Kerala High Court
Miraj Divakaran Parayil vs The Thrissur Corporation on 10 April, 2025
Author: Bechu Kurian Thomas
Bench: Bechu Kurian Thomas
WP(C) NO. 8023 OF 2024
1
2025:KER:38150
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
THURSDAY, THE 10TH DAY OF APRIL 2025 / 20TH CHAITHRA, 1947
WP(C) NO. 8023 OF 2024
PETITIONER :
MIRAJ DIVAKARAN PARAYIL,
AGED 51 YEARS,
S/O. DIVAKARAN PARAYIL, PARAYIL HOUSE,
PARAYIL LANE, M.G ROAD, POOTHOLE S.O,
THRISSUR DISTRICT, PIN - 680004
BY ADVS.
SHRI.M.R.DHANIL
SMT.SENITTA P. JOJO
RESPONDENTS :
1 THE THRISSUR CORPORATION,
REPRESENTED BY ITS SECRETARY,
CORPORATION OFFICE, THRISSUR DISTRICT,
KERALA, PIN - 680001
2 THE SECRETARY, THRISSUR CORPORATION,
CORPORATION OFFICE, THRISSUR DISTRICT,
KERALA, PIN - 680001
BY ADV SHRI.SANTHOSH P.PODUVAL
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
04.03.2025, ALONG WITH WP(C).2711/2023 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Corrigendum dated 02.06.2025
The words "on the same day" appearing in the last line of this page
shall stand corrected and substituted with the words "on 10.04.2025".
Sd/-
BECHU KURIAN THOMAS, JUDGE
RKM
WP(C) NO. 8023 OF 2024
2
2025:KER:38150
BECHU KURIAN THOMAS, J.
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WP(C) Nos.2711/2023, 861/2024, 1152/2024, 1266/2024,
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2384/2024, 2625/2024, 2664/2024, 2666/2024, 2762/2024,
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33264/2023, 33347/2023, 33569/2023, 3097/2024, 34151/2023,
3136/2024, 3150/2024, 3673/2024, 3684/2024, 34927/2023,
4227/2024, 4264/2024, 4283/2024, 35246/2023, 35919/2023,
5533/2024, 5591/2024, 36263/2023, 5879/2024, 36596/2023,
36678/2023, 6049/2024, 6241/2024, 37132/2023, 37409/2023,
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10254/2024, 10329/2024, 10333/2024, 40918/2023, 10470/2024,
10471/2024, 40984/2023, 10534/2024, 10587/2024, 41113/2023,
10793/2024, 10821/2024, 10825/2024, 10877/2024, 11348/2024,
11488/2024, 41980/2023, 12133/2024, 12237/2024, 12364/2024,
12379/2024, 12490/2024, 12688/2024, 12719/2024, 12781/2024,
44132/2023, 12899/2024, 12937/2024, 12959/2024, 43261/2023,
13091/2024, 13258/2024, 43859/2023, 13603/2024, 14181/2024,
44176/2023, 44208/2023, 13948/2024, 44242/2023, 14270/2024,
14640/2024, 14646/2024, 15064/2024, 15303/2024, 15396/2024,
16010/2024, 16464/2024, 16678/2024, 17271/2024, 17700/2024,
17988/2024, 18420/2024, 19202/2024, 19226/2024, 19285/2024,
19369/2024, 19389/2024, 19944/2024, 20125/2024, 20247/2024,
20255/2024, 20389/2024, 20442/2024, 20500/2024, 20606/2024,
21016/2024, 21205/2024, 21439/2024, 21677/2024, 21740/2024,
21830/2024, 22384/2024, 22636/2024, 23066/2024, 23237/2024,
23438/2024, 23454/2024, 23522/2024, 23600/2024, 24030/2024,
24818/2024, 25502/2024, 25629/2024, 25845/2024, 25910/2024,
WP(C) NO. 8023 OF 2024
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29422/2024, 29663/2024, 29725/2024, 30157/2024, 30060/2024,
30070/2024, 30230/2024, 30233/2024, 30237/2024, 30258/2024,
30307/2024, 30309/2024, 30582/2024, 30800/2024, 31328/2024,
32942/2024, 33956/2024, 34359/2024, 37429/2024, 38067/2024,
38322/2024, 38436/2024, 38454/2024, 38783/2024, 39104/2024,
42384/2024, 43823/2024, 43838/2024, 44637/2024, 45122/2024
Dated this the 10th day of April, 2025
COMMON 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 WP(C) NO. 8023 OF 2024 4 2025:KER:38150 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 as 01.04.2016.
