IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 2ND SEPTEMBER 2010 / 11TH BHADRA 1932 WP(C).No. 33061 of 2007(J) -------------------------- PETITIONER: --------------- SREE NARAYANA DHARMA PRABODHINI SABHA KUMBALANGHI SOUTH P.O. KOCHI 682 007 REPRESENTED BY ITS SECRETARY, SHRI V.V.SUDHEER. BY ADV. SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE SRI.S.SUJIN RESPONDENTS: --------------- 1. THE TAHSILDAR, KOCHI. 2. SECRETARY TO GOVERNMENT REVENUE (SPECIAL CELL) DEPARTMENT GOVT.OF KERALA SECRETARIAT, THIRUVANANTHAPURAM. R1 AND R2 BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) 33061 OF 2007 APPENDIX PETITIONER'S EXHIBITS: EXT. P1 : TRUE COPY OF THE NOTICE DATED 4.5.2007 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONER. EXT. P2 : TRUE COPY OF THE REPLY DATED 14.5.2007 SUBMITTED BY THE PETITIONER BEFORE THE FIRST RESPONDENT. EXT.P3 : TRUE COPY OF THE NOTICE DATED 11.7.2007 ISSUED BY THE DEPUTY SECRETARY, REVENUE (SPECIAL CELL) DEPARTMENT, GOVERNMENT OF KERALA, TRIVANDRUM TO THE PETITIONER. EXT. P4 : TRUE COPY OF THE ORDER DATED 4.9.2007 ISSUED TO THE PETITIONER BY THE PRESIDENT, KUMBALANGHI GRAMA PANCHAYATH. EXT. P5 : TRUE COPY OF THE ORDER DATED 4.9.2007 ISSUED BY THE SECOND RESPONDENT. EXT. P6 : TRUE COPY OF THE PROCEEDINGS OF THE FIRST RESPONDENT NO. B2 – 1484/07 DATED 17.9.2007 EXT. P7 : TRUE COPY OF THE ASSESSMENT ORDER NO. B2 – 1484/07 DATED 17.9.2007 ISSUED TO THE PETITIONER BY THE FIRST RESPONDENT. EXT. P8 : TRUE COPY OF THE DEMAND NOTICE DATED NO. B2 1484/2007 DATED 17.9.2007 ISSUED TO THE PETITIONER BY THE FIRST RESPONDENT. EXT. P9 : TRUE COPY OF THE STATEMENT BY THE PETITIONER' BEFORE THE 1ST RESPONDENT ON 14.5.2007 EXT. P10 : TRUE COPY OF THE STATEMENT GIVEN BY THE PETITIONER BEFORE THE GOVERNMENT ON 31.07.2007 /TRUE COPY/ P.S. TO JUDGE P.R. RAMACHANDRA MENON, J. .............................................................................. W.P.(C) No. 33061 OF 2007 ......................................................................... Dated this the 2nd September, 2010 J U D G M E N T The petitioner is challenging the correctness and sustainability of the Exts.P5 to P7 orders passed by the respondents with regard to assessment of the building tax under Section 5 of the Kerala Building Tax Act . The case of the petitioner is that the petitioner is a charitable institution pursuing charitable activities and it is in connection with the same , a 'hall/kalyanamandapam' was constructed with intend to give it for the use of the members, who mostly belong to the lower strata of the society, collecting only a nominal amount, more particularly towards electricity charges . It is also the case of the petitioner that the petitioner is giving the said hall 'free of cost' for almost all philanthropic activities being pursued at the instance of the local authorities as certified by the concerned Grama Panchayat vide Ext. P4. W.P.(C) No. 33061 OF 2007 2 2. Assessment proceedings were initiated against the petitioner, issuing Ext. P1 notice, when the position was brought to the notice of the first respondent, pointing out that the petitioner is entitled to have exemption as provided under Section 3(1) (b) of the 'Act'; besides raising other contentions as well. On raising the plea of exemption, as provided under Section 3(2) of the Act, the matter was referred to the Government for its decision. On receipt of the reference, Ext.P3 notice was issued with regard to the hearing scheduled and after hearing the petitioner, Ext. P5 order was passed by the Government on 04.09.2007, rejecting the claim for exemption. This was followed by Exts. P6 and P7 assessments made by the first respondent fixing a liability of Rs.30,600/-, which in turn was demanded as per Ext.P8. The petitioner is challenging Exts. P5 to P8 in this Writ Petition. 3. The first respondent has filed a counter affidavit seeking to sustain the course and events pursued by the assessing authority as well as the Government . With regard to the issue in hand, it is asserted that the petitioner institution is a charitable W.P.