Kerala High Court
M/S. Iqraa International Hospital & ... vs The District Collector on 13 June, 2025
2025:KER:42218
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE ZIYAD RAHMAN A.A.
TH
FRIDAY, THE 13 DAY OF JUNE 2025 / 23RD JYAISHTA, 1947
WP(C) NO. 45147 OF 2024
PETITIONER/S:
M/S. IQRAA INTERNATIONAL HOSPITAL & RESEARCH
CENTRE
RUN BY JDT ISLAM ORPHANAGE COMMITTEE,
MALAPARAMBA, CALICUT ,
REPRESENTED BY ITS EXECUTIVE DIRECTOR
DR. P.C. ANWAR, PIN - 673009
BY ADVS.
SHRI.B.KRISHNAN
SHRI.R.PARTHASARATHY
RESPONDENT/S:
1 THE DISTRICT COLLECTOR,
CIVIL STATION, KOZHIKODE DISTRICT,
PIN - 673020
2 THE SUB COLLECTOR,
APPELLATE AUTHORITY UNDER KERALA BUILDING TAX
ACT, CIVIL STATION, KOZHIKODE,
PIN - 673020
3 THE TAHSILDAR,
KOZHIKODE TALUK OFFICE, CIVIL STATION,
ERANHIPALAM, KOZHIKODE DISTRICT,
PIN - 673020
4 THE VILLAGE OFFICER,
VENGERI VILLAGE OFFICE,
KOZHIKODE DISTRICT,
PIN - 673010
W.P.C No. 45147 of 2024
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OTHER PRESENT:
SMT.RESHMITHA R CHANDRAN, SR.G.P
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 13.06.2025, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.C No. 45147 of 2024
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JUDGMENT
The petitioner is a Hospital and Research Centre run by a charitable institution. The petitioner had earlier constructed the buildings, to be used for the purpose of conducting the hospital for which, an assessment for building tax was already made and the tax was also paid.
2. Later, the petitioner constructed a new building in the very same compound, having a plinth area of 5480.69 Sq.M. According to the petitioner, the said building was constructed separately from the other existing buildings in the premises and the same was constructed solely for the treatment of Kidney related diseases. The construction was completed on the basis of a separate permit and separate completion plan. A separate occupancy certificate was also issued to the same by the Corporation of Kozhikode.
3. However, when the assessment of the said building for the purpose of building tax under the provision of the Kerala Building Tax Act, 1975, (hereinafter referred to as the 'Act') was W.P.C No. 45147 of 2024 4 2025:KER:42218 necessitated, Ext.P1 assessment was made by the 3rd respondent, clubbing the new building along with the other buildings in the compound and treating all such buildings as a single unit. Thus, the total amount of building tax payable by the petitioner was fixed as Rs.50,67,800/- which was after adjusting the building tax already paid in respect of the existing buildings, as contemplated under section 5(4) of the Act.
4. As against Ext.P1, the petitioner submitted Ext.P2 appeal before the 2nd respondent, and it resulted in Ext.P3 appellate order by which the appeal was dismissed. Ext.P4 is the revision petition submitted by the petitioner before the 1 st respondent and the same was rejected as per Ext.P5 order. This writ petition is submitted by the petitioner challenging Exts.P3 and P5 orders.
5. I have heard, Sri. R.Parthasarathy, the learned counsel for the petitioner and Smt.Rashmitha R Chandran, the learned Government Pleader for the respondents.
6. In the writ petition, the petitioner is challenging the assessment made by the respondents by treating all the W.P.C No. 45147 of 2024 5 2025:KER:42218 buildings in the premises as a single unit, and in addition to that, the petitioner is also aggrieved by the rejection of the claim of the petitioner seeking exemption under Section 3 (1) of the Act, as according to the petitioner the said building is being used for charitable purposes. Therefore, it is the case of the petitioner that, as the exemption was a matter to be considered by the Government, it ought to have been referred to the Government.
