High Court of KeralaSingle Judge2017-10-25Writ petition disposed of. Impugned orders set ...

Gilbert D'Souza v. State of Kerala and others

Case / Petition Number:WP(C).No. 14038 of 2011 (D)

Neutral Citation:/ null /

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A. Muhammed Mustaque
Judgment Date: 2017-10-25
Court Decision / Holding: The court held that when the construction cost of the apartment complex is shown (or reasonably inferred) to have been met jointly by the co-owners, each apartment should be treated as a separate building under Explanation 2 to Section 2(e) of the Kerala Building Tax Act, 1975. The impugned orders taxing the entire building as a single unit were set aside. The Tahsildar was directed to reassess each building separately for building tax, taking into account plinth area, and to levy tax on any common areas if applicable.
Final Disposition: Writ petition disposed of. Impugned orders set aside. Tahsildar to assess each building separately for building tax based on plinth area; common areas to be taxed if applicable.

Parties to the Case

Appellants / Petitioners

Gilbert D'Souza

Respondents

State of Kerala, represented by its Secretary (Revenue), Secretariat, Thiruvananthapuram 695 001
District Collector, Ernakulam Collectorate, Kakkanad, Kochi-30
Revenue Divisional Officer, Fort Kochi 682 001
The Tahsildar, Kanayannur Taluk Ernakulam, Kochi 682 011
A. Ramadas, S/O. Rajagopal, Aged about 48 years, Flat No.29/2312/A, Suvarag Apartments, Haritha Nagar, Chambakkara, Kochi 682 038
V. Unnikrishnan, S/O. Vasudevan, Aged about 55 years, Flat No.29/2312/A2, Suvarag Apartments, Chamabakkara, Kochi 682 038
Josekutty Mathew, S/O. Late P.C.Mathew, Aged about 49 years, Residing at Pampara House, Marangoli P.O, Kottayam 686 612
Usha Suresh, W/o Suresh Menon, Aged about 41 years, Flat No.29/2312/A5, Suvarag Apartments, Haritha Nagar, Chambakkara, Kochi 682 038
R. Gopalakrishnan, S/O. Not known to the petitioner, Flat No.29/2312/A6, Suvarag Apartments, Haritha Nagar, Chambakkara, Kochi 682 038
Suma Mohan, W/o. C.R. Mohan, Aged about 50 years, Flat No.29/2312/A7, Suvarag Apartments, Haritha Nagar, Chambakkara, Kochi 682 038

Legal Representation & Advocates

Counsels for Petitioners

• SRI.E.K.NANDAKUMAR
• SRI.P.BENNY THOMAS
• SRI.P.GOPINATH
• SRI.K.JOHN MATHAI
• SRI.JOSON MANAVALAN

Counsels for Respondents

• SRI.C.K.GOVINDAN

Case Synopsis & Summary

This writ petition concerns the tax treatment of a building comprising eight flats constructed by six employees of a company who later invited two more employees to occupy the premises. The Kerala Building Tax Act, 1975 defines a building and provides in Explanation 2 to Section 2(e) that when a building contains different apartments or flats owned by different persons and the construction cost was met jointly by all, each such apartment should be deemed a separate building for tax purposes. The petitioner contends that since the co‑owners funded the construction jointly, the eight flats must be treated as separate buildings, not as a single unit; he relies on a bench decision, P.P Varghese v. Tahsildar and others, and cites Supreme Court dicta in State of Kerala v Mammikutty to support a broader interpretation of joint funding. The respondents counter that the burden lies on the co‑owners to prove joint funding and, in the absence of such evidence, the structure should be treated as a single unit for building tax, consistent with the Act’s general definition and the default presumption of ownership. The court ultimately agrees that joint funding of construction, though not always evidenced, is the critical factor; it holds that the impugned orders treating the building as a single unit must be set aside and directs the Tahsildar to assess each building separately based on plinth area, with common areas taxed if applicable. The petition is disposed accordingly.

