High Court of KeralaSingle Judge2016-09-02Writ petitions disposed; Demands for tax and li...

Bodygear International (P) Ltd. v. Kadungallur Grama Panchayat

Case / Petition Number:WP(C).No. 5716 of 2009 (H)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A.M. Shaffique
Judgment Date: 2016-09-02
Court Decision / Holding: Any demand for tax or for obtaining licence against the petitioners is quashed, however, without prejudice to the right of the Panchayat to invoke their jurisdiction on the basis of the Act 34 of 2014. It is made clear that, in respect of the areas which come under Section 1(2) of the amended provision, the Panchayat shall have no jurisdiction in the matter.
Final Disposition: Writ petitions disposed; Demands for tax and licensing quashed; For areas under amended Section 1(2), Panchayat shall have no jurisdiction; Without prejudice to rights under Act 34 of 2014.

Parties to the Case

Appellants / Petitioners

Bodygear International (P) Ltd.
Pananghat Polymer Packing (P) Ltd.
JeeYes Concrete Blocks
Duracoat Paints (P) Ltd.
Damodar Industries
Spectrum Reagents & Chemicals
Arjuna Natural Extracts Ltd.
Thamarachallil Polymers
Unipack (India) Pvt. Ltd.
Industrial Reagents and Chemicals
Jaison Industries
Christ Wood & Metals Crafts Industries
Chilton Refrigerations (P) Ltd.
Yoman Bone & Allied Products
Power Controls
Mac Field Beverages India (P) Ltd.
Kingston Plastics Pvt. Ltd.
P.K.V & Sons

Respondents

Kadungallur Grama Panchayat, Kadungallur

Legal Representation & Advocates

Counsels for Petitioners

• SRI.JOY C. PAUL
• SRI.DOMINIC JOHNSON

Counsels for Respondents

• SRI.P.V.BALAKRISHNAN
• SRI.DINESH MATHEW
• J.MURICKEN

Case Synopsis & Summary

The petitioners in this batch of writ petitions are a cluster of industrial units located within the Industrial Development Area at Edayar, Muppathadom, Aluva, including Bodygear International (P) Ltd., Pananghat Polymer Packing (P) Ltd., JeeYes Concrete Blocks, Duracoat Paints (P) Ltd., Damodar Industries, Spectrum Reagents & Chemicals, Arjuna Natural Extracts Ltd., Thamarachallil Polymers, Unipack (India) Pvt. Ltd., Industrial Reagents and Chemicals, Jaison Industries, Christ Wood & Metals Crafts Industries, Chilton Refrigerations (P) Ltd., Yoman Bone & Allied Products, Power Controls, Mac Field Beverages India (P) Ltd., Kingston Plastics Pvt. Ltd., and P.K.V & Sons. They challenge the Kadungallur Grama Panchayat’s demand for taxes and the demand to obtain licences to operate their units, arguing that the Kerala Panchayat Raj Act, 1994 (the Act) does not apply to industrial areas and that the establishments fall within exempted zones. The petitioners rely on the interpretation in Pepsico India Holdings Pvt. Ltd. v. State of Kerala (2007) that the Act has no application in industrial areas, and they contend that the amended provisions in 2014 should not revive the Panchayat’s jurisdiction over these units. The respondent Panchayat submits that the Act can be invoked and that the 2014 amendments extend or alter its reach to certain industrial locations. The court observes that while the 2014 amendments clarify the jurisdictional scope, the existing rule in industrial areas remains, and, accordingly, the petitions are disposed of by quashing tax and licence demands against the petitioners, with a caveat that for areas coming under Section 1(2) of the amended provision, the Panchayat shall have no jurisdiction. The order is issued with liberty for the Panchayat to act under the amended Act 34 of 2014 in applicable cases.

