Daughters of Mary Charitable Society v. State of Kerala and others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNESDAY, THE 15TH DAY OF JULY 2020 / 24TH ASHADHA, 1942** **WA.No.894 OF 2020** **AGAINST THE JUDGMENT IN WP(C) 10430/2020(C) OF HIGH COURT OF KERALA DT.27.5.2020** ## **APPELLANT/PETITIONER IN THE WRIT PETITION:** **DAUGHTERS OF MARY CHARITABLE SOCIETY** **REG.No.1072/99, DM CONVENT, VENNIYOOR, NELLIVILA PO, VENGANOOR, TRIVANDRUM - 695 523 REPRESENTED BY ITS PRESIDENT.** **BY ADVS. SRI.GEORGE VARGHESE(PERUMPALLIKUTTIYIL) SRI.A.R.DILEEP SRI.P.J.JOE PAUL SRI.MANU SRINATH SRI.RAJAN G. GEORGE** ## **RESPONDENTS/RESPONDENTS IN THE WRIT PETITION:** **1. STATE OF KERALA REPRESENTED BY SECRETARY, REVENUE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695 001** **2. SECRETARY, NEYYATTINKARA MUNICIPALITY, NEYYATTINKARA MUNICIPALITY OFFICE, TB JUNCTION-HOSPITAL JCT ROAD, ALUMMOODU, NEYYATTINKARA, KERALA - 695 121.** **3. VILLAGE OFFICER, KOLLAYIL VILLAGE OFFICE, SWADESHABHIMANI NAGAR, NEYYATTINKARA, KEARLA 695 121.** W.A.No.894/2020 -2- **4. TAHSILDAR, NEYYATTINKARA TALUK OFFICE, ALUMMOODU, NEYYATTINKARA KERALA - 695 121.** **5. TAX OFFICER, NEYYATTINKARA TALUK OFFICE, ALUMMOODU, NEYYATTINKARA, KERALA - 695 121.** **R1,3,4,5 BY SENIOR GOVERNMENT PLEADER SRI.MOHAMMED RAFIQ R5 BY ADV. SRI R.T.PRADEEP** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 15.07.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.No.894/2020 -3- “ **CR”** ## **JUDGMENT** ## **T.R.RAVI, J.** This appeal is filed at the instance of the petitioner in W.P. (C)No.10430 of 2020. The appellant is a Society and they approached this Court praying for a declaration that the building owned by them which houses the DM convent, Chaikkottukonam, is entitled for exemption from payment of building tax and luxury tax under the Kerala Building Tax Act, 1975 and also for exemption from payment of property tax under Section 235(a) of the Municipality Act, 1994. There are also consequential prayers for quashing the orders of assessment and for refund of amounts collected as building and luxury taxes from the appellant. The learned Single Judge by judgment dated 27.05.2020 dismissed the writ petition finding that the appellant is not entitled to exemption under the Building Tax Act and Municipality Act. 2. Heard Sri George Varghese Perumpallikuttiyil on behalf of the appellant, Sri Mohammed Rafiq, Senior Government W.A.No.894/2020 -4- Pleader, on behalf of respondents 1 and 3 to 5 and Sri R.T. Pradeep learned Standing Counsel for the 2[nd] respondent Municipality. 3. The contention of the appellant is that the building which is a novitiate home is entitled to exemption both under the Building Tax Act as well as under the Kerala Municipality Act, having regard to the fact that it is used for the residence as well as study by the nuns belonging to the religious order and that it is also used for their religious practices and functions. According to the counsel, residence is a purpose incidental to the main purpose and hence an exemption cannot be rejected on the ground that the building is used for the residence of the nuns. Relying on the judgment of a Division Bench of this Court in **Mother Superior, Adoration Convent v. Government of Kerala and another** reported in **[2008 (1) KLT 446]** , the counsel for the appellant contends that religious purposes would include residence of the nuns also and hence the appellant is entitled to exemption from building tax and luxury tax. Since the W.A.No.894/2020 -5- amounts have already been paid, the Counsel submits that the appellant is entitled to refund of the tax wrongly collected. The Counsel for the respondents on the other hand contend that there cannot be any comparison between the exempting provisions in the Kerala Building Tax Act and the Municipality Act and that even on a plain reading the scope of the provisions of the two enactments are different. The Senior Government Pleader relied on the decision of a Full Bench of this Court in **Aswirathul Musthaqeem Sangham v. State of Kerala** reported in **[2019 (1) KLT 238]** , to submit that once an assessment order is issued, the assessing authority becomes _“functus officio”_ and it is not possible for the assessee to raise a valid claim before the said authority. In the above said decision, the Full bench held that even after the passing of the assessment order, it is open for the owner of the building to raise a claim for exemption, in an appeal filed against the assessment order. 4. For the purpose of proper appreciation of the contentions of the parties, we are extracting the relevant W.A.No.894/2020 -6- ## statutory provisions; ## “ **Section 3(1)(b) of the Building Tax Act** **3.Exemptions** .- (1) Nothing in this Act shall apply to xxxx xxxx xxxx xxxx xxxx (b) buildings used principally for religious, charitable or educational purposes or as factories or workshops or cattle/pig/poultry farms or ply houses.” ## **Section 235(a) of the Kerala Municipality Act, 1994.** “ **235. Exemption from property tax, service cess, etc** .- The following buildings and lands shall be exempted from the property tax as may be levied under section 233 and service cess as may be levied under sub-section (4) of section 230, namely, (a)buildings set apart for public worship and actually so used or used for incidental purposes, religious study centres.” 5. It can be seen from Section 3(1)(b) above, that to qualify for exemption under the Building Tax Act, what is required is the user of the building **principally** for religious, charitable or educational purposes. At the same time, for the purpose of exemption from payment of property tax, the requirement under Section 235(a) of the Kerala Municipality Act is that the building W.A.No.894/2020 -7- should be set apart for “public worship” and actually so used or used for incidental purposes, religious study centres. It can thus be seen that the requirement under both the Statutes are totally different. The mere fact that a building is entitled to exemption under the Building Tax Act will not necessarily mean that the said building is also entitled for exemption under the Municipality Act from the purview of property tax and vice versa. 