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 WP(C) NO. 8023 OF 2024 5 2025:KER:38150 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) WP(C) NO. 8023 OF 2024 6 2025:KER:38150 of the Act, the Municipality took steps for collection of property tax as per the procedure prescribed under the Rules. Subsequently, the implementation of the revised tax was, by a Government Order, made with effect from 01.04.2013. However, since the procedure in various Municipalities and Corporations were not completed and demands were not made immediately thereafter, the Government had, in public interest, permitted the Local Self Government Institutions to levy the revised property tax with effect from 01.04.2016 as per G.O.(Rt) No.540/2019/LSGD dated 06.03.2019. The said order, extending the date of levy of revised property tax from 01.04.2013 to 01.04.2016 took into consideration the quantum of background work, data collection and data entry required and to be verified, which was a time-consuming process.
7. It is pleaded that the said Government Order prescribes that, wherever tax was levied and collected at the revised rates prior to 01.04.2016, it shall be adjusted towards the liability from 01.04.2016 and thereby the Government Order has been issued to streamline the property tax collection. It is further stated that though the Government has the power for retrospective imposition of tax, in the instant cases there are no retrospective fixation or retrospective revision of tax. The property tax was revised and fixed with effect from 01.04.2013 itself and hence there was no retrospectivity, but is made prospectively from WP(C) NO. 8023 OF 2024 7 2025:KER:38150 01.04.2013 and later, since the procedural formalities were not completed, the demand alone was made belatedly by some of the Local Self Government Institutions. Referring to section 282 of the Act it was pointed out that the notice can be issued within four years from the date on which such person should have been assessed. It is further pleaded that none of the notifications have been challenged nor has any of the amendments been questioned and therefore the remedy of the petitioners is to file a statutory appeal.
8. I have mainly heard Sri. Nimod, Sri. Parthasarathy, Sri. Joseph Sebastian, Sri. T. M Abdul Latheef, Sri. K. P Sudheer, Sri. Sabu George, Sri. Millu Dandapani and other respective learned counsel for the petitioners. I also heard Sri. Santhosh Poduval the learned Standing Counsel for Thrissur Corporation and Smt. Deepa K.R., the learned Special Government Pleader on behalf of the respondents.
9. The issues that arise for consideration are:
(i) What is the mode of assessment contemplated under section 233 of the Act as well as the Rules thereon?
(ii) What are the requirements under the Act and the Rules that have been complied with by the Thrissur Municipality?
(iii) Whether there are any non-compliances with the requirements and if so, whether such non-compliance would affect the levy and the consequential demand?
(iv) Whether the power under section 282 of the Act can be exercised to levy property tax from 2016-17 onwards?
(v) Whether the demand notices issued in the instant cases are barred by WP(C) NO. 8023 OF 2024 8 2025:KER:38150 limitation?
(vi) Whether the rules are unconstitutional since under Article 243X only the Legislature of a State can make a law for levying tax ?
