Dismissed

V.S.Abdul Latheef, v. the Tahsildar

Kerala HC12 Oct 2023WP(C)/33329/2023

Case brief

AI extract

What is this about?

This writ petition challenged building and luxury tax notices aggregating 11 apartment areas. The High Court held the assessment correct as the petitioner was the owner of all 11, allowing aggregation. Supreme Court precedents were cited on purposive interpretation. The petition was dismissed, ordering parties to approach appellate authorities for factual disputes on flat sales.

What did the court decide?

Writ petition dismissed. Matter left open for filing appeal before appellate authority regarding disputed facts about the sale of one flat.

V.S.Abdul Latheef, Vs the Tahsildar — Property and Title | Kerala HC (2023)

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W.P.(C) No. 33329/2023

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH

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THURSDAY, THE 12^TH DAY OF OCTOBER 2023 / 20TH ASWINA, 1945

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WP(C) NO. 33329 OF 2023

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PETITIONER:

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V.S.ABDUL LATHEEF, AGED 68 YEARS S/O. VEZHAPILLIL SEYD MOHAMMED , MONIYAPPILLIL, VELIYATHUNADU KARA, KARUMALLUR VILLAGE, PARAVUR TALUK, ERNAKULAM DISTRICT, NOW RESIDING AT PERIYAR HOUSE, PERIYAR NAGAR - 17, PULINCHODE, THAIKKATTUKARA - , THAIKATTUKARA DESOM, ALUVA EAST VILLAGE, ALUVA TALUK, ERNAKULAM DISTRICT, PIN – 683 106. BY ADVS. R.RANJANIE R.LAKSHMI NARAYAN

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RESPONDENTS:

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1 THE TAHSILDAR, OFFICE OF THE TASILDAR, KANAYANNUR TALUK, PARK AVENUE, NEAR SUBHASH PARK, MARINE DRIVE, KOCHI - ., PIN – 682 011.

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2 THE REVENUE DIVISIONAL OFFICER. OFFICE OF THE REVENUE DIVISIONAL OFFICER,FIRST FLOOR, KB JACOB ROAD, FORT KOCHI, KOCHI -, PIN – 682 001.

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SMT. JASMINE M.M, GOVERNMENT PLEADER

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C) No. 33329/2023

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DINESH KUMAR SINGH, J.

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--------------------------------------------------------W.P.(C). No. 33329 of 2023

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Dated this the 12^th day of October, 2023.

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JUDGMENT

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The present writ petition has been filed impugning Exhibits P7 and P8 demand notices for building tax and luxury tax in respect of 11 apartments owned by the petitioner in a residential complex by name ‘Tulsi Nest’ situated at old survey No. 685/3A of the Vattekunnamkara, Thrikkakkara North Village. The petitioner, the owner of the land, entered into an agreement with Tulsi Developers India Pvt. Ltd. As per the said agreement, 65% of the share of the building, land and parking area belongs to the Company and 35% with the petitioner. The building was constructed as an apartment complex by name 'Tulsi Nest'' with 11 floors i.e., basement + ground + 9 floors in the name of Tulsi Nest consisting of 36 residential apartments, car parking, common areas and common facilities and a super built up area of 3865.24 sq. meters. After the building got constructed, 11 apartments came to the share of the petitioner. Thereafter, the petitioner was issued with Exhibit P6 notice by the assessing authority. In response to the said notice, the petitioner had submitted a reply with supporting documents and admitted the ownership of 11 flats.

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Though the petitioner submitted the joint venture agreement relating to the builder, Tulsi Developers India Pvt. Ltd., and the documents in support of their claim seeking the benefit of Explanation to Section 2(e) of the Kerala Building Tax Act, he did not submit documents pertaining to 11 flats under his ownership. By Exhibit P6 notice, the petitioner was directed to produce documents within two weeks of receipt of the letter, failing which it was said that as per the Kerala Building Tax Act, assessment would be completed in the petitioner’s name.