Provisions of Law Cited

Kerala Building Tax Act, 1975 - Section 2(e)Kerala Building Tax Act, 1975 - Explanation 1 to Section 2(e)Kerala Building Tax Act, 1975 - Explanation 2 to Section 2(e)Plantations Labour Act, 1951 - Section 15

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner argued that when land is owned by multiple persons and construction is undertaken on their behalf, the cost of construction should be treated as jointly met by the co-owners. Relying on the bench decision in P.P Varghese v. Tahsildar and others (2006 (2) ILR 88 Ker) and the Supreme Court’s State of Kerala v. Mammikutty (2015 (3) KLT 138 (SC)), he asserted that the presence of joint funding means each apartment should be considered a separate building for building tax purposes. He emphasized that the flat owners had entered into separate occupancy arrangements post-permit and that the tax authority could not treat the complex as a single unit merely due to joint ownership. The petitioner sought a direction to reassess the property on a per-apartment basis. respondents: The respondents argued that the Building Tax Act defines a building without regard to the number of owners. The burden is on the co‑owners to prove that construction cost was met jointly; without such evidence, a single unit assessment is appropriate. They contended that mere joint ownership does not automatically trigger separate assessments, and that explanation to Section 2(e) requires concrete proof of joint funding before treating each flat as a separate building.

Contentions of Respondents

The respondents contended that the authorities could assess the entire block as a single unit in the absence of evidence of joint funding; they argued that the cost of construction could have been met by a single party or not proven to be joint, and thus the single-unit assessment was permissible. They submitted that Explanation 2 only applies if there is evidence that the construction cost was met jointly; without such proof, the default presumption remains that the building is a single unit, even if co-owners reside in multiple flats. They urged the court to uphold the impugned orders or, if necessary, direct limited reassessment once joint funding is established.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
P. P. Varghese v. Tahsildar and others	2006 (2) ILR 88 (Ker)	Mentioned Only	Petitioner relied on this bench decision to argue that co-owners of land with a constructed complex may own separate apartments; court mentions the case but does not apply it as the controlling principle.
State of Kerala v. Mammikutty	2015 (3) KLT 138 (SC)	Positive	Cited for the proposition that joint funding need not be pre-construction; subsequent purchasers may share construction costs, supporting the interpretation that joint funding can lead to separate unit assessments under Explanation 2.

