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2014 DIGILAW 474 (KER)

Panhikayil Chandralekha v. Secretary to Defence

2014-06-24

K.VINOD CHANDRAN

body2014
Judgment : 1. The petitioners are wife and husband who claim the benefit of, exemption from property tax; as has been provided all over the country for ex-servicemen, their wives and their widows. Exemption has been granted by the respective States as per the request made by the Kendriya Sainik Board. Admittedly, the 2nd petitioner is an ex-servicemen and the 1st petitioner, his wife, who owns a property within the Cantonment area, wherein the petitioners have constructed a residential house bearing No.T.S. No.538 Pt. of Cannanore Cantonment numbered as 90-E. The exemption is claimed for the said property, in which the petitioners are residing. 2. The learned counsel for the petitioners, would contend that on a request made by the Kendriya Sainik Board, as is evidenced from Ext.P3, the Government of Kerala through the Local Self Government Department, exempted from property tax, residential buildings in the municipal area, constructed by the widows of ex-servicemen, who died in combat and ex-servicemen who were injured in combat. By Ext.P4, the said exemption was extended to ex-servicemen as also their widows. Ext.P5 extended such benefits to the Panchayat area also. By Ext.P6, even the wives of ex-servicemen were exempted, if the ex-serviceman along with his wife, is residing in the said house, with a further condition that, such exemption shall be applicable only to a single building for each individual. 3. The petitioners also rely on Ext.P12, by which, the Director, Directorate of Sainik Welfare had written to the Secretary Kendriya Sainik Board; on a request made by the 2nd petitioner herein, directing extension of such privilege to ex-servicemen residing in the Cantonment area. The learned counsel pointedly refers to the obvious unfairness insofar as the petitioners, who have house within the Cantonment area, under the Cantonment Board. constituted under the Cantonment Act, 2006, (hereinafter referred to as the Act of 200) is required to pay property tax while an ex-servicemen living nearby, but in a property coming under the Local Self Government Institution (LSGI) is exempted. 4. The learned counsel for the respondent Board however, refers to the general powers of taxation conferred on the Board under S.66 of the Act of 2006. 4. The learned counsel for the respondent Board however, refers to the general powers of taxation conferred on the Board under S.66 of the Act of 2006. While sub-section (1) mandates the sanction of the Central Government, to impose property tax and tax on trade, profession etc, sub-section(2) specifically confers a power on the Board, to impose any tax, which under any enactment for the time being in force may be imposed by any municipality in the State, in which the Cantonment is constituted. Section 10 of the Act of 2006 also deems a Board, constituted under the Act to be a Municipality, under Clause (e) of Article 243 P of the Constitution of India. The provisions read together, according to the counsel, indicate that Board has power to impose tax when the State enactment provides for such imposition by the local authority; within which area the Board is also situated. The exemption notification of the LSG Department of the concerned State being not applicable to the Cantonment Boards, the plea is that no benefit could be granted on such exemption, being granted by the State. The Board is under the Central Government and subject to only orders passed by such Government. 5. The deeming provision definitely, confers authority on the Board, to act as a local authority, within the area constituted under the Board. The provisions noticed also confer power on the Board to impose any tax, which a local authority is entitled to impose under a valid enactment passed by the State. Undisputedly, the Municipality and the Panchayat within the State of Kerala are entitled to impose tax on property, as provided under the Kerala Municipalities Act, 1994 and the Kerala Panchayat Raj Act, 1994. But, the levy made by the Board is not empowered by such enactments, but by the specific provision in the Act of 2006, which sanctions the levy. The exemption being under a notification, as empowered by the provisions of the State enactments; cannot take away the levy, as imposed by the Act of 2006. 6. It is in such circumstance, that the 4th respondent takes a contention, rightly so, that they are entitled to impose such tax, de hors any exemption notification issued by the State. The exemption being under a notification, as empowered by the provisions of the State enactments; cannot take away the levy, as imposed by the Act of 2006. 6. It is in such circumstance, that the 4th respondent takes a contention, rightly so, that they are entitled to impose such tax, de hors any exemption notification issued by the State. It is also to be noticed that the second proviso to sub-section (2) prohibits the Board from abolishing any tax imposed under Section 66 or varying it to the Boards financial disadvantage, without the prior sanction of the Central Government. This effectively prohibits the Board from taking any decision sanctioning exemption. Hence, on the mere ground of fairness, the Board would be incompetent, to make any variance or for granting exemption to the tax imposed by the Act of 2006. However, it is pertinent that Section 112 of the Act of 2006, confers on the Central Government, the general power of exemption from any tax imposed under the Act of 2006. 7. The property tax imposed by the Cantonment Board on the first petitioner's property, though at the rates and in the manner imposed under the respective State enactment, by virtue of subsection (2) of Section 66 would be a tax imposed by the Act of 2006 and subject to any exercise of power under Section 112. Hence, the Central Government, definitely, has the power to exempt the property tax imposed by a State enactment, which gets incorporated in Act of 2006 by virtue of sub-section (2) of Section 66. 8. The States have already exempted the property tax to the earlier specified categories on the basis of the request made by the Sainik Board. In the teeth of such exemption being possible, but such power being in the exclusive domain of the Central Government, it is only proper that the Union of India consider the exemption, under Section 112 of the Act of 2006. There shall be a direction to the 1st respondent to place the matter before the appropriate authority for consideration of exemption. As is clear from the circumstances noticed herein above, the denial of such exemption would be unfair, especially in the teeth of the exemption granted to similarly placed persons, residing within the State, but outside the area of the Cantonment Board. As is clear from the circumstances noticed herein above, the denial of such exemption would be unfair, especially in the teeth of the exemption granted to similarly placed persons, residing within the State, but outside the area of the Cantonment Board. The Registry shall forward a copy of this judgment to the first respondent who shall ensure that a decision is taken in the matter within a period of six months from today. The 4th respondent shall also forward a certified copy of this judgment, to the first respondent. Since an interim order was granted, on filing of the writ petition, the levy of the property tax from the first petitioner herein shall be stayed till orders are passed on the exemption application. Writ petition allowed with the above observations.