(C) No. 33061 OF 2007 3 institution by itself is not a ground for granting exemption; as absolutely no material was produced by the petitioner before the Government to show that the building was mainly used for charitable activities . It is also stated that the petitioner has admitted collection of amounts (though describing it as 'small amounts') from the members with regard to the use of the above Hall. It is also observed therein that no 'statement of accounts' was ever produced by the petitioner to substantiate the position with regard to the claim of charitable activities and non-collection of any rent from the members/general public. It was after considering such vital aspects, that the second respondent/Government passed Ext.P5 order declining the relief sought for . 4. In spite of the specific observations made in Ext.P5, the petitioner has not chosen to produce any statement of accounts, at least before this Court to substantiate the claim for exemption. No copies of the audited balance sheet or extracts of accounts have been brought to light. This being the position, the reasoning given by the second respondent in Ext.P5 for rejecting the claim W.P.(C) No. 33061 OF 2007 4 for exemption appears to be very much correct and sustainable and the same does not call for any interference, more so, when the scope of judicial review in such instance stands restricted, as made clear by a Division Bench of this Court in Thirurangadi Muslim Orphanage Committee vs. Govt. of Kerala & Another (2007(2) KHC 822) 5. However, Mr.N.N.Sujanapalan, the learned Sr. Counsel appearing for the petitioner submits that the rejection of the claim for exemption does not give any passport to the assessing authority to have the assessment finalised, adopting a course quite contrary to the statutory prescriptions. The learned Senior Counsel submits that Ext. P5 order is dated 04.09.2007 and immediately after passing the same, the first respondent / assessing authority passed Exts. P6 and P7 assessment orders on 17.09.2007 i.e, within a couple of weeks, that too, even without issuing any notice to the petitioner with regard to the extent of assessment. In other words, Exts. P6 and P7 have been passed behind the petitioner without giving any opportunity of hearing and as a natural consequence, the petitioner stands W.P.(C) No. 33061 OF 2007 5 divested of the opportunity to substantiate the figures with regard to the plinth area and other relevant aspects, to have fixed the quantum. 6. Heard the learned Government Pleader. 7. Going by the contents of Ext. P7, the notice referred to therein as item No.2 is Ext.P1 notice issued by the first respondent on 04.05.2007 and it was on receipt of the said notice, that the claim for exemption was raised by the petitioner. It is settled law that once a claim for exemption is received, the assessing authority is not supposed to proceed to make any assessment, but is required to make a reference for decision of the Government as provided under Section 3(2) of the Kerala Building Tax Act, which in turn has been satisfied in the present case. When the claim for exemption is rejected, the matter has to be considered by the assessing authority with regard to the extent of fixation of liability, for which, 'hearing' is essential, enabling the assessee to substantiate his version. In view of the fact that no opportunity has been afforded to the petitioner, after rejecting the claim for exemption vide Ext. P5 W.P.(C) No. 33061 OF 2007 6 and before passing Exts. P6/P7 orders of assessment, this Court does not require a second thought to hold that it is in contravention of the statutory prescriptions and the principles of natural justice. 8. Accordingly, Exts.P6 and P7 orders are set aside. The first respondent is directed to consider the matter afresh and finalise the proceedings with regard to fixation of quantum, after giving an opportunity of hearing to the petitioner. This shall be done as expeditiously as possible, at any any rate within 'three months' from the date of receipt of a copy of this judgment. The Writ Petition is disposed of. P.R. RAMACHANDRA MENON, JUDGE. lk