Kerala High Court
State Of Kerala vs Joseph D' Cunha on 17 January, 2013
Author: Manjula Chellur
Bench: Manjula Chellur, A.M.Shaffique
IN THE HIGH COURT OF KERALAAT ERNAKULAM
PRESENT:
THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR
&
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
TUESDAY, THE 24TH DAY OF SEPTEMBER 2013/2ND ASWINA, 1935
W.A.No. 856 of 2013 IN WP(C).22855 of 2007
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JUDGMENT IN WP(C) 22855/2007 of HIGH COURT OF KERALA DATED 17-01-2013
APPELLANTS/RESPONDDENTS:
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1. STATE OF KERALA
(BUILDING TAXASSESSING AUTHORITY), KOCHI.
2. THE REVENUE DIVISIONAL OFFICER,
FORT-COCHIN.
3. THE DISTRICT COLLECTOR AND REVISIONAL AUTHORITY
UNDER KERALA BUILDING TAXACT, ERNAKULAM.
4. THE STATE OF KERALA
REP. BY SECRETARY TO GOVERNMENT,
REVENUE (SPECIAL CELL) DEPARTMENT,SECRETARIAT,
THIRUVANANTHAPURAM.
BY SPL. GOVT. PLEADER(TAXES) DR.SEBASTIAN CHAMPAPPILLY
RESPONDENT/PETITIONER:
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JOSEPH D' CUNHA
S/O.SUNNY D' CUNHA, PANDARAPARAMBIL HOUSE,
MURIKKUMPADAM, VYPIN, ERNAKULAM-682 508.
BY ADV. SRI.MILLU DANDAPANI
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 24-09-2013, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
MANJULA CHELLUR, C.J. & A.M.SHAFFIQUE, J.
---------------------------------------------------- W.A. No.856 of 2013
---------------------------------------------------- Dated this the 24th day of September, 2013 Judgment Manjula Chellur, C.J.
The appellants before us are the State of Kerala and its officials. The respondent herein was the writ petitioner who was aggrieved by issuance of Ext.P11 order passed by the 1st respondent in the writ petition denying exemption to the establishment of the respondent-assessee which came to be allowed by the learned Single Judge by virtue of the judgment impugned before us.
2. It is not in dispute that the respondent-assessee is running an ice factory after obtaining licence issued by the Director of Industries and Commerce. It is also not in dispute that the plinth area of the building of the assessee where the ice factory is functioning is 264.47 square metres. According to the writ petitioner, denial of exemption by the Government was wrong as except number of employees in the factory being less than the required number under Section 2(m) of the Factories W.A.No.856/13 2 Act, all other components of 'factory' as also 'manufacturing process' required under the Factories Act were in existence, therefore, he challenged rejection of exemption before the learned Single Judge. The learned Single Judge while considering the issue opined that the establishment in question being a small scale industry and when the intention of the Legislature was not to deny such benefit to the small scale industries, the exemption deserves to be granted to the establishment of the respondent- assessee. It is not in dispute that the claim of exemption came to be rejected by the Government only on the ground that required minimum numbers of workers were not employed in the establishment, therefore, the establishment cannot be considered as a 'factory' in order to extend the benefit of exemption contemplated under Section 3 (1) (b) of the Kerala Building Tax Act, 1975 (for short 'the Act').
3. The entire issue revolves round whether the establishment of the respondent-assessee can be considered as a 'factory' and whether the said consideration must be with reference to the definition of 'factory' under Section 2 (m) of the Factories Act, 1948. Section 2(m) of the Factories Act defines the W.A.No.856/13 3 term 'factory' as under:
"factory" means any premises including the precincts thereof-
(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or
(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on, -
but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952), or a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place.
Explanation I: - For computing the number of workers for the purposes of this clause all the workers in different groups and relays in a day shall be taken into account.
Explanation II: - For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to W.A.No.856/13 4 make it a factory if no manufacturing process is being carried on in such premises or part thereof.
