noted before, is required to be appositely understood. The learned counsel for the State would submit that if there is initial booking and the persons have contributed for the construction definitely there shall be separate computation. The Explanation II has to be read with S.5A which starts with a _non obstante_ clause. S.5A as has been mentioned before refers to “residential building” having plinth area 278.7 sq. mts. or more and, therefore, the said provision also takes note of this definition. In view of the above, the contention advanced by the learned counsel for the W.P.(C) No. 10151 of 2011 -7- State is difficult to accept. The definitions have to be given a proper construction. There can be a case where the owner erects a multi-storied building consisting 10 floors. He builds it at his own cost and thereafter he sells the apartments or flats to 10 persons and in that event he ceases to be the owner of the building. The 10 purchasers become the owners of flats and in such a situation it will lead to an absurdity because one single person who once owned the entire building or several apartments, though has ceased to be the owner in law yet is asked to pay the luxury tax solely on the ground that at the time of construction there was no contribution by the purchasers or to put it differently there had been no prior booking. This is not the intention. The Explanation II to Section 2(e) has to be read harmoniously with proviso to S.2(k) and S.5A of the Act. The intention of the legislature as gatherable is that ownership of different flats and the cost of construction of building are met by all such persons. The meeting of the cost jointly is not to be narrowly construed to mean that there has to be an investment before the commencement of the construction of the building. The persons who purchase afterwards they really share the value of the construction cost apart from the profit margin due to the builder or the seller. Unless such an W.P.(C) No. 10151 of 2011 -8- interpretation is placed, the original owner of flats when he ceases to be the owner of the building or the purchaser of a small apartment less then 278.7 square meters would still be liable to pay luxury tax. Such an interpretation would lead to absurdity.” 5. In the case on hand, the right to construct has been assigned in favour of the petitioner's wife. Thereafter, the building had been constructed, but no material is produced or relied upon by the authorities to arrive at a conclusion that the petitioner's wife had contributed to the cost of the construction of the building. The assignment made in respect of the building cannot be said to be unjustified. But as far as the luxury tax is concerned, the liability depends upon the ownership of such apartments, which is held by the Apex Court in **Mammikutty's case** (supra). Therefore, the building has to be assessed as a single unit for payment of building tax and separately for luxury tax under Section 5A. The luxury tax cannot be charged on account of the fact that the apartment is separately owned by the individual concerned on the basis of Ext.P2 Settlement Deed and the assessment made by the local W.P.(C) No. 10151 of 2011 -9- authority. Under such circumstances, I am of the view that this writ petition can be disposed of as under: (i) The challenge to the levy of one time building tax is negatived. Petitioner is liable to pay tax as demanded in Ext.P4. (ii) The demand for luxury tax in terms of Ext.P5 is set aside. **Sd/A.M. SHAFFIQUE JUDGE** Scl/20.06.2016