Ison George vs. State Of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL TUESDAY, THE 02ND DAY OF JUNE 2020 / 12TH JYAISHTA, 1942 WP(C).No.3603 OF 2020(A) PETITIONER/S: ISON GEORGE AGED 48 YEARS KADATHUKULAM(H),CHEERAMCHIRA.P.O, CHANGANASSERY-686106. BY ADV. SRI.RAJU K.MATHEWS RESPONDENT/S: 1 STATE OF KERALA REPRESENTED BY ITS SECRETARY TO GOVERNMENT (TAXES),GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM- 695001. 2 DISTRICT COLLECTOR, COLLECTORATE,KOTTAYAM-686002. 3 THASILDAR, TALUK OFFICE,CHANGANASSERY-686101. 4 VILLAGE OFFICER, VILLAGE OFFICE,CHETHIPUZHA, CHANGANASSERY-686106. OTHER PRESENT: GP SRI PAUL ABRAHAM VAKKANAL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06-03- 2020, THE COURT ON 02-06-2020 DELIVERED THE FOLLOWING: WP(C).No.3603 OF 2020(A) 2 JUDGMENT Dated this the 2nd day of June 2020 The petitioner, who is an owner of a residential building having an area of 188.5 Sq.m comprised in Sy.No.82/8-1 situated in Chethipuzha Village in Chaganasherry Taluk aggrieved of the assessment order, Ext.P1, Demand notice Ext.P1(a) and order dated 4.12.2019 calling upon him to pay the luxury tax as per the provisions of Section 5A of the Kerala Building Tax Act, 1979. 2. As per the facts, the petitioner is stated to have constructed 263.24 Sq.m of the property comprised in the aforementioned survey but the 3rd respondent ie., Tahsildar assessed the building by taking into consideration total plinth area as 357.30 sq.m. Resultantly, directed the petitioner to pay an amount of Rs.17,400/- in 3 equal installments of Rs.5800/- each. The petitioner preferred an appeal before the 2nd respondent and also remitted the installment amount of Rs.5800/- on 16.8.2008. The 2nd respondent obtained a report from the 3rd respondent regarding the excluded portion covered by the Truss work and arrived at a total plinth area of 289.22 sq.m. However, the 2nd respondent again obtained a report dated 24.12.2013 from the 3rd respondent wherein the 3rd WP(C).No.3603 OF 2020(A) 3 respondent reiterated his stand that the 24.45 sq.m was liable to be included in the assessable area. Vide order dated 4.2.2016, the 3rd respondent assessed the area to be 289.22 sq.m by including 24.45 sq.m of non residential portion. 3. The petitioner was not served with the order of the appellate court despite the fact that he had approached the office of the 2nd respondent to ascertain the fate of the appeal. Since he didn't get any response, he submitted an application under the Right to Information Act. The order of the appellate authority was communicated that he was not keeping well and he could not make arrangements for challenging the order. The revision petition before the first respondent ie., Secretary to Government (Taxes) was preferred but it was rejected vide order dated 1.6.2018 by barred by limitation. He was served with a revised Assessment order dated 4.12.2019 determining the plinth area of the residential building as 289.22 sq.m and assessed the building tax as Rs.9,000/-. The petitioner was also served with an order dated 4.12.2019, imposing Luxury Tax under Section 5A of the Kerala Building Tax Act. The learned counsel representing the petitioner submits that Section 5A was inserted to the Kerala Building Tax Act by the Kerala Finance Act 1999 charging a luxury tax on a plinth area of above 278.7 sq.m WP(C).No.3603 OF 2020(A) 4 or more and completed on or after the 1st day of April 1999 by specifying different rates of the area. The aforementioned Section was referable to Entry 62 of List II, Schedule 7 of the Constitution of India, as it stood prior to the Amendment of the Constitution. However, the post amendment the List II, was changed wherein the previous entry of luxury tax was substituted with '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' . 4. The Government with introduction of State Goods and Services Tax Act 2017 provided for 'amendment in certain Acts' and as per Section 174 for 'Repeal and Saving'. The Kerala Tax on Luxuries Act, 1976 (32 of 1976) has been repealed. Thus the impugned demand of luxury tax is not sustainable in the eyes of law. But with the amendment aforementioned, there was no change or repealing of Section 5A of 1975 Act. In the absence of any power under the amended list II of Schedule 7, the applicability of Section 5A cannot be permitted to continue. As per the repealing clause, the pending proceeding under Section 5A have not been saved. It is further submitted that the provisions of Section 5A was challenged in this court on the Division Bench of this Court in Sudhakaran v. State of Kerala WP(C).No.3603 OF 2020(A) 5 (2004 KHC 651) and did not find the amendment on or after 1st April 1999 to be unconstitutional. 5. I have heard the learned counsel for the parties and appraised the paper book and of the view that there is no force and merit in the submission. 6. Section 5(A) introduced in Kerala Building Tax Act, 1975 empowers the State to charge luxury tax to the extent on a building having a plinth area of 278.7 sq. m or more completed on or after the 1st day of April 1999. Article 246 of the Constitution of India specifies the subject matter of laws made by Parliament and by the Legislatures of States. The same reads as under: 246. Subject matter of laws made by Parliament and by the Legislatures of States (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in Schedule VII (in this Constitution referred to as the 'Union List'). (2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in Schedule VII (in this Constitution referred to as the 'Concurrent List'). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in Schedule VII (In this Constitution referred to as the 'State List'). (4) Parliament has power to make laws with WP(C).No.3603 OF 2020(A) 6 respect to any matter for any part of the territory of India not included (in a State) notwithstanding that such matter is a matter enumerated in the State List. 7. On a perusal of the aforementioned provisions, Parliament has exclusive power to make the laws with regard to any matters enumerated in List I in the Schedule VII (Union List). Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State will also power to make laws with respect to any of the matters enumerated in List III in Schedule VII ('Concurrent List'). Clause (3) empowers the legislature of any such State or any part thereof with respect to any of the matters enumerated in List II in Schedule VII ('State List'). 8. Prior to the 101st amendment, the unamended Entry 62 of second list was as under: 62. 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. However after the amendment, taxes on certain items have been vested with the State Legislature. The same reads as under: 62. Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling. 9. There would have been a force in the argument of the WP(C).No.3603 OF 2020(A) 7 learned counsel representing the petitioner as by introduction of Central Goods and Sales Tax Act. Sections 173 and 174 describing amendments to certain acts and repealing and saving clause has repealed Kerala Tax on Luxuries Act, 1976 ie., Act No.32 of 1976. The relevant portion of Section 174 of the Kerala State Goods and Services Act reads as under: 174. Repeal and saving- (1) Save as otherwise provided in this Act, on and from the date of commencement of this Act,- (i) The Kerala Value Added Tax Act, 2003 (30 of 2004) except in respect of goods included in entry 54 of the State List of the Seventh schedule to the Constitution including the Goods to which the Kerala General Sales Tax Act, 1963 (15 of 1963) is applicable as per the provisions of the Kerala Value Added Tax Act, 2003 (30 of 2004); (ii) The Kerala Tax on Entry of Goods into Local Areas Act, 1994 (15 of 1994); (iii) The Kerala Tax on Luxuries Act, 1976 (32 of 1976) 10. However, the introduction of 5A was brought by Act No.23 of 1999 ie., not by 32 of 1976. Thus it cannot be said that the taxes on luxury was not saved in the repealing and saving clause. The vires of Section 5A prior to the 101 amendment of the constitution was assailed in this Court in Sudhakaran's case (Supra). While noticing the contention of the respective parties on the point of the legitimacy of the State legislature cause amendment, the court held as under. “ The argument is devoid of merit and cannot be WP(C).No.3603 OF 2020(A) 8 accepted. It is not in dispute that the State legislature has the power to levy tax on luxuries under Entry 62 of List II of the Seventh Schedule to the Constitution which reads as under: “62. Taxes on luxuries including taxes on entertainments, amusements, betting and gambling”. Under this Entry, the Legislature can levy taxes on luxuries. It does not restrict the Legislature to levy such a tax under one Statue only. Different luxuries can be brought to tax under one and the same statue or under different enactments. So long as the legislature has the power to levy such a tax under Entry 62, it may exercise that power by levying the tax under the same Statute or under different Statutes. The argument that the Legislature is bound to levy luxury tax on all luxuries under one comprehensive. Legislation cannot be accepted. The Act was enacted in the year 1975 with a view to levy a non recurring tax on buildings. This tax was levied under Entry 49 of List-II of the Seventh Schedule, which gives power to the State Legislature to levy taxes of lands and buildings. The legislature in its wisdom inserted S.5A in the Act by Act 23 of 1999 with effect from 1.4.1999 and levied luxury tax of two thousand rupees annually on all residential buildings having a plinth area of 278.7 square meters or more and completed on or after April 1, 1999. There is nothing wrong in the Legislature levying luxury tax under Entry 62 and building tax under Entry 49 by the same enactment namely the Act because it has the power to levy both the taxes. Further, there is nothing wrong with the Legislature levying luxury tax on buildings by inserting S.5A in the Act and levying tax on other luxuries by enacting the 1976 Act. The reason why luxury tax on residential bullrings has been levied by inserting S.5A in the Act and has not been clubbed with such a tax on other items under the 1976 Act is simple to comprehend. The Act was enacted to provide for the levy of one time building tax on every building and the revenue authorities had been entrusted with the duty to enforce the provisions thereof. When the Legislature decided to levy a luxury tax on residential buildings, it decided to insert S.5A in the Act so that the revenue authorities which are already familiar with the enforcement of building tax would be able to enforce WP(C).No.3603 OF 2020(A) 9 the luxury tax as well. The 1976 Act, on the other hand, is enforced by the officers of the commercial taxes department who are stationed in trade centers and towns and may not be familiar with residential buildings. It is for this reason that the Legislature in its wisdom inserted S.5A in the Act and levied luxury tax on residential buildings. No fault can be found with the action of the Legislature in this regard. We have, therefore, no hesitation in rejecting the contention of the learned counsel for the appellant.” Since as already noticed, there is no repealment of Act 23 of 1999 introduced Section 5A for charging of a luxury tax on the building having a specified plinth area or more with effect from on or after 1st April 1999, the action of the respondents in charging the tax and raising the demand cannot be said to be without jurisdiction or lack of competency. For the reason aforementioned, I do not find any justification warranting any interference under Article 226 of the Constitution of India to bring the case within the realm of jurisdiction. The writ petition stands dismissed. Sd/- AMIT RAWAL sab JUDGE WP(C).No.3603 OF 2020(A) 10 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1