Cherian Skaria v. State of Kerala and Others

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH TUESDAY, THE 8[TH] DAY OF AUGUST 2023 / 17TH SRAVANA, 1945 ``` ## **`WP(C) NO. 31783 OF 2019`** ## **`PETITIONER:`** ``` CHERIAN SKARIA, AGED 68 YEARS S/O.SKARIA, KONALIL PUTHUCHIRA HOUSE, THURUTHICAD P. O., KALLOOPPARA VILLAGE, KALLOOPPARA PANCHAYATH, MALLAPPALLY TALUK, PATHANAMTHITTA DISTRICT. BY ADVS. P.HARIDAS CHERIAN GEE VARGHESE BIJU HARIHARAN R.B.BALACHANDRAN RENJI GEORGE CHERIAN P.C.SHIJIN ``` ## **`RESPONDENTS:`** ``` 1STATE OF KERALA, REPRESENTED BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF REVENUE, GOVERNMENT OF KERALA, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695 001. 2THE DISTRICT COLLECTOR, PATHANAMTHITTA, PIN - 689645. 3TAHSILDAR, TALUK OFFICE, MALLAPPALLY, PATHANAMTHITTA DISTRICT, PIN - 689 585. 4VILLAGE OFFICER, KALLOOPPARA VILLAGE, KALLOOPPARA P. O., MALLAPPALLY TALUK, PATHANAMTHITTA DISTRICT, PIN - 689 583. BY ADV GOVERNMENT PLEADER ``` ``` ARUN AJAY SANKAR-GP ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` W.P.(C) No.31783 of 2019 ``` ``` 2 ``` ## **JUDGMENT** ## **Dated this the 08[th] day of August, 2023** 1. Heard Sri.Haridas, learned counsel for the petitioner as well as Mr.Arun Ajay Sankar, learned Government Pleader 2. This writ petition has been filed under Article 226 of the Constitution of India, seeking the following prayers:- - (i) Call for the records leading to Exts.P2, P3, P6 and P7 (ii) Issue a writ in the nature of mandamus or any other appropriate writ, order or direction commanding the respondents to assess only new construction covered by Ext.P1 and its plinth area alone for assessment of building tax and exemption of luxury tax. - (iii) May grant such other reliefs this Hon’ble court deem fit and necessary in the facts and circumstances including the cost of this writ petition. 3. Whereby the 3[rd] respondent had passed the order assessing the luxury tax of the building of the petitioner taking the plinth area as 290.55 sq.m. which would include plinth area of the building constructed before the appointed day that is 10[th] ``` W.P.(C) No.31783 of 2019 ``` ``` 3 ``` February, 1992 and additions made after the appointed day. The petitioner had challenged the demand notice dated 24[th] March, 2012. Against the said order of the 3[rd] respondent, petitioner filed an appeal before the District Collector. However, the District Collector rejected the said appeal by Ext.P6. Petitioner thereafter filed the revision before the State Government. The State Government vide the order dated 01.10.2019, Ext.P7 rejected the revision. Under the scheme of Kerala Building Tax Act, a building, for which the construction was completed before the appointed day i.e, 10[th] day of February, 1992 is not amenable to the building tax or the luxury tax. The building constructed after the appointed day is amenable to the building tax and if it exceeds the prescribed limit i.e, 278.7 sq.m., on such building, luxury tax is to be levied. 4. In the present case, originally the building in question was constructed before the appointed ``` W.P.(C) No.31783 of 2019 ``` ``` 4 ``` day. However, some extension and improvements came to be made after the appointed day. Two authorities concurrently have held on facts that the improvements and the additions were made in the year 2011 i.e, after the appointed day. 5. Learned Counsel for the petitioner has placed reliance in the case of **Sacred Heart Convent v. State of Kerala and Another [2013** **(3) KHC 674]** However on a reading of the said judgment, it is evident that the judgment is not in respect of the facts about additions made after the appointed day in the building which was constructed and completed before the appointed day. Paragraph Nos. 3 and 4 of the said judgment are extracted hereunder. “3. The Act is deemed to have come into force on the 1[st] day of April, 1973 in terms of Section 1(3) thereof. Section 5, which is the charging provision, provides that, subject to the other provisions contained in the Act, there shall be charged a building tax based on the plinth area on every building, the construction of which is completed on or after the appointed day. ``` W.P.