Provisions of Law Cited

Kerala Panchayat Raj Act, 1994 (13 of 1994)Section 1(2) of the Kerala Panchayat Raj Act, 1994Amendment Act 34 of 2014Sections 2, 4, 7 and 8 of the Kerala Panchayat Raj Act, 1994 (as amended by Act 34 of 2014)Section 3 of the Kerala Panchayat Raj Act, 1994 (as amended)Proviso inserted to Section 1(2) of the Kerala Panchayat Raj Act, 1994Chapter XIX of the Kerala Panchayat Raj ActKerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999 (5 of 2000)Article 243Q of the Constitution ( proviso context )

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the Kerala Panchayat Raj Act, 1994 and especially Section 1(2) carve out industrial areas from the Act's jurisdiction; the 2014 Amendment Act (Act 34 of 2014) modifies the scope by extending certain provisions to industrial townships declared under constitutional and statutory schemes, and the pre-amendment stay on demands applies. They rely on Pepsico India's ruling that the Act has no application in industrial areas and seek quashing of tax and licence demands. They argue that the industrial units located within the industrial development area should be governed by other statutory schemes and not by the Panchayat; subject to amendment, the Act should not impose new compliance burdens.

Contentions of Respondents

The respondents maintain that the Panchayat has jurisdiction to levy taxes and require licences consistent with the Kerala Panchayat Raj Act and that the 2014 amendment clarifies the scope, extending or limiting the Act's reach to specific listed industrial areas, with the right to enforce where applicable. They contend that the amended Section 1(2) modifies the earlier exemptions and that certain industrial areas fall within the Act's ambit. They seek to preserve the mechanism of tax/licence collection under the Act, subject to the amended provisions.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Pepsico India Holdings Pvt. Ltd. v. State of Kerala	2007(2) KLT 835	Partly Overruled / Limited	The judgment acknowledges the Pepsico ruling that industrial areas are outside the Panchayat's jurisdiction, but the 2014 amendments modify the scope; the current decision restricts or narrows the applicability of the Pepsico rule to areas not falling under the amended Section 1(2).

