Kerala High Court
Vadakarapathi Grama Panchayath vs A.G.Ajith Prasad on 12 July, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR.JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 12TH DAY OF JULY 2024 / 21ST ASHADHA, 1946
WA NO.685 OF 2024
ARISING OUT OF THE JUDGMENT DATED 29.02.2024 IN WP(C) NO.2054 OF
2017 OF HIGH COURT OF KERALA
APPELLANTS/RESPONDENTS 2 AND 3:
1 VADAKARAPATHI GRAMA PANCHAYATH
REPRESENTED BY ITS SECRETARY, KOZHINPPARA P O,
PALAKKAD, PIN - 678557
2 SECRETARY
VADAKARAPATHI GRAMA PANCHAYATH,
KOZHIPPARA P O, PALAKKAD, PIN - 678557
BY ADV.SRI.NIRMAL.S., VADAKARAPPATHI GRAMA PANCHAYAT
RESPONDENTS/PETITIONER/1ST RESPONDENT:
1 A.G.AJITH PRASAD
AGED 60 YEARS
TRUSTEE, AHALIA INTERNATIONAL FOUNDATION,
ELIPPARA, PALAKKAD, PIN - 678557
2 STATE OF KERALA
REPRESENTED BY THE SECRETARY TO GOVERNMENT,
DEPARTMENT OF LOCAL SELF GOVERNMENT, SECRETARIAT,
THIRUVANANTHAPURAM-695001., PIN - 695001
BY ADV.SRI.V.K.SHAMSUDHEEN, SR.GOVERNMENT PLEADER
K.B.GANGESH, R1
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.07.2024,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WA NO.685/2024 2
JUDGMENT
Dated this the 12th day of July, 2024 Syam Kumar V.M., J.
Appellant Nos.1 and 2 are the Panchayat and its Secretary respectively, who were respondents 2 and 3 in W.P.(C) No. 2054 of 2017. They have filed this appeal challenging the judgment dated 29.02.2024 of the learned Single Judge. Respondents 1 and 2 were the petitioner and the 1st respondent respectively in the said W.P.(C).
Facts in brief:
2. The 1st respondent/petitioner is the trustee representing a trust that runs an Ayurvedic Medical College functioning from within the jurisdictional limits of the appellant Panchayat. A men's hostel and ladies hostel numbered by the Panchayat are situated within the Medical College campus. The said hostel buildings were assessed to property tax by the Panchayat as per the rates prescribed in Ext.P2 G.O. dated 14.01.2011 issued by the 1st respondent. The rate of property tax leviable as per Ext.P2 G.O. on buildings used for educational purposes were between Rs.3/- to Rs.8/- per square meter and the 1st respondent's hostels were assessed at Rs.5/- by the appellant Panchayat. The property tax thus assessed was being WA NO.685/2024 3 remitted by the 1st respondent as evidenced by Ext.P1 series receipts. While so, vide Ext.P4 G.O. dated 24.02.2015, the 2 nd respondent modified Ext.P2 G.O. and prescribed property tax at the rate of Rs.30/- to Rs.60/- for private hostels and homestays.
As duty bound, appellant Panchayat issued Ext.P3 demand to the 1st respondent specifically pointing out that during an inspection carried out within the premises of the 1 st respondent by the Audit Department of the 2 nd respondent, certain unauthorised constructions had been noticed in the campus and further that the property tax due and payable with respect to the hostel buildings were as per the rate fixed in Ext.P4 G.O. dated 24.02.2015. The 1st respondent who was hitherto paying tax at a lower rate as envisaged in Ext.P2 G.O. was thus called upon by the appellant Panchayat vide Ext.P3 to remit an amount of Rs.17,16,846/- along with penal interest towards arrears of property tax due from 2011 onwards with respect to the hostel buildings. The said demand for tax was responded to by the 1 st respondent with a letter (Ext.P5) to the appellant seeking to withdraw the demand notice inter alia contending that Ext.P4 G.O. related to private hostels and homestays and not to the hostel buildings of educational institutions like the 1 st respondent. Appellant issued Ext.P6 letter in reply to the 1st respondent rejecting the contentions in Ext.P5 and calling upon WA NO.685/2024 4 the 1st respondent to clear the arrears of the building tax as demanded vide Ext.P3. Arrear demand notices stating the split up of the amounts due from the 1st respondent were also issued which are produced as Exts.P7 and P8 along with the W.P.(C). At that juncture overlooking the appellate remedy available, the 1st respondent filed the abovesaid Writ Petition inter alia seeking to quash Exts.P3, P6, P7 and P8 pointing out that they are illegal and unsustainable. Basing on the contention put forth in the WP that vide G.O. dated 27.04.2015 (Ext.P9), which stipulated that tax on commercial buildings ought not be revised above 100% than the existing tax and the increase brought forth by Ext.P4 being more than 800% is arbitrary and unreasonable, a prayer to quash Ext. P4 G.O. issued by the 2 nd respondent was also made in the W.P.(C).