10. Before dealing with the aforesaid issues, it is necessary to refer to the interpretation to be adopted while considering a taxing provision. The method of interpretation to be adopted in respect of a taxing statute has been laid down in various decisions, including Commissioner of Sales Tax, U.P v. Modi Sugar Mills Ltd. [AIR 1961 SC 1047]. In a recent decision in Chief Commissioner of Central Goods and Service Tax and Others v. Safari Retreats Private Limited and Others [2024 SCC Online SC 2691], the Supreme Court had reiterated the principles that govern the interpretation of a taxing statute. Those principles are extracted below:
"RULES REGARDING THE INTERPRETATION OF TAXING STATUTES
25. ............. The principles governing the interpretation of the taxation statutes can be summarised as follows:
a. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise;
b. If the language of a taxing provision is plain, the consequence of giving effect to it may lead to some absurd result is not a factor to be considered when interpreting the provisions. It is for the legislature to step in and remove the absurdity;
c. While dealing with a taxing provision, the principle of strict interpretation should be applied;
d. If two interpretations of a statutory provision are possible, the Court ordinarily would interpret the provision in favour of a taxpayer and against the revenue;
e. In interpreting a taxing statute, equitable considerations are entirely out of place;
WP(C) NO. 8023 OF 2024 9 2025:KER:38150 f. A taxing provision cannot be interpreted on any presumption or assumption;
g. A taxing statute has to be interpreted in the light of what is clearly expressed. The Court cannot imply anything which is not expressed. Moreover, the Court cannot import provisions in the statute to supply any deficiency;
h. There is nothing unjust in the taxpayer escaping if the letter of the law fails to catch him on account of the legislature's failure to express itself clearly;
i. If literal interpretation is manifestly unjust, which produces a result not intended by the legislature, only in such a case can the Court modify the language;
j. Equity and taxation are strangers. But if construction results in equity rather than injustice, such construction should be preferred;
k. It is not a function of the Court in the fiscal arena to compel the Parliament to go further and do more;
l. When a word used in a taxing statute is to be construed and has not been specifically defined, it should not be interpreted in accordance with its definition in another statute that does not deal with a cognate subject. It should be understood in its commercial sense. Unless defined in the statute itself, the words and expressions in a taxing statute have to be construed in the sense in which the persons dealing with them understand, that is, as per the trade understanding, commercial and technical practice and usage."
11. With the above principles in mind, the issues mentioned earlier are considered as below:-
Issue No.(i) What is the mode of assessment contemplated under section 233 of the Act as well as the Rules thereon?
12. Part IXA of the Constitution of India deals with Municipalities. Article 243X confers power upon the State Legislature to authorise a Municipality to levy, collect and appropriate taxes, duties, tolls and fees in accordance with such procedure as may be specified by law. In accordance WP(C) NO. 8023 OF 2024 10 2025:KER:38150 with the aforesaid power, the State has enacted section 233 of the Act, enabling every Council of a Municipality to levy property tax on every building situated within its area and not exempted under the Act. Till 2009, property tax was levied on the basis of the annual value of a building, calculated on the basis of the annual rent that can be received for the property. However, by Act 30 of 2009, the provision was substituted providing for levy of property tax on the basis of plinth area of the building.
13. Section 233(2)(a) of the Act as was enacted in 2009, contemplated the Government to fix, by notification, the minimum and maximum limits of rates of basic property tax that can be made applicable to one square metre of plinth area of different categories of buildings and the date that it shall come into force. Seven categories had been specified in the provision of which the seventh was a general category and section 233(2)(b) enables the Government to fix sub categories of the above referred seven categories of buildings.
14. After the Government prescribes the minimum and maximum limits of rate of basic property tax, as mentioned in the preceding paragraph, the Council of the respective Municipality has to fix, as per section 233(3) of the Act, the rates of basic property tax as applicable to each category of building within its area and such rates shall be the same for all buildings of the same category or its sub category. Sub-section (5) of section 233 of the WP(C) NO. 8023 OF 2024 11 2025:KER:38150 Act stipulates that the Government must by notification, fix the date from which the basic property tax fixed by the Council shall come into force. After the basic property tax rate is fixed, various other steps are also required to be carried out to arrive at the annual property tax of a building.
