High Court of KeralaSingle JudgeWrit petition allowed by remand for fresh asses...

Mohammed Nazar and others v. State of Kerala

Case / Petition Number:WP(C).No.23331/2005

Case Details & Bench

Court
High Court of Kerala
Hon'ble Judges
  • P.R.RAMAN
Judgment Date
2008-05-28
Court Decision / Holding
Writ Petition is allowed by way of remand. The matter is remanded to the Assessing Authority for fresh consideration to determine, on evidence, whether the four apartments should be treated as separate buildings or as part of one building for tax purposes. Any amounts already paid will be adjusted towards final liability as assessed.
Final Disposition
Writ petition allowed by remand for fresh assessment

Parties to the Case

Appellants / Petitioners

  • Mohammed Nazar, S/O. Hassan Mohammed
  • K.M. Shaila
  • Shaheeda Banu A.
  • Hassan Mohammed K.

Respondents

  • State of Kerala, represented by Secretary to Government, Department of Revenue, Government Secretariat, Trivandrum
  • The District Collector, Palakkad
  • The Revenue Divisional Officer, Palakkad
  • The Tahsildar, Palakkad
  • ADDl. District Labour Officer, Palakkad (ADDL.R5 impleaded)

Legal Representation & Advocates

Counsels for Petitioners

  • • Adv. Sri. Jacob Sebastian

Counsels for Respondents

  • • Govt. Pleader Sri Mathew Vadakkel

Case Synopsis & Summary

The petitioners, four closely related families residing in Palakkad, sought relief under a writ petition challenging property tax treatment of four apartments formed on a single structure. They had entered into an agreement in 2001 to transfer half the right over the property and jointly met the construction costs for four apartments. A registered transfer (Ext. P1) occurred later, but the assessment for building tax began with the original owners, petitioners 1 and 2, who held the permit for the entire construction. The core issue was whether the four apartments should be clubbed as a single building or treated as separate buildings for tax purposes. The petitioners argued that, since each apartment appears to have separate electricity and water connections and can be used independently, and because the construction costs were met jointly by all four parties, Explanation 2 to Section 2(e) of the Kerala Building Tax Act 1964 deems each apartment as a separate building. The respondents contended that the building tax is charged on the building, and the four apartments constitute one building. The High Court relied on Lalitha v. State of Kerala (1994 (2) KLT 66) to emphasize that the charge is on the building and not the owner, and that merely owning multiple buildings does not automatically require clubbing unless proven. Finding the evidence insufficient to prove joint construction costs for all four units, the court remanded for fresh assessment, holding that the authorities must determine, on proper evidence, whether the units should be treated separately. The petition was allowed by remand.

Provisions of Law Cited

Kerala Building Tax Act, 1964 - Section 2(e) (including Explanation 2)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued that four apartments were constructed with joint financial contribution and that each unit has independent access, water and electricity connections; therefore, clubbing all four units as a single building for tax purposes is inappropriate. Citing the Kerala Building Tax Act, especially Section 2(e) and its Explanation 2, they contended that when different flats owned by different persons are built with joint construction costs, each flat should be deemed a separate building. They relied on Lalitha v. State of Kerala to support the proposition that the charge is on the building itself and not on the owner, and that ownership alone cannot compel clubbing of buildings without evidence of common cost or structural integration. They asserted that the permit remained in the names of petitioners 1 and 2 and that the absence of conclusive proof of joint construction costs should lead to remand for fresh assessment.

Contentions of Respondents

The respondents argued that building tax is charged on the building as a whole and that four apartments within one structure may be treated as a single building for assessment. They contended that Lalitha v. State of Kerala confirms that the charge is on the building and not linked to ownership, and that there is no provision in the Act mandating clubbing of separate buildings merely because same owner constructs multiple structures. They submitted that the records and prior orders treat all four apartments as part of one building and that the onus is on the petitioners to prove joint construction costs; in the absence of such evidence, the authorities were justified in clubbing the units for assessment."},

Cited Precedents (1)

Case NameCitationTreatmentExplanation
Lalitha v. State of Kerala1994 (2) KLT 66PositiveCited to illustrate that the charge under the Building Tax Act is on the building itself and not on the owner, and that mere ownership of multiple buildings does not automatically mandate clubbing unless there is evidence of joint construction costs or structural integration; supports the view that separate units may be treated independently if conditions are not met.

