India Bible College and Seminary India Gospel Outreach (IGO) Campus, Eraviperoor Village, Thiruvalla Taluk, Pathanamthitta District vs State of Kerala and Others

W.P.(C) No. 9443/2014 : 1 : IN THE HIGH COURT OF KERALA AT ERNAKULAM ## PRESENT THE HONOURABLE MR. JUSTICE SHAJI P.CHALY FRIDAY, THE 18[TH] DAY OF NOVEMBER 2022 / 27TH KARTHIKA, 1944 ## WP(C) NO. 9443 OF 2014 ## PETITIONER/S: INDIA BIBLE COLLEGE AND SEMINARY INDIA GOSPEL OUTREACH (IGO) CAMPUS, ERAVIPEROOR VILLAGE, THIRUVALLA TALUK, PATHANAMTHITTA DISTRICT, REPRESENTED BY ITS VICE PRESIDENT (DEVELOPMENT) MAJOR V.I.LUKOSE (RETIRED). BY ADVS. SRI.LAL K.JOSEPH SRI.JOSEPH KURIAN VALLAMATTAM SRI.V.S.SHIRAZ BAVA SRI.A.A.ZIYAD RAHMAN ## RESPONDENT/S: - 1 THE STATE OF KERALA REP. BY ITS SECRETARY TO DEPARTMENT OF REVENUE, SECRETARIAT, TRIVANDRUM – 695 001. - 2 THE DEPUTY SECRETARY DEPARTMENT OF REVENUE, SECRETARIAT, TRIVANDRUM – 695 001. - 3 THE TAHSILDAR, THIRUVALLA, OFFICE OF THE TAHASILDAR, THIRUVALLA, PATHANAMTHITTA DISTRICT – 688 011. - 4 THE VILLAGE OFFICER, ERAVIPEROOR, PATHANAMTHITTA DISTRICT – 688 011. BY ADV GOVERNMENT PLEADER ## SMT. JASMINE M.M., GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No. 9443/2014 : 2 : ## **‘C.R’** ## **SHAJI P. CHALY, J.** --------------------------------------------------------W.P.(C). No. 9443 of 2014 --------------------------------------------------------Dated this the 18[th] day of November, 2022. ## **JUDGMENT** The petitioner, a religious educational institution owned and managed by K.E. Abraham Foundation, is a society registered under the Travancore Cochin Literary Scientific and Charitable Societies Registration Act, as is evident from Exhibit P1 registration certificate dated 04.10.1989. 2. The writ petition is filed being aggrieved by the order passed by the State of Kerala, respondent No.1, declining exemption under Section 3(1)(b) of the Kerala Building Tax Act, 1975 (‘Act, 1975’ for short) to some part of the buildings of the petitioner institution, such as kitchen, dining hall, staff quarters and car porch, despite finding that the principal activities in the entire building are to provide religious education. According to the petitioner, the society is established for the purpose of providing religious education and other religious and charitable services to the needy and poor people. 3. It is also the case of the petitioner that as part of the said project, the foundation is running several institutions, including the W.P.(C) No. 9443/2014 : 3 : institution referred to in the writ petition. That apart, it is pointed out that the main aim of the institution is to equip the students with a thorough understanding of the teachings of the Bible to give a total view of life in its spiritual, cultural, political and environmental dimensions. Various other contentions are raised with respect to the manner in which the institution is conducted. 4. According to the petitioner, after the completion of the construction of the building in an extent of 36 acres of property situated in various survey numbers of the Eraviperoor Village, Thiruvalla Taluk, the petitioner has submitted nil reports and claimed exemption from the building tax as provided under Section 3(1)(b) of the Act, 1975, since all the buildings are completely used for religious and educational purposes. 5. However, the matter was referred by the third respondent to the State Government as provided under Section 3(2) of the Act, 1975, since the assessing authority was disputing the claim for exemption. Even though the Government has granted exemption for the area used for the bible college, balcony, prayer hall, generator room; and the area of the hostel building, subject to the final outcome of the appeal pending before the Apex Court. However, exemption was declined in respect of kitchen, staff quarters and car porch, as is evident from Exhibit P3 order dated W.P.(C) No. 9443/2014 : 4 : 24.03.2014 and Exhibit P4(a) demand notice dated 24.03.2014. The petitioner was also served with Exhibit P5 order issued by the State Government dated 17.03.2014. It is, thus, challenging the legality and correctness of the aforesaid orders, the writ petition is filed. 6. A counter affidavit is filed by the State Government, respondent No.1, justifying the stand adopted by it and also stating that the Government has exempted portions of the building which is to be exempted as per the provisions of the Act, 1975, and that the assessment has been done only in respect of those building which are found to be assessable by the Government as per due process as laid down under the Act, 1975. Other contentions are also raised to justify the order of assessment and the order passed by the Government in the reference made by the Tahsildar. 