C. T. John v. The Tahsildar, Kottayam and The State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR WEDNESDAY, THE 18TH DAY OF MAY 2016/28TH VAISAKHA, 1938** ## **WP(C).No. 8654 of 2004 (E)** **---------------------------** **PETITIONER(S): -------------** **C.T.JOHN, CHERUVALLIL, THELLAKAM, KOTTAYAM.** **BY ADVS.SRI.MATHEW JOHN (K) SRI.SUJESH MENON V.B.** **RESPONDENT(S):** **--------------** **1. THE TAHSILDAR, KOTTAYAM** **ADDL. 2ND RESPONDENT:** **2.THE STATE OF KERALA, REPRESENTED BY SECRETARY, LOCAL ADMINISTRATION.** **ADDL. 2ND RESPONDENT IS IMPLEADED AS PER ORDER DTD. 5.6.2008 IN THE W.P.(C).** **R1 & 2 BY GOVERNMENT PLEADER SRI.SEBASTIAN CHAMPAPPILLY** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-05-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C).NO.8654/2004** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1: COPY OF THE ORDER OF ASSESSMENT DATED 24.3.2003.** **EXT.P2: COPY OF THE SCHEDULE.** **EXT.P3: COPY OF THE CIRCULAR DATED 10.5.1983.** **EXT.P4: COPY OF THE CERTIFICATE DATED 11.12.2003.** **EXT.P5: COPY OF THE RECEIPT EVIDENCING PAYMENT OF RS.38,894/- DATED 24.4.2003.** **EXT.P6: COPY OF THE RECEIPT EVIDENCING PAYMENT OF RS.38,700/- DATED 14.11.2003.** **EXT.P7: COPY OF THE LETTER DATED 10.2.2004 BY THE PETITIONER TO THE VILLAGE OFFICER, PERUR.P.O.** **EXT.P8: COPY OF THE NOTICE ISSUED BY THE RESPONDENT DATED 30.10.2003.** ## **RESPONDENTS EXHIBITS: NIL.** **//TRUE COPY//** **P.S. TO JUDGE** ## **A.K.JAYASANKARAN NAMBIAR, J. ------------------------------W.P.(C).NO.8654 OF 2004 (E) ----------------------------------Dated this the 18[th] day of May, 2016** ## **J U D G M E N T** The petitioner constructed a building having a plinth area of 1007.73 sq. meters in Ettumanoor Panchayath. It is the case of the petitioner that the construction of the building was completed on 20.5.2002, and by Ext.P1 order of assessment under the Kerala Building Tax Act, 1975, the petitioner was subjected to the levy of building tax, at the rate applicable to buildings constructed within Special Grade Grama Panchayats. Although the petitioner has paid the entire amount assessed under Ext.P1 order of assessment, the challenge in the writ petition is essentially against the provisions of the Schedule to the Kerala Building Tax Act, inasmuch as it brings about a classification between Grama Panchayats, Special Grade Grama Panchayat/Town Panchayats/Municipal Council, and Municipal Corporations for the purposes of levy of building tax. It is also the case of the petitioner that the classification of the Grama Panchayats as Grama Panchayats and Special Grade Grama Panchayts is based on a similar classification that was effected through Ext.P3 Circular, purported to have been issued under the Kerala Panchayats Act, 1960, and which, according to the petitioner, has not been published **W.P.(C).No.8654/2004** **2** till date by the respondents. It is therefore the case of the petitioner that inasmuch as there is no valid classification effected for the purposes of the Kerala Panchayats Act, 1960, the said classification could not have been adopted for the purposes of levy of tax under the Kerala Building Tax Act either. It is also his case that, with the coming into force of the Kerala Panchayat Raj Act, 1994, the classification of Panchayats into Grama Panchayats and Special Grade Grama Panchayats has ceased to have any relevance, and hence, for any assessment done under the Kerala Building Tax Act, 1975, for the period subsequent to 1994, the distinction between Grama Panchayats and Special Grade Grama Panchayats ought not to have been applied while completing assessments under the Kerala Building Tax Act. To support his contention regarding the illegality of the classification effected between Grama Panchayats and Special Grade Grama Panchayats, the petitioner would place reliance on the decisions of the Supreme Court in **Onkar Lal Bajaj and Others v. Union of India and Another - [(2003) 2 SCC 673] - [paragraph ' 27]]** and **St. Stephen s College v. University of Delhi - [(1992) 1 SCC 558] - [paragraph 100]]** . 2. Per contra, the learned Government Pleader appearing on behalf of the respondents would submit that the last classification of **W.P.(C).No.8654/2004** **3** the Panchayats into different grades was made as per G.O.(MS) No.52/83/LA and SWD dated 10.5.1983 and the classification of the Panchayats into Grama Panchayats and Special Grade Grama Panchayats was made on the basis of the average income for the years 1977-78 and 1978-79 as updated up to the period of issuing the Government order. The details of the income slab fixed for regrouping is also enumerated in the counter affidavit. The assessment completed in relation to the petitioner's building, as evidenced by Ext.P1 assessment order, is sought to be justified on the contention that the classification effected under the Kerala Building Tax Act is a valid one and is based on a valid criterion, namely, the average income that was determined in the Panchayat in question, with a higher rate of tax being prescribed for those buildings that were put up in Panchayats which showed receipt of a higher average income. In support of his contentions with regard to the classification for the purposes of Article 14 of the Constitution of India, the learned Government Pleader would rely on the decision in **Basheer Alias N.P. Basheer v. State of Kerala - [(2004) 3 SCC 609 [paragraph 20]]** . 