IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 24TH OCTOBER 2011 / 2ND KARTHIKA 1933 WP(C).No. 32037 of 2006(L) -------------------------- PETITIONER: --------------- REV. FR. SEBASTIAN PANJIKKARAN, SECRETARY-CUM-TREASURER, YUVAKSHETRA CHARITABLE TRUST, EZHAKKAD, PALAKKAD DISTRICT-678 600. BY ADV. MR. K.K.CHANDRAN PILLAI, SENIOR ADVOCATE MR. R.V.SATHYAPRIYAN NAIR RESPONDENTS: --------------- 1. STATE OF KERALA, REP. BY THE PRINCIPAL SECRETARY TO GOVERNMENT, REVENUE (SEPCIAL CELL) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 2. THE LAND REVENUE COMMISSIONER, DEPARTMENT OF REVENUE, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 3. THE REVENUE DIVISIONAL OFFICER, PALAKKAD. 4. THE TAHSILDAR, TALUK OFFICE, PALAKKAD. BY GOVERNMENT PLEADER MR. S. SUDHISH KUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24/10/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO. 32037 OF 2006 APPENDIX PETITIONER'S EXHIBITS : EXT. P1 : TRUE COPY OF TRUST DEED DATED 26.03.2003 EXT. P2 : TRUE COPY OF DEMAND NOTICE DATED 03.10.1997 ISSUED BY THE 4TH RESPONDENT. EXT. P3 : TRUE COPY OF RECEIPT DATED 26.02.2000 EXT. P4 : TRUE COPY OF ORDER DATED 28.10.2000 PASSED BY THE 4TH RESPONDENT. EXT. P5 : TRUE COPY OF RECEIPT DATED 25.11.2000 EXT. P6 : TRUE COPY OF JUDGMENT DATED 02.04.2001 OF THIS H'BLE COURT IN OP. 11531/01 EXT. P7 : TRUE COPY OF INTIMATION DATED 23.06.2001 ISSUED BY THE 1ST RESPONDENT. EXT.P7(a) : TRUE COPY OF INTIMMATION DATED 19.01.2004 ISSUED BY THE 1ST RESPONDENT. EXT. P7(b) : TRUE COPY OF INTIMATION DATED 27.02.2004 ISSUED BY THE 1ST RESPONDENT. EXT. P7(c) : TRUE COPY OF INTIMATION DATED 22.03.2004 ISSUED BY THE 1ST RESPONDENT. EXT.P7(d) : TRUE COPY OF INTIMATION DATED 21.06.2004 ISSUED BY THE 1ST RESPONDENT. EXT.P7(f) :TRUE COPY OF TELEGRAM RECEIVED BY THE PETITIONER ON 13.07.2004 ISSUED BY THE 1ST RESPONDENT. EXT. P8 : TRUE COPY OF REPRESENTATION DATED 08.05.2005 SUBMITTED TO THE MINISTER FOR REVENUE AND LAW EXT. P9 : TRUE COPY OF INTIMATION DATED 12.05.2005 ISSUED FROM THE OFFICE OF THE MINISTER FOR REVENUE AND LAW EXT.P10 : TRUE COPY OF ORDER DATED 07.10.2006 ISSUED BY THE 1ST RESPONDENT. EXT. P11 : TRUE COPY OF DEMAND NOTICE DATED 30.10.2006 ISSUED BY THE 4TH RESPONDENT. /TRUE COPY/ P.A. TO JUDGE P.R. RAMACHANDRA MENON J. ~~~~~~~~~~~~~~~~~~~~~~~ W.P (C) No . 32037 of 2006 ~~~~~~~~~~~~~~~~~~~~~~~ Dated, this the 24th October, 2011 JUDGMENT The issue involved in this case is with regard to the sustainability of the orders passed by the concerned authorities under the Kerala Building Tax, particularly the Government, declining to accept the claim put forth by the petitioner to have exempted the petitioner's building from the purview of tax liability. 2. The sequence of events as narrated in the writ petition is as follows : The petitioner is stated as the Secretary cum Treasurer of a charitable institution, who constructed a building, consisting of three different floors. Different portions of the building are put to different use; the ground floor consists of kitchen, dining hall and dormitories; next floor (middle floor) consists of prayer hall and dormitories and the top floor consists of a conference hall and dormitories. After completing the construction, the assessing authority, who is the 4th respondent issued Ext. P2 notice dated 03.10.1997, directing the petitioner to file return in terms of Section 7 of the Kerala Building Tax W.P. (C) No. 32037 of 2006 : 2 : Act. The petitioner filed return along with an application for granting exemption under Section 3 (1) (b) of the Act. On receipt of the return and application as above, the 4th respondent considered the matter and passed an order dated 08.02.2000 fixing tax liability of Rs. 4,65,300/- and asking the petitioner to satisfy the same as specified. Being aggrieved of the said assessment order, the petitioner preferred statutory appeal before the 3rd respondent, also projecting the claim to have exemption. The appellate authority considered the matter and passed Ext. P2 (a) order dated 10.07.2000, partly accepting the contention of the petitioner that the 'prayer hall' was liable to be exempted from the purview of assessment. Accordingly, the assessing authority was directed to pass fresh assessment order in respect of the remaining area. 3. Pursuant to the said appellate order, the assessing authority reconsidered the matter and passed Ext. P4 order dated 28.10.2000 fixing the tax liability as Rs. 3,16,575/-, after giving credit to Rs. 1,16,325/- remitted by the petitioner towards the ¼th of the liability at the time of preferring appeal, followed by a demand notice to satisfy the due amount. Being aggrieved of the same, the petitioner approached this Court by filing O.P. 11531 of 2001, which culminated in Ext. P6 W.P. (C) No. 32037 of 2006 : 3 : judgment, directing the Government to consider the claim for exemption under Section 3 (1) (b) of the Kerala Building Tax Act. Pursuant to the said verdict, the first respondent/Government issued notice of hearing directing the petitioner to appear on 02.01.2001. It is the case of the petitioner that the proceedings were not finalized by the Government then and there and it was being adjourned day by day, causing much hardships and loss to the petitioner. It was in the said circumstances that the petitioner preferred Ext. P8 representation dated 08.05.2005 before the concerned Minister and a hearing was scheduled; finally culminating in Ext. P10 order dated 07.02.2006, whereby the application preferred by the petitioner for exemption was rejected; followed by Ext. P11 demand notice dated 03.10.2006, which made the petitioner to approach this Court by filing the present writ petition. 4. Heard the learned counsel for the petitioner and the learned Government Pleader appearing for the respondents. 