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IN THE HIGH COURT OF KERALA AT ERNAKULAM
HARISANKAR V. MENON, J.
M/s. Moulana Hospital, Malppuram, Represented by Its Managing Partner, Abdul Rasheed - Petitioner
Versus
The Tahsildar, Perintalmanna & Ors. - Respondents
WP(C) No. 20119 of 2018
Decided On : 25-10-2024
(A) Kerala Building Tax Act, 1975 – Sections 3, 3B, and 5 – Writ petition challenging building tax demand on a portion of a Nursing School converted to hospital – Exemption under Section 3 was valid until the school was shifted – Tax can only be assessed based on the rate at the time of construction completion. (Paras 1-8)
(B) Tax Assessment – The assessment must consider the date of completion of construction for determining applicable tax rates. (Paras 7-8)
Facts of the case :
The petitioner constructed a building in the 1990s, part of which was used as a Nursing School exempt from tax under Section 3. The Nursing School was later shifted, prompting a tax demand on the hospital portion.
Findings of Court :
The court found that tax could only be assessed based on the rate applicable at the time of construction completion, not the current rate.
Issues : The main issue was the correct rate of tax applicable after the exemption was withdrawn.
Ratio Decidendi : The court ruled that tax liability arises based on the completion date of the building, and the petitioner is entitled to have tax assessed accordingly.
Result : Writ petition allowed; tax demand set aside.
JUDGMENT :
Harisankar V. Menon, J.
The petitioner - a hospital, has filed the captioned writ petition challenging Ext.P4 order issued by the 1st respondent herein, by which, building tax with reference to the provisions of the Kerala Building Tax Act, 1975, was sought to be demanded on a portion of a Nursing School, which was later converted as part of the hospital.
2. The short facts necessary for the disposal of this writ petition are as under:
The petitioner had constructed a building in 1990s. Out of the above building, the major portion was being used as the hospital. However, a portion of 435.2 square meters was being used as a Nursing School. As regards the said Nursing School, the petitioner had obtained the benefit of exemption from payment of tax available with reference to the provisions of Section 3 of the Act. There is no dispute also to the fact that the Nursing School was being run by the petitioner.
3. Later, the 1st respondent herein carried out certain inquiries in that regard and came to the finding that the petitioner has shifted the Nursing School from the building where the said school was being run, enjoying exemption as above, to other premises. Therefore, the 1st respondent initiated proceedings against the petitioner, culminating in the issue of Ext.P4 order seeking to demand building tax as against the afore area of 435.2 square meters also, which was admittedly the main part of the hospital. The petitioner points out that the finding in Ext.P4 as regards the shifting of the Nursing School was correct. However, it is pointed out that the tax demanded through Ext.P4 was applying the rate applicable under the statute during 2018. Pointing out the above irregularity, though an application for rectification was filed before the 1st respondent, the said application stood rejected by Ext.P6 order dated 08.05.2018 issued by the 1st respondent herein.
4. It is in the afore circumstances that the captioned writ petition is filed by the petitioner.
5. A counter affidavit is filed on behalf of the 1st respondent herein dated 26.07.2018, seeking to sustain the impugned action.
6. I have heard Smt. Sangeetha Kamath, the learned counsel for the petitioner and Sri. Sayed M. Thangal, the learned Government Pleader.
7. The short issue arising for consideration in this writ petition is as regards the rate of tax payable with reference to the portion of the building, which is now sought to be assessed by Ext.P4 on account of the subsequent developments by which the petitioner became dis-entitled for the benefits under Section 3 of the Act. It is seen that the petitioner had been granted an exemption as against the portion of the building which was being used as the Nursing School - 435.2 square meters. It is this portion, that is now sought to be assessed by Ext.P4 on account of the shifting of the Nursing School. Such assessment by Ext.P4 is made with reference to the provisions of Section 3B of the Act, which reads as under :
Provided that no such assessment shall be made without giving the assessee a reasonable opportunity of being heard.”
(Underlining supplied)
A reading of the above provision would show that as regards buildings that were exempted under Section 3 of the Act for payment of building tax, if it is subsequently found that the building became ineligible for the exemption, the owner of the building is liable to pay building tax as regards that portion also along with interest from the date of completion of construction of the building. Therefore, the crucial date, even under Section 3B, is th
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