Kerala High Court
Parisons Infrastructure (P) Limited vs Tahsildar on 10 March, 2025
WP(C) NO.2019/2015 1
2025:KER:19624
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SYAM KUMAR V.M.
MONDAY, THE 10TH DAY OF MARCH 2025 / 19TH PHALGUNA, 1946
WP(C) NO.2019 OF 2015
PETITIONER:
PARISONS INFRASTRUCTURE (P) LIMITED
NEAR CUSTOMS HOUSE, BTP ROAD,
WILLINGDON ISLAND, COCHIN - 682 009.
BY ADVS.
PARVATHI S
UTHARA ASOKAN(K/001361/2020)
K.I.MAYANKUTTY MATHER (SR.)(K/272/1984)
RESPONDENTS:
1 TAHSILDAR
TALUK OFFICE, FORT KOCHI, KOCHI 682001.
2 STATE OF KERALA
REPRESENTED BY SECRETARY TO THE GOVERNMENT OF
KERALA, REVENUE (SPECIAL CELL) DEPARTMENT,
SECRETARIAT, THIRUVANANTHAPURAM - 695 001.
BY ADV.
SRI.ARUN AJAY SHANKAR, GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 10.03.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
WP(C) NO.2019/2015 2
2025:KER:19624
C.R.
JUDGMENT
Dated this the 10th day of March, 2025 The short question that arises for consideration in the Writ Petition is whether the petitioner's premises could be termed a 'factory,' entitling it to claim exemption from payment of building tax that would otherwise be payable under the Kerala Building Tax Act, 1975 (hereinafter referred to as "the Act of 1975").
2. Petitioner is an incorporated entity engaged in the business of storing, pumping and transporting petroleum Class B and edible oils. Petitioner has for the said purpose put up at Thoppumpady Village, 12 tanks for storing Petroleum Class B each having a capacity of 17380 KL and 9 vegetable oil tanks for storing edible oils, each having a capacity of 292215 KL. Permission in the said respect had been granted to the petitioner under Section 41 A of the Factories Act, 1948 by the Labour and Rehabilitation Department of Government of Kerala as revealed by Ext.P1. Petitioner had also been granted Ext.P2 licence by the Department of Factories and Boilers, Government of Kerala. Ext.P3 licence to import and store petroleum in the facility put up has also been secured by the WP(C) NO.2019/2015 3 2025:KER:19624 petitioner from the Dy. Chief Controller of Explosives. The Corporation of Cochin had issued Ext.P4 Occupancy certificate to the petitioner with respect to the buildings forming part of the facility situated at Thoppumpady Village. While so, Ext.P5 notice was issued to the petitioner by the 1 st respondent Tahsildar, Taluk Office, Fort Kochi in connection with the proposed assessment under the Act of 1975. Petitioner issued Ext.P6 reply inter alia pointing out that the relevant building is registered under the Factories Act and is principally used as a Factory and hence no part of the said building can be assessed to tax as factories have been exempted from the purview of the Act of 1975. The documents sought in Ext.P5 was also produced before the 1 st respondent. Nevertheless, the building of the petitioner was assessed to one-time tax and hence Ext.P7 representation was preferred reiterating that the factory building of the petitioner cannot be exigible to tax under the Act of 1975. The petitioner was later afforded a hearing by the 2 nd respondent and was called upon vide Ext.P8 to produce the muster roll of the employees for the past 6 months for satisfying itself regarding the number of employees employed in the petitioner's premises. The same was duly complied with as revealed by Ext.P9. The petitioner WP(C) NO.2019/2015 4 2025:KER:19624 was also called upon vide Ext.P10 to submit an affidavit stating the details of permanent employees and the same was complied with vide Ext.P11. Thereafter to the surprise of the petitioner, Ext.P12 demand notice was issued by the 1 st respondent demanding payment of Rs. 1,80,000/- towards building tax along with cess of Rs.3,600/- in lumpsum or 4 installments. Petitioner issued Ext.P13 letter inter alia pointing out that they had not been intimated regarding the outcome of the representation made before the 2 nd respondent or regarding order, if any, passed thereupon. It is only then that the petitioner was issued with a copy of Ext.P14 order issued by the 2nd respondent rejecting the exemption sought by the petitioner under the Act of 1975. This Writ Petition is thus filed seeking the following reliefs:
"(i) to call for the records leading up to Exhibit P5 notice issued by the 1st respondent, Exhibit P12 demand notice issued by the 1st respondent and Ext.P14 order passed by the 2nd respondent, and to quash the same by issuance of a writ of certiorari, or any other appropriate writ, order or direction;
(ii) declare that the premises of the petitioner Near Customs House, BTP Road, Willingdon Island, Cochin-682009 is a factory under the Factories Act, and hence entitled for exemption under Section 3(1)(b) of the Kerala Building Tax WP(C) NO.2019/2015 5 2025:KER:19624 Act;
(iii) grant such other reliefs which this Hon'ble Court deems fit and proper to grant in the light of the facts and circumstances of the case and in the interests of justice.