5. The learned counsel for the petitioner submits that absolutely no profit motive is involved with regard to the user of the building, though the 'conference hall' is being used for marriage purposes occasionally. It is also stated that the recent ruling rendered by the Full W.P. (C) No. 32037 of 2006 : 4 : Bench of this Court in Unity Hospital (P) Ltd. Vs. State of Kerala (2011 (1) KLT 236) only deals with the case of exemption in respect of 'hostels' attached to educational institutions and the same does not stand in the way of the petitioner in claiming exemption. It is also stated that merely for the reason that a charitable institution is generating some funds, which in fact is very much necessary for the existence of the institution itself, it will not change the colour and characteristics of the institution from a charitable institution. 6. The learned Government Pleader appearing for the respondents submits, with reference to the materials on record including the counter affidavit, that the factual position as to the nature of the building and the user have been meticulously considered by the assessing authority, appellate authority and also by the Government. The appellate authority, while passing order in appeal, had allowed exemption in respect of the area used as a 'prayer hall'. The matter was considered by the Government in an elaborate manner, also calling for report from different corners and giving an opportunity of hearing to the petitioner to substantiate the facts and figures. It is stated that the petitioner had admitted before the Government that the 'conference hall', with regard to which the main dispute is raised in the original W.P. (C) No. 32037 of 2006 : 5 : petition, is being used for conducting marriages. So also, the dormitories attached to the different floors are permitted to be used by the persons concerned after realizing the fee / charges in this regard. To what extent the income is generated by the petitioner and what is the extent of the alleged charitable activity are necessarily matters to be looked into to ascertain whether the building is principally used for any charitable activity or commercial activity. Merely for the reason that the institutions like that of the petitioner are doing some charitable operations is not enough to get exemption under Section 3 (1) (b) of the Act, as held by this Court in Medical Trust Hospital Vs. State of Kerala (2004 (2) KLT 139). The said decision was reiterated in several decisions of this Court, such as Dharma Sastha Trust Vs. State of Kerala (2011 (3) KLT 399) and St. Sebastian Visitation Hospital Vs. State of Kerala (2011 (4) KLT 104) and like. It is discernible from the impugned order, that despite the opportunity given to the petitioner to produce the books of account, the same was never produced to substantiate the contention. 7. A Division Bench of this Court had an occasion to consider whether the building owned by the religious or charitable institution, when let out to use for commercial purpose, even if the income W.P. (C) No. 32037 of 2006 : 6 : generated therefrom is used for charitable or religious purpose, is to be exempted from the purview of taxation. After considering the materials on record and the relevant provisions of law, the Division Bench of this Court in St. George Orthodex Church Vs. State of Kerala (2009 (4) KLT 704) held that such an activity would amount to commercial activity and that such institutions/parties are not entitled to have exemption provided under Section 3 (1) (b) of the Act. 8. As discussed herein before, the factual position in the case of the petitioner stands considered in detail by the Government and a finding has been rendered accordingly, which is well supported by reasons. No interference is called with regard to the finding or reasoning given by the Government turning down the claim for exemption, more so in view of the binding judicial precedents referred to above. 9. It is stated that the petitioner was never liable or responsible for the delay caused in finalizing the proceedings and hence is not liable to satisfy interest included in Ext. P11 demand. It is the case of the petitioner that the hearing was being adjourned from time to time and it was only after filing a representation before the concerned Minister that the matter was finalized, leading to Ext. P10. W.P. (C) No. 32037 of 2006 : 7 : 10. In this context, it is relevant to note that the proceedings were finalized by the assessing authority way back in the year 2000, by passing Ext. P4 order dated 28.10.2000, casting the liability upon the petitioner. The petitioner sought to challenge the same by filing various proceedings, finally leading to Ext. P10. The fact remains that no interference was made by the appellate authority/3rd respondent who passed Ext. P2(a) order on 10.07.2000 on the assessment order, but for a slight modification, excluding the 'prayer hall' from the purview of taxation. The petitioner ought to have remitted the amount covered by Ext. P4 then and there, but kept the said amount in their account, generating income in some or other ways. This being the position, the challenge raised by the petitioner against imposition of interest, raising the ground of delay in finalization of the proceedings, cannot be found in favour of the petitioner, more so when the interest charged is only @ 6 % p.a. 11. In the above facts and circumstances, this Court finds that the Writ Petition is devoid of any merit and it is dismissed accordingly. However, taking note of the persuasive submission made by the learned counsel for the petitioner, the petitioner is permitted to discharge the outstanding liability by way of two equal monthly W.P. (C) No. 32037 of 2006 : 8 : installments; the first of which shall be effected on or before the 30th of November, 2011 followed by the second installment to be effected on or before the 30th of December 2011. It is made clear, if any default is committed by the petitioner in effecting the installments as above, the respondents will be at liberty to proceed with further steps for realization of the entire amount in lump sum. Sd/ P. R. RAMACHANDRA MENON, JUDGE kmd