7. The learned counsel appearing for the petitioner, specifically contended that, as far as the building of the petitioner in question is concerned, it is a newly constructed one, on the basis of a separate permit and is covered by a separate completion plan and occupancy certificate issued by the Corporation. For all practical purposes, the same is a separate building, in view of the fact that it is structurally independent. The activities that are being carried out in the said building relate to the treatment for the persons suffering from Kidney diseases and it is an independent unit of its own. Therefore, the action on the part of the respondents in clubbing W.P.C No. 45147 of 2024 6 2025:KER:42218 the said building along with the other existing buildings, for the purpose of building tax, was not proper. Besides, the learned counsel reiterated the contentions which the petitioner raised in the writ petition regarding the exemption, as according to the petitioner, a substantial portion of the activities in the said building are for charitable purposes. Thus, the learned counsel for the petitioner seeks interference in the orders impugned in this writ petition. Reliance was also placed on the decisions rendered by this Court in Anil E.K v. Tahasildar [2023 (7) KHC 68] and Lalitha v. State of Kerala [1994 (2) KLT 66], which was also referred to in the Ext.P5 order passed by the 1 st respondent.
8. On the other hand, the learned Government Pleader stoutly opposes the reliefs sought in this writ petition. According to the learned Government Pleader, the contentions raised by the petitioner cannot be accepted as the building forms part of the hospital under the management of the petitioner itself and therefore, it requires to be assessed as a single unit. Thus, the writ petition has to be rejected. With regard to the contention W.P.C No. 45147 of 2024 7 2025:KER:42218 raised by the learned counsel for the petitioner seeking exemption on the ground that the building is being used for charitable purposes, the learned Government Pleader places reliance upon the decision rendered by this Court in M/S Lisie Medical Institutions v. State of Kerala [2023 (4) KLT 432] wherein, it was held that, merely because the institution had obtained the exemption from the provisions of the Income Tax Act, that will not enable the institution concerned to seek exemption for the building under Section 3(1) of the Kerala Building Tax Act. It was also held in the said decision that, unless it is established that free medical reliefs are being provided in the said establishment, the said exemption cannot be granted. It is in this background, the issues raised in this writ petition are to be considered.
9. As far as the statutory provisions applicable to this case are concerned, the main provision is Section 5 of the Kerala Building Tax Act which provides for the charge of the building tax. The said provision reads as follows: W.P.C No. 45147 of 2024 8
2025:KER:42218 "(1) Subject to the other provisions contained in this Act, there shall be charged a tax (hereinafter referred to as "building tax") based on the plinth area at the rate specified in the Schedule on every building the construction of which is completed on or after the appointed day.
(2) In the case of any building, the construction of which is completed prior to the appointed day but the assessment of which has not been initiated or completed or against which appeal or revision has been filed, building tax shall be assessed on the basis of the plinth area at the rate specified in the Schedule.
(3) Where any major repair or improvement is made on or after the appointed day to a building constructed before the said date building tax shall be payable at the rate referred to in sub-section (1) on the additional plinth area of the building resulting from such repair or improvement. (4) Where the plinth area of the building, the construction of which is completed after the appointed day is subsequently increased by new extensions or major repair or improvement, building tax shall be computed on the total plinth area of the building including that of the new extension or repair or improvement and credit shall be W.P.C No. 45147 of 2024 9 2025:KER:42218 given to the tax already levied and collected, if any, in respect of the building before such extension, or repair or improvement.
(5) Where there are out-houses, garages or other structures appurtenant to the building for the more convenient enjoyment of the building, the plinth area of such structure shall be added on to the plinth area of the main building and the building tax assessed accordingly:
Provided that the plinth area of a garage or any other erection or structure appurtenant to a residential building used for the purpose of storage of firewood or for any non- residential purpose shall not be added on the plinth area of that building.
(6) The building tax shall be payable by the owner of the building.
Explanation. - For the purposes of this Act, the construction of a building shall be deemed to have been completed when it is ready for occupation or has been actually occupied, whichever is earlier."
10. Sub-Section (4) of Section 5, contemplates that where the plinth area of the building, the construction of which W.P.C No. 45147 of 2024 10 2025:KER:42218 is completed after the appointed day, is subsequently increased by new extensions or major repair or improvement, building tax shall be computed on the total plinth area of the building including that of the new extension or repair or improvement and credit shall be given to the tax already levied and collected, if any, in respect of the building before such extension, or repair or improvement. Another important provision is Sub-Section (5), which deals with the other structures to be included in the definition of 'building' for the purpose of assessment of tax. As per the said provision, where there are out-houses, garages or other structures appurtenant to the building for the more convenient enjoyment of the building, the plinth area of such structure shall be added to the plinth area of the main building and the building tax has to be assessed accordingly.
