M/S.BAVASONS CONSTRUCTIONS PVT.LTD v. STATE OF KERALA

K.BALAKRISHNAN NAIR,J.--------------------------------------------------------------------------WP(C)NOS.4981, 5083,9193, 9303,9397,9977,10022,10093,10095,10120 & 10160 OF 2007 --------------------------------------------------------------------------JudgmentWP(C)NOS.4981, 5083,9303,9397,9977,10095 & 10120 OF 2007Common questions arise for decision in these Writ Petitions. Therefore,they are heard and disposed of by this common judgment. The main point thatarises for decision in these cases is whether the petitioners, who are builders ofresidential apartments, are entitled to get the benefit of the second explanation toSection 2(e) of the Kerala Building Tax Act. The said explanation reads as follows:“Where a building consists of different apartments or flats ownedby different persons and the cost of construction of the buildingwas met by all such persons jointly, each such apartment or flatshall be deemed to be a separate building.”2. Essentially, whether the petitioners are entitled to get the benefit of theabove quoted explanation is a question of fact, which cannot be decided in a WritPetition. It has to be decided by the fact finding authorities. But, alleging that thedecision making process is vitiated, the petitioners have directly approached thisCourt. Since I find considerable force in their submission, these Writ Petitionsare entertained.3. The petitioners in these Writ Petitions are builders, who constructedresidential flats in the properties owned by them. They submit, all those flatswere allotted to individual flat owners under separate agreements before the WPC 4981/07 & connected cases2commencement of the construction or immediately thereafter. The individualallottees have advanced the necessary funds for completing the construction, asagreed, from time to time, in instalments. By the time, the construction was overand they paid the entire amount. Thereafter, the undivided rights in the landwere also assigned to them by registered sale deeds. In some cases, the sale deedswere executed even before the completion of the construction. So, the petitionerssubmit, while assessing the building tax for the residential complexes constructedby them, they are entitled to get the protection of Explanation 2 to Section 2(e) ofthe Kerala Building Tax Act. 4. All the petitioners point out that they were not given an effectiveopportunity to present their case, claiming the benefit of the above quotedexplanation. Without giving them a proper opportunity and without referring tothe materials produced by them, they have been held to be not entitled to get thebenefit of the said explanation and the buildings have been assessed to buildingtax, treating the same as a single unit. In some cases, the assessment orders havebeen issued in printed formats, without referring to any of the facts of the case.So, the petitioners pray for quashing the impugned assessment orders andconsequential demands. 5. I heard the learned Government Pleader appearing for the respondents.In most of the cases, I find that without giving a proper opportunity of beingheard to the petitioners and without dealing with the contentions raised by them,the assessments have been made. The agreements entered into between theallottees of the flats and the petitioners were ignored, for the reason that they WPC 4981/07 & connected cases3were not registered agreements. Apparently, it was done, on the strength of twocirculars issued by the Government to ignore unregistered agreements. Thosecirculars are produced as Exts.P8 and P9 in Writ Petition (C) No.10095 of 2007.6. The assessment of building tax is a quasi-judicial function. Whilemaking the assessment, the Assessing Officer will be guided, only by theprovisions of the Building Tax Act and the Rules. He shall not be guided by anyinstruction issued by the superior officers or by the Government. The circularissued by the Government that unregistered agreements entered into between thebuilders and the allottees of the flats should be ignored, is illegal andunsustainable. The assessing authority shall not, in any way, be influenced by thesaid circular. 7. Under the provisions of the Kerala Building Tax Act, the Governmenthave power to issue orders for removal of difficulties. But, the said power cannotbe exercised to issue directions to the authorities, exercising judicial/quasi-judicial functions, dictating to them, how to exercise those functions. See thedecision of the Apex Court in B.Rajagopala v. STA Tribunal (AIR 1964 SC1573). The relevant portion of the said decision reads as follows :“In interpreting S.43A, we think, it would be legitimate toassume that the legislature intended to respect the basic andelementary postulate of the rule of law, that in exercising theirauthority and in discharging their quasi-judicial function theTribunals constituted under the Act must be left absolutely freeto deal with the matter according to their best judgment. It is WPC 4981/07 & connected cases4of the essence of fair and objective administration of law thatthe decision of the Judge or the Tribunal must be absolutelyunfettered by any extraneous guidance by the executive oradministrative wing of the State. If the exercise of discretionconferred on a quasi-judicial Tribunal is controlled by any suchdirection, that forges fetters on the exercise of quasi-judicialauthority and the presence of such fetters would make theexercise of such authority completely in-consistent with thewell-accepted notion of judicial process. It is true that law canregulate the exercise of judicial powers. It may indicate byspecific provisions on what matters the tribunals constituted byit should adjudicate. It may by specific provisions lay down