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Extracted Judgment Text

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## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **WEDNESDAY, THE 25TH DAY OF OCTOBER 2017/3RD KARTHIKA, 1939** ## **WP(C).No. 14038 of 2011 (D)** **-------------------------------------------** **PETITIONER(S) :** **--------------------------** **GILBERT D'SOUZA, FLAT NO.29/2312/A1, SUVARAG APARTMENTS, HARITHANAGAR, CHAMBAKARA, KOCHI-38.** **BY ADVS. SRI.E.K.NANDAKUMAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN** **RESPONDENT(S) :** - **-----------------------------** **1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY (REVENUE), SECRETARIAT, THIRUVANANTHAPURAM 695 001.** **2. DISTRICT COLLECTOR, ERNAKULAM COLLECTORATE, KAKKANAD, KOCHI-30.** **3. REVENUE DIVISIONAL OFFICER, FORT KOCHI 682 001.** **4. THE TAHSILDAR, KANAYANNUR TALUK ERNAKULAM, KOCHI 682 011.** **5. A.RAMADAS, S/O. RAJAGOPAL, AGED ABOUT 48 YEARS, FLAT NO.29/2312/A, SUVARAG APARTMENTS, HARITHA NAGAR, CHAMABAKKARA, KOCHI 682 038.** **6. V.UNNIKRISHNAN, S/O. VASUDEVAN, AGED ABOUT 55 YEARS, FLAT NO.29/2312/A2, SUVARAG APARTMENTS, CHAMABAKKARA, KOCHI 682 038.** **7. JOSEKUTTY MATHEW, S/O.LATE P.C.MATHEW AGED ABOUT 49 YEARS, RESIDING AT PAMPARA HOUSE, MARANGOLI P.O, KOTTAYAM 686 612.** **..2/-** **..2..** **WP(C).No. 14038 of 2011 (D)** **-------------------------------------------** **8. USHA SURESH, W/O OF SURESH MENON AGED ABOUT 41 YEARS, FLAT NO.29/2312/A5, SUVARAG APARTMENTS, HARITHA NAGAR, CHAMABAKKARA, KOCHI 682 038.** **9. R.GOPALAKRISHNAN, S/O. NOT KNOWN TO THE PETITIONER, AGE NOT KNOWN TO THE PETITIONER, FLAT NO.29/2312/A6, SUVARAG APARTMENTS, HARITHA NAGAR, CHAMABAKKARA, KOCHI 682 038.** **10. SUMA MOHAN, W/O.C.R.MOHAN, AGED ABOUT 50 YEARS, FLAT NO.29/2312/A7, SUVARAG APARTMENTS, HARITHA NAGAR, CHAMABAKKARA, KOCHI 682 038.** ## **R1 TO R4 BY SR. GOVERNMENT PLEADER SRI.C.K.GOVINDAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 25-10-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Msd.** ## **WP(C).No. 14038 of 2011 (D)** ## **-------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** - **EXHIBIT P1: TRUE COPY OF THE SALE DEED NO.990/1995 OF SRO MARADU DATED 17.02.1995 IN FAVOUR OF THE PETITIONER CONVERYING 1/6TH UNDIVIDED SHARE IN 13.965 CENTS.** - **EXHIBIT P2: TRUE COPY OF THE SALE DEED NO. 3813/96 OF MARADU SRO DATED 04.07.1996 EXECUTED BY THE PETITIONER AND OTHER OWNERS IN FAVOUR OF RADHA RAJAN.** - **EXHIBIT P3: TRUE COPY OF THE SALE DEED NO.3814/96 OF MARADU SRO DATED 13.07.1996 EXECUTED BY THE PETITIONER AND OTHER OWNERS TO N.SUBRAMANYAN.** - **EXHIBIT P4: TRUE COPY OF THE CONSTRUCTION AGREEMENT DATED 26.07.1996 EXECUTED BETWEEN THE PETITIONER AND OTHERS.** - **EXHIBIT P5: TRUE COPY OF THE MEMO DATED 11.07.1997 ISSUED BY THE CORPORATION OF COCHIN SHOWING THE ASSESSMENT OF APARTMENT NO. 29/2312/A1 IN THE NAME OF THE PETITIONER.** - **EXHIBIT P6: TRUE COPY OF THE PROPERTY TAX RECEIPT DATED 22.03.2000 FOR THE PERIOD 1999-2000 ISSUED TO THE PETITIONER BY THE CORPORATION OF COCHIN.** - **EXHIBIT P7: TRUE COPY OF THE PROVISIONAL INVOICE ISSUED BY THE KERALA STATE ELECTRICITY BOARD DATED 09.03.1998 TO THE PETITIONER.** - **EXHIBIT P8: TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER AS WELL AS TO RESPONDENTS 5 TO 10 DATED 24.01.2007.** - **EXHIBIT P9: TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 4TH RESPONDENT DATED 24.01.2007.** - **EXHIBIT P10: TRUE COPY OF THE APPEAL PREFERRED BY THE PETITIONER TO THE 3RD RESPONDENT DATED 16.06.2007.** - **EXHIBIT P11: TRUE COPY OF THE ORDER PASSED BY THE 3RD RESPONDENT DATED 10.06.2010 DISMISSING EXHIBIT-P10 APPEAL.** - **EXHIBIT P12: TRUE COPY OF THE REVISION PETITION DATED 05.08.2010 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** - **EXHIBIT P13: TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 01.12.2010 BEARING NO.B10-50739/10/KDIS.** **WP(C).No. 14038 of 2011 (D)** **-------------------------------------------** **EXHIBIT P14: TRUE COPY OF THE BUILDING PERMIT DATED 31.05.1995 ISSUED BY THE ASSISTANT EXECUTIVE ENGINEER, EAST ZONAL OFFICE, CORPORATION OF COCHIN.** **EXHIBIT P15: THE TRUE COPY OF THE OCCUPANCY CERTIFICATE DATED 28.12.1996 ISSUED BY THE ASSISTANT EXECUTIVE ENGINEER, EAST ZONAL OFFICE, CORPORATION OF COCHIN.** **EXHIBIT P16: THE TRUE COPY OF THE APPROVED BUILDING PLAN OBTAINED FORM THE CORPORATION OF COCHIN.** **RESPONDENT(S)' EXHIBITS :** ## **NIL** **//TRUE COPY//** **P.S.TO JUDGE.** **Msd.** ## **A. MUHAMED MUSTAQUE, J.** ------------------------------------ ## W.P. (C) No.14038 of 2011 ------------------------------------ Dated this the 25[th] day of October, 2017 ## **J U D G M E N T** Six employees of a company purchased land for the purpose of construction of an apartment. Later two more employees of the company joined with them. Accordingly, eight apartments were completed. Each one of them took each of such apartment. This was followed by the building tax assessment assessing the entire building as a single unit. The challenge in this writ petition is whether such building can be treated as a single unit or as an individual apartment. 2. The 'building' is defined under Section 2(e) of the Kerala Building Tax Act, 1975 as follows: “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 **W.P.(C) No.14038/2011** **2** attached to the main structure. Explanation 1.- In the case of buildings constructed for providing housing accommodation for workers and their families residing in plantations, in pursuance of Section 15 of the Plantations Labour Act, 1951 (Central Act 69 of 1951) or buildings constructed under the Government of India Subsidised Housing Scheme for industrial workers, each part of a building providing or intended to provide accommodation for a worker or a worker and his family shall be deemed to be a separate building. 