M/S.DESAI HOMES (A REGISTERED PARTNERSHIP FIRM) v. THASILDAR, TALUK OFFICE, EAST FORT, PAZHAVANGADI, TRIVANDRUM; REVENUE DIVISIONAL OFFICER, CIVIL STATION, KUDAPPANAKKUNNU, TRIVANDRUM; THE DISTRICT COLLECTOR, CIVIL STATION, KUDAPPANAKKUNNU, TRIVANDRUM; STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, TRIVANDRUM

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **THURSDAY, THE 10TH DAY OF MARCH 2016/20TH PHALGUNA, 1937** ## **WP(C).No. 2737 of 2016 (N) ---------------------------** ## **PETITIONER(S):** **--------------------------** **M/S.DESAI HOMES (A REGISTERED PARTNERSHIP FIRM) 2ND FLOOR, AGED 60 YEARS DD TRADE TOWER, KALOOR - KADAVANTHRA ROAD COCHIN - 682 017 REPRESENTED BY ITS MANAGING PARTNER, MR.V.R.DESAI** **BY ADVS.SRI.E.K.NANDAKUMAR (SR.) SRI.M.GOPIKRISHNAN NAMBIAR** ## **RESPONDENT(S):** - **----------------------------** **1. THASILDAR, TALUK OFFICE, EAST FORT, PAZHAVANGADI, TRIVANDRUM - 695 023.** **2. REVENUE DIVISIONAL OFFICER, CIVIL STATION, KUDAPPANAKKUNNU, TRIVANDRUM - 695 043.** **3. THE DISTRICT COLLECTOR, CIVIL STATION, KUDAPPANAKKUNNU, TRIVANDRUM - 695 043.** **4. STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, TRIVANDRUM - 695 001.** **R1-R4 BY ADV. GOVERNMENT PLEADER SRI. S. SUDHISH KUMAR** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10-03-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 2737 of 2016 (N) ----------------------------------APPENDIX PETITIONER(S)' EXHIBITS ------------------------------------EXT.P1: TRUE COPY OF THE LETTER NO.832/DH/TVM/OTBT/2015 DATED 25/09/2015 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT (WITHOUT ENCLOSURE) EXT.P2: TRUE COPY OF THE COVERING LETTER NO.948/DH/TVM/OTBT/2015 DATED 05/11/2015 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT (WITHOUT ENCLOSURE) EXT.P3: TRUE COPY OF THE BUILDING PERMIT ISSUED BY THE TEHN SREEKARYAM GRAMA PANCHAYATH DATED 04/07/2008 EXT.P4: TRUE COPY OF THE OCCUPANCY CERTIFICATE DATED 04/10/2013 ISSUED BY THE CORPORATION OF TRIVANDRUM EXT.P5: TRUE COPY OF THE DETAILED LIST OF THE INDIVIDUALS WHO HAD PURCHASED THE APARTMENTS DATED NIL EXT.P6: TRUE COPY OF AN INDIVIDUAL RETURN FILED BY AN APARTMENT OWNER SHRI THOMSON VARGHESE AND SMT.JAIMOLE VARGHESE DATED NIL EXT.P6(A): TRUE COPY OF THE SALE AGREEMENT ANNEXED IN THE INDIVIDUAL RETURN SHRI THOMSON VARGHESE AND SMT.JAIMOLE VARGHESE DATED 25/09/2008 EXT.P6(B): TRUE COPY OF THE COPY SALE DEED ANNEXED IN THE INDIVIDUAL RETURN SHRI THOMSON VARGHESE AND SMT.JAIMOLE VARGHESE DATED 17/10/2014 EXT.P6(C): TRUE COPY OF THE EXTRACT OF THE CORPORATION TAX ASSESSMENT INDEX SHEET ISSUED BY THE CORPORATION OF THIRUVANANTHAPURAM ANNEXED WITH THE INDIVIDUAL RETURNS DATED 21/11/2013. EXT.P6(D): TRUE COPY OF THE EXTRACT OF THE STATEMENT OF PAYMENT MADE BY APARTMENT OWNER SHRI THOMSON VARGHESE DATED NIL EXT.P7: TRUE COPY OF THE PROCEEDINGS DATED 19/12/2015 OF THE 1ST RESPONDENT ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER EXT.P8: TURE COPY OF THE DEMAND NOTICE DATED 19/12/2015 ASSESSING RS.71,76,600/- AS THE BUILDING TAX ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. RESPONDENT(S)' EXHIBITS --------------------------------------EXT.R1(A) COPY OF THE PAYMENT DETAILIS.** **// TRUE COPY //** ## **P.A TO JUDGE** **SB** ## **K. VINOD CHANDRAN, J.** ## **===================== W.P.(C) No.2737 of 2016 - N** ## **====================== Dated this the 10[th] day of March, 2016** ## **J U D G M E N T** The petitioner is aggrieved with Ext.P7 order passed by the 1[st] respondent under the Kerala Building Tax Act, 1975 (for brevity 'the Act'). The petitioner's contention is that the petitioner had entered into a sale agreement to sell the undivided interest in a property to various persons, who in turn entrusted them with the construction of the apartments. The construction cost of the various apartments in the multi-storied building was also met by different persons, who had purchased undivided interest in the property, is the contention. 