7. I have heard the learned counsel for the petitioner Sri. Lal K. Joseph and Smt. M. M. Jasmine, learned Government Pleader, and perused the pleadings and material on record. 8. The learned counsel for the petitioner has advanced arguments in accordance with law deliberations made above. 9. The learned Government Pleader has advanced arguments supporting the orders of assessment and the Government order declining exemption. Exemption to a buiding is W.P.(C) No. 9443/2014 : 5 : provided under Section 3(1) of the Act, 1975. Section 3(1)(a) of the Act, 1975 deals with the buildings owned by the Government of Kerala or the Government of India or any local authority. Clause (b) of Section 3(1) deals with buildings used principally for religious, charitable or educational purposes or as factories or workshops or cattle/pig/poultry farms or poly houses. It is important to note that exemption as per Section 3(1)(b) is for the buildings used principally for religious purposes. 10. The case advanced by the petitioner is that the entire building constructed by the petitioner is used for religious purposes. In fact, going by Exhibit P5 order dated 17.03.2014 passed by the State Government, it is clear that exemption was granted to certain portions of the buildings constructed as is specified above; however, certain portions were not granted exemption. 11. In my considered opinion, what is to be looked into for granting exemption is whether the building is principally used for religious purposes. The Government, having found that the building constructed by the petitioner, is used principally for religious purposes, cannot segregate portions of the building stating that a certain area of the building is used for the residential accommodation of the staff, hostel etc. W.P.(C) No. 9443/2014 : 6 : 12. The relevance of the word ‘principally’ was considered by a Division Bench of this Court in _**Sacred Heart Hospital v. Secretary to Government**_ [2011 (2) KLT 15], wherein after taking into consideration various judgments rendered by this Court, has held as follows at paragraphs 12 and 13: 12. From the principles laid down in the aforesaid judgments, it can be seen that though medical relief contemplated in Section 3 of the Act is free medical relief, the Act does not render a hospital building, which is principally used for charitable purposes, ineligible for exemption from building tax, for the reason that some charges are levied on patients who can afford to pay such charges. 13. While we are in complete agreement with the principles laid down in the judgments referred to above, we may also state that, the very concept of charity denotes altruistic thought and action. The object of charity must necessarily be to benefit others who deserve it. In a truly charitable activity, any possible benefit to the person who does the charitable act is merely incidental or even accidental and immaterial. The action which flows from charitable thinking is not directed towards benefiting oneself and it is always directed at benefiting others. It is this direction of thought and effort and not the result of what is done in terms of the financially measurable gain, which W.P.(C) No. 9443/2014 : 7 : determines the act as charitable and which qualifies for exemption under Section 3 of the Act. Therefore, charitable purpose contemplated in Section 3 of the Act does not necessarily exclude carrying on activities for which charges are levied on those who can pay and what is relevant is whether building is principally used for charitable purposes.” 13. Recently, the Apex Court had occasion to consider the question of exemption as per Section 3(1)(b) of the Act, 1975 in ## _**Government of Kerala v. Mother Superior Adoration Convent**_ [2021 (2) KLT 270 (SC), and it is held as follows at paragraphs 11, 12 and 24 thus: 11. Before coming to the case law that has been cited before us, it is important to first analyse S.3(1)(b) with which we are directly concerned. First and foremost, the subject matter is “buildings” which as defined, would include a house or other structure. Secondly, the exemption is based upon user and not ownership. Third, what is important is the expression “principally”, showing thereby that the legislature decided to grant this exemption qua buildings which are “principally” and not exclusively used for the purposes mentioned therein. Dominant object therefore is the test to be applied to see whether such building is or is not exempt. Fourthly, religious, charitable or educational purposes are earmarked by the legislature as qualifying for the exemption as they do not pertain to business or commercial activity. Fifthly, what is important is that even factories or workshops which produce goods and provide services are also exempt, despite profit motive, as the Legislature obviously wishes to boost production in factories and services in workshops. What is important to note is that the expression “used principally for” is wider than the expression “as” which precedes the words “factories or workshops”. 