IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 1262 of 2009()
1. THE DISTRICT COLLECTOR, CIVIL STATION,
... Petitioner
2. THE REVENUE DIVISIONAL OFFICER,
3. THE TAHSILDAR, KANAYANNUR TALUK,
Vs
1. V.K.SREEKUMARI KUNJAMMA, AGED 54 YEARS,
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.P.M.MOHAMMED SHIRAZ
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice B.P.RAY
The Hon'ble MR. Justice P.N.RAVINDRAN
Dated :21/12/2010
O R D E R
C.R.
C.N.RAMACHANDRAN NAIR,
BHABANI PRASAD RAY, &
P.N.RAVINDRAN, JJ.
....................................................................
Writ Appeal No.1262 of 2009
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Dated this the 21st day of December, 2010.
JUDGMENT
Ramachandran Nair, J.
The specific question referred to the Full Bench by a Division
Bench of this court is whether a building with two residential
apartments owned by the same person should be assessed as a single
building in his name as the owner or should be assessed as two
buildings treating each residential apartment as a separate building in
the name of the same owner. Considering the importance of the issue
and the divergent opinions expressed by different Benches of this
court, the Division Bench referred the matter for decision by Full
Bench. We have heard Government Pleader appearing for the
appellant and counsel appearing for the respondent.
2. The learned Single Judge referred to a Single Bench judgment
of this court in LALITHA VS. STATE OF KERALA reported in 1994
(2) KLT 66 and held that since there is no provision for clubbing plinth
W.A. 1262/2009 2
areas of different buildings under common ownership for the
assessment of building tax, the building involved which is a single
building with two residential apartments, cannot be assessed as one
building. The question has to be considered with reference to the
relevant provisions in the Kerala Building Tax Act, 1975 (hereinafter
called “the Act”) which are extracted hereunder:
S.2. Definitions:-
(e) “building” means a house, out-house, garage, or any
other structure, or part thereof, whether of masonry, bricks,
wood, metal or other material, but does not include any
portable shelter or any shed constructed principally of mud,
bamboos, leaves, grass or thatch or a latrine which is not
attached to the main structure.
Explanation 1:- In the case of buildings constructed for
providing housing accommodation for workers and their
families residing in plantations, in pursuance of Section 15 of
the Plantations Labour Act, 1951 (Central Act 69 of 1951) or
buildings constructed under the Government of India
Subsidised Housing Scheme for industrial workers, each part
of a building providing or intended to provide
accommodation for a worker or a worker and his family shall
be deemed to be a separate building.
Explanation 2:- Where a building consists of different
apartments or flats owned by different persons and the cost of
construction of the building was met by all such persons
jointly, each such apartment or flat shall be deemed to be a
separate building.
W.A. 1262/2009 3
(k) “plinth area” means the area included in the floor of
a building and where a building has more than one floor the
aggregate area included in all the floors together:
Provided that in the case of a building referred to in the
Explanation 2 to clause (e), the plinth area shall be calculated
separately.
S.5. Charge of building tax:- (1) Subject to the other
provisions contained in this Act, there shall be charged a tax
(hereinafter referred to as “building tax”) based on the plinth
area at the rate specified in the Schedule on every building
the construction of which is completed on or after the
appointed day.
S.7. Return of completion, etc., of building:- (1) The owner of
every building the construction of which is completed, or to
which major repair or improvement is made on or after the
appointed day shall furnish to the assessing authority a return
in the prescribed form within the prescribed period along with
a copy of the plan approved by the local authority or such
other authorities as may be specified by the Government in
this behalf and verified in the prescribed manner and
containing such particulars as may be prescribed.
S.9. Assessment:- (1) If the assessing authority is satisfied
that a return made by an owner under Section 7 or Section 8
is correct and complete, it shall assess the amount payable by
him as building tax or luxury tax on the basis of the return.”
What is clear from the above provisions is that the subject matter of
assessment is the building and the person to be assessed is the owner
and the basis of assessment is the plinth area of the building. The
W.A. 1262/2009 4
charging section makes it clear that the charge of tax is on the plinth
area of every building constructed after the appointed day. Section 7
makes it mandatory that the owner of every building the construction
of which or the major improvement to which is made on or after the
appointed day, shall furnish to the officer a return in the prescribed
form for the purpose of assessment. Section 9 says that if return is
correct and complete, the Assessing Officer shall complete assessment
based on return filed. What is clear from these provisions is that
assessment has to be completed for each and every building
constructed and for this purpose, the owner of the building should file
as many returns as the number of buildings he has constructed.