6. Section 233 of the Municipality Act, authorises the Municipality to levy property tax on every building within the Municipal area. Section 233(2) says that for the purpose of levying property tax, the Government shall issue notification, fixing the minimum and maximum limits of rates of tax regarding different buildings categorised according to user. One of the category of buildings stated is “used for residential purpose”. Section 235(a) does not carve out any exemption from among the buildings used for residential purpose in favour of the residence of the nuns or for the purpose of novitiate homes. For the purpose of exemption under Section 235(a), the building W.A.No.894/2020 -8- should either be set apart for “public worship” and actually so used or it should be used for incidental purposes, which can mean only purposes incidental to public worship or it should be used as religious study centre. Even going by the pleadings in the writ appeal, the building in question occupies 560 Sq.Ft. and is used as home for the nuns and no other activity takes place there, commercial or otherwise. It is further stated that the building contains a novitiate home for training nuns, for lodging space for nuns and also prayer homes. None of the above purposes would entitle the building for exemption from property tax under Section 235(a), since they do not fall under the category of “public worship” or its incidental purposes. The claim that the building is used as religious study centre along with the use as home for nuns cannot be accepted as a purpose coming under Section 235(a). Section 235(a) does not contemplate exemption for buildings used for the purpose of residence of students engaged in religious study at a religious study centre. The counsel for the appellant attempted to draw an inference W.A.No.894/2020 -9- from the Explanation to Section 235(a) which says that the exemption granted under the Section shall not extend to buildings, for which rent is realised by the owners and to residential houses not being hostels attached to educational institutions and to residential houses attached to libraries. We are of the opinion that the explanation does not lead to any inference that the building used as home for nuns and as novitiate homes come within the purview of Section 235(a). 7. The counsel for the appellant relied on the judgment of a Division Bench of this Court in **Mother Superior (supra)** to say that residence of nuns is an incidental purpose under Section 235(a) of the Municipality Act. At the outset we note that the above judgment has been rendered in a case where the question of exemption from building tax in terms of Section 3(1)(b) of the Kerala Building Tax Act alone was considered. The Division Bench of this Court held that if the activities which are going on in the convent in question are predominantly religious, then the buildings used for residence of the nuns in the convent should W.A.No.894/2020 -10- also be entitled for exemption. The Division Bench was considering the issue on the basis of the requirement under the particular statute that the building is used principally for religious purposes. We are of the opinion that the above judgment cannot in any way support a claim for exemption under the Municipality Act. We cannot accept a proposition that residence of nuns is a purpose incidental to “public worship”. As far as “religious study centres” are concerned, the statute does not make any qualification as to incidental purposes. 8. Regarding the claim for refund of Building tax and luxury tax collected, on the ground of exemption of the building under the Building Tax Act, it is admitted that the petitioner was assessed to building tax under Section 5 of the Kerala Building Tax Act, 1975 as well as for luxury tax under Section 5A of the said Act. The appellant had remitted the building tax in four equal monthly instalments in 2002-03 period itself, as seen from Ext.P5 receipts. The luxury tax assessed has also been remitted by the appellant as seen from Ext.P6. Since the appellant has W.A.No.894/2020 -11- already suffered the assessment as early as in 2002 and complied with the direction to pay the amounts due as tax without any demur, and has also not challenged the correctness of the assessment by filing any appeal, we are not inclined to grant any relief in the matter of taxability under the Building Tax Act. The prayer for refund of the amounts collected as building tax and luxury tax from the appellant is rejected. However, we make it clear that the appellant will be entitled to contend that they are entitled to exemption under the Building Tax Act, relying on the judgment of the Division Bench in **Mother Superior (supra)** or such other decisions, if any demand for luxury tax is made for the period subsequent to 2008. The question of quashing the assessment under the Building Tax Act and the Luxury Tax Act, which had attained finality long time back, and directing refund of the amounts collected, by invoking the extraordinary jurisdiction under Article 226 of the Constitution of India, cannot be considered at this distance of time. For the reasons stated above, the writ appeal is dismissed, W.A.No.894/2020 -12- reserving the right of the appellant to challenge any demand for luxury tax for the period subsequent to 2008, which remains unsatisfied, on the ground that the appellant is entitled to exemption from payment of the tax. Sd/- **K. VINOD CHANDRAN JUDGE** Sd/- **T.R. RAVI JUDGE** dsn W.A.No.894/2020 -13- ## **APPENDIX** ## **APPELLANT'S ANNEXURE:** **ANNEXURE A1: TRUE COPY OF NOTICE OF DEMAND NO.R6/R5/7418/2020 DT.1.7.2020.**