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** ## **FRIDAY, THE 2ND DAY OF SEPTEMBER 2016/11TH BHADRA, 1938** ## **WP(C).No. 5716 of 2009 (H)** **------------------------------------------** ## **PETITIONER(S) :** **-------------------------** **1. BODYGEAR INTERNATIONAL (P) LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **2. PANANGHAT POLYMER PACKING (P) LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **3. JEEYES CONCRETE BLOCKS, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **4. DURACOAT PAINTS (P) LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **5. DAMODAR INDUSTRIES, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **6. SPECTRUM REAGENTS & CHEMICALS, BINANIPURAM P.O, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **7. M/S. ARJUNA NATURAL EXTRACTS LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **8. THAMARACHALLIL POLYMERS, BINANIPURAM P.O., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **9. M/S. UNIPACK (INDIA) PVT. LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **10. INDUSTRIAL REAGENTS AND CHEMICALS, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **..2/-** **..2..** ## **WP(C).No. 5716 of 2009 (H)** ## **----------------------------------------** **11. JAISON INDUSTRIES, BINANIPURAM P.O, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **12. CHRIST WOOD & METALS CRAFTS INDUSTRIES, BINANIPURAM P.O., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **13. M/S.CHILTON REFRIGERATION'S (P) LTD., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **14. YOMAN BONE & ALLIED PRODUCTS, BINANIPURAM P.O, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **15. POWER CONTROLS, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **16. MAC FIELD BEVERAGES INDIA (P) LTD., BINANIPURAM P.O, INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **17. KINGSTON PLASTICS PVT. LTD., BINANIPURAM P.O., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **18. P.K.V & SONS,** - **BINANIPURAM P.O., INDUSTRIAL DEVELOPMENT AREA, EDAYAR, MUPPATHADOM, ALUVA.** **BY ADVS. SRI.JOY C. PAUL SRI.DOMINIC JOHNSON** **RESPONDENT(S) :** - **-----------------------------** ## **KADUNGALLUR GRAMA PANCHAYAT, KADUNGALLUR, REP. BY ITS SECRETARY.** ## **BY ADVS. SRI.P.V.BALAKRISHNAN SRI.DINESH MATHEW J.MURICKEN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-09-2016, ALONG WITH W.P(C).NO. 12816 OF 2009 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. ## **WP(C).No. 5716 of 2009 (H)** ## **----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXT. P1(A): TRUE COPY OF THE NOTICE ISSUED TO THE 1ST PETITIONER. EXT. P1(B): TRUE COPY OF THE NOTICE ISSUED TO THE 2ND PETITIONER. EXT. P1(C): TRUE COPY OF THE NOTICE ISSUED TO THE 2ND PETITIONER. EXT. P1(D): TRUE COPY OF THE NOTICE ISSUED TO THE 3RD PETITIONER. EXT. P1(E): TRUE COPY OF THE NOTICE ISSUED TO THE 4TH PETITIONER. EXT. P1(F): TRUE COPY OF THE NOTICE ISSUED TO THE 5TH PETITIONER. EXT. P1(G): TRUE COPY OF THE NOTICE ISSUED TO THE 6TH PETITIONER. EXT. P1(H): TRUE COPY OF THE NOTICE ISSUED TO THE 7TH PETITIONER. EXT. P1(I): TRUE COPY OF THE NOTICE ISSUED TO THE 7TH PETITIONER. EXT. P1(J): TRUE COPY OF THE NOTICE ISSUED TO THE 8TH PETITIONER. EXT. P1(K): TRUE COPY OF THE NOTICE ISSUED TO THE 8TH PETITIONER. EXT. P1(L): TRUE COPY OF THE NOTICE ISSUED TO THE 9TH PETITIONER. EXT. P1(M): TRUE COPY OF THE NOTICE ISSUED TO THE 9TH PETITIONER. EXT. P1(N): TRUE COPY OF THE NOTICE ISSUED TO THE 10TH PETITIONER. EXT. P1(O): TRUE COPY OF THE NOTICE ISSUED TO THE 10TH PETITIONER. EXT. P1(P): TRUE COPY OF THE NOTICE ISSUED TO THE 11TH PETITIONER. EXT. P1(Q): TRUE COPY OF THE NOTICE ISSUED TO THE 12TH PETITIONER. EXT. P1(R): TRUE COPY OF THE NOTICE ISSUED TO THE 13TH PETITIONER. EXT. P1(S): TRUE COPY OF THE NOTICE ISSUED TO THE 13TH PETITIONER. EXT. P1(T): TRUE COPY OF THE NOTICE ISSUED TO THE 14TH PETITIONER. EXT. P1(U): TRUE COPY OF THE NOTICE ISSUED TO THE 15TH PETITIONER. EXT. P1(V): TRUE COPY OF THE NOTICE ISSUED TO THE 16TH PETITIONER. EXT. P1(W): TRUE COPY OF THE NOTICE ISSUED TO THE 17TH PETITIONER. EXT. P1(X): TRUE COPY OF THE NOTICE ISSUED TO THE 18TH PETITIONER.** ## **WP(C).No. 5716 of 2009 (H)** **----------------------------------------** **EXT. P2: TRUE COPY OF THE ORDER DATED 05.07.1994. EXT. P3: TRUE COPY OF THE CIRCULAR DATED 16.04.2007. RESPONDENT(S)' EXHIBITS :** ## **NIL** **//TRUE COPY//** **P.A.TO JUDGE.