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Kerala High Court · body

2025 DIGILAW 14 (KER)

Abad Builders Pvt. Ltd. v. Maradu Municipality

2025-01-06

VIJU ABRAHAM

body2025
JUDGMENT The first petitioner is a builder and the second petitioner is the Apartment Owners Association. Petitioners have approached this Court challenging Exts.P3, P4, P6 and P9 and also seeking a declaration that the recreation area and caretaker’s room which is statutorily provided in a residential apartment complex cannot be assessed in commercial tariff for levy of Municipal property tax. 2. The 1 st petitioner constructed an apartment complex on their land having an extent of 30.41 ares comprised in Sy.Nos.274/16, 33, 14-2, 11-2-2, 11-3, 14-3 of Maradu Village, Kanayannur Taluk in the name and style “Abad Golden Oak” on the strength of Ext.P1 building permit obtained from the 1 st respondent Municipality on 31.03.2018. The 1 st petitioner completed the construction of the apartment complex as per the building permit which includes 52 apartments including a recreation block and a caretaker’s room. After completion of the construction, Ext.P2 occupancy certificate was issued and door numbers were assigned to different apartments including the recreational area and the caretaker’s room. 3. The 1 st respondent Municipality raised a demand for Municipal Property Tax in respect of the recreational block as well as the caretaker’s room in commercial tariff and issued Exts.P3 and P4 demands. The 1 st petitioner remitted property tax as against Exts.P3 and P4 for the 1 st and 2 nd half of 2019-20 under protest. Learned senior counsel appearing for the petitioners would contend that as per Rule 50 of the Kerala Municipality Building Rules, 1999 (hereinafter referred to as ‘KMBR, 1999’) the 1 st petitioner is bound to provide a recreation space of suitable size in a residential apartment having more than 12 dwelling units, and that the recreational space shall not be less than 6% of the total floor area of all the units taken together, and a minimum 35% of such recreational space shall be provided outside the building on the ground itself, and the remaining recreational space may be provided either inside a building or outside or both. The learned Senior Counsel also referred to Rules 4 and 5 of the Kerala Municipality (Property Tax, Service Cess and Surcharge) Rules, 2011 (hereinafter referred to as ‘Surcharge Rules, 2011’) and contended that going by Rule 5 it is clear that the residential apartments are to be levied property tax under the residential tariff alone, and there is no legal warrant to separate the recreation area and caretaker’s room to levy property tax under commercial tariff. It is further submitted that as mandated in Rule 50 of KMBR, 1999, the 1 st petitioner has provided a recreational block having 406.69 sq.mtrs adjacent to the apartment complex and a caretaker’s room on the ground floor, i.e. having an area of 18.68 sq.mtrs. 4. The 1 st petitioner challenged the said demand of assessing the property tax of the area in commercial tariff and sought review of the said demand by submitting Ext.P5 representation. The Finance Standing Committee of the 1 st respondent Municipality considered the said request and by Ext.P6 decided to confirm the levy of tax at commercial tariff in respect of the recreational block as well as the caretaker’s room. Thereupon, the 1 st petitioner filed Ext.P7 representation before the 4 th respondent Government, and Ext.P8 report was submitted by the 2 nd respondent Secretary of the Municipality before the 4 th respondent. On the basis of Ext.P8 report the 4 th respondent sustained the stand taken by the 1 st respondent Municipality and rejected the request of the 1 st petitioner as per Ext.P9 order. 5. Petitioners submit that the stand taken in the impugned orders is clearly against the statutory provisions contained in the KMBR Rules, 1999 and Surcharge Rules, 2011 in as much as the same is in violation of Section 233 of the Kerala Municipality Act, 1994 (hereinafter referred to as Act 1994), which is a charging provision to levy property tax on building, Rule 30 and Rule 50 of the KMBR Rules 1999. The petitioner’s building permit is one of residential occupancy falling under Group A1 as initialised in Rule 30 of KMBR, 1999 includes residential apartments, residential flats and the said provision is extracted below:- “Rule 30(3)(a) Group A1 (a) Group A1. – Residential Building shall include any building in which sleeping accommodation is provided for normal residential purposes, (with or without cooking) and or dining facilities. – Residential Building shall include any building in which sleeping accommodation is provided for normal residential purposes, (with or without cooking) and or dining facilities. They shall include one or multi- family dwellings, apartment houses or residential flats. Small professional offices or spaces for advocates, doctors, engineers, architects, chartered accountants, beauticians, tailors, photographers, videographers, telephone booth operator, computer professionals, typists, electrical or electronic equipment service professionals, not exceeding (50 sq.meters floor area) and used as part of principal residential occupancy are also included in this group.” Learned Senior Counsel also relied on Rule 2(ava) of the KMBR, 1999 which defines ‘occupancy group’ and Rule 2(cha) which defines ‘use group’ and the relevant provisions are also extracted below:- “Rule 2(ava) defines the connotation ‘occupancy group’ means the principal occupancy for which a plot, a building or a part of a building is used or intended to be used; for the purposes of classification of a plot or building according to