2005 Supreme(SC) 284

2005(2) Supreme 768
Supreme Court of India
(From Kerala High Court)
Mrs. Ruma Pal & C.K. Thakker, JJ.
M. Ahammedkutty Haji —Appellant
versus
Tahsildar, Kozhikode Kerala and Ors. —Respondents
Civil Appeal No. 1307 of 2005
(Arising out of S.L.P. (C) No. 6675 of 2004)
Decided on 18-2-2005
Counsel for the Parties :
For the Appellant : S.N. Bhat, Advocate.
For the Respondents : K.R. Sasiprabhu, Advocate.­

Important point
For assessment of the building tax under the Kerala Building Tax Act, when the case relates to a new building and as the ­local authority had not determined the capital value u/s 6(1) of the Act, the assessing autho­rity could not have exercised the power u/s 6(3) of the Act, therefore, it was open to the said authority to exercise the power of rectification of mistake u/s 15(1) of the Act on the basis of determination of capital value by the local authority.

Headnote:Kerala Building Tax Act, 1975—Sections 5, 6(3), 15 and 16—Assessment of building tax—Determination of capital value—Building was completed in 1987—Capital value exceeded Rs. 20,000/- —Applicability of the Act—Appellant had constructed a Shopping Complex in Kozhikode Corporation in year 1987—Appellant filed return under the Act for assessment of building tax for the said building—Assessing authority quantified capital value at Rs. 12,32,820/- and determined building tax payable by appellant at Rs. 97,032/- —Subsequently, the local authority fixed capital value of the building at Rs. 42,84,000/- and annual value at Rs. 4,28,400/- —Proceedings initiated u/s 15(1) of the Act by the assessing authority for rectification of mistake in the assessment order—Appellant was asked to pay Rs. 4,02,150/- as building tax on the basis of valuation fixed by the local authority—Whether assessing authority was justified in invoking Section 15 of the Act and in exercising power of rectification of mistake apparent on the record—(Yes)—Since the case relates to a new building and as the local authority had not determined the capital value in assessment books of the local authority, assessing authority could not have exercised the power u/s 6(3) of the Act.

       Held : To us, it is clear that the action of the local authority as also of the assessing authority was legal, valid and within the powers conferred on them by the statute. Whereas Section 5 is charging section, Section 6 deals with determination of capital value. It is not in dispute that the building was completed in 1987 and the capital value exceeded Rs. 20,000/- and hence the provisions of the Act would apply to the said building. For determining the capital value, it is the local authority within whose area the building is situate to fix annual value of the building under sub-section (1) of Section 6 of the Act. Sub-section (2) of the said Section enacts that notwithstanding anything contained in sub-section (1), if the assessing authority is of the opinion that the annual value fixed for the building in the assessment books of the local authority is too low, it may fix annual value of the building after affording opportunity to the person or persons affected thereby. Sub-section (3) of Section 6, in our opinion, would apply only to those cases where the local authority has not fixed the annual value of the building in any case falling under sub-section (2), sub-section (3) or sub-section (4) of Section 5 within a period of six months after the completion of repair, improvement, construction, addition or combination as the case may be. A conjoint reading of sub-sections (2), (3) and (4) of Section 5 and sub-section (3) of Section 6 makes it clear that power of assessing authority is limited to the cases of repair, improvement, construction, additions or combination of a building already in existence and it does not extend to a totally new building or a building constructed for the first time and to which the Act applies. In our view, the submission of the respondents is well founded that in cases of newly constructed buildings, the assessing authority cannot exercise power under sub-section (3) of Section 6 of the Act and hence, the order passed by the assessing authority i.e. Tehsildar, Kozhikode on 15th February, 1988 was wholly without jurisdiction. If it is so, rectification of mistake by the assessing authority in exercise of power under Section 15 of the Act on the basis of the action of the local authority under sub-section (1) of Section 6 of the Act would be legal and lawful (Para 13)

       Since the case relates to a new building and as the local authority (Kozhikode Corporation) had not determined the capital value in the assessment books of the local authority under sub-section (1) of Section 6 of the Act, the assessing authority (Tehsildar, Kozhikode) could not have exercised the power under sub-section (3) of Section 6 of the Act. The said provision has limited application to cases covered by sub-sections (2), (3) or (4) of Section 5 to a building already in existence and there was repair, improvement, construction, addition or combination afterwards. The said provision does not enable or empower the assessing authority to ­assess those buildings which are newly constructed and covered by sub-section (1) of Section 6 of the Act as the assessing authority had no power to deal with such new buildings. As the order passed on 15th February, 1988 by the assessing authority was without jurisdiction, it was open to the said authority to exercise the power of rectification of mistake on the basis of determination of capital value by the local authority and the action was taken in compliance with proviso to sub-section (1) of Section 15 of the Act after observing the principles of natural justice by giving reasonable opportunity of being heard to the appellant-assessee in the matter. The action taken by the assessing authority cannot be said to be illegal or unlawful. Neither the District Collector nor the High Court could be said to have exceeded the jurisdiction in confirming the order passed by the assessing authority and we see no infirmity therein. (Para 31)