(C) No.31783 of 2019 ``` ``` 5 ``` The term "appointed day" is defined in Section 2(a) of the Act to mean such day as the Government may for the purpose of the Act, specify by notification in the Gazette. The day so notified by the Government is 10th day of February, 1992. Therefore, liability to tax under the Act either by way of building tax under the Act, or as luxury tax under Section 5A of the Act, would have no application to a building, the construction of which was completed before 10/02/1992. 4. Of contextual relevance is the report in the statutory form in terms of Rule 3 of the Kerala Building Tax Rules, 1974, for short, the "Rules", made by the jurisdictional Village Officer, that the building was completed in 1987 and it was occupied in 1988. It also discloses the nature of the building, as residential (hostel). If the completion of the building and occupation were way back in 1987 and 1988 respectively, there is no question of any liability to pay any tax, whatsoever, under the provisions of the Act. Therefore, the demand under the Act as against the appellant/petitioner is without jurisdiction and has to go. On that premise, question relating to claim for exemption becomes academic In the result, the Writ Appeal and Writ Petition are ordered as follows: (a) In supersession of all orders and decisions impugned in the writ petition, it is hereby declared that the building in question (as reported by the village officer in Form-I under Rule 3 of the Rules) is not liable ``` W.P.(C) No.31783 of 2019 ``` ``` 6 ``` to any amount as tax either under Section 5 or under Section 5A of the Act. (b) The interim order impugned in the writ appeal is vacated. (c) If any amount has been paid following any demand, either under interim directions, or otherwise, that shall be refunded to the appellant/petitioner, within a period of two months from the date of production of a copy of this judgment before the competent authority.” 6. The question involves in the present writ petition is that whether the luxury tax is to be levied only on the plinth area of the additions made after the appointed day or it has to be added with the plinth area of the building in respect of which the construction was completed before the appointed day ie., 10[th] February 1992. Section 5 of the Kerala Building tax Act is the charging provision, which reads as under.. “Where the plinth area of the building, the construction of which is completed after the appointed day is subsequently increased by new extensions or major repair or improvement, building tax shall be computed on the total plinth area of the building including that of the new extension or repair or improvement and credit shall be given to the tax already ``` W.P.(C) No.31783 of 2019 ``` ``` 7 ``` levied and collected, if any , in respect of the building before such extension, or repair or improvement.” 7. A full bench of this Court has an occasion to deal with the scope of Section 5(A) of the Kerala Building Tax 1975. The full Bench held that for the purposes of the building tax as well as the luxury tax, the plinth area of the additions or making improvements on building which was constructed before the appointed day has to be taken into consideration. The plinth area of the additions and the plinth area of the building originally constructed before the appointed day taken together if seem exceeds the prescribed limit of 276.72 Sq.m, such building would attract the luxury tax. Paragraphs 5 and 6 of the said judgment of the full bench in the case of **State of Kerala and others v. Moilakariyath Abdulla [2012 (1) KHC 43]** which are relevant for the purpose of the present writ petition read as under : ``` W.P.(C) No.31783 of 2019 ``` ``` 8 ``` 5. S.5(3) & S.5(4) make it clear that as and when improvement or addition is made to existing building, assessment needs to be modified. So far as the building construction of which was completed prior to the appointed day i.e. 10/02/1992 is subject to any improvement or modification, building tax at the applicable rate is payable under S.5(3) of the Act only on the additional plinth area. However, under S.5(4), if the building to which modification or extension of plinth area is made, was originally constructed after the appointed day stated above, then assessment for building tax has to be made as if it is a new building on completion of construction of the building with the improvement or extension, and what is provided therein is that the building owner is entitled to rebate of tax paid on the original construction. We notice that completion of construction of the building is