occupancy, an occupancy shall be deemed to include the subsidiary occupancies which are contingent upon it; Rule 2(cha) defines the connotation ‘use group’ means the principal use for which a plot, a building or part of a building is used or intended to be used.” Based on these provisions it is the contention of the learned Senior Counsel that the recreational block provided in the apartment complex as a statutory requirement cannot be taken out of the residential occupancy or could treat such area distinctly as one under commercial tariff for levy of property tax. It is submitted that the said area earmarked as recreational block and caretaker’s room are not used for any commercial activity and are used for the benefit of the apartment owners and therefore cannot be treated as one of ‘commercial use’ merely on surmises and conjectures. The learned Senior Counsel would further submit that the legal provision is abundantly clear from a reading of Group F occupancy (mercantile/commercial occupancy) as to when can a building be considered as a commercial occupancy. Group F occupancy is extracted below for easy consideration:- “Group F (Mercantile/Commercial Occupancy) “F.[Group F] – Mercantile or commercial building shall include any building or part of a building which is used for display and sale of merchandise such as shops, stores, markets, either wholesale or retail. Group F occupancy is extracted below for easy consideration:- “Group F (Mercantile/Commercial Occupancy) “F.[Group F] – Mercantile or commercial building shall include any building or part of a building which is used for display and sale of merchandise such as shops, stores, markets, either wholesale or retail. Banking and financial institutions, public and private business houses, professional establishment of doctors, dentist, engineers, architects, lawyers, pathological laboratories, tailor shops, video shops, barbershop, beauty parlours, news stands, milk booths, restaurants and non-nuisance type of small establishments like armature winding shops using power motor or machine of capacity not exceeding 3 horse power are included in this group. Further, buildings or part of buildings used exclusively for parking of vehicles (parking buildings, parking plazas etc.) are also included in this group.“ Section 233 of the Act, 1994 is the charging provision enabling the Municipality to levy property tax. Relevant portion of Section 233 relevant for consideration of this case is extracted below: “233. Property Tax - (1) Every Council of the Municipality shall, in accordance with the provisions of this Act and the rules as may be prescribed, levy property tax on every building (including the land appurtenant thereto) situated within the area of the respective Municipality and not exempted as per the provisions of the Act. (2) (a) For the purpose of levying property tax, the Government shall, by notification, fix the minimum and maximum limits of rate of basic property tax applicable to one square meter plinth area of the following categories of building in accordance with the use and the date on which they shall come into force, namely:- (i) used for residential purpose; (ii) used for industrial purpose; (iii) used for Schools and Hospitals; (iv) used for amusement parks, mobile telephone tower etc; (v) used for commercial purpose; (vi) used for other purpose; (vii) Any other category of building notified by the Government. (a) The Government may by notification fix the sub-categories of each category of building from (i) to (vii) above and the minimum limits of rates of basis property tax applicable to them. (a) The Government may by notification fix the sub-categories of each category of building from (i) to (vii) above and the minimum limits of rates of basis property tax applicable to them. (9) In the case of a building, if two or more uses or its sub-categories referred to in sub-section (2) or any two or more factors referred to in sub-section (7) or two or more kinds of a factor are applicable at the same time, the aggregate of annual property tax shall be assessed by reckoning separately, the property tax as applicable to the respective part of the building: Provided that, if more than one kind of anyone of the factors such as construction of roof of the building, construction of floor of the building, are applicable to a building at the same time the annual property tax of the building shall be assessed on the basis of that kind applicable to more than half portion of the aggregate plinth area.? 6. It is also profitable to extract Rule 50 of KMBR 1999 which deals with “recreation space” for a proper determination of the issues involved in this writ petition, which reads as follows: “50. Recreation space. - (1) Any residential apartment having more than 12 dwelling units in a single plot or single building, shall be provided with a recreational space of suitable size. (2) The recreational space as per sub rule (1) shall have not less than 6% of the total carpet area of all the units taken together. A minimum 35% of such recreational space shall be provided outside the building on the ground itself. Remaining recreational space may be provided either inside a building or outside or both. The recreational space, if provided out side a building on the ground shall be exclusive of parking areas, driveways and other utility areas. If recreational space is partly provided on any open terrace, the recreational space so provided shall not be more than 25% of the open terrace area. Such space shall be enclosed all around either by walls or parapet walls made of stable materials to a height of not less than 150 centimetres with grill mesh of size not more than 10 centimetres X 10 centimetres over it up to further height of 150 centimetres. Such recreational space in open terrace shall be provided with safety measures including exits as per these rules. Such recreational space in open terrace shall be provided with safety measures including exits as per these rules. Note:- (1) Spaces like swimming pool, recreation hall or health club shall also be considered as recreation space for this purpose. (2) The recreation space may be provided as a single unit or as different units.” 