IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH MONDAY, THE 2ND JUNE 2008 / 12TH JYAISHTA 1930 WP(C).No. 20107 of 2007(R) -------------------------- PETITIONER: ------------ M/S.CHOICE CANNING COMPANY, A DIVISION OF M/S.CHOICE TRADING CORPORATION, PALLURUTHY, REPRESENTED BY IT'S DIRECTOR, MR.P.BALACHANDRAN. BY ADV. SRI.C.A.MAJEED SRI.SHAJAHAN P.M. RESPONDENTS: ------------- 1. STATE OF KERALA, REPRESENTED BY PRINCIPAL SECRETARY TO GOVT.REVENUE (SPECIAL CELL) DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. DISTRICT COLLECTOR, CIVIL STATION, ERNAKULAM. 3. TAHSILDAR, KOCHI, TALUK OFFICE, FORT KOCHI. BY GOVERNMENT PLEADER, SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH, J. --------------------------------- W.P.(C).No.20107 of 2007-R --------------------------------- Dated this the 2nd day of June 2008 J U D G M E N T Petitioner is a company. In its name a building housed in two floors, namely, the ground floor and the first floor is built. In the ground floor, there is admittedly a factory. In the first floor housed is an office, laboratory and room where the packing materials are stored. Assessment proceedings were commenced under the Kerala Building Tax Act. Exemption was granted only in respect of ground floor. The petitioner has approached this Court earlier by filing O.P.No.33354/2000 challenging the assessment order. By an interim order produced as Ext.P7, this Court directed the factories Inspector to file a report as to whether the entire building is principally used as a factory building and the approximate area covered by the building. Ext.P8 report was filed by the Inspector, which reads as follows:- “Choice Canning Company, Pulimuttupalam, Kochi is a registered factory with Regn.No.CHN/03/133/90 for processing of marine products, employing 80 workers and using 361 KW. The whole building is covered under the licence and is used as a factory. The approximate plinth area of the building including the two floors is 1680 m2.” 2. Thereafter, by Ext.P9, there was a direction to the Tahsildar to conduct inspection of the building and file a report W.P.(C).No.20107/2007-R -: 2 :- about the installations and activities in the petitioner's building in respect of which building tax exemption was claimed. This was followed by Ext.P10 judgment. Inter alia, the learned Single Judge found that from the report of the Tahsildar it is clear that the ground floor is principally used as Factory. It is further ordered as follows:- “However, it is stated that the first floor is office building. If the ground floor and first floor are separate and distinct units for separate use, then of course the ground floor which is principally used as factory only is entitled to exemption from building tax. The first floor is to be separately assessed as it is used for commercial purpose i.e. for office use. The W.P. is therefore disposed of directing the Tahsildar to hear the petitioner and issue a detailed order granting exemption to the eligible area and to make assessment for the area used as office. Recovery proceedings will continue to remain stayed for two months and in between the Tahsildar will issue fresh order as above and thereafter recovery will be limited to the tax payable for the office building. The payment if any made will be adjusted towards tax liability due for the office building.” 3. Ext.P11 is a communication by which the District Collector referred the matter to the Government for a decision under Section 3(1)(b) of the Building Tax Act, 1975. Therein it is held as follows:- W.P.(C).No.20107/2007-R -: 3 :- “The Hon'ble High Court's direction was complied by the assessing authority and a detailed verification was conducted on 31/12/2005. The Tahsildar has reported that the plinth area of the building as per approved plan is 1287m2 and on verification it was found that the actual plinth area to be 2770.26m2. The soaking area, Freezer store, Raw section, Packing area, Plant Room are functioning in the Ground Floor and the office room, packing material, store and the laboratory are functioning in the Ist Floor. The plinth area of the office reported to be 129.6m2. The Tahsildar has reported that the office is functioning as a part of the factory and not used as a distinct unit. It is also reported that the company is functioning for the processing of sea food products and 75 employees are working in the factory at present.” 4. It is thereafter that Ext.P12 order is passed. In Ext.P12 all that was stated after referring to the contentions of the parties as follows:- “4. In this case the Hon'ble High Court as per judgment dated 15th February, 2005 in O.P.No.33354 of 2000 has directed the Tahsildar to hear the petitioner and issue a detailed order granting exemption to the eligible area and to make assessment for the area used as office. The Court has also observed that if the ground floor and first floor are separate and distinct units of separate use, then of course the ground floor which is principally used as factory only is entitled to get exemption from building tax. Hence the ground floor of the building alone is eligible to be exempted from building tax under Section 3 (1)(b) of the Kerala Building Tax Act, 1975 and the first floor has to be separately assessed for building tax, as it is used for commercial purpose i.e. for office use.” W.P.(C).No.20107/2007-R -: 4 :- 5. I heard the learned counsel, Sri.C.A.Majeed appearing on behalf of the petitioner and also the learned Government Pleader. Petitioner challenges Ext.P12 order. Learned counsel for the petitioner submits that having regard to Exts.P9 and P11 namely, the report of the factory Inspector and also of the Tahsildar referred to by the District Collector and Ext.P10 judgment, Ext.P12 cannot be sustained. Learned Government Pleader on the other hand submits that this is a case where only the ground floor is entitled for exemption. According to him on a totality of the facts, factory is only functioning in the ground floor. In this connection both the parties sought for the support from the definition of factory under Section 2(m) of the Factories Act. 6. Counsel for the petitioner stressed on the word's definition of factory. Under Section 2(m) “factory” means any premises including the precincts thereof. It is also contended that it should also take in the portion contained in the first floor. 7. Having regard to the materials placed before me, I think that this matter should be reconsidered by the first respondent. For that purpose Ext.P12 is quashed. In view of the fact that Ext.P12 is being quashed Ext.P13 will also stand quashed. There will be a direction to the first respondent to take a fresh decision, W.P.(C).No.20107/2007-R -: 5 :- in accordance with the law, within a period of two months, after affording an opportunity of hearing to the petitioner. (K.M.JOSEPH, JUDGE) ms