V.K. Joseph v. District Collector, Ernakulam; Tahsildar, Kanayanoor Taluk, Ernakulam; Village Officer, Ernakulam Village Office, Park Avenue Road, Kochi

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 19TH DAY OF JULY 2016/28TH ASHADHA, 1938 WP(C).No. 14875 of 2016 (H) ---------------------------- PETITIONER : ----------------------- V.K.JOSEPH S/O.K.KUNJUMMEN, AGED 67 YEARS, FLAT NO.4, MANSION KHARISMA, PANAMPALLY NAGAR, KOCHI-682 036. BY ADVS.SRI.R.SANJITH SMT.C.S.SINDHU KRISHNAH SMT.LEKSHMI RAMAKRISHNAN RESPONDENTS : ------------------------- ## 1. DISTRICT COLLECTOR COLLECTORATE, ERNAKULAM. ## 2. THE TAHSILDAR KANAYANOOR TALUK, ERNAKULAM. ## 3. THE VILLAGE OFFICER ERNAKULAM VILLAGE OFFICE, PARK AVENUE ROAD, KOCHI-11. R BY GOVERNMENT PLEADER SMT.LILLY K.T. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19-07-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 14875 of 2016 (H) ---------------------------- ## APPENDIX PETITIONER(S)' EXHIBITS -------------------------------------- EXT.P1 TRUE COPIES OF THE REPRESENTATION DATED 31.3.2016 SEEKING WITHDRAWAL OF DEMAND NOTICE ALONG WITH POSTAL RECEIPT. EXT.P2 TRUE COPY OF THE NOTICE DATED 24.1.2015. EXT.P3 TRUE COPY OF THE NOTICE BEARING NO.B3:2157/06 DATED 24.4.2006. EXT.P4 TRUE COPY OF THE TAX PAID RECEIPTS FOR THE PERIOD 2004-05 TO 2009-10 ASSESSMENT YEARS. RESPONDENT(S)' EXHIBITS : NIL --------------------------------------- /TRUE COPY/ P.A TO JUDGE AV **A.M.SHAFFIQUE, J. ------------------------------------** W.P.(C).No.14875 of 2016 **-----------------------------------** Dated this the 19[th] day of July, 2016 ## **J U D G M E N T** The petitioner challenges Ext.P2 notice issued by the Village Officer calling upon the petitioner to pay an amount of 16,000/-₹ being luxury tax at the rate of 4,000/- from 2010 onwards. ₹ 2. According to the petitioner, the building was assessed to payment of building tax under the Kerala Building Tax Act, 1975 for an amount of 1,52,100/- as per order dated 24.04.2006. The₹ petitioner remitted the said amount. The total area of the building was 1219.39 sq.metres. It is also stated that the petitioner was paying luxury tax up to 2010 as evident from Ext.P4 series. In the meantime, petitioner had assigned the right in respect of the apartments to several persons and a representation to that effect was submitted to the Village Officer indicating the sale of apartments to various persons and the area of the property in question. It is stated that even without considering Ext.P1, further demands are being made and left with no other remedy, the petitioner has approached this Court. 3. On the basis of available records, the learned Government Pleader argued that if the petitioner seeks for any further concession regarding the liability to pay luxury tax, it is for the petitioner to approach the assessing authority under the Building W.P.(C).No.14875 of 2016 2 Tax Act, 1975 and take up the matter after producing necessary materials in order to indicate that subsequent to the assessment of tax, the apartments had been conveyed to different persons. Insofar as such an option had not been utilised by the petitioner, the demand is perfectly justified. 4. The law in this regard is well settled by the judgment of the Apex Court in _**State of Kerala v. Mammikutty [2015 (3) KLT 138 (SC)]**_ wherein it is held as follows : _“14. In this context, it is imperative to analyse what is meant by “residential building”. The definition in clause 2 (l), means a building or any other structure or part thereof used for residential purpose and house or out-house or garage appurtenant to a building for more beneficial enjoyment. It excludes hotels, boarding places, lodges and the like. Thus, the expression “residential building” cannot be interpreted without reference to the term “building” and Explanation II to S.2(e) of the Act. Therefore, each residential building owned by single owner would be subjected to luxury tax, if it has the plinth area which exceeds 278.7 sq.mts. It makes no difference whether the residential building consists of one floor or it is two-storied or three-storied or consists of multiple flats or apartments. The entire plinth area in the residential building owned by a singular owner is required to be aggregated. It is noticeable that S.5A does not refer to aggregate plinth area of all the floors. The intention of the legislature is apparent that if a person is the owner of the plinth area of 278.7 sq.mts or more in one building, even if it consists of separate or distinct apartments, he would be liable to pay the luxury tax under S.5A of the Act. It_ W.P.