2. The petitioner contends that in such circumstance, the building tax assessment as per the Act has to be on individual apartment owners and not on the petitioner, **2** W.P.(C) No.2737 of 2016 - N construing the building as one single unit. It is also submitted that on filing of return if the returns are rejected; to make an assessment, then, a notice has to be issued as has been laid down in **Tharu** v. **Tahsildar [2003(1) KLT 219]** . 3. The learned Government Pleader submits that a notice was issued to the petitioner, who was the occupant of the building on 23.07.2015 asking them to show cause as to why a return was not filed and on the petitioner not complying with the same again a notice was issued granting a personal hearing on 07.11.2015. Then the petitioner had filed a return with only Ext.R1(a), accompanying, the return. The evidence produced is grossly insufficient to substantiate the contention of the individual apartments having been constructed expending the money of the purchasers. The statement furnished by the petitioner itself, as Ext.P5 states it to be the List Of Individuals who Purchased Apartments, clearly indicating that the purchasers had not constructed the apartments and the **3** W.P.(C) No.2737 of 2016 - N transaction was one of sale of constructed apartments. It is also submitted that no reliance can be placed on the petitioner's accounts maintained by themselves and the petitioner would have to prove categorically that the amounts for the construction of the building were expended by the purchasers with proper evidence of bank statements and so on and so forth. 4. On the question of the evidence to be produced and the adjudication to be made this Court has considered the issue in **Bavasons Constructions (P) Ltd.** v. **State of Kerala [2007 (3) KLT 101]** , paragraph 9 of which is extracted hereunder:- 9. The petitioners-builders shall produce materials before the concerned Tahsildars regarding the allotment of individual flats to the respective owners. They shall also produce the agreements entered into with the owners of flats and also evidence to show that the payments were made by the allotteees from time to time to foot the bills for construction. They shall produce their books of accounts and bank statements. They shall also produce the deeds, assigning the undivided interest in the property. They shall produce those materials before the concerned Tahsildars before 30.04.2007. If those materials are produced to **4** W.P.(C) No.2737 of 2016 - N show that the construction of the flats is covered by Explanation 2 to S.2(3) of the Building Tax Act, then, the assessments shall be made separately. The assessing authorities shall consider the claim relating to each flat and render a separate speaking decision with reference to each flat. A common order can be passed for each residential complex. But, in that order, there should be separate finding regarding each flat/apartment. In case any flat is remaining unallotted, the assessment in respect of such flat shall be made, treating the builder as the owner. In case, in relation to a particular flat, sufficient materials are not produced to support the claim for the benefit of Explanation 2 to S.2(e), then also, the assessment shall be made, treating the builder as the owner of the apartment. While making separate assessments of the flats, the common area shall also be divided on pro rata basis, so that the entire built up area of the building is assessed to building tax. The petitioners shall also furnish the correct address, as far as possible, of the allottees of the flats, to the assessing authorities. The assessing authorities shall afford an opportunity of being heard to the petitionersbuilders and the individual flat owners and pass final orders in the matter, as far as possible, before 30.07.2007. They shall , as stated earlier, deal with the assessment relating to every flat/apartment separately, with reference to the documents produced. In this context, it is apposite to remind the assessing authorities, the powers conferred on them under S.17 of the Act. The said section reads as follows: “ -- **Powers to take evidence on oath etc.