11. The specific case of the petitioner is that the newly constructed building is structurally independent, the activities therein are separate, and the same does not depend upon the other buildings. In the decision relied on by the learned counsel for the petitioner, i.e Anil E.K's case (supra), this Court W.P.C No. 45147 of 2024 11 2025:KER:42218 considered the question of assessment of building tax for 17 buildings owned by a single owner situated in a compound and used for a common purpose as a tourist Resort. After examining the various provisions contained in the Act, it was observed that, if all the buildings are structurally separate and separately numbered, merely because of the reason that the buildings are functionally the same, such buildings cannot be clubbed together as a single unit.
12. On the other hand, in Ext.P5 order the contention raised by the petitioner, against the concept of clubbing together, was rejected by the 1 st respondent by placing reliance upon the decision rendered by this Court in Lalitha' case(supra). On carefully going through the observations made by this Court in Lalitha's case, it can be seen that, the proposition that was laid down in the said case was that, if the building was structurally separate, the question of clubbing together would not arise. However, if the buildings are mutually dependent and form an integral unit, it has to be assessed as a single unit. The examples for such integral units cited were a W.P.C No. 45147 of 2024 12 2025:KER:42218 house with a garage, out-houses for servants, latrines, cow- shed etc. Of course, the instances of various buildings in a hotel complex or factory were also referred to in the said decision. However, the ultimate finding in the said decision in facts of that case was that, the clubbing the building was not proper.
13. On going through the statutory stipulations contained in Sub-Section (5) of Section 5 of the Act, which is relied on by the respondents for clubbing all the buildings of the petitioner in same compound including the new building, it can be seen that, even though said provision contemplates for adding the plinth area of certain structures to the plinth area of the main building, for the purpose of assessment of building tax, the nature of the building/structures referred to in the sub-section is very much crucial. It is to be noted that the expression used in Sub-Section (5) of the Act reads as follows: "Where there are out- houses, garages or other structures appurtenant to the building for the more convenient enjoyment of the building.".
W.P.C No. 45147 of 202413
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14. Thus, the intention behind incorporation of Sub- Section (5) of the Act appears to be that, for the purpose of building tax, in cases where the structures similar to the nature of out-houses, garages, appurtenant to the building, which are required for more convenient enjoyment of the main building, the plinth area of such structures have to be added to the plinth area of the main building. A careful reading of subsection (5) of section 5 would indicate that, as rightly pointed out by the learned counsel for the petitioner, the principles of Ejusdem generis have to be applied while interpreting the term "other structures appurtenant to the building" . In other words, that expression has to be understood, in terms of the nature of the buildings specifically referred to in the said provisions, namely "out-houses and garages". As far as the petitioner's building is concerned, evidently the same is claimed to be used for running a hospital where the treatment for persons with kidney diseases are provided. Therefore, such a building, if it is structurally different, cannot be brought within the purview of class/category of the structures included in Sub-Section (5)of W.P.C No. 45147 of 2024 14 2025:KER:42218 the Section 5 of the Act. This is particularly because, a building used for providing treatment, cannot be understood as structures failing in the class or category of "outhouses and garages" which cannot have any independent existence at all. Since the petitioners building provides services to patients with kidney diseases, the major purpose and function of his building is to provide health care facilities and treatment . While going through the statutory wording of Sub section 5 of Section (4) and it's proviso , it relates more to the household aspects and the function and purpose of the household activities. Thus, the purpose and function of petitioners building is different from what is intended under Sub section 5 of Section (4) and its proviso. Therefore, I do not find that the finding entered into by the respondents for clubbing all the buildings together by including the new building is legally sustainable.
15. There is yet another aspect which fortifies the aforesaid view. There is no dispute in this case that, as far as the other buildings are concerned, they were already subjected to tax by completing the assessment. The new assessment was W.P.C No. 45147 of 2024 15 2025:KER:42218 necessitated when the petitioner had constructed a new building in the very same compound. The re-assessment of a building, the construction of which is already completed and subjected to tax, can be done only under the circumstances contemplated under Sub-Section (4) of Section 5 of the Act. However, going through the said provision it can be seen that, such a reassessment is contemplated only in cases where the plinth area of such a building is subsequently increased by new extensions or major repair or improvement. As far as the new building constructed by the petitioner in this case is concerned, under no circumstances, such a building can be treated as an extension of the existing building, or a major repair or improvement. Section 2(k) of the Kerala Building Tax Act defines 'Plinth area ' as follows; "plinth area" means the area included in the floor of a building and where a building has more than one floor the aggregate area included in all the floors together". Thus, even as per the definition of 'Plinth Area' under sec 2 (k), the area included in the floor of a building is only considered. It does not refer to any building that is W.P.C No. 45147 of 2024 16 2025:KER:42218 structurally separate, which is very conspicuous. Therefore, on that reason also the finding entered into by the respondents, required to be interfered with.