7. The relevant provisions of the Surcharge Rules 2011 especially Rule 4, Rule 5 and Rule 9, which are relevant for consideration of this case are extracted below: “ 4. Fixing of rates of basic property tax. - (1) the Municipality shall, by resolution, fix the rates of basic property tax in whole number to be levied in the area of the Municipality to a square meter of plinth area for each category of building, mentioned before in accordance with the use, if the Government have fixed their sub-categories, for it also, subject to the minimum and maximum limits of basic tax rates fixed by the Government as per sub-section (2) of section 233, for each category of building, namely:- (i) used for residential purpose; (ii) used for industrial purpose; (iii) used for schools or hospitals: (iv) used for amusement parks, mobile telephone tower; (v) used for commercial purpose; (vi) used for other purposes; (vii) Any other category of buildings as notified by the Government (2) The Council shall, initially consider preliminary proposals to fix rates of basic property tax or revision of existing rates and before passing a resolution for fixing rates finally, notice as to the intention of that resolution shall be published in the notice board of the office of the municipality and in a newspaper having wide circulation in the area of the Municipality and in the places directed by the Council and publicity shall be given to the notice through pamphlets, noticeboards, etc. and a period of not less than thirty days shall be allowed to submit objections and if any objections are received within the time stipulated that shall be considered by the council. (3) The rates of basic property tax for all buildings of same category or its subcategories, as the case may be, shall be the same throughout the area of the Municipality in accordance with use. (3) The rates of basic property tax for all buildings of same category or its subcategories, as the case may be, shall be the same throughout the area of the Municipality in accordance with use. (4) The Secretary shall publish a notification specifying the final rates of basic property tax fixed by the Council and the date of its commencement and the period during which it will be in force, the notification shall be published in the noticeboard of the office of Municipality and in two newspapers having circulation in the area of the Municipality. Publicity shall be given to the said notification through pamphlets, ward level noticeboards, etc. (5) The rates of basic property tax fixed by the Council shall have effect for a period of five years from the date of its commencement and the Council shall revise the rates to be in force for the next each five year period by making addition at the rate of twenty five percentage of the existing rates as per sub-section (4) of section 233 in due course and those shall be published as per sub-rule (4). 5. Assessment of basic property tax. - (1) All buildings in the area of Municipality shall be classified in accordance with the use stated in sub-rule (1) of rule 4 in order to assess property tax. Note 1:-Buildings for residential purposes includes houses, apartments, residential flats, hostels (except lodges) etc. Note 2:-Buildings for industrial purpose means buildings for production or processing any kind of products, objects or things or for collecting or operating machineries. Note 3:-Buildings for commercial purposes means buildings for selling, purchasing and gathering goods for sale and it includes restaurants and buildings constructed for commercial purpose appurtenant to the places of worship. Note 4:-Buildings for other purposes includes offices, auditorium, kalyanamandapam, conference hall, workshop, service station, lodges, etc; buildings related to any profession and which cannot be included in any other categories may be considered as buildings for other purposes. Note 4:-Buildings for other purposes includes offices, auditorium, kalyanamandapam, conference hall, workshop, service station, lodges, etc; buildings related to any profession and which cannot be included in any other categories may be considered as buildings for other purposes. (2) Plinth area of any building multiplied with the rate of basic property tax fixed by the Council as per sub- rule (1) of rule 4 to each and every category of any building in accordance with the use, rounded to its next higher whole number shall be the basic property tax of that building and shall be the basis for assessment of annual property tax of that building as per rule 9. ............... .............. ................ ............. ................. ............... ............. .............. 9. Criteria for assessment of the annual property tax of the building .