Finding of the learned Single Judge:
3. The learned Single Judge, after considering the counter statement filed on behalf of the appellant Panchayat, the reply affidavit filed by the 1st respondent and the counter affidavit of the 2nd respondent and after hearing the parties, set aside the notices impugned in the W.P.(C) and allowed the Writ Petition inter alia holding that the hostels of the 1st respondent if they are situated within the campus and is part of the campus cannot be categorised as a 'private hostel' or 'homestay' and WA NO.685/2024 5 they are not exigible to property tax at the rate prescribed for private hostel and homestay as envisaged in Ext.P4 notification.
The said judgment of the learned Single Judge is challenged by the appellant Panchayat and its Secretary in this Writ Appeal.
4. Heard Sri.Nirmal S., learned counsel appearing on behalf of the appellants and Sri.K.B. Gangesh, learned counsel appearing on behalf of the 1st respondent. Sri.V.K.Shamsudheen, learned the Government Pleader was also heard on behalf of the 2nd respondent.
Appellants' contentions:
5. Learned counsel appearing on behalf of the appellants contends that the learned Single Judge failed to take note of the fact that the 1st respondent is a self-financing college and that Ext.P4 G.O. had revised the property tax for private hostels to be fixed between Rs.30/- to Rs.60/-. In so far as the said G.O. has not been challenged, the appellant Panchayat was justified in imposing the property tax as envisaged in the said G.O. It is also contended by the learned counsel for the appellants that the Audit Department of the 2nd respondent had raised objections with respect to the property tax not collected from the 1st respondent as per Ext.P4 G.O. and hence the appellants were legally bound to initiate steps for recovery of arrears based on audit enquiry report passed by the Audit WA NO.685/2024 6 Department of the 2nd respondent. The learned counsel for the appellants heavily relied on a clarification letter dated 02.02.2018 [Ext.R2(a)] wherein to a query raised by the appellant Panchayat it had been clarified by the Deputy Director of the State Audit Department that hostels other than hostels up to the Higher Secondary Level within the compound of the educational institution are liable to pay property tax at the rate between Rs.30/- and Rs.60/-. Thus the appellants submit that the demand notices issued by the appellants to the 1 st respondent calling upon them to clear the arrears of property tax was fortified by the clarification issued vide Ext.R2(a). The learned counsel contended that the Single Judge's judgment does not take note of the said crucial facts. The learned counsel for the appellants thus prays that the judgment of the learned Single Judge may be set aside.
Respondents' contentions:
6. Per contra the learned counsel appearing for the 1st respondent submits that the judgment of the learned Single Judge does not call for any interference. He submits that the finding of the learned Single Judge that Ext.P4 G.O. does not even get attracted as against the hostels of the 1 st respondent which are situated within the campus and that such hostels within the campus are part of the college and cannot be said to WA NO.685/2024 7 be a private hostel is valid and justified in law. The learned counsel submits that the reasoning of the learned Judge that a private hostel denotes a hostel run by any other person than the management of the college in a building constructed by them and privately managed and that the said connotation does not take in a hostel run by a college management is unassailable in law. The learned counsel also defended the observation of the learned Single Judge that a hostel cannot be termed as a 'homestay' since a homestay is available to the general public on payment whereas a hostel is available only to the students and not to the general public. The learned counsel for the 1st respondent thus seeks for a dismissal of the Writ Appeal. The learned Government Pleader appearing for the 2 nd respondent defended Ext.P4 G.O. and basing on the counter affidavit filed submitted that vide the said G.O., the Government decided to include and notify certain Sections in Ext.P2 G.O. to fix property tax on private hostels and homestays between Rs.30/- and Rs.60/- per square meter. The said G.O. further stipulated levy of property tax at Rs.3/- to Rs.8/- per square meter of the plinth area for a category of buildings used for occupancy such as auditorium, canteen, workshop etc. in the compound of educational building occupancy and exclusively used for such occupancy.WA NO.685/2024 8
Discussion and conclusion:
7. We note that Ext.P4 G.O. of 2015 does not supplant or substitute Ext.P2 G.O. of 2011. To the extent it concerns the subject matter of this W.A., the relevant additions brought in by Ext.P4 G.O. are the inclusion of an additional sub-category each to Sl.Nos.1 and 4 of Ext.P2, namely, sub categories 1(a) and 4(a) respectively. We note that Sl.No.1 of Ext.P2 G.O. concerning residential houses thus gets a sub category viz., 1(a) which pertains to 'Private hostels and Homestay' and fixes the property tax for the same between Rs.30/- and Rs.60/- per square meter. Similarly, Sl.No.4 of Ext.P2 G.O. pertaining to buildings used for educational purposes gets a sub category 4
