IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 10TH NOVEMBER 2009 / 19TH KARTHIKA 1931 OP.No. 16034 of 2001(H) ---------------------------------- PETITIONERS: --------------------- 1. A.S. SURESH SHENOY, S/O. A.L. SREENIVASA SHENOY, XLI/1423, ARANGATH CROSS ROAD, PULLEPPADY, KOCHI – 682 016. 2. ANIL G.SHENOY, S/O. A.S. GUNA SHENOY, XL/5421, BANERJI ROAD, ERNAKULAM, KOCHI-682 018. 3. A.V. GOPALAKRISHNA SHENOY, S/O. A.L. VASUDEVA SHENOY, XL/5422, BANERJI ROAD, ERNAKULAM, KOCHI-682 018. 4. A.S. GUNA SHENOY, S/O. A.L. SREENIVASA SHENOY, XL/5421, BANERJI ROAD, ERNAKULAM, KOCHI – 682 018. 5. A.S. SASIDHARA SHENOY, S/O. A.L. SREENIVASA SHENOY, XL/6614, T.D. ROAD, ERNAKULAM, KOCHI-682 011. 6. SATHISH ANAND SHENOY, S/O. A.S. SASIDHARA SHENOY, XL/6614, T.D. ROAD, ERNAKULAM, KOCHI – 682 011. 7. SADASIVA SHENOY, S/O. A.S. SASIDHARA SHENOY, XL/6614, T.D. ROAD, ERNAKULAM, KOCHI-682 011. O.P. NO.16034/2001-H: 8. RENJITH G. SHENOY, S/O. A.V. GOPALAKRISHNA SHENOY, XL/5422, BANERJI ROAD, ERNAKULAM, KOCHI – 682 018. BY ADVS. MR.D.KRISHNA PRASAD, MR.D.NARENDRANATH, MR.JOJI VARGHESE, MR.K.A.SHAJI MATHEW, MR.M.HARISHARMA, MR.T.P.ELDHOSE. RESPONDENTS: ------------------------ 1. STATE OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE DISTRICT COLLECTOR, ERNAKULAM, (REVISIONAL AUTHORITY UNDER THE KERALA BUILDING TAX ACT). 3. THE SUB COLLECTOR, FORT KOCHI, (APPELLATE AUTHORITY UNDER THE KERALA BUILDING TAX ACT). 4. THE TAHSILDAR,KANAYANNOOR (ASSESSING AUTHORITY UNDER THE KERALA BUILDING TAX ACT). R1 TO R4 BY GOVERNMENT PLEADER (TAX) MR. K.P. PRADEEP. THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 10/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P. NO. 16034/2001-H: ORDER ON C.M.P. NO. 25334/2001 IN O.P. NO. 16034/2001-H CLOSED 10/11/2009. SD/- S.SIRI JAGAN, JUDGE. APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE AGREEMENT DTD. 07/02/1987 EXECUTED BY A.L. VASUDEVA SHENOY & OTHERS. EXT.P.2: COPY OF THE AGREEMENT DTD. 26/06/90 NO.2284/1990 OF THE ERNAKULAM SUB REGISTRY OFFICE, EXECUTED BY A.L. VASUDEVA SHENOY & OTHERS. EXT.P.3: COPY OF THE CERTIFICATE DTD. 07/06/2000 ISSUED BY M/S. VARMA & VARMA, CHARTERED ACCOUNTANTS. EXT.P.4: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.5: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.6: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.7: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.8: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.9: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.10: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.11: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.12: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. O.P. NO.16034/2001-H: EXT.P.13: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.14: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.15: COPY OF THE RECEIPT FOR PAYMENT OF PROPERTY TAX DTD. 31/08/1990 ISSUED BY THE CORPORATION OF KOCHI. EXT.P.16: COPY OF THE ORDER NO. B3/6581/92 DTD. 05/05/1993 OF THE R.4. EXT.P.17: COPY OF THE ORDER NO. K.DIS.4049/99/G. DT.D 20/12/2000 OF THE R.3. EXT.P.18: COPY OF THE MEMORANDUM OF REVISION DT.D 07/02/2001 SUBMITTED BY THE PETITIONERS BEFORE THE R.2. EXT.P.19: COPY OF THE ORDER NO.K.DIS.3967/2001/B10 DTD. 23/04/2001 OF THE R.2. EXT.P.20: COPY OF THE RECEIPT FOR PAYMENT OF RS.87,750/- ISSUED BY THE VILLAGE OFFICER, ERNAKULAM, DTD. 11/06/1993. EXT.P.21: COPY OF THE RECEIPT FOR PAYMENT OF RS.87,750/- DTD. 29/12/1993 ISSUED BY THE VILLAGE OFFICER, ERNAKULAM. EXT.P.22: COPY OF THE RECEIPT FOR PAYMENT OF RS.87,750/- DTD. 28/03/1994 ISSUED BY THE VILLAGE OFFICER, ERNAKULAM. EXT.P.23: COPY OF THE PETITION/LETTER DTD. 26/03/1990 SUBMITTED TO THE COMMISSIONER OF THE CORPORATION OF COCHIN BY A.L. VASUDEVA SHENOY. EXT.P.24: COPY OF THE RECEIPT DTD. 27/07/1990 ISSUED BY THE CORPORATION OF COCHIN. EXT.P.25: COPY OF THE REVISION PETITION DTD. 24/05/1999 FILED BY THE PETITIONERS BEFORE THE R.2. EXT.P.26: COPY OF THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE YEAR ENDED 31/03/2000 IN RESPECT OF THE BUILDING BY NAME SHENOY CHAMBERS. RESPONDENTS' EXHIBITS: NIL. //TRUE COPY// P.A. TO JUDGE. Prv. S.SIRI JAGAN, J. ================== O.P.No. 16034 of 2001 ================== Dated this the 10th day of November, 2009 J U D G M E N T The petitioners in this original petition are members of one family. They jointly owned 22.435 cents of property by the side of the Shanmugham Road in Ernakulam. They decided to construct a commercial building in that property. Ext.P1 agreement