- (1) After the basic property tax of a building is reckoned as per sub-rule (2) of rule (5), on the basis of factors such as zone in which the building is located, availability of road facility to the building, construction of roof, age, construction of floor, air- conditioning facility and deductions and additions in the basic property tax shall be effected in accordance with the criteria and in percentage stated in the Schedules under rule 6 and the annual property tax of the building shall be assessed by adjusting the amount so arrived after making deductions and additions as such rounded to the next higher whole number: Provided, the aggregate deduction so allowed in respect of all items shall not exceed seventy five percentage of the basic property tax as provided in sub-section (7) of section 233. (2) In case of a building, where two or more uses or two or more factors to be made as basis to make deduction and additions in the basic property tax or in the case of two or more kinds of a factor are applicable at the same time, the aggregate annual property tax of that building shall be assessed by reckoning separately, the property tax as applicable to the respective part of the building. Provided, if more than one kind of any one of the factors such as construction of roof, construction of floor are applicable to a building at the same time, annual property tax of the building shall be assessed by effecting deduction and addition in the basic property tax on the basis of that kind which is applicable to more than half portion of aggregate plinth area of the building. (3) When minimum and maximum limits of rates of basic property tax and subject to the said limits, basic property tax rates are refixed as per sub-rule (5) of rule 4, the secretary shall reassess the basic property tax and annual property tax of each building from specific date and the Council and secretary shall take proceedings for it in advance. (4a) When annual property tax of an existing building for residential purpose is assessed initially on the basis of plinth area, minimum of twenty five percentage addition shall be made in the previous property tax. (4b) When annual property tax of an existing building for residential purpose is assessed initially on the basis of plinth area, if there is addition in the previous annual property tax, such addition shall not exceed sixty percentage of the previous annual property tax and the annual property tax of the said building shall be assessed subject to this limit. (4c) When annual property tax of an existing building for commercial purpose is assessed initially on the basis of plinth area, minimum of twenty five percentage addition shall be made in the annual property tax existed immediately before. (4d) When annual property tax of an existing building for commercial purpose is assessed initially on the basis of plinth area, if there is addition in the previous annual property tax, such addition shall not exceed one hundred and fifty percentage of the annual property tax which existed and the annual property tax of the said existing building shall be assessed subject to this limit: Provided, after the conduct of last annual property tax assessment or reassessment, if any addition or structural improvement or any change is made in the use of the said building, aforesaid limits mentioned in the sub rules shall not be applicable. (5) In case of a multistoreyed building used for commercial purpose or office purpose, when the property tax is assessed initially on the basis of the plinth area, deduction in the annual property tax at the rate of 5 percentage of the annual property tax reckoned for the first floor above the ground floor, for the second floor – 10 percentage of the annual property tax reckoned, for the third floor – 15 percentage of the annual property tax reckoned, for the fourth floor – 20 percentage of the annual property tax reckoned, for the fifth floor – 25 percentage of the annual property tax reckoned, for each floor above the sixth floor – 25 percentage of the annual property tax reckoned shall be allowed.? 8. The learned Senior Counsel would further contend that the recreation block and caretaker’s room in the residential apartment complex of the petitioners cannot be treated as one for commercial use going by the classification of building prescribed under Section 233 (2) of the Act, 1994 or Rule 4 and 5 of the Surcharge Rules, 2011, and that going by proviso to Sub-section 9 to Section 233 of the Act, 1994 the classification should be on the basis of the use of the majority area of the aggregate plinth area. The learned Senior Counsel would further submit that none of the reasons stated for rejecting the claim of the petitioners as per Ext.P9 order passed by the Government are legally sustainable. 9. A detailed counter affidavit has been filed by respondents 1 to 3 contending that the caretaker room and recreational room of the apartment building was assessed to annual property tax and the tax has been fixed based on the user of the building. The respondent Municipality reiterated the stand taken in Ext.P9 order. Further, it is contended that KMBR Rules, 1999 is intended for issuance of occupancy certificate and the determination of property tax is not based on KMBR Rules for which there is a separate statute provided, i.e. the Surcharge Rules 2011. It is further submitted that if the recreational room and caretaker’s room are assessed at residential tariff, that would cause considerable financial loss to the Municipality. It is further contended that the ownership of the recreation room and caretaker’s room are still with the builders. It is further submitted that if the recreational room and caretaker’s room are assessed at residential tariff, that would cause considerable financial loss to the Municipality. It is further contended that the ownership of the recreation room and caretaker’s room are still with the builders. It is also contended that the commercial value of the flats is determined on the basis of these facilities and the builders are getting financial gain as well. It is further contended that the impugned orders are appealable before the Tribunal for Local Self-Government Institutions and the present writ petition is not maintainable. 