IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 8TH APRIL 2010 / 18TH CHAITHRA 1932 WP(C).No. 24782 of 2009(P) -------------------------- PETITIONER(S): --------------- M/S.RAJ BUILDERS, REP.BY ITS MANAGING PARTNER SURESH RAJAN, 2ND FLOOR,PALM LANDS COMPLEX, TEMPLE ROAD,ALUVA-683 101. BY ADV. MR. V.V.SURENDRAN MR. P.A.HARISH RESPONDENT(S): --------------- 1. STATE OF KERALA, REP.BY SECRETARY (TAXES),THIRUVANANTHAPURAM. 2. THE TAHASILDAR, (ASSESSING AUTHORITY UNDER THE KERALA BUILDING TAX ACT),THALUK OFFICE,ALUVA. 3. THE REVENUE DIVISIONAL OFFICER, (APPELLATE AUTHORITY UNDER BUILDING TAX ACT), RDO OFFICE,FORT COCHIN,COCHIN-1. 4. THE DISTRICT COLLECTOR, (REVISIONAL AUTHORITY UNDER THE BUILDING TAX ACT), COLLECTORATE,ERNAKULAM. GOVERNMENT PLEADER MR. BIJOY CHANDRAN FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15/12/2009, THE COURT ON 08/04/2010 DELIVERED THE FOLLOWING: WP(C).24782/09-P APPENDIX PETITIONER'S EXHIBITS:- EXT.P1:- TRUE COPY OF AGREEMENT OF SALE OF UNDIVIDED SHARE DT.13.7.06 EXT.P2:- TRUE COPY OF AGREEMENT FOR CONSTRUCTION OF APARTMENT DT.13.7.06 EXT.P3:- TRUE COPY OF SALE DEED NO.5295/05 DT.19.9.05 EXT.P4:- TRUE COPY OF THE BUILDING PERMIT EXT.P5:- TRUE COPY OF REPORT OF THE BUILDING INSPECTOR AND DETAILS OF THE STRUCTURE EXT.P6:- TRUE COPY OF COMPLETION CERTIFICATE OF THE APARTMENT EXT.P7:- TRUE COPY OF ASSESSMENT PROCEEDINGS DT.2.3.07 EXT.P8:- TRUE COPY OF ASSESSMENT ORDER DT.6.3.07 EXT.P9:- TRUE COPY OF ORDER OF THE APPELLATE AUTHORITY DT.28.10.08 EXT.P9(a):- TRUE COPY OF STATEMENT OF ACCOUNTS OF THE FIRM EXT.P9(b):- TRUE COPY OF STATEMENT OF ACCOUNT IN FEDERAL BANK EXT.P9(c):- TRUE COPY OF DO- DO- IN HDFC BANK EXT.P10:- TRUE COPY OF ORDER OF REVISIONAL AUTHORITY DT.25.7.09 RESPONDENT'S EXHIBITS:- NIL OKB //TRUE COPY// P.A. TO JUDGE C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.24782 OF 2009 ------------------------------ Dated this the day of April, 2010 J U D G M E N T ---------------------- 1. Contentions in the writ petition is that the petitioner is the builder and promoter of an apartment complex, “Imperial Park” situated at Thottakkattukara, Aluva, which consists of 20 independent residential apartments. The Building Permit for construction was originally obtained in the name of owners of the land and intending buyers of apartments have entered into distinct agreements with the land owners for purchase of undivided shares along with rights to construct each apartment chosen by them. Those buyers have also entered into separate agreements with the petitioner for construction of the respective apartments. Sale Deeds were executed transferring undivided shares in the land in favour of all the owners, subsequently. The cost of construction of each apartment was met by the individual buyers. Specimen copies of such agreements and Sale Deeds are produced as W.P.(C).24782/09 -2- Ext.P1 to P3. The Building Permit got subsequently transferred into the joint name of all the apartment owners, and completion certificate as evidenced from Ext.P6 was issued in their names, on 21.2.2007. 2. Issue involved in this writ petition is with respect to assessment of tax under the Kerala Building Tax Act, 1975. The petitioner is challenging the assessment made against them, treating the entire complex as a single building and treating the petitioner as owner who is liable for payment of the tax assessed. According to the petitioner, on receipt of notice from the 2nd respondent assessing authority, they appeared before him and clarified that the assessment need be made against owners of all the apartments treating individual apartments as separate buildings. But without affording any opportunity to the petitioner to produce materials to substantiate such claim Ext.P7 and P8 were issued assessing tax on the basis of entire plinth area of the complex and demanding the petitioner to make payment of the entire amount. In Ext.P7 it is stated that the petitioner had failed to produce any documents in proof of the claim for separate assessment. W.P.(C).24782/09 -3- 3. The petitioner filed appeal before the 3rd respondent against Exts.P7 and P8. They produced copies of all relevant agreements, ownership certificates, etc:. It is revealed from Ext.P9 appellate order that the Tahsildar had produced documents such as copies of Sale Deeds, Building permit, occupancy certificate, approved plan and such other documents along with his report. But the appellate authority observed that those documents do not constitute sufficient proof regarding eligibility for separate assessment as provided under Explanation 2 to Section 2(e) of the Act. It is mentioned that the petitioner was not able to produce any substantial proof regarding expenditure of the cost of construction by individual owners and therefore the building in question is not liable to be assessed separately. 