IMPORTANT POINT
The court established that the government has the authority to set minimum property tax enhancements under the Kerala Municipality Act, 1994, and that such rules are valid if they align with the provisions of the Act.

JUDGMENT :

S.MANU, J.

This appeal is filed by the State against the judgment dated 7.1.2022 of a learned Single Judge of this Court in W.P.(C)No.19085/2014. By the impugned judgment, the learned Single Judge declared that Rules 9(4a) and 9(4c) of the Kerala Municipality (Property Tax, Service Cess and Surcharge) Rules, 2011 which prescribe fixation of property tax at a minimum of 25% over and above the tax levied for the previous year, is ultra vires the Kerala Municipality Act, 1994.

2. First respondent filed the writ petition. He owns a building at Taliparamba. The Taliparamba Municipality assessed the entire building to property tax prior to 1.4.2011 on the basis of annual rental value. Contentions of the 1st respondent as stated in the writ petition are summarized as follows:-

“The Kerala Municipality Act, 1994 was amended as per Act No.30 of 2009 as per which section 233 was substituted with a new provision envisaging fixation of property tax on the basis of location/zone, availability of road, plinth area, flooring and roofing materials used, age, floor status, materials used for walls, air-conditioning facility, nature of use etc. The amendment came into force on 7-10-2009. Thereafter the Government framed Kerala Municipality (Property tax, Service tax and Surcharge) Rules, 2011 by exercising the powers under Section 233(19) of Kerala Municipality Act, 1994. The said Rule was amended as per Kerala Municipality (Property tax, Service tax and Surcharge) (Amendment) Rules, 2013 with effect from 1-4-2013. In the mean time the Section 233 of Kerala Municipality Act, 1994 also was amended as per Kerala Municipality (Second Amendment) Ordinance 2012 and Kerala Municipality (Fourth Amendment) Ordinance 2012 which came into force on 25-11-2012 and it was re-promulgated as Kerala Municipality (Amendment) Ordinance 2013. The ordinances were later replaced by Kerala Municipality (Amendment) Act, 2014. As per the amended provisions the Government and Council respectively have given the power to revise the rates of basic tax in such manner as to have an enhancement of 25% on the existing limits and rates by the completion of every five years. The rule making power of the Government was amended so as to vest the Government with the power to make Rules regarding the determination of maximum and minimum limit of enhancement of annual property tax. Rules 9(4A) and 9(4C) of Kerala Municipality (Property tax, Service tax and Surcharge) Rules, 2011 prescribe fixation of property tax at a minimum of 25% over and above the tax levied for the previous year even if Property tax arrived at on computation as per the said Rules is less than the tax levied for the previous year. Such a fixation is not warranted as per section 233 of Kerala Municipality Act, 1994. Section 233(8) of Kerala Municipality Act 1994 says that the amount so arrived at by allowing deductions and making additions on the basic property tax under sub-section (7) shall be adjusted to the next higher whole number and the amount so assessed shall be the annual property tax of the building. The Rule making power under Section 233(19) of Kerala Municipality Act, 1994 also does not empower the Government to fix a minimum property tax as provided in Rule 9(4-A) and (4-C) of the Rules. Hence Rule 9(4A) and 9(4C) of Kerala Municipality (Property tax, Service tax and Surcharge) Rules, 2011 are ultra vires to Section 233 of Kerala Municipality Act, 1994 and without any authority of law. As per Article 265 of the Constitution of India, no tax shall be levied or collected except by authority of law. Since the property tax collected by the first respondent from the petitioner for the period from 1-4-2011 is under the old provision Section 233, it is unauthorised and illegal. If the Property tax is computed as per Section 233(7) and (8) the high rate of tax collected previously on the basis of annual rental value would have come down considerably. Therefore the first respondent is liable to refu