10. To the said contention raised in the counter affidavit, a detailed reply affidavit has been filed by the petitioners and contended that it is not correct to say that the 1 st petitioner has not transferred the ownership of the recreational area to the 2 nd petitioner. As per the conveyance deed, 99.80% of the super built-up area has been transferred to the allottees, and the allottees have taken assignment of the proportionate common area as part of the holding. After the allotment process was over, the Apartment Owners Association was registered as evident from Ext.P11, and since the formation of the association, common area including the caretaker’s room, and recreational area are under their control. By Ext.P12 handing over agreement/letter of undertaking, the 1 st petitioner handed over the common areas to the 2 nd petitioner. The learned Senior Counsel also relied on Ext.P15, which is one of the sale deeds by which the apartments were sold by the 1 st petitioner, especially Clause 2 (VI) which mandates that all common amenities available in the project whether existing now or those that may come into existence later shall continue to be made available for the benefit of all the purchasers of the project. 11. The learned Standing Counsel for the 2 nd respondent has produced certain documents along with a petition filed as IA No.1 of 2024, in support of their contentions and submitted that Ext.R2(a) occupancy certificate reveals that the super built-up area of the building complex is 7376.78 sq.mts, and out which only 6951.41 sq.mts has been sold by the builder to the apartment holders i.e. after deducting the recreational area and the care taker’s room. It is further submitted that the builder themselves have submitted property tax return declaring that they are the owners of the building which is set apart as a recreational block and caretaker’s room as evident from Exts.R2(b) and R2(d). It is further submitted that Ext.P12 letter of undertaking is not a registered deed and since the 1 st petitioner continued to be the owner of the caretaker’s room as well as the recreational block, and the same has not been transferred to the association it can only be taxed at the commercial tariff. 12. To the said submission, the learned Senior Counsel relying on Ext.P16 Sale Deed No.176/1 of 2024 dated 18.01.2024 of Maradu SRO submits that the recreational block as well as caretaker’s room has been transferred to the Apartment Owners Association. It is further contended that the stipulation in Ext.P12 which is the letter of undertaking regarding handing over to the owners association is that the ownership change of the common area will be done as and when the association members are ready to take the conveyance from the builder, and that is the precise reason for the delay in executing Ext.P16. Further, it is submitted that no commercial gain in any form is enjoyed by the builder or the apartment owner’s association from the common area i.e. recreational block and caretaker’s room to treat its occupancy as commercial. 13. The 4 th respondent has also filed a counter affidavit reiterating the stand taken in Ext.P9 and contended that the petitioners are bound to pay tax at the commercial rate in respect of the recreational block and the caretaker’s room. 14. I have considered the rival contentions on both sides. 15. First of all let me consider the contention of the 1 st respondent Municipality that the writ petition is not maintainable in as much as a remedy by way of revision is provided before the Tribunal for Local Self Government Institution for challenging the orders impugned herein. It is to be noted that though a demand was made towards property tax treating recreational block as well as caretaker’s room at commercial tariff, appeal was preferred before the 3 rd respondent Finance Standing Committee of the 1 st respondent and the Finance Standing Committee confirmed the said levy as per Ext.P6. It is to be noted that though a demand was made towards property tax treating recreational block as well as caretaker’s room at commercial tariff, appeal was preferred before the 3 rd respondent Finance Standing Committee of the 1 st respondent and the Finance Standing Committee confirmed the said levy as per Ext.P6. Thereupon the 1 st petitioner filed Ext.P7 representation before the 4 th respondent Government and after receiving Ext.P8 report from the 2 nd respondent, the 4 th respondent sustained the stand of the Municipality and rejected the request of the 1 st petitioner as per Ext.P9. Since the order under challenge is an order passed by the Government and the issues involved are only interpretations of the provisions of the Act and Rules, I am of the view that the writ petition cannot be rejected on the sole ground that a revision is maintainable before the Tribunal. It is settled law that the availability of an alternative remedy is not an absolute bar in the exercise of the power of judicial review by High Courts as held by the Apex Court in Whirlpool Corporation v. Registrar of Trademarks, Mumbai, (1998) 8 SCC 1 , Habanslal Sahnia v. Indian Oil Corpn. Ltd, (2003)2 SCC 107 and the judgment of the Himachal Pradesh High Court in Joginder Kumar Gautam v. State Bank of India and Ors., ILR 1990 (2) HP 457 16. Admittedly what has been constructed by the 1 st petitioner is an apartment complex in the name and style “Abad Golden Oak” for which Ext.P1 building permit was obtained from the 1 st respondent. 