High Court of KeralaDivision Bench2020-09-17Writ appeal allowed; directions issued for fres...

Leela Jose Pulikkan v. Tahsildar (Assessing Authority), Thrissur; K.J. George; Village Officer, Chiyyaram

Case / Petition Number:WA No. 1645 of 2018

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran, J.
T. R. Ravi, J.
Judgment Date: 2020-09-17
Court Decision / Holding: Writ appeal allowed. Directs Tahsildar to initiate fresh assessment, considering evidence produced by the appellant, the builder, and individual purchasers. Tahsildar must not pass a printed form order and must provide reasons for rejection of claims. Purchasers should be issued notices to produce evidence; if purchasers establish payment, they must be assessed as separate units; if not, the appellant can be assessed to the extent of construction not funded by purchasers, within Section 5A limits. All relevant documents Exts.P5 and P6 to be considered. The process should be completed in a reasonable time. No order as to costs.
Final Disposition: Writ appeal allowed; directions issued for fresh, evidence-based assessment by the Tahsildar and related procedural requirements.

Parties to the Case

Appellants / Petitioners

Leela Jose Pulikkan

Respondents

The Tahsildar (Assessing Authority), Taluk Office, Thrissur
K. J. George
Village Officer, Chiyyaram Village

Legal Representation & Advocates

Counsels for Petitioners

• Smt. S.K. Devi
• Sri. Santhosh P. Abraham

Counsels for Respondents

• Sri. R. Bindu
• Sri. Prasanth M.P
• Government Pleader(B/O)

Case Synopsis & Summary

Leela Jose Pulikkan, the owner of property in Thrissur, faced building tax assessment for an apartment complex developed by the 2nd respondent using funds contributed by individual purchasers. The appellant challenged the Building Tax assessment in WPC 24237/2018 before the Kerala High Court, arguing that the tax liability should not be imposed on her as the construction was financed by buyers and the liability should arise on individual purchasers under Section 5A. The Learned Single Judge dismissed the writ petition on the ground of an alternate efficacious remedy. The matter was carried in writ appeal by the appellant. The record reveals that the 2nd respondent entered into agreements for sale and for construction, constructed the apartment complex with funds from purchasers, and separately conveyed deeds to individual purchasers after sale. Purchasers filed returns; notices were issued seeking evidence of payment for construction. A Division Bench relied on a prior Division Bench decision (Varghese v. State of Kerala) to interpret the need for evidence and the proper allocation of tax. The court held that the Tahsildar’s procedure was not proper given the complex facts and directed fresh assessment on the basis of evidence produced by the appellant, builder, and purchasers, with notices issued to purchasers. The appeal was allowed with no costs, and directions were issued to complete the assessment process in a non-printed form with reasons.”

Provisions of Law Cited

Section 5A of Building Tax Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that the building tax cannot be levied on the landowner where construction was undertaken by the builder with funds received from individual purchasers. The facts involve a sale-cum-construction arrangement: the builder had a right to construct an apartment complex on the landowner's property; apartments were sold to individuals who funded construction. The appellant argues that the current assessment fails to examine whether the funds from purchasers were used for construction and whether tax should be assessed on individual purchasers under Section 5A, as held by a Division Bench in Varghese v. State of Kerala (2013(2) KLT 831). The procedure employed by the Tahsildar is argued to be flawed, and there needs to be a fact-based assessment with evidence from all parties; if purchasers prove payment, they must be assessed individually, and any portion not funded by purchasers could be subject to luxury tax only within Section 5A limits. The appellant seeks remand for fresh, evidence-based assessment.