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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 P.R.RAMAN WEDNESDAY, THE 28TH MAY 2008 / 7TH JYAISHTA 1930 WP(C).No. 23331 of 2005(C) -------------------------PETITIONER: ------------ 1. MOHAMMED NAZAR, S/O. HASSAN MOHAMMED, AGED 35, LOVELY GARDEN, CHIRAKKAD ROAD, KUNNATHURMEDU, PALAKKAD. 2. K.M. SHAILA, LOVELY GARDEN, CHIRAKKAD ROAD, KUNNATHURMEDU, PALAKKAD. 3. SHAHEEDA BANU. A., LOVELY GARDEN, CHIRAKKAD ROAD, KUNNATHURMEDU, PALAKKAD. 4. HASSAN MOHAMMED. K., LOVELY GARDEN, CHIRAKKAD ROAD, KUNNATHURMEDU, PALAKKAD. BY ADV. SRI.JACOB SEBASTIAN RESPONDENTS: ------------- 1. STATE OF KERALA, REP. BY SECRETARY TO GOVERNMENT, DEPARTMENT OF REVENUE GOVERNMENT SECRETARIAT, TRIVANDRUM. 2. THE DISTRICT COLLECTOR, PALAKKAD. 3. THE REVENUE DIVISIONAL OFFICER, PALAKKAD. 4. THE TAHSILDAR, PALAKKAD. ADDL. 5. DISTRICT LABOUR OFFICER, PALAKKAD. (ADDL.R5 IS IMPLEADED AS PER ORDER DTD. 14/11/2005 IN I.A.NO.16637/2005) BY GOVT.PLADER SRI MATHEW VADAKKEL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/05/2008,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## W.P.(C).NO.23331/2005 ## APPENDIX ## PETITIONER'S EXTS: |EXT.P1|TRUE COPY OF THE REGISTERED SALE DEED DTD. 31/10/2001.| |---|---| |EXT.P2|COPY OF THE PHOTOGRAPHS OF THE PETITIONER'S BUILDING.| |EXT.P3|TRUE COPY OF THE ORDER DATED 23/2/2004 OF THE 4TH| ||RESPONDENT.| |EXT.P4|TRUE COPY OF THE ORDER DATED 26/8/2004 ISSUED BY THE| ||RESPONDENT.| |EXT.P5|TRUE COPY OF THE ORDER DATED 15/7/2005 OF THE 2ND| ||RESPONDENT.| |EXT.P6|TRUE COPY OF THE RECEIPT DATED 10/3/2004 ISSUED BY| ||THE VILLAGE OFFICE, PALAKKAD-3.| |EXT.P7|TRUE COPY OF THE RECEIPT DATED 10/12/2004 ISSUED| ||BY THE VILLAGE OFFICE, PALAKKAD-3.| |EXT.P8|TRUE COPY OF THE EXPLANATION DATED 10/12/2004.| |EXT.P9|TRUE COPY OF THE DEMAND NOTICE DATED 16/2/2005.| |EXT.P10|TRUE COPY OF THE REVENUE RECOVERY NOTICE DATED| ||1/10/2005.| ## **P.R.RAMAN, J.** ## **--------------------------W.P.(C).NO.23331 OF 2005 ---------------------------DATED THIS THE 28TH DAY OF MAY,2008** ## **JUDGMENT** Petitioners admittedly are closely related. But according to them, they represent different families and out of their desire to live close by, they decided to put up individual apartments, though it is structurally one. For that purpose, they entered into an agreement in 2001 whereby the petitioners 1 and 2 agreed to transfer half the right over the property to petitioners 3 and 4 and also decided to meet the cost of construction equally. This was followed by a registered document dated 31/10/2001 actually transferring half the right over the property in favour of petitioners 3 and 4. This document is produced as Ext.P1. Admittedly, this document of transfer comes later to the point of construction. According to the petitioners, the fact that actual ownership was conveyed subsequently by a registered deed is of no consequence, since the cost of construction was met jointly followed by an agreement dated 3/8/2001 between the parties. They have produced some photographs to show that the said apartments have got -2- ## WP(C).No.23331/2005 separate electric connection and the existence of one does not depend on the other in the sense that each apartment can be enjoyed separately. Placing reliance on some decisions it is contended in such a situation that the building has to be assessed separately and it is impermissible to club the areas of all the four buildings together for the purpose of assessment. This contention was however not accepted by the Assessing Authority or the Higher Authorities in appeal or in revision. Petitioners reiterated their contention as aforesaid to impugn the orders passed by the authorities, who treated all the four buildings as part of the same structure and the areas of all the four buildings were added together for the purpose of assessment. The correctness of the order is therefore under consideration. 2. The facts are therefore not in dispute. The property where the building was constructed originally belonged to petitioners 1 and 2 who subsequently transferred half the right over the property to petitioners 3 and 4 by Ext.P1. Meanwhile four apartments were constructed. Admittedly, the permit for the entire construction stands in the name of petitioners 1 and 2 alone. In the factual situation, whether all the four apartments to be clubbed together arises for consideration. 