3. A counter affidavit has been filed by the 1 st respondent inter alia stating that though the petitioner claims to be covered by the Factories Act, nothing had been produced to support the said contention and that proper muster roll was not being maintained by the petitioner. Only 3 to 5 persons had been seen to affix their signature on one or two pages of the muster roll. No manufacturing process was taking place in the relevant building and the same was used only to store and supply petroleum products. No licence to supply edible oils had been obtained by the petitioner. The muster roll had only 3 to 5 labourers working in the premises. As per the provisions of the Factories Act, a factory should have at least 10 persons as workers. For the said reasons, the building of the petitioner does not come under the definition of factory building and hence is not entitled to exemption under the Act of 1975.
4. Heard Smt.Parvathy.S., Advocate for the petitioner and Sri. Arun Ajay Sankar, Government Pleader for the respondents. WP(C) NO.2019/2015 6
2025:KER:19624
5. Contentions of the petitioner in brief:
• Exts.P5 notice, P12 demand and P14 order are illegal and violative of Section 3 (1) (b) of the Act of 1975 and Section 2
(m) and 2 (k) of the Factories Act.
• Section 3 (1) (b) of the Act of 1975 exempts places being used as factories and workshops from building tax. • Petitioner's building and its premises qualify as a factory and are thus entitled to exemption from tax under the Act of 1975. • Ext.P1 GO, which was issued to the petitioner to set up the facility, is issued under the Factories Act and Rules. The same are special enactments. Once the building and its premises are certified as a Factory, the authorities under the Act of 1975 cannot treat the building differently.
• Ext.P12 demand notice under the Revenue Recovery Act is dated 17.11.2014. Ext.P14 order is dated 29.10.2014. Ext.P14 order was not served on the petitioner till Ext.P13 dated 20.12.2014 was preferred. This shows the malafides on the part of the first and second respondents.
• Ext.P14 order is totally illegal and violates Section 3(1)(b) of the Act of 1975, and Sections 2(m) and 2(k) of the Factories WP(C) NO.2019/2015 7 2025:KER:19624 Act.
• The muster roll submitted to the 2 nd respondent contains the requisite number of employees to meet the mandates of the Factories Act.
• No evidence or finding of a conclusive nature has been presented to conclude that the petitioner's building is not being used as a factory.
• The 2nd respondent's finding that the petitioner procured no license for edible oil is incorrect.
• The 2nd respondent's finding in Ext.P14 that no production activities are carried out on the premises is unwarranted and will not deprive a factory of its status.
• Buildings ancillary to a factory are also eligible for exemption under Section 3(1)(b). Reliance is placed on the judgment of this Court in Mathrubhumi Printing and Publishing Co. Ltd. v. State of Kerala and another (2023 (6) KLT 767). • To understand the purpose and object of giving an exemption under Section 3 (1) (b) of the Act of 1975, the building has to be a factory as defined under the Factories Act. In the absence of any definition of factory under the Act of 1975, the definition WP(C) NO.2019/2015 8 2025:KER:19624 in the Factories Act has to be considered. Reliance was placed on the dictum laid down in State of Kerala and others v. Joseph D Cunha [2013 KHC 3673] and Dream World Water Park, Trichur v. Tahsildar, Mukundapuram Taluk and others [2013 (4) KHC 471]
6. Contentions of the respondents in brief:
• The challenges put forth against Exts.P5, P12 and P14 are not sustainable in law.