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According to the petitioner, he had submitted all relevant documents as demanded vide Exhibit P6 demand notice. The assessing authority, vide Exhibit P7 order, considered the area of the building as 1162 sq. meters and assessed the building tax accordingly for Rs.3,40,515/- with Cess of Rs.6810/-. Similarly, the luxury tax was also assessed taking into account the plinth area of the building as 1162 sq. meters, for which demand has been made in Exhibit P9.

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The learned counsel for the petitioner submits that the petitioner had sold one flat and only 10 flats are now in the possession of the petitioner. From the pleadings in the writ petition, it is not known when the petitioner had sold one flat and whether the flat was sold before or after the occupancy certificate

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was issued.

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As per the petitioner’s own admission, he was the owner of 11 flats. When the notice was issued to him for the purpose of filing returns for assessing the building tax, the petitioner did not dispute that the total area of 11 flats would come to 1162 sq. meters. As there was no dispute about the facts, the assessing authority would not be required to pass a detailed order.

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The Supreme Court in the decision reported in State of Kerala and Others v. A.P. Mammikuty [2015 (3) KHC 794 (SC), has considered the scope of explanation II to Section 2(e) of the Kerala Building Tax Act, 1975. Paragraphs 14 to 17 are relevant to the context and they read thus:

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“14. In this context, it is imperative to analyse what is meant by "residential building". The definition in Clause 2(1), 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 Section 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 Section 5A does not refer to aggregate plinth area

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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 Section 5A of the Act. It also becomes further clear when the definition of "plinth area" in Section 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, Section 2 (k) has an insegragable nexus with the definition of "building". Explanation II to Section 2(e) which defines "residential building" only conveys about the building meant for residential purpose and what it includes. Section 5A is the charging Section and as has been stated earlier, it commences with a nonobstante 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. Section 2 (k) defines "plinth area" of the building. Section 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 Section 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

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noted, the proviso to Section 2 (k) clearly stipulates that if a building as referred falls under Explanation II to Section 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 Section 5A which starts with a non-obstante clause. Section 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 multistoried 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 Section 2 (k) and Section 5A of the Act. The intention of the legislature as gatherable is that ownership of different flats and the cost of construction of buildings 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

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an investment before the commencement of the 13-10-2023 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.

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In our considered opinion, the principle of purposive interpretation of the provision has to be adopted and when such a construction is placed, it serves the legislative intent. To elaborate, a person may have a three-storied building and he owns it, then there has to be different computation as per the main part of Section 2 (k) and for that it has to be calculated as is done by the revenue authority. Once he ceases to be the owner, he will not be liable to pay the luxury tax. But as long as he continues to be the owner, as per Section 5A, he will be liable to pay the luxury tax for all floors/apartments subject to the cap provided under Section 5A of the Act. In this context we may refer to the decision in State of T.N. v. Kodaikanal Motor Union (P) Ltd. [(1989) 3 SCC 91] wherein this Court, after referring to K.P. Varghese v. ITO [(1981) 4 SCC 172 : 1981 SCC (Tax) 293] and Luke v. IRC [(1964) 54 ITR 692 : 1963 AC 557 (HL)], observed thus:

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“The courts must always seek to find out the intention of the legislature. Though the courts must find out the intention of the statute from the language used, but language more often than not is an imperfect instrument of expression of human thought. As Lord Denning said it would be idle to expect every statutory provision to be drafted with divine prescience and perfect clarity. As Judge Learned Hand said, we must not make a fortress out of dictionary but remember that statutes must have some purpose or object, whose imaginative discovery is judicial craftsmanship. We need not

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always cling to literalness and should seek to endeavour to avoid an unjust or absurd result. We should not make a mockery of legislation. To make sense out of an unhappily worded provision, where the purpose is apparent to the judicial eye 'some' violence to language is permissible.”

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In Keshavji Ravji and Co. v. CIT [ (1990) 2 SCC 231] it has been held by this Court that when in a taxation statute where literal interpretation leads to a result that does not sub-serve the object of the legislation another construction in consonance with the object can be adopted.

