P.V. Ali Mubarak v. Tahsildar and Assessing Authority (under the Kerala Building Tax Act) Kanayannur Taluk, Ernakulam & State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM** **THURSDAY, THE 28TH JANUARY 2010 / 8TH MAGHA 1931** ## **WP(C).No. 29170 of 2005(V)** **---------------------------------------** ## **PETITIONER(S):** - **----------------------** **1. P.V. ALI MUBARAK, RESIDING AT PEEVEE HOUSE, NILAMBUR.** **2. PEEVEE HOLDINGS AND PROPERTY DEVELOPERS LTD., HAVING REGISTERED OFFICE AT NO.6, 4TH FLOOR, KASHI ARCADE, 116/C, SIR THYAGARAYA ROAD, T. NAGAR, CHENNAI-600 017, REPRESENTED BY ITS DIRECTOR, MR.N.BALASUBRAMANIAN.** **3. M/S.SKYLINE PEEVEES PROPERTIES (P) LTD., 39/1238, PEEVEES HOUSE, KALATHIPARAMBU ROAD, COCHIN-682 016, REPRESENTED BY ITS AUTHORISED SIGNATORY, MR.L.VANCHEESWARAN.** **BY ADV. MR.SREELAL N.WARRIER, MR.SIVARAM R.MENON.** ## **RESPONDENT(S):** **-------------------------** **1. THE TAHSILDAR AND ASSESSING AUTHORITY (UNDER THE KERALA BUILDING TAX ACT), KANAYANNUR TALUK, ERNAKULAM-682 016.** **2. STATE OF KERALA, REPRESENTED BY PRINCIPAL SECRETARY TO GOVERNMENT, REVENUE DEPARTMENT, SECRETARIAT, TRIVANDRUM.** **R1 & R2 BY GOVERNMENT PLEADER MR.PRADEEP.** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/01/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C) NO. 29170/2005-V** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** ## **EXT.P1: COPY OF THE BUILDING TAX ASSESSMENT ORDER AND DEMAND NOTICE ISSUED BY THE 1ST RESPONDENT.** **EXT.P2: COPY OF THE ENCUMBRANCE CERTIFICATE FOR THE PERIOD 01/01/1990 TO 10/12/2004 ISSUED BY THE SRO, ERNAKULAM.** **EXT.P3: COPY OF THE TEXT OF THE SALE DEED NO.3781/1999 OF SRO, ERNAKULAM EXECUTED BY 2ND PETITIONER IN FAVOUR OF APARTMENT OWNER.** **EXT.P4: COPY OF THE BUILDING PERMIT ISSUED BY THE CORPORATION OF COCHIN IN RESPECT OF THE SCHEME BUILDING.** ## **EXT.P5: COPY OF THE CONSTRUCTION AGREEMENT EXECUTED BETWEEN 3RD PETITIONER AND A APARTMENT OWNER.** **EXT.P6: COPY OF THE COMPUTATION OF AREA OF INDIVIDUAL FLATS AND COMMERCIAL AREA WITH COVERING LETTER ISSUED BY THE 3RD PETITIONER TO THE 1ST RESPONDENT.** ## **EXT.P7: COPY OF THE REPRESENTATION GIVEN BY 3RD PETITIONER BEFORE THE 1ST RESPONDENT.** **EXT.P8: COPY OF THE COMMUNICATION IN REPLY TO EXHIBIT P8 ISSUED BY THE 1ST RESPONDENT.** **EXT.P9: COPY OF THE REVENUE RECOVERY DEMAND NOTICE ISSUED BY THE 1ST RESPONDENT.** ## **RESPONDENT'S EXHIBITS: NIL** ## **//TRUE COPY//** ## **P.S. TO JUDGE** **rs.** C.K.ABDUL REHIM,J. -------------------------------------------WPC.29170 of 2005 --------------------------------------------Dated this the 28th day of January, 2010. ## JUDGMENT This writ petition is filed against Ext.P1 order of assessment issued under the Kerala Building Tax Act 1975 and against the consequent demand raised against the first petitioner. First petitioner is the Director of 2[nd] petitioner company, which owned the property wherein the building in question is constructed. The 2[nd] petitioner company had entered into an agreement with the 3[rd] petitioner, which is another company formed for the purpose of promoting a multi storied commercial building in the property. The building was constructed as a commercial space up to the first floor and as residential apartments from floors 2 to 11, comprising 39 distinct residential apartments. According to the petitioners the residential apartments are owned by different persons who had purchased undivided shares in the land and who had expended money for construction of such apartments. The 2[nd] petitioner has transferred the undivided shares into the name of such 2 WPC.29170/2005 purchasers through registered sale deeds. The individual purchasers have executed construction contracts (agreements) with the 3[rd] petitioner for construction of the respective apartments. According to the petitioners, 39 different returns were submitted by the owners concerned, and with respect to the commercial portion the 3[rd] petitioner had also furnished such returns, before the 1[st] respondent for completing the assessment. It is further stated that the 1[st] petitioner had produced copies of accounts in order to prove that expenses for construction was met by each such individual purchasers. But complaint of the petitioners is that without looking into such voluminous records produced, the first respondent had finalised assessment as per Ext.P1. Subsequently coercive steps was initiated for realisation of the amount covered under Ext.P1 from the 1[st] petitioner. Hence the writ petition is filed . 