15. For easier comprehension, the different stages and steps in fixing the annual property tax of a building in a Municipality are narrated below:
Stage 1. Fixing the basic property tax.
1. Government to fix the minimum and maximum limits of rates of basic property tax for one square metre of plinth area for the different categories of buildings and notify the date that it shall come into force. [See Sec.233(2)]
2. Municipality to inform the public through publication in the notice board and in a newspaper about the Council's intention to fix the basic property tax and invite objections. [See section 233(3) & Rule 4(2)].
3. Fix the rates of basic property tax for each category or sub-
category of buildings by a resolution of the Municipal Council. [See Sec.233(3) and Rule 4(1)]
4. The final rates of basic property tax fixed by the Council, including the date of commencement and period of operation shall be published on the noticeboard of the office of Municipality and in two newspapers. [See Sec.233(3) and Rule 4(4)]
5. Government to notify the date on which the rates of basic property tax fixed by the Council shall come into force. [See WP(C) NO. 8023 OF 2024 12 2025:KER:38150 Section 233(5)].
6. Classify the Municipality into prime zones, secondary zones and tertiary zones and publish a notice inviting objections to such classification. [See Rule 7(1)].
7. Finalise the zones after examining the objections and publish them on the notice board of the Municipality. [See Rule 7(3)]
8. Classify the roads and pathways within the Municipality as roads having a width of 5 m and more/less than 5 m, apart from pathways with a width of 1.5 m or less. [See Rule 8].
9. Assess the basic property tax of a building by multiplying the basic rate of property tax with the plinth area of the building. [See Rule 5(2) and Sec.233(6)].
Stage 2. Assessment of Annual Property Tax.
1. A public notice in Form-1 shall be published by the Municipality, containing the details helpful to the owners to assess the tax by themselves and a summary of the said notice shall be published in two newspapers, requesting the owners of the buildings to submit a tax return. [See Sec.233(10) and Rule 10].
2. The return shall be filed in Form-2, and a model of the form shall be published on the Municipality's noticeboard. [See Sec.233(11) and Rule 11].
3. The Secretary or authorised Officer shall conduct an inquiry/site inspection and assess the property tax by recording the details of the building in the property tax assessment register. [See Sec.233(13) and Rule 12].
4. After the particulars of assessment are recorded in the property tax assessment register and in the property tax demand register, a demand notice shall be issued to each owner of the WP(C) NO. 8023 OF 2024 13 2025:KER:38150 building. [Sec.233(13) and Rule 14].
5. While assessing the property tax, deductions/additions to the basic property tax shall be carried out on the basis of the Schedules to Rule 6. [See Sec.233(7) & Rule 9].
16. It is relevant to mention that there are no deductions or additions provided for buildings in the prime zone, while a deduction of 10% and 20% are provided for buildings in the secondary and tertiary zones respectively. Buildings on the sides of roads having a width of less than 1½ m are to be given 10% deduction and those with no public way facility with a 20% deduction. Buildings with low type roofs like those constructed with tiles, sheets, palm leaf or grass have to be given 10% deduction, while those with concrete roofs will have no deductions. Buildings between 10 and 25 years of age ought to be given a deduction of 10% while those between 25 and 50 years are entitled to a deduction of 20% and buildings of 50 years and more with a deduction of 50%. Notwithstanding the above entitlement for deductions, the total of deductions shall not exceed 75% of the basic property tax. The above mode is to be adopted while fixing the annual property tax of a building in the Municipality.
Issue No. (ii). What are the requirements under the Act and the Rules that have been complied with by the Thrissur Municipality?