significant because it is only on completion of the building, tax is to be assessed. Under the explanation to S.5, construction of a building shall be deemed to have been completed when it is ready for occupation or has been actually occupied. However, this does not mean that construction of a building once completed cannot be modified, reconstructed or extended thereafter involving completion of construction each time such extension or modification is made. So much so, under the statutory scheme, we feel completion of construction in respect of an existing building happens periodically if the building is subjected to major improvements or extensions as and when made. ``` W.P.(C) No.31783 of 2019 ``` ``` 9 ``` 6. Going by the above scheme of levy of tax on constructed buildings and periodical revision of building tax as and when additions or modifications of the existing building are made, we feel the same scheme applies to luxury tax as well. The liability for luxury tax is on residential buildings with plinth area of 278.7 sq.ms. or more, the construction of which are completed after 01/04/1999. So much so, if any modification is made to an existing residential building after 01/04/1999 leading to increase in plinth area reaching 278.7 sq.ms. or more, the building will attract luxury tax under S.5A of the Act. S.5A does not authorise independent assessment of additional plinth area constructed to a residential building after 01/04/1999 for the purpose of luxury tax alone. So much so, in our view, the judgment of the Division Bench above referred declaring the liability for luxury tax for extensions made to residential buildings after 01/04/1999 only if such additions exceed the limit of plinth area provided under S.5A is against the statutory scheme of levy of luxury tax. In fact, the statute does not visualise separate treatment of existing or already completed constructions and additions made to such buildings. A residential building remains the same and should be treated only as one building, no matter modifications or additions are made periodically leading to extension of plinth area. Since the assessment is only on building constructed, reconstructed or modified with extension, luxury tax has to be considered with reference to the total plinth ``` W.P.(C) No.31783 of 2019 ``` ``` 10 ``` area of the building with the additions. So much so, there is no scope for considering liability for luxury tax with reference to the additional plinth area constructed after 01/04/1999 as held by the Division Bench. We, therefore, hold that S.5A applies to residential buildings, the plinth area of which after extensions or additions made after 01/04/1999 reach or exceed 278.7 sq.ms. In other words, for the purpose of levy of luxury tax plinth area of the building as a whole has to be considered with the additions or extensions made after 01/04/1999. We, therefore, hold that the view expressed by the Division Bench in the above judgment is not correct and accordingly, we overrule the above referred Division Bench judgment. 8. Considering the aforesaid facts and the law as well as the judgment rendered by the full bench in **State of Kerala and others v. Moilakariyath Abdulla** (supra), I find that the writ petition has no merits and substance, it is, therefore, dismissed. Sd/- ## **DINESH KUMAR SINGH** ## **JUDGE** AP ``` W.P.(C) No.31783 of 2019 ``` ``` 11 ``` ## **`APPENDIX OF WP(C) 31783/2019`** |`PETITIONER EXHIBITS`|| |---|---| |`EXHIBIT P1`|`TRUE COPY OF THE NO OBJECTION CERTIFICATE`| ||`DATED 9.6.1997`| |`EXHIBIT P2`|`TRUE COPY OF THE ORDER OF ASSESSMENT DATED`| ||`24.3.2012.`| |`EXHIBIT P3`|`TRUE COPY OF THE NOTICE OF DEMAND DATED`| ||`24.3.2012.`| |`EXHIBIT P4`|`TRUE COPY OF THE NOTICE OF DEMAND DATED`| ||`24.3.2012.`| |`EXHIBIT P5`|`TRUE COPY OF THE ORDER OF THE RDO DATED`| ||`29.11.2012.`| |`EXHIBIT P6`|`TRUE COPY OF THE ORDER DATED 27.8.2019.`| |`EXHIBIT P7`|`TRUE COPY OF THE ORDER DATED 1.10.2019.`| |`EXHIBIT P8`|`TRUE COPY OF THE CERTIFICATE FROM THE`| ||`KALLOOPPARA GRAMA PANCHAYAT NO.C6/2766/2018`| ||`DATED 16/05/2018.`| |`EXHIBIT P9`|`THE COVERING LETTER ADDRESSED TO DEPUTY`| ||`COLLECTOR, (RR) PATHANAMTHITTA DATED`| ||`09/08/2018.`| |`EXHIBIT P10`|`TRUE COPY OF THE CERTIFICATE FROM THE`| ||`KALLOOPPARA GRAMA PANCHAYAT NO.C8/4448/2018`| ||`DATED 23/08/2018.`| |`EXHIBIT P11`|`TRUE COPY OF THE FORWARDING LETTER DATED`| ||`12/08/2019 TO THE 3RD RESPONDENT.`|