4. The petitioner had filed revision before the 4th respondent. Bank statements evidencing cash flow, contributed by each owners and affidavits of some of the apartment owners to the effect that they have expended funds for construction of the flats, were also produced before the revisional authority. But the revisional authority held that relevant evidence to prove that the cost of construction W.P.(C).24782/09 -4- of each apartment was met by each of them is lacking. It is stated that there is no document produced which reveal that payment of the construction of building were made by allottees from time to time while the construction was progressing. Hence the revision petition is dismissed. Challenge is against the assessment confirmed in appeal and revision. 5. In the counter affidavit filed by the 2nd respondent it is contended that the petitioner had failed to produce convincing evidence before any of the authorities to prove that the cost of construction was met by individual owners of distinct apartments at the time of construction and therefore the building in question is not liable to be assessed separately as one coming within the purview of Explanation 2 to Section 2(e) of the Kerala Building Tax Act. Along with I.A.No:14585/2009 the petitioner had produced Ext.P9(a), P9 (b) and P9(c) documents which are Statements of Accounts and Bank Statements which according to them will reveal that there was cash flow during the period of construction from individual owners. Hence it is contended that the building in question is liable to be assessed separately. W.P.(C).24782/09 -5- 6. The question regarding entitlement for separate assessment under Explanation 2 to Section 2(e), mainly depends on the facts and circumstances of each case. The guiding principles in this matter, which need be looked into by the assessing authorities, has been well illustrated in the decision of this court in M/s.Bavasons Constructions (P) Ltd. Vs. State of Kerala (2007 (3) KLT 101). The procedure to be followed while making such assessments is enumerated in the said decision. It is incumbent on the part of the assessing authority to issue notice to all the individual owners and to verify their claims with respect to ownership and also with respect to expenditure of funds for construction. In the case at hand it is evident that none of the authorities had gone deep into any such aspect by proper advertence to the documents produced. No opportunity was seen afforded to any of the individual owners to substantiate their claims. Therefore I am of the opinion that the question as to whether the building is liable for separate assessment has not been properly adverted to or considered in a legal manner. Hence the matter need reconsideration at the hands of the assessing authority. W.P.(C).24782/09 -6- 7. In the result Exts.P7 which were confirmed in Ext.P9 appellate order and further in Ext.P10 revisional order, are hereby quashed. The matter is remanded to the 2nd respondent for finalising fresh assessment. The 2nd respondent shall issue notice to the petitioner as well as to the individual owners of all the apartments, who were holding ownership as on the date of completion of the construction. The parties should be given adequate opportunity to produce all relevant documents to substantiate their claims regarding ownership and expenditure of funds. Fresh assessment shall be completed with due advertence to all such documents, bearing in mind the guiding principles as enumerated in the decision cited above and also contained in other decisions of this court on the subject and a decision on the question regarding eligibility for assessment under Explanation 2 to Section 2(e) shall be taken by the assessing authority. The 2nd respondent shall complete the proceedings as early as possible, at any rate within two months from the date of receipt of a copy of this judgment. 8. Needless to say that amount of tax if any paid by W.P.(C).24782/09 -7- the petitioner shall be appropriated in accordance with the outcome of the fresh assessment to be completed. C.K.ABDUL REHIM, JUDGE. okb