16. Of course, being a hospital, there may be sharing of the common facilities to some extent, including the sharing of the administrative machinery of the hospital and the amenities therein. However, going through the statutory provision contained in Sub-Section (5) of Section 5 of the Act, where the addition of plinth area of a structure which does not form part of the original building is contemplated, I do not find that a building in the nature of the petitioner's could be included therein. As mentioned above, subsection (5) of Section 5 contemplates addition or major repair to the building, which evidently refers to the additional constructions structurally attached to the building. Moreover, merely because there is sharing of some of the common amenities/facilities between the buildings, that would not be sufficient to bring such a building within the class of structures similar to "outhouses and garages" as contemplated under section 5(4) of the Kerala Building W.P.C No. 45147 of 2024 17 2025:KER:42218 Tax Act. In such circumstances, I find that, the impugned orders are to be interfered with and the matter has to be remitted to the 3rd respondent to pass fresh assessment orders, after confirming that the building is structurally separate. It is clarified that, in case it is found that the building is structurally separate, the new building has to be assessed separately.
17. As far as the next contention with regard to the question of exemption is concerned, evidently the same was rejected by the respondents without referring to the said question to the Government, apparently on the reason that the new building was clubbed together with the other buildings existing in the said compound, for the purpose of tax. It is also discernible from the impugned orders that, the exemption claimed by the petitioner in respect of the existing buildings was already considered by the Government and the exemption was specifically rejected by issuing an order in this regard. Therefore, in those circumstances, the decision taken by the respondents not to refer the question of exemption to the Government was justifiable. However, in case the new building W.P.C No. 45147 of 2024 18 2025:KER:42218 has to be separately assessed, the said question has to be decided by the Government, as it is an independent building and therefore a fresh consideration is required. As pointed out by the learned Government Pleader, while considering the said question, the observations made by this Court in the Lisie Medical Institutions's (supra), would come into play. Anyhow, it is a question that has to be examined by the Government on the basis of the materials placed before the Government, if it is referred for consideration.
In such circumstances, this writ petition is disposed of, quashing Exts.P1, P3 and P5 orders with a direction to 3 rd respondent to reconsider the assessment of the petitioner and to carryout the assessment of the new building of the petitioner separately, if it is structurally different. In the event of separate assessment being made, the claim of exemption has to be decided and for the said purpose, the matter has to be referred to the Government for an appropriate decision. The 3 rd respondent shall do the needful in the light of the aforesaid directions within a period of two months from the date of receipt W.P.C No. 45147 of 2024 19 2025:KER:42218 of a copy of this judgment, after giving the petitioner an opportunity for being heard. In the event of assessment is made in favour of the petitioner or the exemption is granted to the petitioner, the excess amount, if any, collected from the petitioner by way of building tax, shall be refunded to the petitioner within a reasonable time.
Sd/-
ZIYAD RAHMAN A.A. JUDGE rpk W.P.C No. 45147 of 2024 20 2025:KER:42218 APPENDIX OF WP(C) 45147/2024 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 04.07.2023 ISSUED BY 3RD RESPONDENT Exhibit P2 TRUE COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT DATED 05.08.2023 Exhibit P3 TRUE COPY OF THE ORDER PASSED BY 2ND RESPONDENT DATED 20.10.2023 Exhibit P4 TRUE COPY OF THE REVISION FILED BEFORE THE 1ST RESPONDENT DATED 14.11.2023 Exhibit P5 TRUE COPY OF THE ORDER PASSED BY 1ST RESPONDENT DATED 11.9.2024 Exhibit P6 TRUE COPY OF THE GOVERNMENT ORDER GO(RT)NO.3698/16/RD DATED 19-09-2016 Exhibit P7 TRUE COPY OF THE CHEQUES SUBMITTED BEFORE THE VILLAGE OFFICER DATED 04- 08-2023 Exhibit P8 TRUE COPY OF THE CHEQUES SUBMITTED BEFORE THE VILLAGE OFFICER DATED 18- 11-2023