• Ext.P14 order is legal and valid. Petitioner is bound to remit the amount sought under Ext.P12 demand notice. • Petitioner's premises do not qualify as a factory so as to entitle exemption. The same is only a storage unit. • It is a terminal and intermediary area where the relevant material is stored. No manufacturing process is being carried out in the building and the petitioner's premises. • The product's character does not change while it is handled in the petitioner's building. Mere storage of a product cannot be considered part of the 'manufacturing process'. • Taxation statutes are to be interpreted widely so as to achieve its objective. Reliance is placed on the dictum laid down in WP(C) NO.2019/2015 9 2025:KER:19624 Maheshwari Fish Seed Farm v. T.N. Electricity Board and another [(2004) 4 SCC 705] • At the time of hearing, the petitioner had not produced any relevant documents to support the contention that the disputed building falls under the purview of the Factories Act. • After hearing and enquiry, it was clearly found that no manufacturing process was taking place in the building, which is used to store and supply petroleum products. • No licence was obtained by the petitioner. Only 3 to 5 labourers were working as per the muster roll, and henceforth, the said building will not come under the ambit of the Factories Act.
• Though the petitioner was given several opportunities to produce records to substantiate their contention, they failed to produce any reliable records.
• The Deputy Tahsildar was deputed to inspect and verify the records, but again the petitioner failed to produce any documents.
• Proper Muster rolls were not maintained and only 3 to 5 persons were seen affixing their sign on two or three pages of WP(C) NO.2019/2015 10 2025:KER:19624 the roll.
• Reliance is placed on the dictum laid down in Mohamed Haneef v. & Co. and others v. Regional Director, Employees State Insurance Corporation. [1969 KHC 4706]; Himalaya Drug Company v. State of Kerala (2020 (3) KLT
799) and Dream World Water Park, Trichur v. Tahsildar, Mukundapuram Taluk and others [2013 (4) KHC 471] Discussion and analysis
7. Section 3 of the Act of 1975 relates to exemptions. It reads as follows:
"3. Exemptions.- (1) Nothing in this Act shall apply to- (a) buildings owned by the Government of Kerala or the Government of India or any local authority; and (b) buildings used principally for religious, charitable or educational purposes or as factories or workshops.
Explanation.- For the purposes of this sub- section, "charitable purpose" includes relief of thepoor and free medical relief. (2) If any question arises as to whether a building falls [under sub- section (1) or underSection 3A], it shall be referred to the Government and the Government shall decide the question aftergiving the interested parties an opportunity to present their case. (3) A decision of the Government under sub-section (2) shall be final and shall not be called inquestion in any Court of law."
Thus, buildings used principally as 'factories' are exempted from the Act of 1975. The question to be answered is whether the petitioner's WP(C) NO.2019/2015 11 2025:KER:19624 building qualifies for such an exemption. The Act of 1975 does not define a 'factory'. The meaning of the said term will have to be understood from elsewhere. Smt. Parvathy would contend that since the terms 'factory' and 'manufacturing process' have been defined in the Factories Act, 1948, the said definition should apply. She relies on the dictum in Dream World Water Park (supra) to support the said contention. The term 'manufacturing process' is defined in Section 2 (k) (ii) of the Factories Act, 1948 as including 'pumping oil, water, sewage or any other substance'. The term 'Factory' has been defined in Section 2 (m) (i) of the Factories Act of 1948 to mean any premises including the precincts thereof, where ten or more workers are working or were working on any day 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. Explanation 1 to Section 2 (m) states that for computing the number of workers for the purpose of the clause, all workers in different groups and relays in a day shall be taken into account. It is thus contended by the learned counsel for the petitioner that the building and premises of the petitioner wherein 'pumping oil' is being carried out and wherein as reflected from Ext.P9 muster rolls workers sufficient to meet the WP(C) NO.2019/2015 12 2025:KER:19624 statutory mandates had been working, qualify as a factory and is thus entitled to exemption in Section 3 of the Act of 1975.