3. I have heard the learned counsel for the petitioner as also the learned Government Pleader for the respondents. **W.P.(C).No.8654/2004** **4** 4. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I find that the issues to be considered in the instant writ petition are two fold, namely, (i) whether the classification of Panchayats into Grama Panchayats and Special Grade Grama Panchayats, for the purposes of levy of building tax under the Kerala Building Tax Act is justifiable ? and (ii) whether the said classification under the Kerala Building Tax Act has ceased to have any significance with the coming into force of the Kerala Panchayat Raj Act, 1994 ? I note from the writ petition that the specific case of the petitioner is that Ext.P3 circular, wherein the basis for classification of Panchayats into various grades including Special Grade Panchayats is outlined, has not been published in the Gazette. I find however that, even assuming that Ext.P3 circular has not been published and therefore, has not come into force as mandated by the legal provisions under the Kerala Panchayats Act, 1960, the legality of the said Circular, can have a bearing only on any rights that accrue to the petitioner under the Kerala Panchayats Act, 1960. It is not in dispute that in the Schedule to the Kerala Building Tax Act, while there is a classification effected between Grama Panchayats and Special Grade Grama Panchayats, there is no express reference to any Circular which formed the basis of the said **W.P.(C).No.8654/2004** **5** classification. In other words, it has to be seen as a conscious adoption by the State Legislature, of a criteria to support a classification of Panchayats for the purposes of levy of building tax. The said classification of Panchayats must be seen as manifesting a fiscal policy of the State Legislature, and interference with the same can only be in accordance with the well recognised grounds for such interference as laid down by judicial precedents. In this context, it is relevant to note that in matters of taxation, the State Legislature is given wide power and discretion in relation to classification for the purposes of tax. It is trite that the State Legislature can choose the subject of taxation reasonably, and so long as the tax is not seen as patently discriminatory, arbitrary or violative of Article 14 of the Constitution of India, the courts will not interfere with legislative expressions of fiscal policy. So long as the classification is founded on an intelligible differentia that has a rational nexus with the object sought to be achieved by the Statute in question, the classification cannot be assailed as unconstitutional. On the facts of the instant case, I find that the differential rate of building tax as applicable to Grama Panchayats, Special Grade Grama Panchayats and Municipal Corporations is based on a criteria, namely, the average annual income of the Panchayats in question. If the said criteria of average annual income is adopted by the State Legislature as the basis for a **W.P.(C).No.8654/2004** **6** classification for the purposes of levy of building tax, it cannot be said to be an arbitrary one having no rational nexus with the object sought to be achieved by the Legislature. Subjecting buildings constructed in affluent areas to a higher rate of tax than those put up in less affluent areas results in a levy of tax on equitable basis and cannot be said to be arbitrary or irrational. Resultantly, I reject the challenge in the writ petition to the classification effected in the Schedule to the Kerala Building Tax Act, and find that the said Schedule does not suffer from any constitutional infirmity. 5. As regards the contention of the petitioner with regard to the applicability of the higher rate of tax in respect of the building put up by him in the Ettumanoor Panchayat, I make it clear that nothing in this judgment shall stand in the way of the petitioner challenging the correctness of Ext.P1 assessment order if it is his case that Ettumanoor Panchayat, wherein his building is put up, does not fall within the category of a Special Grade Grama Panchayat for the purposes of the Kerala Building Tax Act. Accordingly, while disposing this writ petition, by rejecting the challenge against the validity of the Schedule to the Kerala Building Tax Act and the legality of the assessment on that basis, I leave it open to the petitioner to contest Ext.P1 assessment order, on the ground that the building in question **W.P.(C).No.8654/2004** **7** would not attract the higher rate of tax as applicable to buildings put up within Special Grade Grama Panchayats for the purposes of the Kerala Building Tax Act. If the petitioner prefers an appeal against Ext.P1 order within a period of one month from today, the said appeal shall be considered on merits by the Appellate authority, and a decision rendered thereon, after hearing the petitioner, within a further period of three months from the date of receipt of a copy of this judgment. The writ petition is disposed as above. ## **A.K.JAYASANKARAN NAMBIAR JUDGE** prp/19.5.16