2 nd petitioner is the association of apartment owners of “Abad Golden Oak” which is also a registered association as evident from Ext.P11. The specific case of the petitioners is that after the formation of the association as per Ext.P11 in 2020 the common areas including the caretaker’s room and recreational area are under the control of the 2 nd petitioner and Ext.P12 agreement was also executed wherein in clause (d) under ‘Builders’ covenants’ it is agreed that the ownership change of common area buildings will be done as and when the association members are ready to execute the deed. It is evident from Ext.P13 that the corpus fund of Rs.10,00,000/- was given to the 2 nd petitioner association in 2020 itself. It is evident from Ext.P13 that the corpus fund of Rs.10,00,000/- was given to the 2 nd petitioner association in 2020 itself. Ext.P15 is a sale deed in respect of the sale of an apartment to one of the allottees, wherein it is agreed by the builders under the ‘vendors’ covenants’, especially clause (vi), that all the common amenities available in the project whether existing now or those that may come into existence later, shall continue to be made available for the benefit of all the purchasers in the project. Further clause F.6 under Schedule – F of Ext P15 dealing with ‘purchasers' covenants’ mandates that the purchasers shall have the right to use the common amenities and facilities such as gymnasium, swimming pool, health club, children’s play area, jogging track and recreation hall subject to the rules and regulations of the builder/association of owners. As agreed in Ext.P12 the ownership change of common area buildings will be done as and when the association members are ready to execute the deed, and necessary deed was also executed transferring the common areas to the 2 nd petitioner association as per Ext P16 sale deed No.176/1/2024 dated 18.01.2024 whereby the recreational block as well as the caretaker’s room has been transferred to the 2 nd petitioner association. Therefore as soon as the association was ready to take over the recreational block and caretaker’s room, Ext.P16 sale deed was executed transferring the same to the apartment owners association. It is pertinent to note that it is undertaken by the petitioners that there is absolutely no commercial gain in any form enjoyed by the builders or the apartment owners association from the common area, ie., recreational block and caretaker’s room so as to treat the occupancy as commercial occupancy. It is also further undertaken by the learned senior counsel that the 1 st petitioner will not undertake any commercial activity using the recreational block or caretaker’s room. This Court is also of the opinion that after executing Ext.P16 sale deed in favour of the 2 nd petitioner, the 1 st petitioner cannot undertake any commercial activity using the recreational block or caretaker’s room in the apartment complex. 17. There is no disagreement on the fact that the building now constructed is under Group A1 occupancy as initialised in Rule 30 of KMBR, 1999 which includes residential apartments, residential flats, etc. 17. There is no disagreement on the fact that the building now constructed is under Group A1 occupancy as initialised in Rule 30 of KMBR, 1999 which includes residential apartments, residential flats, etc. Rule 2(ava) of KMBR, 1999 defines “occupancy group” as the principal occupancy for which a plot, a building or a part of a building is used or intended to be used for the purposes of classification of a plot or building according to occupancy, an occupancy shall be deemed to include the subsidiary occupancies which are contingent upon it. Likewise, Rule 2(cha) defines “use group” as the principal use for which a plot, a building or part of a building is used or intended to be used. Admittedly, it is a residential apartment complex, of which there is a recreational block and caretaker’s room. It is not in dispute that mercantile/commercial occupancy comes under Group F. As per Section 233 of Act, 1994 dealing with levy of property tax, it is the duty of the Municipal Council to levy property tax on buildings including land appurtenant thereto based on the categories mentioned in Section 233(2)(a) which classifies occupancy as residential in clause (i) and commercial purpose in clause (v). Likewise, Rule 4 of the Surcharge Rules 2011 deals with the fixation of rates of basic property tax and Rule 5 deals with the assessment of basic property tax and Rule 9 deals with criteria for assessment of annual property tax of the building. Going by Section 233 of the Act 1994, and the relevant Rules in the Surcharge Rules 2011 as stated above, property tax shall be fixed in accordance with the use of the building and the buildings have been categorized into various categories including one used for residential purpose and for commercial purpose. Rule 5 of the Surcharge Rules 2011 which deals with the assessment of the basic property tax classifies buildings for residential purposes to include houses, apartments, residential flats, hostels etc. and categorizes buildings for commercial purposes as buildings for selling, purchasing and gathering goods for sale and includes restaurants and buildings constructed for commercial purpose appurtenant to the place of worship. and categorizes buildings for commercial purposes as buildings for selling, purchasing and gathering goods for sale and includes restaurants and buildings constructed for commercial purpose appurtenant to the place of worship. Section 233(9) of the Act 1994 and Rule 9(2) of the Surcharge Rules 2011 deal with the criteria for assessment of property tax of the building which mandates that in case of a building where two or more uses or two or more factors to be made as basis to make deduction and additions in the basic property tax or in case of two or more kinds of a factor