IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH FRIDAY, THE 30TH JANUARY 2009 / 10TH MAGHA 1930 WP(C).No. 32330 of 2008(W) -------------------------- PETITIONER(S): --------------- PROVINCIAL SUPERIOR, FRANCISCAN CLARIST CONGREGATIN OF NUNS, VIMALA PROVINCE, NIRMALA BHAVAN, KAVMPADY ROAD, MUVATTUPUZHA -16. BY ADV. MR.MOHAN JACOB GEORGE SMT.P.V.PARVATHI SMT.REENA THOMAS MR.L.RAM MOHAN RESPONDENT(S): --------------- 1. STATE OF KERALA, REPRESENTED BY ITS PRINCIPAL SECRETARY TO GOVERNMENT, REVENUE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANATHAPURAM. 2. TAHSILDAR,MUVATTUPUZHA. 3. VILLAGE OFFICE, MUVTTUPUZHA. GOVERNMENT PLEADER MR.BEJOY CHANDRAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ' C.R. ' K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 32330 OF 2008 W ```````````````````````````````````````````````````` Dated this the 30th day of January, 2009 J U D G M E N T Petitioner challenges Exts.P3, P7 and P8. A direction is sought to consider Ext.P6 and to take further steps in accordance with law. 2. Briefly put the case of the petitioner is as follows. Petitioner is the Provincial Superior of Franciscan Clarist Congregation of Nuns which is a religious Congregation of Nuns. It is a charitable society under the Travancore Cochin Literary, Scientific & Charitable Societies Registration Act. Ext.P1 is produced as its registration certificate. It is the case of the petitioner that the primary and main objective of the society is working for the welfare of the poor. It is with the intention of fully satisfying the aims and objectives of the Congregation that a hospital by name 'Nirmala Medical Centre' was constructed at Muvattupuzha and the same is providing free medical relief to the poor, it is stated. It is also the case that the medicines are also WPC.32330/08 : 2 : supplied free of cost by the hospital for the cancer patients and a separate portion of the building itself is dedicated for Pain and Palliative Care Section and absolutely free treatment is provided not only for the cancer patients but in respect of all other departments, it is submitted. Even in respect of those persons from whom nominal fee is collected, the same is not on any commercial basis, it is contended. Ext.P2 is produced as certificate issued by the Income Tax Officer to contend that it is a charitable institution and is registered under section 12AA of the Income Tax Act. Ext.P3 is a notice issued dated 4.10.2008 by the Tahsildar, Muvattupuzha under the Building Tax Act, 1975 directing the petitioner to produce the documents to substantiate the building tax return filed by the petitioner. It is stated that the notice was issued under section 7(2) of the Building Tax Act which was repealed and non existent. She was advised that the notice can be construed as a notice under section 7(3) of the Act. The petitioner filed Ext.P4 on 7.10.2008 seeking 20 days time. Thereafter, the petitioner went to Rome in connection with the canonization ceremony of St.Alphonsa. It is stated that the WPC.32330/08 : 3 : building including the Chappel and the Convent are entitled for exemption. The petitioner filed Ext.P5 representation dated 10.10.2008. Petitioner also filed Ext.P6 return, it is stated, along with a covering letter dated 17.10.2008. It is while so, the petitioner is served with Ext.P7 assessment order dated 15.10.2008 and Ext.P8 demand notice dated 15.10.2008. 3. A statement has been filed by the respondent wherein it is, inter alia, stated as follows: A multi storied building having plinth area of 15,997.14 sq.m. was built to run a hospital named Nirmala Medical Centre. The ground floor and first floor were completed in 2001 and the second floor was completed in 2006 and 2008. It is stated that the respondent issued notice to the Provincial Superior for hearing on 7.10.2008. The Assistant PRO requested 20 days time. 7 days time was granted. But, the petitioner did not produce any documents or records. The petitioner did not file return to the assessing authority. It is stated that the building is not used principally for charitable purposes and that the assessment order was passed after giving time to produce documents. It is stated WPC.32330/08 : 4 : that the order was passed on expiry of the allowed time to produce documents. The Village Officer measured the plinth area as the petitioner did not submit the completion report or returns. Notice in Form No.IV is also issued. It is stated that the respondent has asked the petitioner several times to file the return. The petitioner was given opportunity to file arguments. It is stated that the hospital comprises luxury rooms and pay wards. 4. The petitioner has filed reply affidavit in which it is, inter alia, stated as follows. The application for exemption was submitted by the petitioner and copy of the same was also submitted by registered post enclosing Ext.P5. Ext.P9 is the copy of the acknowledgment card dated 15.10.2008. There is denial of the allegation that the petitioner was asked to file return. It is stated that the construction of the second floor was completed in July 2008. It is also stated that the hospital is an ordinary hospital. 