John John Poovathummoodu v. State of Kerala; Ansal D A v. State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **FRIDAY, THE 25TH DAY OF SEPTEMBER 2020 / 3RD ASWINA, 1942** ## **WP(C).No.24019 OF 2018(B)** ## **PETITIONER/S:** **JOHN JOHN POOVATHUMMOODU AGED 66 YEARS, S/O.JOHN,POOVATHUMMOODU, PERUMPANACHY PO,CHANGANACHERY, KOTTAYAM 686536** **BY ADVS. SRI.G.SANTHOSH KUMAR (P). SRI.V.R.SASSIDHARAN** ## **RESPONDENT/S:** |**1**|**STATE OF KERALA**| |---|---| ||**REPRESENTED BY THE CHIEF SECRETARY,GOVERNMENT**| ||**SECRETARIAT, THIRUVANANATHAPURAM**| |**2**|**THE DISTRICT COLLECTOR**| ||**KOTTAYAM, CIVIL STATION PO,KOTTAYAM 686001**| |**3**|**THE REVENUE DIVISIONAL OFFICER**| ||**MINI CIVIL STATION,UNION CLUB ROAD, PUTHEN**| ||**CHANDA,KOTTAYAM 686001**| |**4**|**THE VILLAGE OFFICER**| ||**MADAPALLY VILLAGE, CHANGANACHERY TALUK,KOTTAYAM**| ||**DISTRICT, 686001**| ## **R1-4 BY GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.09.2020, ALONG WITH WP(C).16967/2020(U), THE COURT ON 25.9.2020 DELIVERED THE FOLLOWING:** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** **FRIDAY, THE 25TH DAY OF SEPTEMBER 2020 / 3RD ASWINA, 1942** ## **WP(C).No.16967 OF 2020(U)** ## **PETITIONER/S:** **ANSAL D A, AGED 35 YEARS S/O.ABDUL KAREEM,SUBAH,PADAMUGAL, THRIKKAKARA,ERNAKULAM,PIN-682021.** **BY ADVS. SRI.M.K.CHANDRA MOHANDAS SRI.PRATHEEK VISWANATHAN SRI.SHAKTHI PRAKASH SHRI.HARIKRISHNAN M.S.** ## **RESPONDENT/S:** |**1**|**THE STATE OF KERALA**| |---|---| ||**REPRESENTED BY THE CHIEF SECRETARY,**| ||**GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM-695001.**| |**2**|**THE PRINCIPAL SECRETARY TO GOVERNMENT REVENUE**| ||**DEPARTMENT,**| ||**GOVERNMENT SECRETARIAT,**| ||**THIRUVANANTHAPURAM-695001.**| |**3**|**THE TAHSILDAR,**| ||**ALUVA TALUK,ERNAKULAM,**| ||**PIN-683101.**| |**4**|**THE VILLAGE OFFICER,**| ||**ALUVA EAST VILLAGE,ERNAKULAM,PIN-683563.**| ## **OTHER PRESENT:** **SMT.RANJITHA, GP** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23.09.2020, ALONG WITH WP(C).24019/2018(B), THE COURT ON 25.9.2020 DELIVERED THE FOLLOWING:** **WP(C).24019/2018 and 16967/2020** **3** ## **JUDGMENT** ## **Dated this the 25[th] day of September 2020** Petitioner, who is the owner of a residential building situated in Survey No.477/1-12-2, Block No.36 of Aluva East Village said to have been completed on 10.4.2018 ie., in the financial year 2018-19, through instant writ petition has sought the indulgence of this Court for issuance of writ of certiorari for quashing Section 5A of Kerala Building Tax Act 1975 (hereinafter referred to as '1975 Act'), as unconstitutional with effect from 16.9.2016, in view of amendment caused in Entry No.62, List II, Seventh Schedule of the Constitution of India with a further prayer to quash the order Ext.P4 and issue mandamus directing the respondents not to recover the amount vide Ext.P1 of building tax of Rs.49,200/pertaining to the period specified therein, which has been demanded, in installments. 2. In support of the aforementioned prayer, it is **WP(C).24019/2018 and 16967/2020** **4** averred that the petitioner has already paid building tax as assessed and demanded by the 3[rd] respondent, vide receipts dated 7.7.2020 and 6.8.2020 Exts.P2 and P3. But 3[rd] respondent assessed the petitioner for luxury tax at the rate of Rs.4000/- for the financial year 2018-19, Rs.6,000/- for the financial year 2019-20 and Rs.7500/- for the financial year 2020-21, under Section 5A of the 1975 Act since the plinth area of the building is above 278.7 m[2] . The learned counsel appearing on behalf of the petitioner submits that the constitutional validity of levy of luxury tax under Section 5A of the 1975 Act was earlier, challenged in this Court on the premise that it could not coexist with onetime tax levied under provisions of the Luxury tax 1976 Act and also property tax levied under the Municipality/Panchayath Raj Act by drawing power from Entry 49 of List II of the Seventh Schedule of the Constitution by referring Division Bench judgment of this Court in **Sudhakaran vs. State of Kerala, 2004 (KHC) 651** . 