8. Sri. Arun Ajay Sankar, on the other hand, would contend that a 'factory' invariably presupposes that some 'manufacturing process' is undertaken or carried out therein. According to him, a building wherein a raw material or substance is brought in and is simply stored there for some time, only to be taken out later in the same physical condition, without any change whatsoever to its nature, character or form, cannot by any stretch of imagination be termed as a place where any 'manufacturing process' worth the term is being undertaken. Merely because the material is being pumped in and out using an electric motor pump does not qualify the premise to be termed a 'factory'. Any such interpretation of the terms 'manufacturing process' and 'factory' would negate the object of the relevant taxing statute. Reliance is placed on the dictum laid down by the Hon'ble Supreme Court in Maheshwar Fish Seed Farm (supra) to buttress this contention. In the said case, while considering the question whether the term 'Agriculture' would include 'pisciculture' too, as some statutes had included the latter within the definition of the former, it was held by the Hon'ble WP(C) NO.2019/2015 13 2025:KER:19624 Supreme Court that for such an interpretation to be sustained, firstly the statutes ought to be in pari materia. Further, a definition coined by the legislature for the purpose of a particular enactment though is often extended or an artificial meaning assigned to it to fulfill the object of that enactment, such definitions given in other enactments cannot be freely used for finding out the meaning to be assigned to a term of common parlance used in an altogether different setting. Pointing to the dictum laid down in Dream World Water Park (supra) wherein it was held that mere pumping of water cannot be meant to understand that the building involved is principally used as a factory, Sri. Arun Ajay Sankar submits that mere pumping in and out of petroleum or edible oils carried on in the building and premises of the petitioner will not qualify it as a factory entitling exemption from the Act of 1975. He points to the following quote in Maheshwar Fish Seed Farm (supra) of Justice G.P. Singh in Principles of Statutory Interpretation (9th Edn., 2004, at p.163) "[I]t is hazardous to interpret a statute in accordance with a definition in another statute and more so when such statute is not daling with any cognate subject or the statutes are not in pari materia."
The learned Government Pleader thus insists on a purposive WP(C) NO.2019/2015 14 2025:KER:19624 interpretation and approach while discerning the scope, ambit and meaning of the relevant words used in the statute, especially a taxing statute, with a proper appreciation of the context in which it had been used rather than a perfunctory understanding of the term and importing the same to understand the meaning of the similar word in another statute which has a totally different purpose and import.
9. Though I am impressed by the contentions put forth by Sri. Arun Ajay Sankar, I am afraid the same cannot be accepted in the facts and circumstances of the case at hand. The building of the petitioner satisfies the twin conditions needed for being a factory. 'Pumping oil' as required in Section 2 (k) (ii) of the Factories Act, 1948 to qualify as a 'manufacturing process' is admittedly being carried out from the relevant building and its premises. The dictum in Dream World Water Park (supra), wherein the use of a motor pump to pump water into the Water Theme Park was held not to bring the park within the ambit of a factory, cannot be put to use here as facts and circumstances substantially differ. Regarding the second requirement for being termed a factory viz., the number of workers employed, though essentially a question of fact, the requirement of WP(C) NO.2019/2015 15 2025:KER:19624 minimum numbers of workers employed in the premises by the petitioner is prima facie seen satisfactorily met by the petitioner with around 14 workers being employed as envisaged in the explanation to Section 2 (m) of the Factories Act, 1948. (See Ext.P9 Muster roll). The relevant mandates having thus been met, the need to dwell further into the nature of the 'manufacturing process' or the very existence or not of such a process does not arise. Once the mandates of the statute, as understood in its natural and literal sense are satisfactorily met, the benefits or exemptions as statutorily ordained would at once follow and vest in the person envisaged. Any further enquiry that would require a foray beyond the realm of the statutory precepts, would be a violation of the legislative intent. I hence refrain from doing the same.