5. I heard learned counsel for the petitioner Sri.Mohan Jacob George and learned Government Pleader Sri.Bejoy Chandran. Learned counsel for the petitioner would submit that the procedure adopted by the assessing officer is unsustainable. WPC.32330/08 : 5 : He would submit that no notice was issued under section 7(3) of the Building Tax Act. The only notice issued was the notice in form IV issued under section 9(2)/9(4) of the Act which is produced as Ext.P3. Ext.P3 is dated 4.10.2008 and the petitioner was given only three days' time. It is further submitted that unless there is a notice issued under section 7(3), resort cannot be made to section 9(4) of the Act. He submits that when a statute commands that things must be done in a particular manner, it impliedly forbids the doing of the act in any other manner. He further relied on the decision of the learned single Judge of this court in Kuriyakose Vs. Municipal Council, Sherthallai [1981 KLT 122] to contend that even the time granted under Ext.P3 is unacceptable in law. He would further submit that the petitioner had indeed given the application seeking exemption on 15.10.2008 and actually the order has been passed later on but pre-dating it so as to make it appear that it is passed on 15.10.2008. It is also pointed out by the learned counsel for the petitioner that the assessment order has been afflicted with another vitiating fact, namely, it is not supported by reasons. WPC.32330/08 : 6 : 6. Per contra, learned Government Pleader would submit that here is a case where the petitioner has to file return as contemplated in sub section 7. He places reliance on the Kerala Building Tax (Plinth Area) Rules after the amendment brought about by SRO No.218/07. After amendment, Rule 5 of the Kerala Building Tax (Plinth Area) Rules reads as follows. “ The return under sub-section (1) or (3) of Section 7 or Section 8 shall be in Form II and it shall be filed within two months from the date of completion of construction, major repairs or improvement of the building or actual occupation of the building whichever is earlier.” He would further contend that while it is true that no return has been filed by the petitioner, not having filed the return, the petitioner cannot assail the assessment proceedings. He contends that the assessment can be sustained having regard to the fact that when there is a duty to file return under section 7(1) read with Kerala Building Tax (Plinth Area) Rules as amended within a time limit, it is open to the officer to feel not satisfied and proceed to assess the petitioner when return is not filed. 7. In order to appreciate the contention of the parties, it is WPC.32330/08 : 7 : necessary to refer to sections 7, 8 and 9 and they are extracted below. “ 7. Return of completion etc., of building -- [(1) The owner of every building the construction of which is completed, or to which major repair or improvement is made on or after the appointed day shall furnish to the assessing authority a return in the prescribed form within the prescribed period along with a copy of the plan approved by the local authority or such other authorities as may be specified by the Government in this behalf and verified in the prescribed manner and containing such particulars as may be prescribed] (2) xxxxxx (3) If the assessing authority is of opinion that any person is liable to furnish a return under sub - section (1), then, notwithstanding anything contained in that sub-section, it may serve a notice, upon that person requiring him to furnish within such period, not being less than thirty days from the date of service of notice, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner and containing such particulars as may be specified in the notice. (4) The assessing authority it may, if it WPC.32330/08 : 8 : satisfied that it is necessary so to do, extend the date for the furnishing of the return under this section. 8. Return after due date and amendment of return - If any person has not furnished a return within the time allowed by or under Section 7, of having furnished a return under that section discovered any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment it made. 9. Assessment - (1) If the assessing authority is satisfied that a return made by an owner under section 7 or section 8 is correct and complete, it shall assess the amount payable by him as building tax or luxury tax on the basis of the return. (2) If the assessing authority is not so satisfied, it shall serve a notice on the assessee either to attend in person at its office on a date to be specified in the notice or to produce or cause to be produced on that date any evidence on which the assessee may rely in support of his return. (3) The assessing authority, after hearing such evidence as the assessee may produce and such other evidence as it may require on any specified point and after WPC.32330/08 : 9 : conducting such inquiries or inspection as it may consider necessary, shall by, order in writing, assess the amount payable by him as building tax. (4) For the purpose of making an assessment under this Act, the assessing authority may serve on any person who has made a return under sub section 1 of section 7 or section 8 or upon whom a notice has been served under sub section 3 of section 7, a notice requiring him to produce or cause to be produced on a date specified in the notice such records or other documents as the assessing authority may require. (5) If any person fails to make a return in response to any notice under sub section 3 of section 7, or fails to comply with the terms of any notice issued under sub section 2 or sub section 4 of this section, the assessing authority shall assess the amount payable by the person as building tax to the best of its judgment.” A perusal of section 7(1) would show that there is a duty cast on the owner of every building who has completed the construction