** The assessing authority, the appellate authority and the revisional authority shall, for the purpose of this Act, have the same powers as are vested in a **5** W.P.(C) No.2737 of 2016 - N Civil Court under the Code of Civil Procedure, 1908 (Central Act 5 of 1908), when trying a suit, in respect of the following matters, namely:- (a) enforcing the attendance of any person and examining him on oath or affirmation; (b) compelling the production of documents; (c) issuing commissions.” 5. Subsequently a Full Bench of this Court in **District** **Collector** v. **Sreekumari Kunjamma [2011 (1) KLT 248 (F.B)]** , held that Explanation 1 of Section 2(e) of the Act provides for assessment of each residential unit within a building as a separate building for assessment. However, this can be only when the construction is carried out by several persons sharing cost of construction and owning the building as flats or apartments separately among themselves. Such pooling of resources and each holding the separate apartments under their particular ownership has to be proved before the Assessing Officer. It was categorically held that the provisions of the Act specifically provide for a building to be assessed as one unit **6** W.P.(C) No.2737 of 2016 - N irrespective of the number of flats or apartments, subject only to the exemptions provided therein, being for plantation workers or under a subsidised housing scheme of Government of India and also when the flats or apartments are constructed by the respective persons, with their own resources and owns such separate flats or apartments. A sale made after the construction would also be immaterial insofar as the assessee proving that the construction was made with the separate resources of the assessee. 6. The decision in **Tharu** (supra) found that the Assessing Officer when deciding to reject the return shall issue a pre-assessment notice so as to facilitate the production of further evidence to substantiate the returns filed. There is also a requirement to then hear the assessee and if necessary, conduct an inspection and pass assessment orders giving reasons for the assessment made. This Court found that if the return is accepted, the assessing order could go ahead and pass an order **7** W.P.(C) No.2737 of 2016 - N accepting the return but when an adverse order is contemplated against the building owner, assessment should be issued in Form V in terms of Section 9(1) of the Act, which contemplates a further notice. 7. Here, the petitioner had filed the returns on the notice of the respondent and after hearing them, finding that there is no sufficient evidence to substantiate the return, the assessing officer has decided to reject the returns. The assessment order was also passed after rejecting the returns, without further notice. Hence it is an adverse order, for which the petitioner should have been given a notice as contemplated under Section 9(1). Only to facilitate such notice being issued, this Court would set aside Ext.P7 order. 8. Notice shall be issued within a period of two weeks from the date of receipt of a certified copy of this judgment and the petitioner shall be granted a months time to produce all the evidence and on such production of evidence or on the expiry of **8** W.P.(C) No.2737 of 2016 - N the period, whichever is earlier, the Assessing Officer shall go ahead with the assessment in accordance with law and in accordance with the principles laid down in the aforesaid decisions. The petitioner definitely shall be given an opportunity of hearing before orders are passed and final orders shall be passed within a month of the date of hearing. The writ petition is disposed of. No Costs. **Sd/K. VINOD CHANDRAN, JUDGE** // true copy // P.A to Judge. SB/11/03/2016