3. As per Section 2(e) of the Kerala Building Tax Act, the term "building" means a house, out-house, garage, or any other structure or part -3- ## WP(C).No.23331/2005 thereof, whether of masonry, bricks, wood, metal or other material, but does not include any portable shelter or any shed constructed principally by mud, bamboos, leaves, grass or thatch or a latrine which is not attached to the main structure. As per explanation 2 of the said section (definitions) 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. Reading the main section with Explanation 2, if the building is structurally one where there are different apartments or flats, then to treat such apartments or flats, the conditions provided in Explanation 2 would be satisfied. 4. This Court in **Lalitha v. State of Kerala (1994 (2) KLT 66)** held that the charge is on the building as such, and not with reference to its owner. There is no provision in the Act for clubbing together various buildings constructed by the same owner either on the same financial year or otherwise. Thus the same owner can construct different buildings; but still each of them will have to be clubbed, merely because he owns all the four buildings, there is no provision for clubbing the areas of all the four buildings together for the purpose of assessment. In other words, the ownership is not determinate to see whether a particular structure could be -4- ## WP(C).No.23331/2005 called "a building" or not. I say so, because a person can construct a building in a particular locality and suppose he is constructing another building within the distance of 1 km., there cannot be any doubt that both these constructions are to be treated as separate buildings. But then a question will arise when a mutli-storeyed building is constructed by the same owner, whether each such apartment or flat is to be treated as separate building. In such a situation, Explanation 2 will be attracted. This Court in the above decision held that two separate units may constitute one building, if they are built for the purpose of one or other, and are functionally integrated. For example, a house with a garage, outhouse for servants, latrines, cow-shed and so on forms an integral unit and has to be assessed as such. A hotel complex which may consist of = of numerous buildings like cottage, kitchen complex, shopping arcade etc. may constitute one unit for the purpose of assessment. But when there is no inherent connection between the buildings, when they do not exist for each other and are otherwise separate, there is no provision anywhere in the Act which requires such separate entities to be clubbed together into one or which deems them to be one building. It is true that the ownership may be transferred later as contended by the petitioners; but then if the cost of construction is met by the four persons jointly, it may be possible -5- WP(C).No.23331/2005 for the petitioners to contend that the buildings in question have to be treated separately. But no acceptable evidence is adduced by the petitioners in this regard. Whether the cost of construction was met by four persons separately is a question of fact, on which no evidence is on record. The construction of the building using joint funds is a matter which could be proved by adducing evidence; but the petitioners have failed in this regard. Therefore, it is not possible to accept the contention that though the ownership is transferred later, the cost of construction has been met by all the four persons together, for the simple reason that there is no material to be acted upon before accepting such a contention. 5. In the above circumstances, it has to be deemed that until the actual ownership is transferred to the other two persons by Ext.P1, it continued to be in the name of petitioners 1 and 2. Permit is also in the name of petitioners 1 and 2. The question whether all the four apartments have got separate access, separate water connection, separate electric connection and whether the existence of one depends on the other, whether it is intended to be used separately, these are all factors which one could say that all the four apartments are separate. If they are separate buildings, the question of treating the area occupied by all such building as one does not arise as held by this Court. This aspect of the matter has -6- WP(C).No.23331/2005 to be examined by the authorities concerned for which purpose the orders impugned in this writ petition are quashed. The matter is remanded for fresh consideration by the assessing authority. The amounts if any, paid will be adjusted towards final liability as assessed. Writ Petition is allowed by way of remand. **P.R.RAMAN,** **Judge.** **kcv.**