** Msd. ## **A.M.SHAFFIQUE, J** *** * * * * * * * * * * *** W.P.C.Nos.5716 & 12816 of 2009, 18790, 18852, 20000 & 20075 of 2011, 7161 & 11104 of 2012 and 18284 of 2013 ---------------------------------------Dated this the 2[nd] day of September 2016 ## **J U D G M E N T** These writ petitions have been filed challenging the demand for tax as well as the direction issued by the Panchayat calling upon the petitioners to obtain licence for setting up/continue the existing industries. 2. The main contention urged by the petitioners is in respect of the applicability of the Kerala Panchayat Raj Act, 1994 (hereinafter referred to as 'the Act') in respect of the industries within the industrial areas of the State. It is stated that though the Act is extended to the whole of the State of Kerala, in view of Section 1(2) of the Act, areas which are within the limits of Cantonments, Nagar Panchayats, Municipal Councils, Municipal Corporations and the industrial areas of the State have been exempted from the area of operation of the Panchayat. This position has been declared by a Division Bench of this Court in W.P.C.No.5716/2009 & conn.cases 2 **Pepsico India Holdings Pvt. Ltd. v. State of Kerala** _[2007(2) KLT 835]_ . In so far as the petitioners' establishments are all situated within the industrial area, it is apparent that the Act has no application and Panchayat cannot invoke their powers into the industrial areas where the units have been set up by the petitioners. Therefore, the contention of the petitioners that the demand for tax as well as the demand for taking licence for such institutions is not covered by the provisions of the Act. 3. It is pointed out that Section 1(2) of the Act has been amended by the Kerala Panchayat Raj Amendment Act, 2014 by Act 34 of 2014 by which Section 1 has been amended in the following manner: _**“1. Short Title and Commencement** .- (1) This Act may be called the Kerala Panchayat Raj (Amendment) Act, 2014._ _(2) Section 3 of this Act shall be deemed to have come into force on the 17[th] day of May, 2010, Sections 2, 4, 7 and 8 shall be deemed to have come into force on the 14[th] day of June, 2010 and the remaining sections shall be deemed to have come into force on the 28[th] day of October, 2013._ W.P.C.No.5716/2009 & conn.cases 3 _Amendment of Section 1.- In sub-section (2) of Section 1 of the Kerala Panchayat Raj Act, 1994 (13 of 1994) (hereinafter referred to as the principal Act),-_ _(a) for the words “Industrial areas”, the words, figures and letters “areas specified as industrial township under the proviso to clause (1) of Article 243Q of the Constitution and areas declared as industrial areas under the Kerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999 (5 of 2000)” shall be substituted;_ _(b) after the existing proviso, the following proviso shall be inserted, namely:-_ _“Provided further that the provisions of Chapter XIX of this Act shall extend to the areas declared as industrial areas under the Kerala Industrial Single Window clearance Boards and Industrial Township Area Development Act, 1999.”_ 4. By virtue of the aforesaid amendment, for the words “Industrial areas” the following has been incorporated. _“Areas specified as industrial township under the proviso to Clause (1) of Article 243Q of the Constitution and areas declared as industrial_ W.P.C.No.5716/2009 & conn.cases 4 _areas under the Kerala Industrial Single Window Clearance Boards and Industrial Township Area Development Act, 1999 (5 of 2000)”_ . This amendment is made effective from 14/06/2010. In other words, other than the areas specified above, all other areas will come under the provisions of the Act, effective from 14/06/2010. It is also contended by the learned counsel appearing for the petitioners that separate writ petitions had been filed challenging the amended provision especially in regard to the retrospectivity of the said provision with effect from 14/06/2010 and this Court had stayed collection of amounts with reference to the demands made prior to the amendment coming into effect, that is from 14/06/2010 onwards till the date of amendment i.e. 23/12/2014. Having regard to the aforesaid submissions, I am of the view that these writ petitions can be disposed of as under: i) Any demand for tax or for obtaining licence against the petitioners is hereby quashed, however, without prejudice to the right of the Panchayat to invoke their jurisdiction on the basis of the Act 34 of 2014. W.P.C.No.5716/2009 & conn.cases 5 ii) It is made clear that, in respect of the areas which come under Section 1(2) of the amended provision, the Panchayat shall have no jurisdiction in the matter. (sd/-) **(A.M.SHAFFIQUE, JUDGE)** jsr