17. On 21.10.2011, Municipality passed a resolution fixing rates to be levied for different categories of building. On 22-11-2011, as per resolution WP(C) NO. 8023 OF 2024 14 2025:KER:38150 No. 65, the areas within the Thrissur Corporation were decided to be divided into three different zones and objections were invited as per Ext.R1(b) as required under rule 7 and rule 4(2) respectively of the Rules. The notice is pleaded as published in the Mathrubhumi, Indian Express, General and Veekshanam daily newspapers on 24-05-2013, inviting objections from the public. It is pleaded that, since no objections were received, the basic property tax rates were fixed as per resolution dated 13-11-2013 and the owners of buildings were, by public notice dated 03-03-2014 asked to submit their returns as evident from Ext.R1(c). Thus the requirements under rule 4(4) and rule 7 of the Rules have been complied with. A public notice in Form 1 is also pleaded as having been published by the Corporation in its noticeboards. Issue No.(iii). Whether there are any non-compliances with the requirements and if so, whether such non-compliance would affect the levy and the consequential demand?
18. The two main non compliances by the Thrissur Corporation as is revealed from the pleadings and the documents produced is the absence of publication in two newspapers of the final rates of basic property tax fixed as per resolution dated 13-11-2013, as required under rule 4(4) read with section 233(10) of the Act and the failure to publish the summary of the public notice in Form-1 in two newspapers. This requirement also flows out of section 233(10) of the Act and rule 10 of the Rules. There is nothing to indicate that a summary of the said public notice was published in two WP(C) NO. 8023 OF 2024 15 2025:KER:38150 newspapers, requesting the owners of the buildings to submit a tax return as per rule 10 of the Rules. Rule 10(2) requires the summary of the public notice to be published in two newspapers having circulation in the Municipality. There is no pleading in the affidavit that there was any such publication in newspapers or that the said requirement has been complied with. There is no compliance of rule 10(2) of the Rules. However, the question arises whether the requirement of publication in two newspapers of the final rates of basic property tax fixed and the summary of the public notice under Form 1, is a mandatory requirement or substantial compliance will be sufficient.
19. In Subaidabi K.M. v. State of Kerala [2024 (2) KLT 450], it has been held in respect of the very same Rules relating to Perinthalmanna Municipality that the preliminary proposal under Rule 4(2) is to be published in a newspaper having wide circulation in the area of the Municipality and the final rates of basic property tax is to be published in the notice board of the office of the Municipality and in two newspapers having circulation in the area of Municipality as per Rule 4(4) of the Rules. On the above basis, the final rate of basic property tax fixed in the Perinthalmanna Municipality was interfered with by the learned Single Judge for failure to comply with rule 4(4) of the Rules.
20. Similar situation arises in the present cases also. In the instant cases, there is neither any pleading nor has any newspaper publication been WP(C) NO. 8023 OF 2024 16 2025:KER:38150 produced to satisfy the requirement of rule 4(4) of the Rules. The said rule reads as follows:
"The Secretary shall publish a notification specifying the final rates of basic property tax fixed by the council and the date of its commencement and the period during which it will be in force, the notification shall be published in the noticeboard of the office of Municipality and two newspapers having circulation in the area of the Municipality. Publicity shall be given to the said notification through pamphlets, ward level noticeboards etc."
21. As per section 522 of the Act, every notification, unless otherwise provided, must be published in the Gazette and the Government shall have the power to publish it in any other manner specified by them instead of the Gazette. The publication in the noticeboard of the Municipality and in two newspapers having circulation in the area as provided in rule 4(4) of the Rules can be regarded as another manner specified by the Government for publication. Hence, such a publication is a mandatory requirement as it is required to be a replacement for a notification in the Gazette. The Thrissur Corporation has thus failed to comply with the publication under rule 4(4) of the Rules.