(C).No.14875 of 2016 3 _also becomes further clear when the definition of “plinth area” in S.2(k) is properly appreciated. It clearly postulates that “plinth area” means the area included in the floor of the building and where building has more than one floor aggregate area included in all the floors are taken together. The proviso to the said definition lays down that in case of a building referred to in the Explanation II to clause (e), the “plinth area” shall be calculated separately. Thus, S.2(k) has an insegragable nexus with the definition of “building”. Explanation II to S.2(e) which defines “residential building” only conveys about the building meant for residential purpose and what it includes. S.5A is the charging Section and as has been stated earlier, it commences with a non-obstante clause. It determines the annual luxury tax on all residential buildings having a plinth area of 278.7 sq. mts. or more. It provides a date for completion that is 1st April 1999. Though, it does not provide for aggregate it refers to residential building definition of which refers to a building. S.2(k) defines “plinth area” of the building. S.5A also includes “plinth area”. Though the term “aggregate” is not mentioned but the words therein are buildings having plinth area and in that context one is required to scan and analyse the meaning of the term “building” and the “plinth area” as defined under S.2(e) and 2(k) respectively. “Plinth area” as defined clearly provides that when one building has more than one floor, the aggregate area includes all the floors. To give an example, a building consisting of four storeys belongs to a single owner, the aggregate of all the floors are to be included for calculation of the plinth area and thereby the computation of the luxury tax has to be determined as provided under Section 5A. Be it noted, the proviso to S.2_ W.P.(C).No.14875 of 2016 4 _(k) clearly stipulates that if a building as referred falls under Explanation II to S.2(e), the plinth area shall be calculated separately. The Explanation II refers to different apartments or flats owned by different persons. It also states that the cost of the construction of the building is to be met by all such persons jointly. This Explanation, as noted before, is required to be appositely understood. The learned counsel for the State would submit that if there is initial booking and the persons have contributed for the construction definitely there shall be separate computation. The Explanation II has to be read with S.5A which starts with a non obstante clause. S.5A as has been mentioned before refers to “residential building” having plinth area 278.7 sq. mts. or more and, therefore, the said provision also takes note of this definition. In view of the above, the contention advanced by the learned counsel for the State is difficult to accept. The definitions have to be given a proper construction. There can be a case where the owner erects a multi-storied building consisting 10 floors. He builds it at his own cost and thereafter he sells the apartments or flats to 10 persons and in that event he ceases to be the owner of the building. The 10 purchasers become the owners of flats and in such a situation it will lead to an absurdity because one single person who once owned the entire building or several apartments, though has ceased to be the owner in law yet is asked to pay the luxury tax solely on the ground that at the time of construction there was no contribution by the purchasers or to put it differently there had been no prior booking. This is not the intention. The Explanation II to Section 2(e) has to be read harmoniously with proviso to S.2(k) and S.5A of the Act. The intention of the legislature as gatherable is that_ W.P.(C).No.14875 of 2016 5 _ownership of different flats and the cost of construction of building are met by all such persons. The meeting of the cost jointly is not to be narrowly construed to mean that there has to be an investment before the commencement of the construction of the building. The persons who purchase afterwards they really share the value of the construction cost apart from the profit margin due to the builder or the seller. Unless such an interpretation is placed, the original owner of flats when he ceases to be the owner of the building or the purchaser of a small apartment less then 278.7 square meters would still be liable to pay luxury tax. Such an interpretation would lead to absurdity.”_ 5. Insofar as luxury tax in terms of Section 5(a) is recurring tax, the liability to pay arises only if the owner continues to be having ownership of the properties. Once the building or part of it is sold, the liability to pay luxury tax will depend upon the area of property which is being held by the respective owners. Under such circumstances, the question to be considered is whether the petitioner had conveyed the property as envisaged under law. The petitioner has a case that the building consisted of several apartments and it had been sold in favour of eight persons and petitioner is presently having possession of only 133.69 sq.metres. This is a matter to be considered by the competent authority in accordance with law. In the result, this writ petition is disposed of as under : 1. The petitioner shall file necessary application before W.P.(C).No.14875 of 2016 6 the assessing authority under the Building Tax Act, 1975 by submitting a proper representation producing all necessary materials and claiming that there is no liability to pay luxury tax in terms of Section 5(a) within a period of four weeks from the date of receipt of a copy of this judgment. 2. On receipt of the said particulars, the assessing authority shall consider the same and pass appropriate orders in the light of the judgment of the Apex Court in _**State of Kerala v. Mammikutty**_ (supra). 3. Until final orders are passed, any demand for luxury tax shall be kept in abeyance. Sd/- ## **A.M.SHAFFIQUE, JUDGE.** AV