dated 7.2.1987 was executed for that purpose, whereby the cost of construction of the building was to be shared by the 15 persons as shown in Ext.P1 agreement. Pursuant to that intention, they submitted a plan before the Corporation for construction of the building on 20.2.1987. That plan was sanctioned and permit for construction was issued by the Corporation on 27.5.1987. According to the petitioners, they could not complete the building within three years from 27.5.1987 as enjoined by the Municipal Buildings Rules. Therefore, they submitted Ext.P23 application for extension of time to complete the construction, on 26.3.1990. Before the construction was complete, within the extended period of validity of the permit, the petitioners together executed Ext.P2 agreement whereby separate areas of the buildings were earmarked for ownership of each petitioner. Therefore, according to the petitioners, even before the construction, separate portions of the building were owned by the petitioners separately with 2 independent title. The basement of the building was set apart as car parking area. Above basement there were three floors. After construction of the building, each petitioner had paid property tax in respect of the portions owned by each petitioner separately, as evidenced by Exts.P4 to P15 receipts dated 31.8.1990. The petitioners sought separate assessment under the Kerala Building Tax Act in respect of the separate areas as per the ownership in accordance with Ext.P2. However, the assessing authority assessed the building to property tax as a single unit and demanded an amount of Rs.3,51,000/- as building tax, by Ext.P16 assessment order. On the ground that the separate areas alloted as per Ext.P2 agreement have to be assessed as separate buildings, the petitioners filed appeal before the Sub Collector. That was dismissed. Against that Ext.P25 revision petition was filed. That revision petition was filed on the ground that the person who passed the appellate order was not the person who heard the appeal and the matter was remanded to the Sub Collector for fresh disposal in accordance with law. However, on remand also, the Sub Collector, by Ext.P17, dismissed the appeal. The petitioners filed Ext.P18 revision petition before the District Collector, which was also dismissed by Ext.P19 order. The petitioners are challenging Exts.P16, P17 and P19 orders in this original petition. 2. The petitioners submit that in view of the decisions of this 3 Court in Kurian George v. Tahsildar [1995 (2) KLT 457], Bhattathiripad v. Tahsildar [1994 (1) KLT 790], Balu v. State of Kerala [1994 (2) KLT 42] and Lissy v. Tahsildar [2003 KLT 497], even commercial buildings are liable to be assessed to building tax as in the case of flats if separate portions of the same building are owned by separate persons. The petitioners, therefore, contend that in view of the fact that separate and distinct portions of the three floors have been alloted separately to each of the petitioners as per Ext.P2 agreement with separate title in respect of their portions, the portions of the building alloted to each should have been assessed separately in accordance with the ownership as per Ext.P2 and could not have been assessed as a single building. The petitioners submit that the reasons stated in Exts.P17 and P19 for rejecting the contentions of the petitioners are unsustainable. The counsel for the petitioners points out that in Ext.P17 the contentions of the petitioners were rejected on the ground that since the validity of the building permit expired on 19.5.1990, which was not seen extended, the building was completed prior to 19.5.1990, whereas Ext.P2 agreement was executed only subsequently on 26.6.1990. Therefore, Ext.P2 has been executed with the sole object of getting the building assessed separately and to avoid assessment as a single building. Further, the reason mentioned in Ext.P17 is that the petitioners constitute a Hindu undivided family 4 residing in the same house and, therefore, they have shown separate ownership only for claiming separate assessment and not because they actually owned separate portions of the building separately. According to the petitioners, both the reasonings are wrong. The petitioners would contend that as is evident from Exts.P23 and P24, the petitioners had sought for extension of the period of permit on 26.3.1990, for which renewal fee was paid as per Ext.P24 dated 27.7.1990. According to the petitioners, along with