22. As far as the requirement of publication of the public notice under Form 1 as prescribed in rule 10 of the Rules read with section 233(10) of the Act is concerned, it is noticed that the first respondent has published public notice in Form-1, but the summary of the said public notice is not seen WP(C) NO. 8023 OF 2024 17 2025:KER:38150 published in two newspapers. Though, the statutory provision provides only for a public notice and the mandatory requirement of publishing public notice in Form 1 has been complied with, the principle of substantial compliance could be attracted since the newspaper publication required under rule 10 is only a summary of the public notice. In the decisions in Raza Buland Sugar Co. Ltd., Rampur v. Municipal Board, Rampur [AIR 1965 SC 895], Rai Vimal Krishna and Others v. State of Bihar and Others [(2003) 6 SCC 401] and Sonik Industries, Rajkot v. Municipal Corporation of the City of Rajkot [AIR 1986 SC 1518], the Supreme Court has adopted the principle of substantial compliance to justify statutory levies. Hence, it is observed that the respondent Corporation had substantially complied with the requirement of publication under rule 10 of the Rules read with section 233(10) of the Act. However, since rule 4(4) has not been complied with by the Thrissur Corporation, the subsequent compliance of rule 10 serves no purpose and the assessment of property tax and consequential demand cannot sustain under law.
Issue No. (iv) Whether the power under section 282 of the Act can be exercised to levy property tax from 2016-17 onwards?
23. Section 282 of the Act reads as follows;
"S.282. Power to assess in case of escape from assessment.
-- Notwithstanding anything to the contrary contained in this Act or the rules made thereunder, where for any reason a person liable to pay any tax or fees leviable under this Chapter has escaped assessment in WP(C) NO. 8023 OF 2024 18 2025:KER:38150 any half- year, the Secretary may at any time within four years from the date on which such person should have been assessed, serve on him a notice assessing to the tax or fee due and demanding payment thereof within fifteen days from the date of such service and thereupon the provisions of this Act and the rules made thereunder shall, so far as may be, apply as if the assessment was made in the half-year to which the tax or fee relates."
24. A reading of the above provision reveals that the power under section 282 of the Act is to assess a person who has escaped assessment in contradistinction to any amount of tax that has escaped assessment. In other words, if for some reason, a person was not assessed to tax, then the Municipality can, within a period of four years from the date on which such person should have been assessed to tax, assess such person. The power under section 282 of the Act cannot be exercised to levy any additional quantum of tax that was omitted from assessment earlier. The power can be exercised to proceed against persons who were wholly omitted from assessment and not a person who was already subjected to an assesment. Hence, the Municipality cannot assess, under section 282 of the Act, persons who have already been assessed to property tax, whether it be from 2016-17 onwards or otherwise..
Issue No.(v) Whether the demand notices issued in the instant cases are barred by limitation?
25. By a notification dated 06.03.2019, Government has permitted the Municipalities to collect the property tax from 01.04.2016. The said WP(C) NO. 8023 OF 2024 19 2025:KER:38150 notification is not what is contemplated under section 279 of the Act, as concededly it has not been published in the Gazette. According to the Government, the notification issued by it on 06.03.2019 is not a retrospective levy but only to protect the officers of the Municipalities from being proceeded against for non-collection of tax from 01.04.2013. With the above proposition in mind, when the statutory scheme is considered, it needs to be borne in mind that, section 237 of the Act makes the property tax and the surcharge payable thereon, including the service cess when levied, to be a first charge upon the building, land and even upon the movable property belonging to the person liable to pay the tax, subject to the prior payment of land revenue due to the Government. The said provision thus creates a charge on the land as well as the income arising from the property. Creation of a statutory charge is intended to ensure priority in the matter of recovery. In the process of recovery, in the absence of any statutory charge, the liability becomes entangled in the rights and actions created and initiated by other persons as well. It is in such circumstances that the statutory tool of creating a first charge is adopted to provide a priority for payment when recovery modes are resorted to. Such a creation of a statutory charge is not a measure of limitation period but as mentioned above, only to identify who should be given priority in payment.