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In the case at hand, as is noticeable, the learned Single Judge had remanded the matter to the revenue authority and the Division Bench has declined to interfere. The Division Bench has applied the functional unit test. We do not accept the same. The learned Single Judge, as we have reproduced a paragraph hereinbefore, has opined that when the plinth area of any residential apartment is above 278.7 sq. mts., then the authority can demand luxury tax for such apartment or flat. Be it noted, the learned Single Judge has held that even if the person is the owner of the entire building the computation would be apartment-wise. The said analysis is also incorrect. We have given purposive interpretation to Explanation II as it has to be read with Section 5A of the Act. When the owner parts with the building each apartment will be segregable for the purpose of luxury tax. If he remains the owner for the whole or part then he will be liable to pay for the plinth area in respect of the flats or apartments that is retained by him subject to the cap as envisaged Under Section 5A of the Act. If he sells away the entire building then it has to be flat/apartmentwise calculation/computation, for every apartment owner is different than the others. Thus, the plinth area would be different. 13-10-2023 (Page 7 of 8) www.manupatra.com The High Court of

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kerala. To clarify further, if a singular person purchases three flats, he will be liable on the basis of aggregate plinth area subject to the cap envisaged Under Section 5A of the Act."

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Thus, considering Section 5A r/w Section 2 and Explanation II to

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Section 2(e), what is relevant is the ownership of the apartment(s)/building. If a person is the owner of more than one apartment in a building or compound, then the area of all the apartments is to be taken together for the purpose of levying building tax and luxury tax. In my considered opinion, that is what has been done by the assessing authority in the instant case. The assessing authority has taken together the area of 11 flats under the ownership of the petitioner to assess and levy building tax and luxury tax.

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The issue as to whether the petitioner has sold one flat before or after the occupancy certificate was issued, is a question of fact and it cannot be decided in a writ petition filed under Article 226 of the Constitution of India. If the fact that one flat has been sold by the petitioner is not considered while levying the building tax and luxury tax, the petitioner may file an appeal before the appellate authority to that extent. I do not find any error of law or facts committed by the assessing authority while assessing the tax by taking 11 flats together for the purpose of levying building tax

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and the luxury tax.

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In the result, writ petition fails and accordingly, it is

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dismissed.

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sd/- DINESH KUMAR SINGH, JUDGE.

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APPENDIX OF WP(C) 33329/2023

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PETITIONER’S EXHIBITS:

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Exhibit P1	THE TRUE COPY OF THE SALE DEED DATED 26.8.93 OF SRO EDAPPALLY, IN FAVOUR OF THE PETITIONER,
Exhibit P2	THE TRUE COPY OF THE SAID RELEASE DEED NO. 3274 DATED 27.7.2022
Exhibit P3	TRUE COPY OF THE MEMORANDUM OF UNDERSTANDING DATED 10.3.2016, EXECUTED BY THE PETITIONER
Exhibit P4	THE TRUE COPY OF THE AGREEMENT DATED 5.8.2016 EXECUTED BY THE PETITIONER,
Exhibit P5	THE TRUE COPY OF THE PROPERTY TAX RECEIPTS ISSUED BY THE KALAMASSERY MUNICIPALITY IN FAVOUR OF THE PETITIONER,
Exhibit P6	THE TRUE COPY OF THE NOTICE DATED 25.5.2023,
Exhibit P7	THE TRUE COPY OF THE PROCEEDINGS DATED 1.9.2023 BEARING NO.B3-11492/22, ISSUED BY THE FIRST RESPONDENT
Exhibit P8	THE TRUE COPY OF THE DEMAND NOTICE DATED 1.9.2023,ISSUED BY THE 1 ST RESPONDENT TO THE PETITIONER REQUIRING PAYMENT OF RS.3,40,515/- IN THE MANNER PRESCRIBED THEREIN,
Exhibit P9	THE TRUE COPY OF THE PROCEEDINGS DATED 1.9.2023 BEARING NO.B3-11492/22, ISSUED BY THE FIRST RESPONDENT, IMPOSING LUXURY TAX,

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RESPONDENTS’ EXHIBITS: NIL

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True Copy

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PS To Judge.

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V.S.Abdul Latheef, v. the Tahsildar

Case brief

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V.S.Abdul Latheef, v. the Tahsildar

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