are applicable at the same time, the aggregate annual property tax of that building shall be assessed by reckoning separately, the property tax as applicable to the respective part of the building. The contention now raised by respondents is that in the building in question, there are two uses, ie., the apartments for residential purposes and the recreational room and caretaker’s room for commercial purposes. Ext. P1 general building permit reveals that the permit has been granted treating the said building as residential. The category of building referred to in the above quoted provisions will not take in the building of the petitioners. The buildings mentioned in the above-referred provisions are such buildings were both residential as well as commercial occupancy is permitted. For example, in a particular building where certain floors are set apart for commercial purposes and other floors are used for residential purposes, the above-quoted provisions will apply. The present building is one where a recreational block and caretaker’s room are provided in a residential apartment complex. As stated above, providing a recreational block in the petitioner’s building is mandatory as per the provisions of Rule 50 KMBR 1999 and if the petitioners does not provide such recreational block, they will not be issued with a building permit. It is in this context that Rule 2(ava) and Rule 2(cha) of KMBR 1999 assume importance as Rule 2(ava) defines ‘occupancy group’ to mean the principle occupancy for which a plot, a building or a part of the building is used or intended to be used and for purpose classification of a plot or building according to occupancy, an occupancy shall deem to include the subsidiary occupancies which are contingent upon it. Likewise, Rule 2(cha) defines ‘use group’ to mean the principal use for which a plot, a building, or part of a building is used or intended to be used. Therefore, even if there are subsidiary occupancies like the recreational block or the caretaker’s room which are absolutely necessary for the residents of a residential apartment and the principal use of the building being for residential purposes, the said building could only be assessed to property tax only under the category of a building used for residential purpose and not for commercial purpose. Therefore, I am of the view that the residential block and caretaker’s room in the apartment complex of the petitioners which is used solely for the benefit of the allottees of the residential complex cannot be assessed to tax at the commercial rate but should be treated as part of the principal occupancy, ie., for residential purpose and assess to property tax accordingly. 18. Let me now consider whether the reasons stated by the Government in Ext.P9 order for rejecting the request of the 1 st petitioner is sustainable or not. The reasons stated in Ext.P9 could be summarized as follows: (i) The recreational block and caretaker’s room of the petitioner’s building have been levied at commercial rate based on the user of the said building. (ii) The recreational block is constructed not as part of the main building and is set apart from the residential complex. (iii) The ownership over the recreational block and the caretaker’s room has not been handed over to the apartment owners or the residence association, and the ownership over the said property is still retained by the 1 st respondent. (iv) The commercial value of the flats is determined taking into consideration such additional facilities provided by the builders. The first reason stated by the Government to reject the claim of the petitioners is that the recreation block and caretaker’s room of the petitioners’ building have been levied at commercial rate based on the user of the said building. I have already held that the principal use for which the building is used or intended to be used is for residential purposes and therefore there is absolutely no basis for the stand of the Government that property tax in respect of the recreational block and caretaker’s room is to be levied at commercial rate. I have already held that the principal use for which the building is used or intended to be used is for residential purposes and therefore there is absolutely no basis for the stand of the Government that property tax in respect of the recreational block and caretaker’s room is to be levied at commercial rate. Admittedly, the recreational block and caretaker’s room are used by the apartment owners association, ie., the 2 nd petitioner herein, and that it has not been put to any commercial use like renting out the space to the general public on a fixed rent, etc. The Government or the Municipality has no case that such an act has been attempted by the petitioners herein. Therefore, as held above, the recreational block and caretaker’s room in the petitioners building can only be treated as an occupancy contingent upon the principal occupancy for which the building is intended to be used and therefore, cannot be charged at the commercial rate for the purpose of levy of property tax. 19. Another reason stated in Ext.P9 is that the recreational block is constructed not as part of the main building and it is set apart from the residential complex. The said ground stated in Ext.P9 to reject the claim of the petitioners goes against the statute itself, ie., KMBR, 1999 wherein Rule 50 mandates that a residential apartment having more than 12 dwelling units should provide a recreational space of suitable size and therefore, it cannot be for a moment said that the recreational block provided in the petitioners’ apartment is used for a commercial purpose. The said issue could be viewed from another angle. Going by the prescription in the statute, ie., Rule 50(1) the builder has no other choice but to provide a recreation space in a residential apartment having 12 dwelling units. Further, the reason stated by the Government cannot be accepted also for the reason that going by Rule 50(2) of KMBR, 1999 a minimum 35% of such recreational space shall be provided outside the building on the ground itself and the remaining recreational space may be provided either inside a building or outside or both. Therefore, what has been done by the petitioners is perfectly in consonance with Rule 50(2) of KMBR,1999 and it is the mandate of the statute that has been complied with by the 1 st petitioner builder. 