Property tax under the Kerala Municipality Act is payable from the date of issuance of an occupancy certificate for buildings used for residential purposes.

JUDGMENT :

This writ petition is filed under Art. 226 of the Constitution of India impugning the demand notices, Exts.P4 to P10. The facts of the writ petition are not in dispute. The building for which the impugned demand notices have been issued is a multi storied apartment constructed by the petitioner. The completion certificate was issued in respect of the said building on 19th Feb 2015. However, the occupancy certificate was issued only on 01.02.2017 by the respondent Municipal Corporation. The impugned demand notices are in respect of the property tax for the period from 1st October 2014 to 28th February, 2017.

2. Learned Counsel for the petitioner submits that the petitioner is not liable to pay the property tax before issuance of the occupancy certificate, which is on 1st February 2017. He further submits that only on issuance of the occupancy certificate, the building is numbered, and electricity, water and gas connections are provided, and thereafter, the building can be used for residential purposes. He further submits that Section 233 of the Kerala Municipality Act and Rules, 1994, provide for levy of property tax by every Council of the Municipality under the provisions of the said Act and the Rules made thereunder. He further submits that Subsection (2) of Section 233 of the Kerala Municipality Act, defines the buildings on which the property tax can be levied. Subsection (2) of Section 233 of the Kerala Municipality Act says that the building should be used for residential purpose or used for industrial purpose or used for a school or hospital or other purposes as defined.

3. The case of the learned Counsel for the petitioner is that the building can be used for residential purpose only when it is numbered and water and electricity connections are provided. He also submits that this Section does not define the purpose for which the building is capable of being used. But subsection (2) of Section 233 would mean that the building is actually used or becomes fit for use for residential purposes or other purposes as defined in Subsection (2). He, therefore, submits that until the occupancy certificate is issued, the building does not become fit for use for residential purpose and, therefore, levying the tax prior to the issuance of the occupancy certificate defeats the scheme of the Act itself. He further submits that, the State Government itself has issued circular dated 03.05.2020 clarifying Rule 24 of the Kerala Municipality (Property Tax and Service Tax and Surcharge) Rules, 2011 to say that levy of property tax should be from the date of issuance of occupancy certificate.

4. Rule 24 of Rules, 2011 reads as under;

24. Obligation of the owner to give notice before construction, or re-construction or demolition of building.-(1) Notwithstanding anything contained in rule 17, in the case of construction or re-construction of any building in the area of the Municipality in accordance with the Kerala Municipality Building Rules, 1999, the owner of the building shall within 15 days from the date on which the completion of building or reconstruction or person residing in the building or the building is used for any other purpose, whichever happens earlier, shall give notice regarding it to the Secretary and furnish property tax return as per rule 11 and he shall be liable to remit revised annual property tax from the beginning of that half year onwards:

Provided, if such date comes within the last two months of a half year, the owner is entitled to get deduction of annual property tax in revised rate as to that building to that half year.

(2) The Secretary may levy an amount not exceeding rupees five hundred as fine on a person committing default in giving notice as per sub-rule (1).

(3) If any building is demolished or destroyed, the owner of the building shall give notice thereof to the Secretary and he shall be liable for payment of the property tax which would have been leviable had the building not been demolished or des