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2004 DIGILAW 150 (KER)

Jayarajan v. Vadakara Nagarasabha

2004-04-02

KURIAN JOSEPH

body2004
Judgment :- Kurian Joseph, J. Liability to pay property tax to the local authority is that of the owner of the building. But, if the owner defaults, is the occupier liable? -2. Petitioner in these three cases are tenants. The tenanted premises are put to the use of running educational institutions. Under S.235(1)(d) of the Kerala Municipality Act, 1994 (hereinafter called'the Act'), the exemption from payment of property tax is available only to "buildings recognised by the Government or registered with the Municipality under this Act and owned and occupied by educational institutions and used only for teaching and libraries open to public". There is no dispute that in these cases, the petitioners are tenants and they are paying rent to the respondents landlords. Therefore, the only issue to be decided in these cases, is as to whose liability it is to pay the tax. Shri Parthasarathy, learned counsel appearing for the petitioners, placing reliance on Ss.237 and 238 of the Act, contends that the liability is of the landlord. Ss.237 and 238 read as follows: "237. Property tax, first charge on property.- (1) The property tax on buildings and lands shall, subject to the prior payment of land revenue, if any, due to the Government thereon, be a first charge upon the said buildings or lands and upon the movable property, if any, found within or upon the same and belonging to the person liable to such tax. 238. Revision and time of payment of property tax.-- Subject to the rules made by Government the property tax shall be assessed and the half yearly tax determined once in every five years and the half yearly tax shall be payable by the owner of the assessed property within thirty days of the commencement of each half year. Provided that except in the case of substantial improvements or addition to an existing building since the last assessment, the annual value of any building shall not exceed the limit, if any, fixed by Government from time to time". 3. It is clear from S.237 that subject only to the prior payment of land revenue due to the Government, in respect of property tax there is first charge on the buildings or lands or the movable property found within or upon the same and belonging to the person liable to such tax. 3. It is clear from S.237 that subject only to the prior payment of land revenue due to the Government, in respect of property tax there is first charge on the buildings or lands or the movable property found within or upon the same and belonging to the person liable to such tax. S.238 provides that the tax shall be payable by the owner of the assessed property. However, it has to be seen that S.238 is subject to the rules made by the Government in the matter of collection of tax. S.234(4) of the Act provides that "the Government may make rules regarding the person by whom and the intervals at which the annual value of buildings, the deduction or addition in the tax made etc. is to be determined and the procedure for realisation of tax amount". R.31 of Schedule 11 onwards to the Kerala Municipalities Rules, 1960 provides for the collection of taxes. As per S.575(2)(ii) of the Kerala Municipality Act, 1994, the said rule is still in force. Rr.30 to 36 provide for coercive steps including distraint of the property of the person liable to pay the tax. R.36 provides that "the property of a person in default under sub-r.(1) of R.32 may be distrained wherever it may be found within the Municipality". R.37 provides as follows: "37. If the tax due on account of any building or land remains unpaid in whole or in part at the end of the period specified in sub-r.(1) of R.32, the Commissioner may if the said tax has not remained unpaid for more than twelve months require the occupier for the time being of such building or land to pay the amount within a specified period not being less than fifteen days and if the occupier fails to comply with such requisition, the Commissioner may distrain and sell any moveable property found on the building or land, and the provisions of the foregoing rule shall, mutatis mutandis apply to all distraints and sales effected under this rule, provided that no occupier shall be liable to prosecution or to a civil suit in respect of any sum recoverable from him under this rule, unless he has wilfully prevented distraint or a sufficient distraint". (emphasis supplied) 4. (emphasis supplied) 4. Pareed Pillai, J. (As His Lordship then was) had occasion to consider the purposive meaning of R.37, and it has been held that R.37 can be put in operation for the whole arrears, and not limiting to the tax of one year. (See the decision in Azeez v. Vaikom Municipality, (1992 (2) KLT 676). 5. S.526 of the Kerala Municipality Act, 1994 reads as follows: "526. Recovery by occupier of sum leviable from owner.-- Where the occupier of any building or land makes on behalf of the owner thereof any payment for which, under this Act the owner but not the occupier is liable, such occupier shall be entitled to recover the same from the owner or may deduct the same from the rent then or thereafter due by him to the owner". 6. A reading of these provisions would give a clear indication that the owner is the person primarily liable to pay the property tax. However, in the event of default on the part of the owner, the occupier is liable to pay the tax, but he is entitled to recovery or adjustment against the future rent due from him to the landlord. 7. Shri Parthasarathy contends that if such a wide meaning is given to the statutory provision, a situation may arise as in the instant case, whereby a tenant will be made liable for the arrears of tax of the landlord even for the period prior to his occupation. Apparently, the legislative intent is to make the occupier liable, in case he wants to continue as occupier. That is the price for the status. That is why, there is a provision not only for deduction or adjustment against the rent, but also for recovery from the owner. 8. It is submitted that regarding the liability with regard to payment of the tax, there are civil suits between the landlord and the tenant. However, that dispute is not the subject matter of the Writ Petitions. It is for the parties to pursue the matter before the Civil Court. It is seen that pursuant to interim orders, the tenants have not been paying the tax to the Municipality. However, that dispute is not the subject matter of the Writ Petitions. It is for the parties to pursue the matter before the Civil Court. It is seen that pursuant to interim orders, the tenants have not been paying the tax to the Municipality. In the event of the parties approaching the Municipality for payment of the dues in instalments and for waiver of the interest, taking note of the fact that there was stay granted by this Court, appropriate orders in accordance with law will be passed by the Municipality in the matter of waiver of penal interest. The Original Petitions are disposed of as above.