10. Hence, from the above discussion, it is only to be concluded that the petitioner's building meets the mandate to be termed a 'factory' and is thus eligible for exemption as envisaged in the Act of 1975. Accordingly, this Writ Petition is allowed. Exts.P12 and P14 are quashed. No costs.
Sd/-
SYAM KUMAR V.M. JUDGE csl WP(C) NO.2019/2015 16 2025:KER:19624 APPENDIX OF WP(C) 2019/2015 PETITIONER'S EXHIBITS EXHIBIT P1 TRUE COPY OF THE ORDER DT.14.3.07 ISSUED BY THE LABOUR AND REHABILITATION DEPARTMENT, GOVERNMENT OF KERALA IN FAVOUR OF THE PETITIONER.
EXHIBIT P2 TRUE COPY OF THE LICENCE RENEWED BY THE DEPARTMENT OF FACTORIES AND BOILERS, GOVERNMENT OF KERALA IN FAVOUR OF THE PETITIONER DATED 20.2.13.
EXHIBIT P3 TRUE COPY OF THE LICENSE NO.
P/HQ/KL/15/1293 (P59884) DT. 07.5.10
ISSUED IN FAVOUR OF THE PETITIONER.
EXHIBIT P4 TRUE COPY OF THE OCCUPANCY CERTIFICATE
DATED 04.04.2014 ISSUED BY THE
CORPORATION OF COCHIN IN FAVOUR OF THE
PETITIONER
EXHIBIT P5 TRUE COPY OF THE NOTICE DT. 19.8.13
ISSUED TO THE PETITIONER BY THE 1ST
RESPONDENT.
EXHIBIT P6 TRUE COPY OF THE REPLY TO EXT.P5 NOTICE
SUBMITTD BY THE PETITIONER TO THE 1ST
RESPONDENT DT. 26.8.13.
EXHIBIT P7 TRUE COPY OF THE REPRESENTATION DT.
19.9.13 SUBMITTED BY THE PETITIONER TO
THE 2ND RESPONDENT.
EXHIBIT P8 TRUE COPY OF THE NOTICE DT. 30.12.13
ISSUED BY THE 2ND RESPONDENT TO THE
PETITIONER.
EXHIBIT P9 TRUE COPY OF THE MUSTER ROLL SUBMITTED TO
THE 2ND RESPONDENT.
EXHIBIT P10 TRUE COPY OF THE LETTER DATED 02.06.2014
SENT BY THE 1ST RESPONDENT TO THE
PETITIONER
WP(C) NO.2019/2015 17
2025:KER:19624
EXHIBIT P11 TRUE COPY OF THE AFFIDAVIT DT. 12.6.14
SUBMITTED BY THE PETITIONER TO THE 1ST
RESPONDENT.
EXHIBIT P12 TRUE COPY OF THE DEMAND NOTICE DT.
17.11.14 ISSUED BY THE 1ST RESPONDENT TO
THE PETITIONER.
EXHIBIT P13 TRUE COPY OF THE LETTER DT. 20.12.14 SENT
BY THE PETITIONER TO THE 1ST RESPONDENT.
EXHIBIT P14 TRUE COPY OF THE ORDER DT. 29.10.14
PASSED BY THE 2ND RESPONDENT.
ADDL. DOCUMENTS:
EXHIBIT P15 TRUE COPY OF THE LICENSE DATED 26.11.2023
ISSUED BY THE DEPARTMENT OF FACTORIES AND BOILERS, GOVERNMENT OF KERALA TO THE PETITIONER EXHIBIT P16 PHOTOGRAPH DISCLOSING THE EXTERNAL VIEW OF THE FACTORY PREMISES EXHIBIT P16(a) PHOTOGRAPH DISCLOSING THE PUMPING STATION WITHIN THE FACTORY