2. Going by Ext.P1 order it is revealed that the building is assessed computing the total plinth area of 7759.47 sq.meters residential portion and 4550.34 sq.meters of non-residential portion together. The assessment is made on the first petitioner. Eventhough notice was seen issued to the individual apartment WPC.29170/2005 3 owners, the assessing authority found that no records were produced to substantiate the claim for separate assessment as contemplated under explanation (ii) to section 2(e) of the Kerala Building Tax Act. Such a finding was arrived mainly relying on a circular issued by the Government, vide No.9031/53/89/ TD dt. 28.8.1990 of the Principal Secretary to the Government. In the said circular it is insisted that there should be proof by way of registered document executed prior to the date of construction in order to avail the benefit of separate assessment. It is stated in Ext.P1 that in view of the Government letter and in view of the fact that all the separate owners have not responded to the notices issued, independent ownership over the building was not proved. Therefore the assessment is completed in the name of the first petitioner, treating the entire building as a single unit. 3. Scope and applicability of explanation (ii) to section 2(e) of the Kerala Building Tax Act, with respect to Building Complex having different apartments owned and occupied by separate individual was elaborately considered by this court in the decision in **Bavasons Constructions (P)Ltd. vs. State of Kerala (2007 (3) KLT 101).** This court observed that WPC.29170/2005 4 assessment of building tax is a quasi judicial function and it shall not be guided by instructions issued by superior officers or the Government. Circular issued by the Government insisting for registered agreements entered into between the builders and allottees of flats, was held to be not sustainable. Various parameters which need be considered for finalising the assessment, has been elaborately dealt with in the said decision. It is held that the eligibility regarding benefit of explanation (ii) to section 2(e) is basically a question of fact and the assessing authority had to consider all material documents and other evidences in order to arrive at a conclusion as to whether separate apartments were constructed by expending individual funds by the purchasers of such apartments. 4. However it is noticed that, the contention of the petitioner that he is only a Director of the 2[nd] petitioner company and that he had executed the sale deeds with respect to transfer of undivided shares only in the capacity as Director of the 2[nd] petitioner company, deserves consideration. It is noticed that the assessing authority while completing the assessment has not looked into such aspects. Further, in view of decision of this WPC.29170/2005 5 court cited supra the assessment could not be made in the name of the owner of the property, merely relying on the requirement specified in the Government letter. On the other hand the assessing authority has to re-evaluate the entire documents and to arrive at a decision as to whether the building in question is liable to be assessed treating each apartment as separate unit under explanation (ii) to section 2(e). So also with respect to the commercial area , the assessing authority has to ascertain who exactly is the owner of the building, before making such assessment. 5. Under the above circumstances Ext.P1 assessment and the consequential demand are hereby quashed. The first respondent is directed to issue notice to the petitioners as well as to all the individual owners of distinct apartments. Parties shall be afforded with opportunity to submit documents in support of their claim for separate assessment. The assessment shall be finalised after affording reasonable opportunity of hearing to the parties, following principles and the procedures prescribed in the decision in Bavasons Constructions Pvt. Limited (cited supra). Fresh assessment shall be completed as early as possible, at any WPC.29170/2005 6 rate within three months from the date of receipt of a copy of this judgment. Needless to say that the amount already remitted by the petitioners by virtue of the interim order of this court dated 17.10.2005, shall be appropriated in accordance with the fresh assessment to be completed. ## C.K.ABDUL REHIM, JUDGE Pmn/ WPC.29170/2005 7