Contentions of Respondents

The respondents argue that the subject property underwent building tax assessment by the Tahsildar, reflecting the owner’s liability, while acknowledging the complex arrangements. They emphasize the need for a proper process and evidence to determine whether funds from purchasers were used for construction and whether individual purchasers should be assessed under Section 5A. The Tahsildar should verify purchaser returns and evidence of payment to the builder; the final assessment should reflect evidence presented by the appellant, builder, and purchasers. The respondents rely on the building tax framework and the preexisting procedures to ensure correct tax liability, while insisting on a procedural, evidence-based approach.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Varghese v. State of Kerala	2013(2) KLT 831	Positive	The judgment cites Varghese to support the proposition that building tax may be assessed on individual apartment owners if there is evidence of funds used for construction; the present court applies this principle and reiterates the need to assess based on evidence.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** ## **THE HONOURABLE MR. JUSTICE T.R.RAVI** **THURSDAY, THE 17TH DAY OF SEPTEMBER 2020 / 26TH BHADRA, 1942** ## **WA.No.1645 OF 2018** **AGAINST THE JUDGMENT IN WPC 24237/2018 DATED 19-07-2018 OF HIGH COURT OF KERALA** ## **APPELLANT:** **LEELA JOSE PULIKKAN HOUSE,CHELAKKOTTUKARA,THRISSUR - 680 005.** **BY ADVS. SMT.S.K.DEVI SRI.SANTHOSH P.ABRAHAM** ## **RESPONDENTS:** **1 THE TAHSILDAR (ASSESSING AUTHORITY) TALUK OFFICE,THRISSUR - 680 020. 2 K.J.GEORGE KUTTICHAKKU HOUSE,PENTA HOMES, VILLA NO.25,CHELAKKOTTUKARA,THRISSUR - 680 005. 3 THE VILLAGE OFFICER CHIYYARAM VILLAGE, EAST FORT P.O., THRISSUR - 680 007. R2 BY ADV. SRI.R.BINDU (SASTHAMANGALAM) R2 BY ADV. SRI.PRASANTH M.P R3 BY GOVERNMENT PLEADER(B/O)** ## **OTHER PRESENT:** **SENIOR GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 17-09-2020, THE COURT ON 17-09-2020 DELIVERED THE FOLLOWING:** **Writ Appeal No.1645/2018** **==> picture [43 x 10] intentionally omitted <==** **J U D G M E N T** **Dated this the 17[th] day of September, 2020** ## **Vinod Chandran, J** The owner of a property has been proceeded against for building tax, which was impugned in the writ petition. The learned Single Judge dismissed the writ petition on the ground of alternate remedy being available which is an efficacious remedy. The appeal is by the person on whom the tax has been assessed. 2. The learned Counsel appearing for the appellant Sri.Santhosh Abraham would submit that facts arising in the case is not as simple as a regular assessment made. The appellant was the owner of the subject property. She had some debts upon which she entered into an agreement with the 2[nd] respondent for sale of the property to him or his assignees. Simultaneously there was an ## **Writ Appeal No.1645/2018** **::3::** agreement executed with the 2[nd] respondent giving him the right to construct an apartment complex therein and sell the individual apartments to various purchasers. The agreement for construction specifically gave the 2[nd] respondent the right to construct the apartment complex with his money or the money received from the prospective purchasers. The 2[nd] respondent proceeded with the agreement and constructed the apartment complex and sold certain apartments before the construction was completed and eventually it stood completed in the year 2016. All the apartments in the complex stood sold and conveyed to the purchasers, who had individually paid for the construction. 3. A notice was issued under the Building Tax Act to the appellant since the local authority had issued the permit for construction in the name of the appellant who was the land owner. After the construction, individual deeds were executed by the appellant herself in the name of the apartment ## **Writ Appeal No.1645/2018** ## **::4::** owners and also conveyed the undivided interest in the landed property. Construction according to the appellant was made by using the amounts received from the individual purchasers by the 2[nd] respondent. The 2[nd] respondent who appears through Counsel admits that he had made the construction on the basis of the amounts received from the individual purchasers and that the individual purchasers had filed returns before the authority. 4. The learned Senior Government Pleader submits that after the reply was received there was a further notice issued to the appellant asking them to produce the evidence with respect to the payment of amounts for the construction of the building which was not complied with. 5. A Division Bench in _**2013(2) KLT 831**_ _**Varghese vs. State of Kerala**_ had held that the building tax has to be assessed on the individual apartment owners only if evidence is produced of the construction having been made on the amounts ## **Writ Appeal No.1645/2018** **==> picture [43 x 10] intentionally omitted <==** handed over by the purchaser to the builder. The destination drawn is from an outright sale of the apartment after completion of construction. We agree with the learned Counsel appearing for the appellant that the procedure followed by the Tahsildar, Assessing Officer was not proper especially in the complex facts as discernible from the aforesaid case. 6. The appellant had executed an agreement for sale as also for construction of the apartment complex based on which the 2[nd] respondent is said to have constructed the building and on his request sale deeds were executed by the appellant to the individual purchasers conveying the undivided property as also the apartment building. What arises for consideration is as to whether the apartment building itself was constructed with the money received from the individual purchasers for which definitely evidence would be available with the 2[nd] respondent or the individual purchasers who have filed the returns under the Act. 7. Ext.P4 is the reply given to the Tahsildar ## **Writ Appeal No.1645/2018** ## **::6::** wherein a number of documents have been produced to evidence the sale of 12 of the apartments in the building. The appellant undertakes to produce the copies of other documents also. The 1[st] respondent would verify the returns filed by the individual purchasers in the apartment complex and issue notices to them also to produce evidence as to the payment of the amounts to the builder for the purpose of construction of the flats before the sale was completed. If any of the purchasers as revealed has not filed return individual notice will be issued on them. The Tahsildar would consider the issue looking at the evidence produced either by the appellant, the 2[nd] respondent builder or the individual purchasers who will be participated in the proceedings. If the individual purchasers establish the payment having been made to the 2[nd] respondent for the construction of the building then necessarily they will have to be assessed individually as separate units. If all the ## **Writ Appeal No.1645/2018** ## **::7::** purchasers are not able to produce evidence, the appellant can be proceeded with for such area which is not constructed with funds received from the individual purchasers. In that circumstance, whatever portion found to have been constructed without funds received from the purchasers if it exceeds the limit under Section 5A, only then luxury tax will be imposed on the appellant. The appellant would also establish before the Tahsildar, the subsequent date on which the purchases were completed and from that date onwards, the individual apartment owners would be entitled to seek re-assessment under Section 5A since the liability under Section 5A is a recurring liability. The appellant as also the 2[nd] respondent personally or through their authorised representatives shall be present before the Tahsildar on 19.10.2020 and the documents available with them shall be produced within a period of one month. The Tahsildar shall initiate the proceedings ## **Writ Appeal No.1645/2018** ## **::8::** as directed herein, issuing notice to the individual purchasers and complete the proceedings within a reasonable time. Exts.P5 and P6 shall stand set aside only for restoration and completion of the proceedings. We would also direct the Tahsildar not to pass an order in the printed form and give his reasons for rejection of the claims made by the appellant, the 2[nd] respondent builder and the individual purchasers. It is made clear that the evidences produced by the appellant, the individual purchasers or the builder/2[nd] respondent shall be considered for the purpose of a final resolution of the assessment. Writ appeal is allowed. No order as to costs. _Sd/-_ ## **K. Vinod Chandran,Judge** _Sd/-_ **T.R Ravi, Judge** jma