3. It was next submitted that the validity of Section **WP(C).24019/2018 and 16967/2020** **5** 5A was upheld on the ground that as per Entry No.62 of List II of the Seventh Schedule as there was no multiplicity of levy under Entry 49 of the same List. However, the entire spectrum of levy under Entry 62 of the List II of the Seventh Schedule underwent a sea change under the Goods and Services Tax regime by the notification of the Constitution 101[st] Amendment Act 2016. In view of the amendments made to Entry 62 and the introduction of Article 246A, the State of Kerala has no authority at all to levy, assess and collect Luxury Tax under Section 5A of 1975 Act after 16.9.2016 ie., the date on which the Constitution 101[st] amendment Act came into force. Entry 62 as exsisted prior to the amendment has undergone a sea change where before amendment as taxes on luxuries, including taxes on entertainments, amusements, betting and gambling were imposed. However after 16.9.2016 it has been defined as 'Taxes on entertainments and amusements to the extent levied and collected by a Panchayath or a Municipality or a Regional Council or a District Council'. Therefore the power of the State to levy **WP(C).24019/2018 and 16967/2020** **6** tax on luxuries enjoyed under Entry 62 of the list II read with Article 246(3) has been taken away. For all intents and purposes, the impact of Section 5A has withered away as State has lost its authority/power to levy Luxury Tax. Article 246A provides that notwithstanding anything contained in Articles 246 and 254, Parliament or the legislature of every State had power to make laws with respect to goods and services tax imposed by the Union or by such State even in respect of supply of goods or services. Thus the power is only with respect to goods and services and supply whereas the activity taxed under Section 5A of the 1975 Act is tax neither on sale of goods nor on services rendered. Aforementioned Section was substituted by Kerala Finance Act 2014, ie., Act No.29 of 2014 for the purpose of Rs.2000/- with effect from 1[st] April 2014. 4. On the other hand, learned counsel appearing on behalf of the State supported the order by relying upon judgment of the Division Bench rendered in **Sudhakaran vs. State of Kerala, 2004 (KHC) 651** wherein the vires **WP(C).24019/2018 and 16967/2020** **7** to Section 5A has been upheld as well as in Koshy P. John vs. State of Kerala, 2003 (KHC) 1210. It was next contended that the luxury tax of Rs. 4,000/- annually on a residential building having a plinth area of less than 278.7 m[2 ] on and after 1[st] April 1999 is not chargeable. A person having a building plinth area of more than one as specified in the Act has been considered luxurious enough to live in a spacious house and therefore cannot be permitted to challenge aforementioned provisions. The plinth area, in the instant case, of the entire building is 617.11 m2. Therefore the petitioner cannot claim exemption and supported the impugned order Ext.P4 dated 9.6.2020 and the demand Ext.P1. Even otherwise the petitioner has a remedy of filing an appeal under Section 11 of 1975 Act, but by laying challenge to the vires of the Act extra ordinary jurisdiction of Article 226 of the Constitution of India has been invoked and thus urged this Court for dismissal of the writ petition. 5. In rebuttal, learned counsel appearing on behalf of the petitioner submits that when Ext.P4 order was **WP(C).24019/2018 and 16967/2020** **8** passed, no opportunity of hearing has been given. Petitioner could have brought the Entry 62 in List II, came into force with effect from 16[th] September 2016 as well as the provisions of Article 246(A) of the Constitution of India. 6. I have heard the learned counsel for the parties and appraised the paper book. No doubt, the vires of the Act challenged in the judgments cited supra have been upheld in other words, the constitutional validity of the aforementioned Act was upheld by comprehensively examining the provisions of Entry 49 in List II as well as the provisions of Section 5A. For the sake of brevity, Section 5A of 1975 Act, is extracted herein below: - **5A. Charge of luxury tax.