IMPORTANT POINT
The court ruled that failure to comply with mandatory publication requirements under the Kerala Municipality Act invalidates property tax demand notices, emphasizing strict adherence to statutory procedures in tax assessments.

JUDGMENT :

Several writ petitions have been filed challenging the assessment of property tax in various Municipalities carried out under the Kerala Municipality Act, 1994 (for short 'the Act'). This batch of writ petitions challenge the demand notices issued to building owners in Thrissur Municipality.

2. For the purpose of reference, the facts in W.P.(C) No.12364 of 2024 are narrated. The writ petitioner is the owner of a hotel. He had paid property taxes for the said building till 2022-23 as per the demand notices issued earlier. Thereafter, on 27.09.2023, petitioner was issued with a demand notice for Rs.2,59,726/- demanding arrears from 2016-17, indicating a huge enhancement of property tax as well as penalty.

3. According to the petitioner, there cannot be any arrears of property tax when there was no demand in the first place and never was there any service of notice prior to 27.09.2023, demanding arrears of property tax. Petitioner contends that the new rates of property tax have been published only in 2023 and therefore the demand from 2016-17 itself, is without authority. Petitioner also claims that the property tax now demanded, at enhanced rates, retrospectively is contrary to the provisions of the Act as well as the Rules and is therefore liable to be interfered with.

4. A statement and an affidavit have been filed by the Municipality pointing out that after the amendment to section 233(2)(a) of the Act, the Government had, by a Gazette notification dated 14.01.2011 fixed the minimum and maximum limits of rates of basic property tax. Thereafter, the Municipality, by a resolution dated 21.10.2011 fixed the rates to be levied for different categories of buildings. By another resolution dated 22.11.2011 the Corporation limits were divided into prime, secondary and tertiary zones, which was published on 24.05.2013 and in the absence of any objections received from any person, the Municipal Council fixed the final rates of property tax as per resolution dated 13.11.2013 and necessary publications were also carried out in accordance with law. It is also averred that, subsequently, by G.O.(Rt) No.540/2019/LSGD dated 06.03.2019, the Government re-fixed the effective date of levy of revised property tax as01.04.2016.

5. According to the first respondent, the Secretary has the power under section 282 of the Act to demand payment of tax which had escaped assessment, by issuing a notice within four years from the date on which such person should have been assessed. The first respondent also pleads that the allegation regarding time-barred demand of arrears is without any basis and that tax has been assessed on the basis of the plinth area available in the records maintained by the Corporation and hence, the demand is legally valid. In the affidavit, it is pointed out that there are 1,63,000 buildings within the Corporation area of Thrissur and after completing all the procedural formalities required under rules 4, 7 and 8 of the Rules, a notification, under rule 10 of the Rules was published on 24.05.2013 in four dailies, apart from a public notice requesting the owners to submit the returns in Form-2. The forms were even distributed through Kudumbasree workers and again a public notice was given through paper publication on 26.05.2014. Thereafter, the Corporation collected the details of all buildings and they were uploaded into the ‘Sanjaya Software’ after appointing data entry operators. According to the Corporation, subsequently, demand notices were issued to the respective owners on the basis of the plinth area and details collected during field verification in conformity with the rates approved by the Council.

6. A counter affidavit has been filed by the Government,pointing out that, pursuant to the Government fixing the minimum and maximum limits of rates of basic property tax applicable to one square metre of plinth area by a notification under sections 233(2) and 233(5) of the Act, the Municipality took steps for collection