High Court of KeralaSingle Judge2020-03-17Petition disposed of with directions.

St. Thomas Church, Aranattukara, Thrissur v. State of Kerala and Others

Case / Petition Number:WP(C) No.16727/2015 (M)

Neutral Citation:/

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: N. Nagareesh
Judgment Date: 2020-03-17
Court Decision / Holding: (i) Ext.P11 order of the Appellate Tribunal and the assessment orders Exts.P15 to P17 are set aside. (ii) The third respondent Assessing Authority is directed to reconsider the issue of exigibility of the petitioner Parish Hall to luxury tax, in light of the law laid down by Sree Narayana Dharma Samajam v. Commercial Tax Officer & others [(2015) 23 KTR 593 (Ker.)], after giving the petitioner an opportunity of hearing. (iii) A decision in this regard shall be taken within three months.
Final Disposition: Petition disposed of with directions.

Parties to the Case

Appellants / Petitioners

St. Thomas Church, Aranattukara, Thrissur 680618 represented by its Vicar, Rev. Fr. Joseph Anthikat

Respondents

State of Kerala, represented by its Secretary, Taxes Department, Secretariat, Thiruvananthapuram-695001
The Assistant Secretary, Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Nurani, Palakkad-678004
The Commercial Tax Officer (Luxury Tax), Commercial Tax Complex, Poothole P.O., Thrissur-680004
The Deputy Tahsildar (R.R.), Office of the Tahsildar (R.R.), Palace Road, Thrissur-680022

Legal Representation & Advocates

Counsels for Petitioners

• SRI.M.GOPIKRISHNAN NAMBIAR
• SRI.P.BENNY THOMAS
• SRI.K.JOHN MATHAI
• SRI.JOSON MANAVALAN
• SRI.JENSON FRANCIS PAYANKAN
• SRI.KURYAN THOMAS

Counsels for Respondents

• SR.G.P.(TAXES) SRI. C.K. GOVINDAN

Case Synopsis & Summary

St. Thomas Church, a Roman Catholic parish at Aranattukara, Thrissur, challenged penalties under the Kerala Tax on Luxuries Act, 1976 for luxury tax on its parish hall for the years 2008-09, 2009-10, and 2010-11. The parish hall is used for catechism, church functions, marriages, and other parish activities, and lies on the church premises with the main church on one side of a road and associated facilities (parish hall, cemetery, parish hall, school) on the other. The Commercial Tax Officer invoked Section 17A to impose penalties equal to double the evaded tax. Appeals followed: the Deputy Commissioner (Appeals) allowed the challenge, but the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal remitted the matter for fresh disposal, directing verification of books and to consider whether any amount is received under Section 4(1) of the Luxury Tax Act. The Tribunal noted the auditorium is located outside the place of worship and separated by a road, which led to reliance on a prior judgment that parish hall and auditorium can be part of the place of worship. The High Court disposed of the petition by (i) setting aside the Tribunal’s order and assessment orders, (ii) directing the Assessing Authority to reconsider the parish hall’s exigibility in light of the Sree Narayana Dharma Samajam ruling, with hearing, within three months.

Provisions of Law Cited

Kerala Tax on Luxuries Act, 1976, Section 17AKerala Tax on Luxuries Act, 1976, Section 4(1)Kerala Revenue Recovery Act, Section 7Kerala Revenue Recovery Act, Section 34

Legal Doctrines & Maxims

Inseparably connected with the activities of a place of worship; if a parish hall or auditorium is part of the place of worship, its exigibility to luxury tax requires a threshold inquiry into its inseparability and use in religious functions.

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the parish hall and related parish facilities are integrally connected with the place of worship and are used for religious activities including catechism, weddings, and other rites. It argues that the auditorium’s location and use do not sever its connection to worship and that any tax liability should be determined only after an inquiry into inseparability and the nature of use, as emphasized in the Court’s earlier ruling in Sree Narayana Dharma Samajam. It seeks quashing of the penalties and restoration of the appellate order, with a remand for consideration consistent with the controlling doctrine.

Contentions of Respondents

The department argues that the parish hall can be a separate taxable entity depending on its use and connection to the place of worship. It defends the Tribunal’s and Assessing Authority’s approach to verify accounts and assess Section 4(1) receipts, maintaining that the law permits taxation of facilities not inseparably connected with worship. It relies on the existing statutory framework and the Tribunal’s order to proceed with fresh disposal after factual verification.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Sree Narayana Dharma Samajam v. Commercial Tax Officer & others	[(2015) 23 KTR 593 (Ker.)]	Positive	The Court treats this decision as controlling authority for evaluating whether parish halls/auditoriums are inseparably connected with the place of worship and thus exempt from luxury tax; it applies the principle to require a focused enquiry before taxation.