or who was carried out a major repair or improvement after the appointed day to furnish return within the time prescribed. Originally sub section 2 of section 7 did contemplate a time limit WPC.32330/08 : 10 : within which the return was to be filed. However, with effect from 10.2.1992, sub section 2 was deleted. Thereafter, it is only by the amendment by SRO No.218/07 as already noted, Rule 5 of the Kerala Building Tax (Plinth Area) Rules was amended enjoining duty of the owner to file a return within two months as already noted. Therefore, after the amendment, there can be no doubt that there is a duty to file a return. The petitioner did not file any return till 17.10.2008. But, the question that is posed before me cannot be answered only with reference to the fact that the petitioner did not file the return. The question will be what is the repercussion of the omission of the petitioner and what is the power of the assessing authority in such circumstances? 8. Sub section 3 of section 7 provides that the officer may call upon the owner to file return. It further contemplates that the owner must be given a period which is not less than 30 days to file the return. Sub section 4 of section 7 further empowers the officer to extend the period for filing the return. Section 8 confers a right upon the assessee, who has already filed a return, to file a revised return before the assessment is completed. The assessment, per WPC.32330/08 : 11 : se, is dealt with under section 9. Section 9(1) contemplates a situation where the assessee has filed the return under section 7 or 8. It further contemplates a contingency where the assessing authority is satisfied that the return is correct and complete. In that event, the assessing authority is bound to assess the amount payable by the assessee as building tax or luxury tax on the basis of the return. Sub section 2 of section 9 and the interpretation of which is the subject matter of the controversy in this case in my view does not lend itself to the construction sought to be placed thereon by the learned Government Pleader. It speaks about the assessing authority not being satisfied. If the interpretation of the learned Government Pleader is to be accepted, it is possible for the assessing authority even in the absence of return to arrive at a condition of mind where he is not satisfied and then he can issue a notice under sub section 2 calling upon the assessee to adduce evidence. There are at least two indications in the provision which dissuade me from accepting the contention raised by the learned Government Pleader. In the first place, the words “is not so satisfied” in sub section 2 of section 9 can bear meaning only WPC.32330/08 : 12 : when one considers the words ‘ is satisfied ’ in sub section 1. The words ‘ is satisfied ’ in sub section 1 of section 9 is employed with reference to the return filed by the owner under section 7 or 8. Therefore, the words ‘ is not satisfied ‘ used in sub section 2 can bear a fruitful meaning only in a situation where the assessee has filed a return. In other words, sub section 2 contemplates a situation where the assessing authority is not satisfied with the contents of the return filed by the owner. This view is further reinforced when one considers the purpose of issuing the notice in sub section 2 of section 9. The purpose of the notice under sub section 2 of section 9 is to enable the owner to produce on the day any evidence on which he relies in support of his return. Therefore, the whole purpose of issuing notice under sub section 2 of section 9 is to adduce evidence in support of the return and it would become totally meaningless in the absence of a return and it becomes purposeful only when a return is filed. 9. Sub section 3 of section 9 contemplates passing of an order by the assessing authority after hearing evidence as produced under sub section 2 and any other evidence as may be WPC.32330/08 : 13 : required on a specified point and further after conducting such enquiry. Sub section 4 of section 9 enables the officer to serve on a person who has filed return under sub section 1 of section 7 or section 8 or upon whom a notice has been served under sub section 3 of section 7, a notice requiring him to produce or caused to be produced such records or such documents as the assessing authority may require. Here again, the notice is contemplated on a person who has filed return under section 7 or 8 or upon whom a notice has been served under sub section 3 of section 7. Lastly, sub section 5 appears to provide for a best of judgment assessment as it provides that if the person does not file a return after a notice is issued under sub section 3 of section 7 or does not comply with the terms of a notice under sub section 2 or sub section 4 of the section, the assessing authority is to assess the amount to the best of his judgment. Under sub section 5 also, unless there is a notice issued under sub section 3 of section 7 or a notice is issued under sub section 2 or sub section 4 of section 9 and he does not comply with it, the assessing authority is not empowered to pass an order of assessment. WPC.32330/08 : 14 : 10. Learned Government Pleader would submit in this context that under sub section 5 the words used is ‘ or ‘ and not ‘ and ‘ and even if a notice is not issued under section 7(3), in view of the fact that Ext.P3 is a notice in form IV under section 9(2)/9(4) and there is a failure on the part of the petitioner to produce evidence, it is open to pass the order which has been passed by the officer. I would think there is no merit in the said contention. Admittedly, there is no notice under sub section 3 of section 7. A notice under sub section 2 of section 9 can be issued as already noted, only when there is a return filed under section 7 or 8 and sub section 2 contemplates a notice to produce evidence for the assessee to make good his return. I have also noticed that sub section 4 of section 9 contemplates only the situations where there is return under section 7 or 8 or a notice has been issued under sub section 3 of section 7 and it is responded in a breach of the direction. 