Therefore, separate building tax assessments have to be made in the
name of very same person for all the buildings constructed or repaired
by him which attract liability. Since the charging section specifically
speaks about levy of tax based on the plinth area of every building
constructed, separate assessment is called for in the name of the same
owner for the plinth area of every building constructed by him. In the
scheme under the Central Income Tax Act, charge of tax is on the total
W.A. 1262/2009 5
income of a person from all sources and under all heads which are
clubbed together for assessment. However, for the purpose of
assessment of building tax, there is no provision in the Act to make
only single assessment for every financial year in respect of plinth area
of all buildings constructed by a person. In the absence of any
provision in the Act authorising clubbing of plinth areas of different
buildings or common assessment in the hands of a single person for all
buildings constructed by him, there cannot be single building tax
assessment for all the buildings constructed by him. So much so, the
statutory scheme authorises separate assessment for each and every
building in the name of the same owner. In other words, same person
can be subject to separate assessment for building tax for each and
every building constructed by him. This proposition of course applies
to independent buildings constructed by a man. However, the question
to be considered is whether this principle laid down in the decision in
LALITHA VS. STATE OF KERALA referred above and followed by
the learned Single Judge applies for assessment of two flats or multi-
flat apartment building constructed and owned by the same person.
W.A. 1262/2009 6
3. The question above referred has to be answered with reference
to the definitions of “building” and “plinth area” which is the basis of
charge under the charging section. “Building” as defined under the
main clause (e) of Section 2 covers all buildings in the literal sense and
besides it, it includes every structure or part of a building. The plinth
area which is the basis of assessment under Section 2(k), takes in the
floor area of the building and where the building has more than one
floor, the aggregate area included in all the floors have to be taken
together. In other words, if a building owned by the person consists of
several floors, the same has to be assessed as a single unit and the
assessment has to be on the total plinth area of the building. Going by
the definition of “building” contained in Section 2(e) read with
definition of “plinth area” under Section 2(k) and the charging section,
Section 5, a multi-storied building or a building with different
residential or commercial apartments has to be assessed as a single unit
on the total plinth area which include the plinth area of all the floors of
the building. However, the assessment has to be necessarily in the
name of the owner or owners of the building, if it is jointly owned by
W.A. 1262/2009 7
several persons. Two exceptions are provided in the Act against single
assessment of multi-flat apartment, whether residential or commercial.
Explanation (1) of Section 2(e) deals with assessment of buildings
constructed for providing accommodation to workers and their families
residing in plantations and also buildings constructed under the
Government of India Subsidised Housing Scheme for industrial
workers. In the case of these buildings, each part of the building
providing or intended to provide accommodation for a worker or
family of a worker shall be deemed to be a separate building. In other
words, but for this exception, even though a building with several
residential units providing accommodation to different workers or
families of different workers is assessable as a single building under
the main clause Section 2(e), the fiction available under Explanation 1
of Section 2(e) provides for treatment of each such residential unit
within a building as a separate building for assessment. In other
words, but for this exception even apartment buildings, whether line
buildings or multi-storied buildings providing accommodation to
employees in plantations or industries, would have been assessed as a
W.A. 1262/2009 8
single building in the name of the owner-employer. The second
exception providing for separate assessment of different flats or
apartments in the same building are those buildings constructed by
several persons sharing the cost of construction and owning the
building as flats or apartments among themselves. Here again, the
exception provides for separate assessment of each flat or apartment of
a multi-flat or multi-apartment building in the name of each owner of
the flat or apartment. It is very common that several persons pool
their resources and construct buildings for commercial or residential
purposes and share the building each one taking separate flat or
apartment. By virtue of the provision contained in Explanation 2,
each and every apartment or flats comprised in the single building
constructed by sharing the cost of construction by the several owners
jointly shall be deemed to be separate buildings for assessment. If
the Explanation was not there in the statute, the building consisting of
different apartments or flats owned by several persons and constructed
by sharing the cost would have been assessed as a single building
under the main clause (e) in the joint names of all of them.
W.A. 1262/2009 9
4. What is clear from the above provision is that a building
irrespective of the number of flats or apartments contained therein,
should be assessed as a single unit and the exceptions are only those
stated in Explanations 1 and 2 stated above. A Division Bench of this
court in SHENOY REAL ESTATES (P) LTD. VS. TAHSILDAR
reported in 2004(1) KLT 133 held that sale of flats by a builder after
completion of construction of apartment building to different owners
will not justify separate assessment of each flat under Explanation (2)
to Section 2(e) of the Act. What is to be noted from this judgment is
that unless apartment building is constructed by the joint owners by
sharing the cost, each and every apartment cannot be assessed as a
separate building, no matter the building after construction was sold by
the owner to different persons. In this case different ownership for the
building happens after completion of construction of the building and,
the sale made thereafter to different owners is immaterial for the
purpose of assessment. In fact, the incidence of tax is on completion
of construction of the building and it is immaterial as to whether the
owner retains the building or transfers the same in full or in part or in
W.A. 1262/2009 10
pieces after completion of construction. Separate assessment of each
and every flat is called for only in respect of the constructions covered
by Explanations (1) and (2) of Section 2(e).
5. In the result and in view of our findings above, we hold that
the single building consisting of two separate flats constructed by the
respondent has to be assessed as a single building as the building does
not fall within the Explanation (1) or (2) of Section 2(e). We,
therefore, allow the appeal by vacating the judgment of the learned
Single Judge and by restoring the single assessment of the building
comprising of two residential units.
C.N.RAMACHANDRAN NAIR
Judge
BHABANI PRASAD RAY
Judge
P.N.RAVINDRAN
Judge
pms