Ext.P25 revision petition, the petitioners had produced a certificate of completion of the building dated 22.8.1990, which also would show that the building was completed after execution of Ext.P2 agreement. The petitioners would also challenge the reasoning given in Ext.P19 to the effect that three of the petitioners were minors at the relevant time and the petitioners had not produced any evidence to show that they had separate source of income to meet the cost of the construction of the building. According to the petitioners, all the petitioners are members of a partnership firm by name M/s.New Guna Shenoy Company, Ernakulam, including minors who were getting income from that partnership firm as is evidenced by Exts.P3 and P26, which are the certificate from the Chartered Accountants and the profit & loss account and balance sheet of the partnership firm. Therefore, according to the petitioners, the minors had separate source of income 5 for meeting the expenses of the construction of the building in question. Therefore, according to the petitioners, the reasons given in Ext.P19 order of the District Collector are also unsustainable. The petitioners got another contention that the inclusion of the car parking area for the purpose of determining the plinth area for assessment is unsustainable in view of the mode of determination of the plinth area prescribed in Section 6 of the Kerala Building Tax Act. 3. The learned Government Pleader would vehemently oppose the prayers of the petitioners. According to him, the petitioners constructed the building jointly as a single unit without allotting separate shares in the same to each and Ext.P2 has been executed subsequent to the completion of the construction of the building solely for the purpose of getting the building assessed to the building tax separately so as to reduce the incidence of tax. According to him, there is no reliable evidence to show that the petitioners are owning separate portions of the building separately with separate title. According to him, the very fact that the period of permit expired on 26.5.1990 and the fact that Ext.P2 was executed only 26.6.90 would clearly prove the said fact. He contends that the evidence produced by the petitioners are not at all sufficient to prove otherwise. He points out that the building was not constructed for residential purposes, but purely for commercial purpose. According to him, when all the 6 petitioners are conducting business together as a partnership firm, as is evident from Ext.P3, from which only expenses required for the construction of the building has been drawn shows that they had no intention to start any separate independent business. He also points out that in Ext.P1 itself, it is specifically stated that the construction of the multi-storied building as a shopping cum commercial complex was for starting a business by letting out, leasing or otherwise utilising the same either as such or by equipping the same in any manner as may be decided by the parties. He further points out that the clauses in Ext.P2 also would suggest that each party does not get absolute freedom to deal with the their allotted separate part of the building in so far as they had no right to sell it without permission from the other partners. He further points out that the fact that subsequent to the construction of the building the petitioners have paid building tax separately would not go to show that they had constructed the building separately with separate ownership of separate portions of the building for each petitioner. He relies on the decision of this Court in Varghese v. Tahsildar [ILR 2006 (2) Ker.88] in support of the proposition that the payment of property tax does not conclusively prove separate ownership on the buildings. 4. Regarding the contention with regard to the car parking area, the learned Government Pleader points out that in view of 7 Section 5(5) read with Section 2(k) and Section 6 of the Kerala Building Tax Act, 1975, it is clear that the area of car parking as garage of a commercial building is also liable to be included in the plinth area for the purpose of of assessment of building tax. 5. I have considered the rival contentions in detail. 