20. Therefore, what has been done by the petitioners is perfectly in consonance with Rule 50(2) of KMBR,1999 and it is the mandate of the statute that has been complied with by the 1 st petitioner builder. 20. Yet another reason stated by the Government for rejecting the claim of the petitioners is that the ownership over the recreational block and caretaker’s room has not been handed over to the apartment owners or to the residents association and ownership over the said property is still retained by the 1 st petitioner. A perusal of Exts.P12, P15 and P16 would reveal that the said stand taken by the Government also is unsustainable. It is pertinent to note that the flats have been sold to various apartment owners by executing sale deeds, one of which is produced as Ext.P15 with the specific clause that all the common amenities available in the project whether existing now or those that may come into existence later, shall continue to be made available for the benefit of all the purchasers in the project. Further Ext.P15 mandated that the purchaser shall have a right to use the common amenities and facilities subject to the rules and regulations of the builder/owners association. So at the time of execution of the sale deed itself, it is made clear or it is agreed by the builder that the common areas will be made available for the benefit of the purchasers. Ext.P12 is the agreement with the building owners association with the 1 st petitioner builder regarding handing over of the common spaces, etc. It is mandated by the builder therein that the ownership change of common areas will be done as and when the association members are ready to execute the deed. As and when the apartment owners were ready to execute the deed, Ext.P16 was executed by the 1 st petitioner in favour of the 2 nd petitioner whereby the recreational block, as well as caretaker’s room, was transferred to the apartment owners association by a registered sale deed. In view of the above the said stand taken by the Government to reject the claim of the petitioners also cannot be sustained. 21. Yet another ground taken by the Government in Ext.P9 to reject the claim of the petitioners is that the commercial value of flats is determined taking into consideration such additional facilities provided by the builders. In view of the above the said stand taken by the Government to reject the claim of the petitioners also cannot be sustained. 21. Yet another ground taken by the Government in Ext.P9 to reject the claim of the petitioners is that the commercial value of flats is determined taking into consideration such additional facilities provided by the builders. The said stand also cannot be accepted in the light of Rule 50 of KMBR,1999 which mandates providing recreational space of suitable size in an apartment complex having 12 dwelling units and therefore, the builder is statutorily bound to provide recreational spaces and only when such recreational spaces are provided by the builder, building permit will be issued to the builder as was issued as per Ext.P1. Further, the learned senior counsel appearing for the petitioners undertakes that the 1 st petitioner will have no right over the recreation block and caretaker’s room after the same has been transferred to the 2 nd petitioner as per Ext.P16 and the petitioners will not put the said facilities in the recreational block for any other commercial activity including giving the said space to third parties on rent. It is a residential apartment project having 52 apartments. Such a huge project definitely requires a recreational block and caretaker’s room so as to cater to the needs of the individual apartment owners. 22. In view of the above facts and circumstances of the case and also taking into consideration the legal position as stated above, this Court is of the opinion that the recreational area and the caretaker’s room attached to a residential apartment cannot be assessed in the commercial tariff for levy of municipal property tax as long as the same is used for the benefit of the apartment owners only. In the present case as the recreational block and caretaker’s room are already transferred to the 2 nd petitioner, the apartment owners association, as evident from Ext.P16, it can only be said that the said areas are used exclusively for the benefit of the apartment owners only. 23. In the present case as the recreational block and caretaker’s room are already transferred to the 2 nd petitioner, the apartment owners association, as evident from Ext.P16, it can only be said that the said areas are used exclusively for the benefit of the apartment owners only. 23. In view of the above, Exts.P3 and P4 demands, Ext.P6 decision of respondents 2 and 3 and Ext.P9 order of the 4 th respondent are quashed and it is declared that the recreational block and caretaker’s room of the petitioners’ apartment cannot be assessed under commercial tariff and can be assessed only under residential tariff for levy of municipal property tax. Writ petition is allowed as above.