11. In the facts of this case, there was no return filed by the petitioner till 17.10.2008. In such circumstances, section 9(2) is patently inapplicable for the reasons which I have already WPC.32330/08 : 15 : indicated. So also as no return was filed under section 7 or 8 and no notice was issued under section 7(3), there was no basis to issue a notice under section 9(4) in a case where no return has been filed by the assessee. Therefore, issuance of Ext.P3 was patently unsustainable and this is as a notice under section 9(2) can be issued only if a return has been filed under section 7 or 8 of the Act. It is noted that the petitioner offered to file the return within 20 days. Sub section 3 of section 7 in fact provides for a period of not less than 30 days for filing the return. I also note that the petitioner did admittedly file the return on 17.10.2008 which is within 20 days as offered by the petitioner. Sub sections 9(1), (2) and (3) together contemplate a situation where the party has filed a return. Sub section 4 only provides for the power to issue notice to produce records. Sub section 5 provides for the consequence of failure to comply with the notices under section 7(3) or 9(2) or 9 (4). If this is taken as an order under section 9(5), then as already noted the impugned order can only be dubbed as illegal as neither was there a warrant of notice under section 9(2) or 9(4) nor was a notice issued under section 7(3). If that be so, the assessment WPC.32330/08 : 16 : order also must be held vitiated. 12. Learned Government Pleader made a submission that while section 7(1) employs the words “shall” when it cast a duty on the owner to file a return, when it comes to sub section 3 of section 7 the word used is “may”. The word “may” employs a discretion and no mandatory duty flows from section 7(3), runs the argument of the learned Government Pleader. Per contra, learned counsel for the petitioner would point out that in the context which the word “may” occurs and having regard to its purport, the word “may” shall be read as “shall”. I have already referred to the manner in which the provisions stand integrated with each other. It may be true that after the amendment, a person may have a duty to file the return within the period indicated in the rules. Failure to file the return may have a consequence as may be provided in law. But the question that would remain in focus is the power of the assessing authority when no return is filed. I have already indicated that the consequence if return has not been filed as also the situation where no notice is issued under section 7(3). If no return is filed WPC.32330/08 : 17 : under section 7(1) or 8 and no notice is issued under section 7(3), then, it is not open to the assessing authority to complete the assessment and pass an order under section 9. This being the consequence of non issuance of notice under section 7 and having regard to the need for the assessing authority to bring to tax the buildings which are otherwise exigible to tax, I would think the word “may” in the circumstances must mean “shall”. For any other interpretation would clothe the authority with a discretion to assess to tax some buildings within the ambit of net of tax buildings. On the other hand, if the word “shall” is used, it would lead to the assessments of all buildings which are otherwise exigible to tax as provided in section 9. The legislature intended that in a case where return is not filed by the assessee, a duty on the part of the authority to issue notice under section 7(3) and proceed to make the assessment. It cannot be the case of the revenue that assessments need not be made as the making of the assessment advances public good and public interest as the collection of tax is in public weal. 13. In the light of this discussion, Ext.P3 notice, Ext.P7 WPC.32330/08 : 18 : assessment order and Ext.P8 demand notice can only be found to be illegal and they are liable to be quashed. I take note of the fact that the petitioner has already filed the return and there is no need to issue a notice under section 7(3). In the light of the fact that there is a claim of exemption raised, there can be a direction to the Tahsildar to refer the claim of the petitioner under section 3(3) of the Act. Accordingly, I quash Exts.P3, P7 and P8 and there will be a further direction to the 1st respondent to refer the question of whether the petitioner is entitled to exemption within two weeks from the date of receipt of a copy of this judgment to the 1st respondent. The 1st respondent shall proceed to consider the matter with an opportunity of hearing to the petitioner within three months of the date of receipt of the reference from the Tahsildar. I make it clear that this will not stand in the way of any action which may be taken for non-filing of the return within time. Writ petition is disposed of as above. (K.M.JOSEPH, JUDGE) aks