(a), which comprises of 'buildings used for occupancy such as auditorium, canteen, workshop etc. within the compound of educational institution and used exclusively for its purpose' and fixes property tax at Rs.3/- to Rs.8/- per square meter. Thus the effect of Ext.P4 G.O. is only to add the above said sub categories 1 (a) and 4 (a) and it has not tinkered with or altered the nature of occupancy or the applicable tax rate under Sl.Nos.1 or 4 of Ext.P2 G.O. Mere addition of a sub category to an existing category of buildings or occupancy does not alter the prescribed rate of tax with respect to the relevant occupancy unless specifically altered. Creation of sub-categories 1 (a) and 4 (a) to WA NO.685/2024 9 Sl.Nos.1 and 4 of Ext.P2 G.O., does not in any manner vary the tax leviable under Sl.No.4 of Ext.P2 G.O. that relates to buildings used for educational purposes. The contention of the appellant Panchayat that with the creation of sub category 1(a) comprising 'Private Hostels and Homestays' vide Ext.P4 G.O., the hostels attached to educational institutions would be excluded from their present classification under Sl.No.4 as 'buildings used for educational purposes' and would get transmigrated into 'residential buildings' envisaged in Sl.No.1 cannot be countenanced. It is even more so since Ext.P2 G.O. classifies/categorizes buildings based on the nature of their occupancy into those used for residential purposes, commercial purposes, educational purposes, hospitals, assembly occupancy, industrial purpose, resorts, amusement parks and mobile telephone towers. The maximum and minimum rates of property tax that could be levied per square meter of the plinth area for each of these occupancies have been prescribed in Ext.P2 G.O. As rightly pointed out by the learned Single Judge, a 'private hostel' mentioned in Ext.P4 G.O. connotes a different meaning from that of a hostel which is managed by an educational institution and that a hostel cannot be said to be a ' home stay' since the latter is available to the general public on payment whereas the former is available only to the students and not to WA NO.685/2024 10 the general public. Thus even while looking at it from the point of view of semantics, the contention of the appellants is illogical and unsustainable in law.
8. Mere prescription of a separate rate of property tax for private hostels and homestays by the Government will not entitle the appellant Panchayat to levy such tax on hostels attached to educational institutions. Such hostel buildings used as part of the educational institution and for educational purposes shall continue to be levied with tax as prescribed for buildings used for educational purposes. They cannot be classified under a different head and be treated as 'private hostels' or 'homestays'.
9. As regards the contention of the appellants that Ext.R2(a) clarification issued by the Deputy Director of the State Audit Department had clarified that the Panchayat would be entitled to levy property tax upon the hostel buildings of the 1 st respondent does not merit any relevance in so far as a letter of clarification issued by the Deputy Director of the Audit Department cannot override or stifle the clear mandates of the Government Order which, if properly read and understood, does not require any clarification or explanation. Hence the reliance on Ext.R2(a) by the appellant Panchayat cannot be substantiated in law. Ext.R2(a) clarification in so far as it contradicts the WA NO.685/2024 11 express and clear purport of Exts.P2 and P4 G.Os can only be treated as a non est in the eye of law. Similarly as regards the contention put forth by the appellants that since Ext.P4 G.O. has not been challenged in the W.P.(C) by the 1 st respondent , the challenge against the imposition of tax under the same by the appellant Panchayat is not sustainable, we note that since the challenge of the 1st respondent was against the improper classification of his building and not for total exemption from the net of taxation and as Ext.P4 G.O. only envisages certain additions to Ext.P2 G.O. and not its total substitution, it was not necessary for the 1st respondent to have challenged the vires of Ext.P4 G.O. and the said contention of the appellants in the said respect is not legally tenable.
10. In view of the above, we find no reason to interfere with the findings of the learned Single Judge. The appeal fails and is dismissed.
Before parting with this appeal we might observe that we have come across many instances where local authorities issue show cause/demand notices to assessees merely based on receipt of an audit objection or clarification and without testing the correctness of the views expressed in those objections/ clarifications against the statutory provisions. In cases such as the instant one, litigation was necessitated only because of the WA NO.685/2024 12 non-application of mind by the Secretary of the local Panchayat to the merits of the 'clarification' obtained from the Audit Department. We feel the time has now come to impose costs in such cases where a citizen is dragged to court for no fault of his and owing solely to the callous attitude of authorities who mechanically issue demand notices on receipt of audit objections, without independently testing the merits of the same vis-a-vis the statutory provisions. Public authorities are required to act more responsibly and in a manner that shows them to be duty conscious rather than power charged. While dismissing the W.A., therefore, we deem it necessary to impose a cost of Rs.10,000/- (Rupees Ten Thousand only) on the appellant Panchayat which shall be paid to the respondent/writ petitioner within three weeks from the date receipt of a copy of this judgment.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
SYAM KUMAR V.M. JUDGE csl