theprinciples which have to be followed by the Tribunals in dealingwith the said matters. The scope of the jurisdiction of theTribunals constituted by statute can well be regulated by thestatute and principles for guidance of the said tribunals mayalso be prescribed subject of course to the inevitablerequirement that these provisions do not contravene thefundamental rights guaranteed by the Constitution. But whatlaw and the provisions of law may legitimately do cannot bepermitted to be done by administrative or executive orders.” In view of the above quoted decision, the circular issued by the Government toignore unregistered agreements is ultra vires and unauthorised. WPC 4981/07 & connected cases58. I find considerable force in the attack made by the petitioners againstthe assessment orders. They have been issued in violation of the principles ofnatural justice. The relevant matters were not adverted to, while issuing thoseorders. So, they are unreasonable in the administrative law sense. Accordingly,they are quashed. 9. The petitioners-builders shall produce materials before the concernedTahsildars regarding the allotment of individual flats to the respective owners.They shall also produce the agreements entered into with the owners of flats andalso evidence to show that the payments were made by the allottees from time totime to foot the bills for the construction. They shall produce their books ofaccounts and bank statements. They shall also produce the deeds, assigning theundivided interest in the property. They shall produce those materials before theconcerned Tahsildars before 30.04.2007. If those materials are produced to showthat the construction of the flats is covered by Explanation 2 to Section 2(3) of theBuilding Tax Act, then, the assessments shall be made separately. The assessingauthorities shall consider the claim relating to each flat and render a separatespeaking decision with reference to each flat. A common order can be passed foreach residential complex. But, in that order, there should be separate findingregarding each flat/apartment. In case any flat is remaining unallotted, theassessment in respect of such flat shall be made, treating the builder as theowner. In case, in relation to a particular flat, sufficient materials are notproduced to support the claim for the benefit of Explanation 2 to Section 2(e),then also, the assessment shall be made, treating the builder as the owner of the WPC 4981/07 & connected cases6apartment. While making separate assessments of the flats, the common areashall also be divided on pro rata basis, so that the entire built up area of thebuilding is assessed to building tax. The petitioners shall also furnish the correctaddresses, as far as possible, of the allottees of the flats, to the assessingauthorities. The assessing authorities shall afford an opportunity of being heardto the petitioners-builders and the individual flat owners and pass final orders inthe matter, as far as possible, before 30.07.2007. They shall, as stated earlier,deal with the assessment relating to every flat/apartment separately, withreference to the documents produced. In this context, it is apposite to remind theassessing authorities, the powers conferred on them under Section 17 of the Act.The said section reads as follows :“Power to take evidence on oath etc. - The assessing authority, theappellate authority and the revisional authority shall, for thepurpose of this Act, have the same powers as are vested ina CivilCourt under the Code of Civil Procedure, 1908 (Central Act 5 of1908), when trying a suit, in respect of the following matters,namely :-(a) enforcing the attendance of any person and examining him onoath or affirmation ;(b) compelling the production of documents ;(c) issuing commissions.”10. Basically, as mentioned earlier, whether the petitioners are eligible forthe benefit of the above said Explanation or not, is a finding of fact. So, in case, WPC 4981/07 & connected cases7any of the parties are aggrieved by the decision of the assessing authority,rendered pursuant to this Judgment, they have remedies under the Act by way ofappeal and revision. Needless to say, if the area of the flat along with the additionmade for the common built up area comes below 100 sq.mts, the said apartmentshall be exempted from the liability to pay building tax, provided it is covered bythe second explanation to Section 2(e) quoted earlier. If it is found that all or anyof the apartments are not entitled to get the benefit of the said explanation andthat they have to be assessed as a single unit, while making the assessment, thetotal amount of tax found due shall be apportioned, mentioning the pro-rata taxdue, in relation to each apartment. This direction is issued, so that the personswho came to own the flats/apartments after the date of completion of thebuilding, i.e., after the occurrence of the taxable event, can pay the amount, ifthey think fit, subject to the terms of the agreement, they have entered into withthe builder.Writ Petition(C) Nos.9193,10022,10093 & 10160 of 200711. The petitioners in these cases are builders, who entered intoagreements with the land owners concerned and constructed residentialcomplexes. Both sides submit that the directions issued in the Judgment in WritPetition (C) No.4981/07 and connected cases may be issued in these cases also.Accordingly, it is ordered that the directions issued in Writ Petition (C)No.4981/07 will govern these cases also. In these cases also, the assessment WPC 4981/07 & connected cases8orders/demand notices are set aside and the assessments shall be completed asdirected in the above batch of Writ Petitions. The Writ Petitions are disposed of as above. 23.03.2007 K.BALAKRISHNAN NAIR,JUDGEsta