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”. 3. The explanation 2 to Section 2(e) of the Act would clearly show that if the cost of construction of the apartments or flats owned by different persons was met by all of them jointly, certainly, each building has to be assessed separately for the purpose of building tax. Since the petitioner did not produce any evidence before the authority regarding the cost of construction of the building, the authorities assumed that the construction has **W.P.(C) No.14038/2011** **3** to be treated as a single unit in the name of joint owners. This decision is called in question in this writ petition. 4. Learned counsel for the petitioner, relying upon the Bench decision of this Court in _**P.P Varghese** vs._ _**Tahsildar and others**_ (2006 (2) ILR 88 (Ker)), referring to paragraph 6, would argue that if the land belongs to different persons, it has to be assumed that the complex constructed therein belongs to each one of such persons. Learned counsel argued on the premise that if the land belongs to third party and constructions have been made on behalf of different persons, then the burden is cast on such owners to prove that the cost of construction was met by them jointly. Learned counsel also relied upon the judgment of the Supreme Court in _**State of Kerala** vs._ _**Mammikutty**_ (2015 (3) KLT 138 (SC)) wherein it was held as follows: “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 interpretation is placed, the original owner **W.P.(C) No.14038/2011** **4** of flats when he ceases to be the owner of the building or the purchaser of a small apartment less than 278.7 square meters would still be liable to pay luxury tax. Such an interpretation would lead to absurdity”. 5. Per contra, learned counsel for the respondents argued that the burden is cast on the persons to prove that the cost of construction was met by them jointly and without which the petitioner cannot contend that each building has to be assessed separately. The co-owners also would be in a position to construct a multi-storied building. In such situation, the presumption is that the entire building belongs to them is a single unit. The Kerala Building Tax Act, 1975, with reference to the definition of building as referred in the Act, whether it owned by different owners or a single owner, does not make a difference as far as levying of building tax is concerned. However, the exception is carved out by way of explanation in the event construction is made to apartment or flat. If the evidence is let in to show that the cost of construction of such apartment or flat was met by them jointly, each such apartment would be treated as a single unit for the purpose of building tax. Therefore, **W.P.(C) No.14038/2011** **5** merely for the reason that the co-owners have constructed multistoried apartment, that will not lead to the presumption that each of that building has to be assessed separately. 6. The authorities has to consider the intention of the parties and the nature of the constructions made to come to a conclusion that each of the apartment has to be treated as a separate unit. The construction was made for the personal purpose of the employee. Nobody was having a case that this was intended for commercial purpose. If the construction is made for personal purpose of the co-owners, certainly, it has to be assumed that the construction of such apartment was made by them jointly by bearing cost of construction of each of the apartment. Therefore, merely because the owners were not able to produce evidence to show that the cost was met by them jointly does not indicate that it was not constructed by them jointly. 7. It is important to note that the petitioner and all other co-owners are employees of a company and they want to have a separate independent apartment. They also entered into an **W.P.(C) No.14038/2011** **6** agreement. This agreement, of course, was entered subsequent to obtaining of permit. It is also seen from the records that each of them are now occupying separate apartments by agreement. Therefore, the agreement need not be doubted. 8. In such circumstances, the irresistible conclusion that can be drawn is that the cost of the apartment complex was met by them jointly so as to come within the meaning of explanation 2 to Section 2(e) of the Act. As already noted, merely because they are joint owners, it will not lead to a presumption that the apartment complex was constructed by them jointly. It is necessary in every case to prove that the cost of construction was met by them jointly. But, in this case, particularly taking note of the fact that the persons are employees of a company and they are owning a separate apartment after the construction, the conclusion that can be drawn is that the cost of construction was met by them jointly even though they have not produced any evidence to prove the same. In the circumstances, this Court is of the view that the impugned orders are to be set aside. Accordingly, they are set **W.P.(C) No.14038/2011** **7** aside. However, it is open to the Tahsildar to assess each building separately for the purpose of building tax taking note of the plinth area. If there is any common area available to all, it is also open to the assessing authority to levy tax for that common area as well. This writ petition is disposed of as above. Sd/- ## **A. MUHAMED MUSTAQUE JUDGE** smp