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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 N.NAGARESH** ## **TUESDAY, THE 17TH DAY OF MARCH 2020 / 27TH PHALGUNA, 1941** ## **WP(C).No.16727 OF 2015(M)** ## **PETITIONER:** **ST.THOMAS CHURCH, ARANATTUKARA, THRISSUR 680 618, REPRESENTED BY ITS VICAR, REV.FR.JOSEPH ANTHIKAT.** **BY ADVS.** **SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.JENSON FRANCIS PAYANKAN SRI.KURYAN THOMAS** ## **RESPONDENTS:** **1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY,TAXES DEPARTMENT, SECRETARIAT,THIRUVANANTHAPURAM-695 001. 2 THE ASSISTANT SECRETARY, KERALA AGRICULTURAL INCOME TAX AND SALE TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,NURANI,PALAKKAD-678 004. 3 THE COMMERCIAL TAX OFFICER(LUXURY TAX), COMMERCIAL TAX COMPLEX,POOTHOLE P.O., THRISSUR-680 004. 4 THE DEPUTY TAHSILDARR(R.R), OFFICE OF THE TAHSILDAR(R.R.), PALACE ROAD,THRISSUR-680 022. BY SR.G.P.(TAXES) SRI. C.K. GOVINDAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17.03.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C)No. 16727/2015 2 ## **JUDGMENT** The petitioner is a Roman Catholic Church situated at Aranattukara in Thrissur District. The present Church was constructed in the year 1964. Prior thereto, there were two Churches on either side of the Aranattukara-Vadukkara Road both belonging to the Roman Catholic Congregation. Subsequently, both Churches were united and the present Church was constructed in the year 1964 at the instance of the Eparchial Bishop. The premises of the Church is situated on either side of Aranattukara-Vadukkara Road. The main Church was built on the western side of the road and chapel, cemetery, parish hall and school building were constructed on the eastern side of the road. 2. The petitioner concedes that the parish hall is being used for conducting catechism classes, functions associated with the Church, to accommodate the parishioners at necessary times and for holding marriage functions of the parishioners. WP(C)No. 16727/2015 3 3. The Commercial Tax Officer (Luxury Tax), invoking Section 17 A of Kerala Tax on Luxuries Act, 1976 imposed a penalty on the petitioner amounting to `3,23,000/- for the year 2008-'09 being double the amount of tax evaded in respect of Luxury Tax in respect of the parish hall. Identical orders were passed as per Exts.P4 and P5 in respect of the years 2009-'10 and 2010-'11. 4. Aggrieved by Exts.P3 to P5 orders imposing penalty, the petitioner filed appeals. The Appellate Authority, namely the Deputy Commissioner (Appeals)-I, Kottayam set aside the penalty imposed as per Ext.P6. 5. Against Ext.P6 order, the Department filed appeal before the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal. The Appellate Tribunal set aside the order of the Deputy Commissioner and the penalty order of the Assessing Authority, and remitted back the issued to the Assessing Authority for fresh disposal in accordance with law. The Assessing Authority was directed to verify the WP(C)No. 16727/2015 4 books of accounts and verify whether any amount is received on account of Section 4(1) of the Luxury Tax Act, 1976. While remitting the matter, the Tribunal found that the auditorium of the petitioner – Church is located outside the place of worship and the Church and the Auditorium are separated by a P.W.D. Road. On that premises, the Tribunal found justification in the decision taken by the Assessing Authority. The Tribunal made it clear that the Assessing Authority is at liberty to proceed against the petitioner as per rule. 6. When the writ petition was taken up for hearing today, the counsel on either side submitted that the issue as to exigibility of a Parish Hall to luxury tax is covered by a judgment of this Court in **Sree Narayana Dharma Samajam v. Commercial Tax Officer and others** reported in [(2015) 23 KTR 593]. In the said judgment, the Division Bench of this Court found that since Parish Hall and Auditorium are being part of place of worship, authorities WP(C)No. 16727/2015 5 have to consider whether the auditorium is inseparably connected with activities of the place of worship and whether it is being used for conducting rituals related to the place of worship. Any assessment should precede such enquiry by the authorities. The law laid down by the Division Bench of this Court in the judgment in **Sree Narayana Dharma Samajam** (supra) would squarely apply to the facts of this case also. 7. In the circumstances, this writ petition is disposed of with the following orders/directions: - (i) Ext.P11 order of the Appellate Tribunal and the assessment orders Exts.P15 to P17 are set aside. - (ii) The third respondent Assessing Authority is directed to reconsider the issue of exigibility of the petitioner Parish Hall to luxury tax, in the light of the law laid down by this Court in S **ree Narayana Dharma Samajam v. Commercial** WP(C)No. 16727/2015 6 **Tax Officer & others** [(2015) 23 KTR 593 (Ker.]