IMPORTANT POINT
The court ruled that the failure to revise property tax limits does not prevent tax collection, interpreting the term 'shall' in Section 233(4) as directory, and set aside the improper classification of the petitioner's building.

JUDGMENT :

(BECHU KURIAN THOMAS, J.)

Petitioner seeks for a declaration that the levy and collection of property tax without fixing the rate of tax as per the mandate of Section 233 of the Kerala Municipality Act, 1994 (for short ‘the Act’) and its Rules is without any authority of law. Petitioner also seeks to quash Ext.P12 demand notice and a direction not to collect property tax for its building under the category of ‘Special Residential’ apart from a further direction to refund the amounts paid towards such tax.

2. Petitioner represents a convent for nuns of the Christian faith under the Congregation of Mother of Carmel. The building used as the residence for aged nuns and other sisters of charity is the subject matter of this writ petition. According to the petitioner, the convent had been paying property tax to the respondent Corporation, without any default. However, when the demand was enhanced exorbitantly and the basis for such a demand was not revealed, except for an oral statement that petitioner's building falls within the category of 'Special Residential', this writ petition was filed.

3. Sri. Raju Joseph, the learned Senior Counsel, as instructed by Sri. Firoz K. Robin, the learned counsel for the petitioner, submitted that neither the Act, nor the Kerala Municipality (Property Tax, Service Cess and Surcharge) Rules, 2011, (for short 'the Rules'), prescribe a category called the ‘Special Residential Building’ and hence imposition of property tax under such a category is without authority. Apart from the above, it was also contended that the minimum and maximum limits of rates of basic property tax has to be fixed by the Government every five years, as per section 233(4) of the Act and if it is not so fixed, at the end of the fifth year, there cannot be any levy of such tax from the expiry of that period till the limits are revised. It was also submitted that the limits of property tax as per section 233(2) of the Act was fixed in 2011 and until it was revised in 2023, there could not have been any levy or collection of tax from 01.04.2016. Subsequent revision of the limits, according to the Senior Counsel, was effected by Ext.P1 Notification dated 01.04.2023, and hence collection of property tax during that period is hit by Article 265 of the Constitution of India, as being one without authority.

4. Smt.K.Deepa, the learned Special Government Pleader relying upon the counter affidavit filed on behalf of the second respondent submitted that the Government had notified the minimum and maximum rates of basic property tax as per a Gazette Notification dated 14.01.2011 and the Rules were also notified on the said date itself with effect from 01.04.2013. However, according to the third respondent, since the various Municipalities and Corporations had not completed the procedural formalities, demands could not be made immediately and hence a Government Order was issued, permitting the local authorities to levy the revised property tax with effect from 01.04.2016 instead of 01.04.2013, considering the time consuming background work. Controverting the contentions of the petitioner, it was submitted that Section 233(4) of the Act is only an enabling provision by which the Legislature can revise the rates of basic property tax to enhance the previous rates and it cannot be treated as a restriction to collect tax if such revision is not carried out. It was further submitted that property tax being the main source of income for the Local Self Government Institutions, various beneficial projects depend upon such tax collection and the entire financial planning of the Municipalities will be affected if the interpretation suggested by the petitioner is accepted.

5. Sri. Santhosh Poduval, the learned Standing Counsel, after referring to the statement and the affidavit filed by the respondent Corporation, contended that, pursuant to the amendment and notification of the Government fixing the minimum and maximum rates of property tax, b