26. In the year 2023, an amendment was brought in and section WP(C) NO. 8023 OF 2024 20 2025:KER:38150 538B has been incorporated, making arrears of tax to be treated as arrears of public revenue recoverable by recourse to the Revenue Recovery Act. Till the amendment, recovery of arrears of tax could have been carried out only by virtue of the provisions in the Municipality Act. It is only to overcome the limited mode of recovery available under the statute that section 538B has been incorporated enabling the Municipality to resort to the Revenue Recovery Act also for recovery of arrears of tax due to it. Merely because the arrears of tax have been treated as arrears of public revenue, the same would not extend the period of limitation. However, for the purpose of recovery of any sum of money when charged on the land, Article 62 of the Limitation Act prescribes a period of limitation of 12 years. In this context, it has to be observed that section 539 of the Act stipulates that no distraint shall be made, no suit shall be instituted and no prosecution shall be commenced in respect of any sum due to a Municipality under this Act after the expiration of a period of three years from the date on which the distraint might first have been made, suit might first have been instituted or a prosecution might first have been commenced. The proviso to the said section carves out an exemption for recovery of the amount in respect of escaped assessment under section 282 of the Act. Thus, a period of limitation of three years is provided for under section 539 of the Act. The question that begs consideration of this Court is whether, despite the creation of charge on the WP(C) NO. 8023 OF 2024 21 2025:KER:38150 property enabling the Municipality to recover the arrears of tax as arrears of public revenue, the limitation period would stand extended beyond three years.
27. As per Section 29(2) of the Limitation Act, 1963, when a period of limitation is provided under a special law, the said period of limitation shall be deemed to have been incorporated as a limitation period under the Limitation Act. In the decision in Corporation of Cochin v. New India Maritime Agencies (P) Ltd. (2003 (3) KLT 209), a Division Bench of this Court considered the implication of creation of a charge on a property, in relation to the erstwhile Municipal Corporations Act, 1961 and held that, despite such a charge on the property, in view of the limitation prescribed under section 417 of that Act by virtue of section 29(2) of the Limitation Act, recovery of any amount due to the Municipality will be governed by a period of three years. For the purpose of reference, the observations in the aforesaid judgment is extracted as below:
"7..........While S.105 of the Act only says that a charge is created, S.417 of the Act prescribes the period of limitation for recovery of tax. Thus, according to us, the time for recovery of property tax is only three years.........."
28. It would be relevant to mention at this juncture the decision of the Supreme Court in State of Kerala and Others v. V.R.Kalliyanikutty and Another (AIR 1999 SC 1305) as well as the Full Bench judgment in Raveendran Nair M.G. V. State of Kerala and Others (2014 (4) KHC 518). WP(C) NO. 8023 OF 2024 22 2025:KER:38150
29. A perusal of the above decisions will reveal that despite the provisions of the Limitation Act stipulating a period of limitation of 12 years for recovery of the amounts due, when it becomes a charge on the property, the period of limitation stipulated in the special statute will have to be given preference and the same will prevail over the general period prescribed under the Limitation Act. As mentioned earlier, neither section 538B nor section 237 of the Act extends the period of limitation for recovery of amounts due to the Municipality. The creation of a charge on the property as well as the recovery of arrears of tax as an arrear of public revenue would not extend the limitation period prescribed under section 539 of the Act and the Municipalities are governed by the said provision. Viewed in the above perspective, the Municipality could have recovered only amounts as arrears for a period of three years.
30. Apart from the above, even the Government had understood section 539 of the Act as restraining recovery of arrears beyond three years, as is noted from the Government Order dated 06.03.2019. Though the interpretation of the Government cannot be regarded as the law of the land, in view of the discussion in the preceding paragraphs, the view is legally tenable.
31. Thus, even if the demand notices were valid, still the recovery under those notices could not have been initiated for arrears beyond three WP(C) NO. 8023 OF 2024 23 2025:KER:38150 years from the date of demand.
Issue No. (vi). Whether the rules are unconstitutional since under Article 243X only the Legislature of a State can make a law for levying tax ?