** [(1) Notwithstanding anything contained in this Act, there shall be charged a luxury tax based on the plinth area at the rate specified in Schedule II, annually on all residential buildings having a plinth area of 278.7 square metres completed on or after the 1st day of April, 1999.] (2) The luxury tax assessed under this Act shall be paid in advance on or before the 31st day of March, every year.] 7. Similarly, the provisions of Entry No.62, List II of Seventh schedule prior to the 101[st] amendment and post **WP(C).24019/2018 and 16967/2020** **9** are extracted herein below: 'Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling' The Entry 62 as substituted by said Amendment Act is as follows: 'Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council' 8. Impugned order Ext.P4, does not refer to provisions of Entry 62, which was brought into force with effect from 16[th] September 2016. The judgments cited supra relate to an era where unamended provisions of Entry No.62 were in vogue. At this stage, I would not examine the vires of the Act as the aforementioned Act has already been examined by the Division Bench and it would be the domain of a Larger Bench. But before it could be referred to a Larger Bench, I am of the view that the matter can be examined at the level of the Assessing officer, in case the petitioner is offered an opportunity of hearing to raise all the pleas as raised in the present writ petition, noticed above. Thus the challenge to the vires, **WP(C).24019/2018 and 16967/2020** **10** for the time being, is kept open. The impugned order Ext.P4 and the demand Ext.P1 are set aside. The matter is remitted to Assessing authority, who is directed to examine the levy of luxury tax as per the provisions of Section 5A post 16[th] September 2016, in view of the 101[st] amendment brought in the constitution of India by amending Entry 62 in List II of Seventh Schedule of Constitution of India. Let the entire exercise be done within a period of four months, in accordance with law by affording an opportunity of hearing to the petitioner. Till such time, the demand as raised is ordered to be kept in abeyance. ## **W.P.(C) No.24019 of 2018** The writ petition is filed by the petitioner laying challenge to notices Exts.P4 and P5 issued and the basis of a communication dated 19.9.2014, Ext.P3 with a further prayer to declare the provisions of Section 5A of the Kerala Building Taxation Act and Rules to be ultra vires since it is not in conformity with the definition of the term 'Luxury' in the Kerala Luxury Tax Act, 1976. Though it is not specifically pleaded in the writ petition qua introduction **WP(C).24019/2018 and 16967/2020** **11** and amendment of Entry No.62 in List II of Seventh schedule of Constitution of India nor the respondents in the reply have attached any copy of assessment order in respect of a building having a plinth area of 375.46 m[2 ] as per the counter, which is 277.9 m[2 ] as per I.A No.1 of 2020 filed by the petitioner, situated in Re.Sy. No.193/9 of Madapally village, construction, thereof, was completed with effect from 21.5.2002, I am of the view that this a fit case where the petitioner should also be given an opportunity of hearing before justifying the demand as reflected in the notices Exts.P4 and P5. Therefore the directions passed in the earlier case would also be same qua time frame and demand to be kept in abeyance would applicable in this case also. **Sd/-** **AMIT RAWAL** sab **JUDGE** **WP(C).24019/2018 and 16967/2020** **12** ## **APPENDIX OF WP(C) 24019/2018** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE REPRESENTATION DATED 04.08.2016 PREFERRED BY THE PETITIONER BEFORE THE 2ND RESPONDENT** **EXHIBIT P2** **TRUE COPY OF THE POSTAL ACKNOWLEDGMENT CARD ADN THE RECEIPT RECEIVED FROM THE OFFICE OF THE 2ND RESPONDENT** **EXHIBIT P3 TRUE COPY OF THE LETTER DATED 19.09.2014 ISSUED BY THE PRINCIPAL SECRETARY, REVENUE DEPARTMENT** **EXHIBIT P4 TRUE COPY OF THE INTIMATIONS DEMANDING LUXURY TAX ISSUED BY THE 4TH RESPONDENT DATED 08.02.2018** **EXHIBIT P5 TRUE COPY OF THE INTIMATIONS DEMANDING LUXURY TAX ISSUED BY THE 4TH RESPONDENT DATED 05.03.2018** **EXHIBIT P6 TRUE COPY OF THE COUNTER AFFIDAVIT WITHOUT EXHIBITS FILED BY THE SECRETARY, MADAPPALLY GRAMA PANCHAYAT IN WPC.NO.17659/2019 BEFORE THIS HON'BLE COURT.** **EXHIBIT P7** **TRUE COPY OF THE COUNTER AFFIDAVIT WITHOUT EXHIBITS FILED BY THE DEPUTY DIRECTOR OF PANCHAYAT IN WPC.NO.17659/2019 BEFORE THIS HON'BLE COURT.** **WP(C).24019/2018 and 16967/2020** **13** ## **APPENDIX OF WP(C) 16967/2020** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE DEMAND NOTICE DATED 09.06.2020 ISSUED FROM THE 3RD RESPONDENT'S OFFICE. EXHIBIT P2 TRUE COPY OF PAYMNENT RECEIPT BEARING NUMBER KL07041306817/2020 DATED 07.07.2020 ISSUED FROM 4TH RESPONDENT'S OFFICE. EXHIBIT P3 TRUE COPY OF PAYMENT RECEIPT BEARING NUMBER KL07041307174/2020 DATED 06.08.2020 ISSUED FROM 4TH RESPONDENT'S OFFICE. EXHIBIT P4 TRUE COPY OF THE ORDER NO.C7-6433/2018 DATED 09.06.2020 PASSED BY THE 3RD RESPONDENT.**