6. I find that the petitioners had started the endeavour by executing Ext.P1 agreement for construction of a commercial building in a property jointedly owned by them. By Ext.P1 they did not decide to have separate portions of the building with separate ownership for each petitioner. They only decided to share the costs of the construction in the proportion fixed in Ext.P1. Pursuant to the same, they had submitted a plan on 20.2.1987. Ext.P1 is dated 7.2.1987. They submitted a plan for construction of the building 20.2.1987, which was sanctioned on 27.5.1987. If their intention was to have separate ownership in respect of the separate part of the building, they could have very well done the separation between 7.2.1987 and 27.5.1987. They had not chosen to do so. They waited for the expiry of the period of the validity of the permit. Even thereafter, they waited for more than a month to execute Ext.P2. No explanation is forthcoming for the same. It is also admitted that the petitioners are jointly doing other business as a partnership firm. It is not as if the petitioners, some of whom are minors, had decided to derive separate 8 income from their separate shares in the big commercial building constructed. A view gatherable from the documents is that they wanted to construct the building jointly and derive income from the same jointly and to apportion the same in accordance with the proportion fixed in Ext.P1. It is not as if a specific flat or a floor is allotted to a particular individual. In fact in Ext.P1 there are 15 persons and the building consists of only three floors. It is relevant to note in this connection that as per Ext.P2 the entire basement set apart for the parking area is alloted to three of the parties. Admittedly, the basement is intended as parking area for the entire building. If that be so, there is no separate parking space for the other owners of the building. I am also unable to place reliance on Exts.P23 and P24 in so far as Ext.P23 is dated 26.3.1990 whereas Ext.P24 receipt for payment of renewal fee is dated 27.7.2009. If they had applied on 26.3.1990 for extension of time, they should have paid renewal fee also along with the same. As such, Exts.P23 and P24 do not prove with any amount of certainty that the petitioners had applied for and obtained extension of time. Even otherwise, if they had obtained extension of time, they would have obtained an order granting extension, which the petitioners have not been able to produce. Therefore, it is clear that Ext.P2 is an after-thought to enable the petitioners to avoid the higher building tax actually payable and not a genuine document relating to 9 the rights of the parties. The fact that 8 of the 15 persons mentioned therein were minors supports this conclusion. Therefore, I am of opinion that the reasoning adopted by the respondents cannot be said to be perverse in any manner. Hence, I am of opinion that the respondents correctly assessed the building as one single unit. 7. As far as parking area is concerned, it is not just an open space. It is a basement area enclosed by walls. As such, it answers the description of a garage. Of course, Section 6 stipulates that the plinth area of a building for the purpose of the Act shall be the plinth area of the building as specified in the plan approved by the local authority or such other authorities as may be specified by Government in this regard and verified by the assessing authority in such manner as may be prescribed. The petitioners' contention is that the petitioners have not paid any property tax in respect of the car parking area and therefore, that area cannot be included in the plinth area for the purpose of Section 6. But I find that in the proviso to Section 6 itself the area of a garage is excluded from assessment only in respect of residential buildings. Further, in Section 5(5) it is stipulated that where there are out-houses, garages or other structures appurtenant to the building for more convenient enjoyment of the building, the plinth area of such structure shall be added to the plinth area of the main building and the building tax assessed accordingly. Therefore, 10 proviso excludes only the area used for non residential purposes. In so far as I have found that the parking area in question answers the description of a garage there is nothing wrong in the inclusion of the parking area also for calculation of the plinth area for the purpose of building tax assessment. In view of the above findings I do not find any merit in this original petition and accordingly, the same is dismissed. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge S.SIRI JAGAN, J. ================== O.P.No. 16034 of 2001-H ================== . J U D G M E N T 10th November, 2009