John John Poovathummoodu vs. State Of Kerala

In support of the aforementioned prayer, it is averred that the petitioner has already paid building tax as assessed and demanded by the 3rd respondent, vide receipts dated 7.7.2020 and 6.8.2020 Exts.P2 and P3. But 3rd respondent assessed the petitioner for luxury tax at the rate of Rs.4000/- for the financial year 2018-19, Rs.6,000/- for the financial year 2019-20 and Rs.7500/- for the financial year 2020-21, under Section 5A of the 1975 Act since the plinth area of the building is above 278.7 m2. The learned counsel appearing on behalf of the petitioner submits that the constitutional validity of levy of luxury tax under Section 5A of the 1975 Act was earlier, challenged in this Court on the premise that it could not coexist with onetime tax levied under provisions of the Luxury tax 1976 Act and also property tax levied under the Municipality/Panchayath Raj Act by drawing power from has been defined as 'Taxes on entertainments and amusements to the extent levied and collected by a Panchayath or a Municipality or a Regional Council or a District Council'. Therefore the power of the State to levy tax on luxuries enjoyed under Entry 62 of the list II read with Article 246(3) has been taken away. For all intents and purposes, the impact of Section 5A has withered away as State has lost its authority/power to levy Luxury Tax. Article 246A provides that notwithstanding anything contained in Articles 246 and 254, Parliament or the legislature of every State had power to make laws with respect to goods and services tax imposed by the Union or by such State even in respect of supply of goods or services. Thus the power is only with respect to goods and services and supply whereas the activity taxed under Section 5A of the 1975 Act is tax neither on sale of goods nor on services rendered. Aforementioned Section was substituted by Kerala Finance Act 2014, ie., Act No.29 of 2014 for the purpose of Rs.2000/- with effect from 1st April 2014. 4. contended that the luxury tax of Rs. 4,000/- annually on a residential building having a plinth area of less than 278.7 m2 on and after 1st April 1999 is not chargeable. A person having a building plinth area of more than one as specified in the Act has been considered luxurious enough to live in a spacious house and therefore cannot be permitted to challenge aforementioned provisions. The plinth area, in the instant case, of the entire building is 617.11 m2.

In rebuttal, learned counsel appearing on behalf of the petitioner submits that when Ext.P4 order was passed, no opportunity of hearing has been given. Petitioner could have brought the Entry 62 in List II, came into force with effect from 16th September 2016 as well as the provisions of Article 246(A) of the Constitution of India.

I have heard the learned counsel for the parties and appraised the paper book. No doubt, the vires of the Act challenged in the judgments cited supra have been upheld in other words, the constitutional validity of the aforementioned Act was upheld by comprehensively examining the provisions of Entry 49 in List II as well as the provisions of Section 5A. For the sake of brevity, Section 5A of 1975 Act, is extracted herein below: 5A.

Similarly, the provisions of Entry No.62, List II of Seventh schedule prior to the 101st amendment and post are extracted herein below: 'Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling' The Entry 62 as substituted by said Amendment Act is as follows: 'Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council'

Impugned order Ext.P4, does not refer to provisions of Entry 62, which was brought into force with effect from 16th September 2016. The judgments cited supra relate to an era where unamended provisions of Entry No.62 were in vogue. At this stage, I would not examine the vires of the Act as the aforementioned Act has already been examined by the Division Bench and it would be the domain of a Larger Bench. But before it could be referred to a Larger Bench, I am of the view that the matter can be examined at the level of the Assessing officer, in case the petitioner is offered an opportunity of hearing to raise all the pleas as raised in the present writ petition, noticed above. Thus the challenge to the vires, for the time being, is kept open. The impugned order Ext.P4 and the demand Ext.P1 are set aside. The matter is remitted to Assessing authority, who is directed to examine the levy of luxury tax as per the provisions of Section 5A post 16th September 2016, in view of the 101st amendment brought in the constitution of India by amending Entry 62 in List II of Seventh Schedule of Constitution of India. Let the entire exercise be done within a period of four months, in accordance with law by affording an opportunity of hearing to the petitioner. Till such time, the demand as raised is ordered to be kept in abeyance. W.P.(C) No.24019 of 2018 The writ petition is filed by the petitioner laying challenge to notices Exts.P4 and P5 issued and the basis of a communication dated 19.9.2014, Ext.P3 with a further prayer to declare the provisions of Section 5A of the Kerala Building Taxation Act and Rules to be ultra vires since it is not in conformity with the definition of the term 'Luxury' in the Kerala Luxury Tax Act, 1976. Though it is not specifically pleaded in the writ petition qua introduction and amendment of Entry No.62 in List II of Seventh schedule of Constitution of India nor the respondents in the reply have attached any copy of assessment order in respect of a building having a plinth area of 375.46 m2 as per the counter, which is 277.9 m2 as per I.A No.1 of 2020 filed by the petitioner, situated in Re.Sy. No.193/9 of Madapally village, construction, thereof, was completed with effect from 21.5.2002, I am of the view that this a fit case where the petitioner should also be given an opportunity of hearing before justifying the demand as reflected in the notices Exts.P4 and P5. Therefore the directions passed in the earlier case would also be same qua time frame and demand to be kept in abeyance would applicable in this case also. AMIT RAWAL sab JUDGE APPENDIX OF WP(C) 24019/2018 PETITIONER'S/S EXHIBITS: EXHIBIT P1OF THE REPRESENTATION DATED 04.08.2016 PREFERRED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXHIBIT P2OF THE POSTAL ACKNOWLEDGMENT CARD ADN THE RECEIPT RECEIVED FROM THE OFFICE OF THE 2ND RESPONDENT EXHIBIT P3OF THE LETTER DATED 19.09.2014 ISSUED BY THE PRINCIPAL SECRETARY, REVENUE DEPARTMENT EXHIBIT P4OF THE INTIMATIONS DEMANDING LUXURY TAX ISSUED BY THE 4TH RESPONDENT DATED 08.02.2018 EXHIBIT P5OF THE INTIMATIONS DEMANDING LUXURY TAX ISSUED BY THE 4TH RESPONDENT DATED 05.03.2018 EXHIBIT P6OF THE COUNTER AFFIDAVIT WITHOUT EXHIBITS FILED BY THE SECRETARY, MADAPPALLY GRAMA PANCHAYAT IN WPC.NO.17659/2019 BEFORE THIS HON'BLE COURT. EXHIBIT P7OF THE COUNTER AFFIDAVIT WITHOUT EXHIBITS FILED BY THE DEPUTY DIRECTOR OF PANCHAYAT IN WPC.NO.17659/2019 BEFORE THIS HON'BLE COURT.