Reading of Section 2(m) clearly indicates, any premises including the precincts thereof wherein the manufacturing process is being carried on as defined under Section 2(k) of the said Act should have ten or more workers on any day of the preceding twelve months, and in any part of which a manufacturing process wasO carried on with the aid of power, or is ordinarily so carried on. If the manufacturing process does not involve aid of power, then number of workers has to be twenty or more in order to qualify the premises as a 'factory'. So far as ice factory is concerned, the claim of the respondent-assessee is, they have less than ten workers though they are using the power so far as manufacturing process is concerned. The water is used for making a saleable product, i.e., ice, therefore, manufacturing process involving the water transforming to a solid form exists. Ice is the product sold from this establishment, therefore, manufacturing process is carried on. In order to attract the definition of 'factory' under the Factories Act, though the manufacturing process is carried on in the establishment as contemplated under Section 2(k) of the said W.A.No.856/13 5 Act, unless the number of workers as mentioned above are working with reference to the establishment using the aid of power or without the aid of power, then only the obligations and other benefits allowed to an establishment as a 'factory' would come into play. In other words, under the Factories Act, the benefits available to the employees as an obligation on the part of the employer would available to the employees only if it is an establishment attracting the definition of 'factory' as contemplated under Section 2(m) of the Factories Act, whether it is in respect of health, working hours or other benefits contemplated under the said Act.
4. Exemption provided under the Kerala Building Tax Act is extended to certain buildings mentioned under Section 3(1)(a) and 3(1)(b) of the Act. So far as Section 3(1)(a) is concerned, it refers to the buildings owned by the Central Government and the State Government and also local authority. So far as Section 3(1)
(b) is concerned, it refers to several establishments, i.e., buildings used principally for religious, charitable which includes relief of the poor and free medical relief or educational purposes or as factories or workshops. Unless the establishment is running W.A.No.856/13 6 a building used principally for the above said purposes described under Section 3(1)(b), no exemption could be extended to such building. The very purpose of extending such exemption to a particular building used for any of the purposes referred to above would clearly indicate that the employer gets the benefit only if the nature of use attracts one of the classifications mentioned under Section 3(1)(b) of the Act. Even under the Factories Act, there is a compulsion on the employer to get the establishment registered under the Factories Act in order to see that the benefits provided under the Act could be extended to the employees. If it is less than the number referred to under Section 2(m) of the Act, there is no obligation on the part of the employer to provide benefits mandatorily required by him. Providing certain benefits provided under the Factories Act would include extra expenditure so far as the establishment is concerned provided the establishment falls within the definition of 'factory'. The intention of the Legislature seems to be to provide some concession to those establishments which are required under the statute of Factories Act to part with money by spending additional amounts so as to create benefits and other amenities W.A.No.856/13 7 required under the said Act. In that view of the matter, we are of the opinion, the concession available under Section 3(1)(b) of the Act definitely intended to be extended only to those establishments which are used principally for religious, charitable or educational purposes or as factories or workshops. If the exemption could be given to each and every establishment irrespective of the nature of process carried on, then the very purpose of giving exemption would be defeated. Therefore, to understand the purpose and the object for giving such exemption under Section 3(1)(b) of the Act would definitely persuade us to opine that unless it is a 'factory' as defined under the Factories Act, in the absence of any definition of 'factory' under the Kerala Building Tax Act, we are of the opinion, such establishment cannot claim any benefit arising out of exemption provided under Section 3(1)(b) of the Act. Therefore, we are of the opinion, the Government was justified in rejecting the exemption sought by the respondent-assessee and the learned Single Judge was not justified in setting aside such rejection of the Government. Hence, the appeal deserves to be allowed setting aside the judgment of the learned Single Judge.
W.A.No.856/13 8
5. Accordingly, the Writ Appeal is allowed and the judgment of the learned Single Judge in W.P.(C) No.22855 of 2007 dated 17.01.2013 is set aside. The parties to bear their own costs.
MANJULA CHELLUR, CHIEF JUSTICE.
A.M. SHAFFIQUE, JUDGE.
srd