12. A reading of the provision would show that the object for exempting buildings which are used W.P.(C) No. 9443/2014 : 8 : principally for religious, charitable or educational purposes would be for core religious, charitable or educational activity as well as purposes directly connected with religious activity. One example will suffice to show the difference between a purpose that is directly connected with religious or educational activity and a purpose which is only indirectly connected with such activity. Take a case where, unlike the facts in Civil Appeal No.202 of 2012, nuns are not residing in a building next to a convent so that they may walk over to the convent for religious instruction. Take a case where the neighbouring building to the convent is let out on rent to any member of the public, and the rent is then utilised only for core religious activity. Can it be said that the letting out at market rent would be connected with religious activity because the rental that is received is ploughed back only into religious activity? Letting out a building for a commercial purpose would lose any rational connection with religious activity. The indirect connection with religious activity being the profits which are ploughed back into religious activity would obviously not suffice to exempt such a building. But if on the other hand, nuns are living in a neighbouring building to a convent only so that they may receive religious instruction there, or if students are living in a hostel close to the school or college in which they are imparted instruction, it is obvious that the purpose of such residence is not to earn profit but residence that is integrally connected with religious or educational activity. 24. This being the case, it is obvious that the beneficial purpose of the exemption contained in S.3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, for the reasons given by us, we agree with the conclusions W.P.(C) No. 9443/2014 : 9 : reached by the impugned judgments of the Division Bench and the Full Bench.” 14. On a consideration of the facts and circumstances, the provisions of Section 3(1)(b) of the Act, 1975 and the principles of law evolved in the aforesaid case, I have no hesitation to hold that Exhibit P5 order dated 17.03.2014 passed by the Government declining exemption to part of the buildings belonging to the petitioner, such as kitchen, dining hall, staff quarters and car porch, cannot be sustained under law. To put it otherwise, aforesaid areas of the buildings principally used for religious purpose are integral and inevitable parts of the buildings, and also incidental to sustain the principal use of religious purpose. There is also no case for the Government that those portions are used for any commercial purposes. 15. Needless to say, Exhibit P5 order passed by the Government and consequential Exhibits P3, P4 and P4(a) orders of assessment demand etc., cannot be sustained under law they are quashed. Resultantly, the writ petition is allowed. sd/- **SHAJI P. CHALY, JUDGE.** Rv W.P.(C) No. 9443/2014 : 10 : ## APPENDIX OF WP(C) 9443/2014 ## PETITIONER’S EXHIBITS: |P1|EXHIBIT P1- TRUE COPY OF THE REGISTRATION| |---|---| ||CERTIFICATE DATED 4-10-1989 ISSUED IN FAVOUR| ||OF THE SOCIETY.| |P2|EXHIBIT P2- TRUE COPY OF THE RETURNS DATED NIL| ||PERTAINING TO THE GENT'S HOSTEL.| |P2(a)|EXHIBIT P2(A)- TRUE COPY OF THE RETURN DATED| ||NIL PERTAINING TO THE LADIES HOSTEL.| |P2(b)|EXHIBIT P2(B)- TRUE COPY OF THE RETURNS DATED| ||NIL PERTAINING TO THE FACULTY QUARTERS.| |P2(c)|EXHIBIT P2(C)- TRUE COPY OF THE RETURNS DATED| ||NIL PERTAINING TO THE DINING-CUM-KITCHEN| ||BLOCK.| |P3|EXHIBIT P3- TRUE COPY OF THE PROCEEDINGS NO.| ||B10-222/09 DATED 24-3-3014.| |P4|EXHIBIT P4- TRUE COPY OF THE ASSESSMENT ORDER| ||DATED 24-3-3014.| |P4(a)|EXHIBIT P4(A)- TRUE COPY OF THE DEMAND NOTICE| ||DATED 24-3-2014.| |P5|EXHIBIT P5- TRUE COPY OF THE GOVERNMENT ORDER| ||DATED 17-3-2014.| |P6|EXHIBIT P6- TRUE COPY OF THE OBJECTION DATED| ||29-3-2014 BEFORE THE 3RD RESPONDENT.| RESPONDENTS’ EXHIBITS: NIL True Copy PS To Judge. rv