32. In W.P.(C) No.35919 of 2024, petitioner has challenged the constitutional validity of the Rules. The contention raised by the petitioner is that under Article 243X, Legislature of a State alone can make laws levying tax and therefore the Rules providing for the procedure for assessment of tax is unconstitutional. At the outset itself it needs to be mentioned that the aforesaid contention is without any merit and is legally untenable.
33. Article 243X empowers the Legislature of a State by law to authorise a Municipality to levy, collect and appropriate such taxes, duties, tolls and fees in accordance with such procedure and subject to such limits. The source of power to legislate a provision as section 233 emanates from Article 243X. In exercise of the said power, the Legislature has made the law in the nature of section 233 of the Act in which the Legislature has prescribed that the procedure for levying tax can be prescribed by Rules. Various sub- sections of section 233 also prescribe the mode in which the tax could be levied and further procedure is prescribed by delegated legislation in accordance with law made by the Legislature. Since the Legislature itself has conferred power upon the Government to make Rules prescribing the procedure, the said Rules cannot be said to be unconstitutional. The contention that unbridled powers have been conferred by the Rules and that WP(C) NO. 8023 OF 2024 24 2025:KER:38150 the procedure cannot be prescribed by the executive or that there is excessive delegation, are all without any merit. Conclusion
34. In the result:
(1) The basic property tax fixation in respect of Thrissur Corporation has not been carried out in accordance with law as it failed to comply with rule 4(4) of the Rules.
(2) Petitioners cannot hence be made liable to pay the annual property tax demanded in the respective demand notices at the revised rates.
All the demand notices impugned in these writ petitions are quashed.
(3) The Thrissur Corporation shall carry out the procedure as prescribed by law from the stage of rule 4(4) of the Rules afresh, without any delay.
(4) After completing the procedure in accordance with law, fresh demand notices can be issued, demanding property tax at the revised rates for the period from three years prior to the date of such demand.
The writ petitions are allowed as above.
Sd/-
BECHU KURIAN THOMAS JUDGE vps/RKM WP(C) NO. 8023 OF 2024 25 2025:KER:38150 APPENDIX OF WP(C) 8023/2024 PETITIONER'S EXHIBITS :
Exhibit P1 TRUE COPY OF THE ONLINE ARREAR DEMAND NOTICE FOR THE BUILDING NO. 38/627 OF THE THRISSUR CORPORATION DATED 24/02/2024 ALONG WITH ITS ENGLISH TRANSLATION Exhibit P2 TRUE COPY OF THE INTERIM ORDER DATED 30/01/2023 IN WP(C) NO. 2822/2023 Exhibit P3 TRUE COPY OF THE INTERIM ORDER DATED 27/09/2023 IN WP(C) NO. 31411/2023 RESPONDENTS' EXHIBITS Exhibit -R1(a) A COPY OF NOTIFICATION NO.(G.O. (P)NO.17/2011/LGD) DATED 14/1/2011 ISSUED BY THE GOVERNMENT ALONG WITH TRANSLATION Exhibit -R1(b) A COPY OF NOTIFICATION NO.(R.1/8109/11) DATED 24/5/13 PUBLISHED BY THE 1ST RESPONDENT ALONG WITH TRANSLATION Exhibit -R1(c) A COPY OF PUBLIC NOTICE NO.(R1/8109/14) ISSUED BY THE SECRETARY, OF 1ST RESPONDENT CORPORATION UNDER FORM 1 DATED 3/3/14.
Exhibit -R1(d) A COPY OF ORDER OF THE GOVERNMENT NO. G.O. 540/2019/LSGD DATED 6/3/19 ALONG WITH TRANSLATION Exhibit -R1(e) A COPY OF DECISION NO.1-OF MUNICIPAL COUNCIL DATED 16/11/19 ALONG WITH TRANSLATION Exhibit -R1(f) A COPY OF NOTIFICATION NO. (R.1/8901/11) DATED 28/12/20.ISSUED BY THE CORPORATION