. (iii) A decision in this regard shall be taken within a period of three months, after giving an opportunity of hearing to the petitioner. Sd/- **N. NAGARESH JUDGE** ncd WP(C)No. 16727/2015 7 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** - **EXHIBIT P1 TRUE COPY OF THE LOCATION MAP OF THE PROPERTY OF THE CHURCH, PREPARED BY THE VILLAGE OFFICER, ARANATTUKARA.** - **EXHIBIT P2 PHOTOGRAPHS OF THE PROPERTY OF THE PETITIONER** - **EXHIBIT P3 TRUE COPY OF THE ORDER DATED 6/7/2010 PASSED BY THE 3RD RESPONDNT FOR THE YEAR 2008-09.** - **EXHIBIT P4 TRUE COPY OF THE ORDER DATED 6/7/2010 PASSED BY THE 3RD RESPONDNT FOR THE YEAR 2009-10.** - **EXHIBIT P5 TRUE COPY OF THE ORDER DATED 6/7/2010 PASSED BY THE 3RD RESPONDNT FOR THE YEAR 2010-11..** - **EXHIBIT P6** - **TRUE COPY OF THE ORDER DATED 6/7/2010 PASSED BY THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM IN APEAL NOS.LT 88, 89 & 90/2010.** - **EXHIBIT P7 TRUE COPY OF THE APPEAL DATED 4/4/2012 FILED BY THE DEPARTMENT BEFORE THE 2ND RESPONDENT APPELLATE TRIBUNAL FOR THE YEAR 2008-09.** - **EXHIBIT P8 TRUE COPY OF THE APPEAL DATED 4/4/2012 FILED BY THE DEPARTMENT BEFORE THE 2ND RESPONDENT APPELLATE TRIBUNAL FOR THE YEAR 2009-10.** **EXHIBIT P9 TRUE COPY OF THE APPEAL DATED 4/4/2012 FILED BY THE DEPARTMENT BEFORE THE 2ND RESPONDENT APPELLATE TRIBUNAL FOR THE YEAR 2010-11.** WP(C)No. 16727/2015 8 - **EXHIBIT P10** - **TRUE COPY OF THE OBJECTION DATED 15/5/2012 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT** - **EXHIBIT P11** - **TRUE COPY OF THE COMMON ORDER DATED 26/7/2012 PASSED BY THE APPELLATE TRIBUNAL IN TRIBUNAL APPEAL NOS.13, 14 & 15 OF 2012.** - **EXHIBIT P12 TRUE COPY OF THE REPRESENTATION DATED 19/11/2012 FILED BY THE PETITIONER BEFORE THE HON'BLE MINISTER FOR FINANCE, GOVERNMENT OF KERALA.** - **EXHIBIT P13 TRUE COPY OF THE COMMUNICATION DATED 21/1/2012 FILED BY THE SECRETARY TO GOVERNMENT, TAXES (B) DEPARTMENT, THIRUVANANTHAPURAM TO THE COMMISSIONER OF COMMERCIAL TAXES** - **EXHIBIT P14 TRUE COPY OF THE REPLY DATED 19/3/2013 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT** - **EXHIBIT P15 TRUE COPY OF THE ASSESSMENT ORDER DATED 21/2/2015 PASSED BY THE 3RD RESPONDENT FOR THE YEAR 2008-09.** - **EXHIBIT P16 TRUE COPY OF THE ASSESSMENT ORDER DATED 21/2/2015 PASSED BY THE 3RD RESPONDENT FOR THE YEAR 2009-10.** - **EXHIBIT P17 TRUE COPY OF THE ASSESSMENT ORDER DATED 21/2/2015 PASSED BY THE 3RD RESPONDENT FOR THE YEAR 2010-11.** - **EXHIBIT P18 TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE KERALA REVENUE RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2008-09.** - **EXHIBIT P19** - **TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 34 OF THE KERALA REVENUE** WP(C)No. 16727/2015 9 **RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2008-09.** - **EXHIBIT P20 TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE KERALA REVENUE RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2009-10.** - **EXHIBIT P21 TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 34 OF THE KERALA REVENUE RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2009-10.** - **EXHIBIT P22 TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE KERALA REVENUE RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2010-11.** - **EXHIBIT P23 TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 34 OF THE KERALA REVENUE RECOVERY ACT DATED 4/5/2015 ISSUED BY THE 4TH RESPONDENT FOR THE YEAR 2010-11.** - **EXHIBIT P24 TRUE COPY OF THE RECEIPT NO.12 DATED 14/3/2011.** - **EXHIBIT P25 TRUE COPY OF THE RECEIPT NO.13 DATED 14/3/2011.** - **EXHIBIT P26 TRUE COPY OF THE RECEIPT NO.14 DATED 14/3/2011.** - **EXHIBIT P27 TRUE COPY OF THE RECEIPT NO.15 DATED 14/3/2011.** **EXHIBIT P28 TRUE COPY OF THE RECEIPT NO.16 DATED 14/3/2011.**