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2025 DIGILAW 2324 (KER)

M. P. Poulose, S/o. Pavu v. State Of Kerala

2025-08-26

P.M.MANOJ

body2025
JUDGMENT : P.M.MANOJ, J. The writ petition is preferred challenging Ext.P17 order passed by the Revenue Divisional Officer, Muvattupuzha rejecting the petitioner’s claim that Luxury Tax is not applicable to his residential building. 2. It is the case of the petitioner that he had constructed a residential building on the basis of a building plan approved by the local authority. The approved plan has a total plinth area of 252.72 Sq. Meters and 20.25 Sq. Meter car porch. The said building was constructed as a duplex residential building, of which the first floor has an area of 174.04 sq. meters, assigned to his son George M. Paul by virtue of settlement deed No. 1089/2002, which was mutated and the basic tax was remitted in the name of George M. Paul. 3. On 04.06.2002, the petitioner was served with a notice demanding Rs.2,000/- towards luxury tax. The petitioner filed O.P. No. 28466 of 2002, claiming the building’s total plinth area was less than stated. The court then disposed of the case, directing the 3 rd respondent to measure the building and set conditions therein. In compliance of the judgment dated 27.02.2003, no action was taken by the 3 rd respondent for a long period. Thereafter, by letter dated 20.12.2010 the petitioner was informed that the building was measured in the absence of the petitioner and area is found to be 315.91 sq. meter and demanding to pay Rs.27,000/- within 7 days. 4. Being aggrieved by that, the petitioner preferred a representation before the 2 nd respondent and also preferred WP(C) No.2779/2011 before this Court for a declaration that the plinth area of the building is below 272.74 sq. meter, thereby does not attract luxury tax. However, the petitioner was directed to resort to the statutory appeal. Accordingly, the petitioner preferred an appeal on 03.03.2011, which was dismissed by the 2 nd respondent without adverting to any of the contentions raised therein. The appeal was rejected, attributing the mala fides in assigning the house to his son. 5. It is further submitted that even though the petitioner has produced all the relevant documents, the 2 nd respondent did not advert to any of those documents to enter into such findings. Then, petitioner once again approached this Court, preferring WP(C) No.33918/2015. The appeal was rejected, attributing the mala fides in assigning the house to his son. 5. It is further submitted that even though the petitioner has produced all the relevant documents, the 2 nd respondent did not advert to any of those documents to enter into such findings. Then, petitioner once again approached this Court, preferring WP(C) No.33918/2015. By judgment dated 05.08.2015, this Court disposed the same, directing the 3 rd respondent to find out whether the building is separate legally and functionally and further that till the execution of the sale deed the building has to be taken as a single unit. In that regard, the petitioner had produced distinct and separate ration cards taken by the petitioner and the family residing at ground floor apartment and the son and his family on the first floor. It is also contended that the gas connections availed by them are of two separate agencies for the two apartments with the help of gas connection consumer card. It is also contended that both the buildings were numbered separately by the 5 th respondent. 6. Without adverting to the facts pointed out, the 3 rd respondent entered into a finding that the attempt of the petitioner was to waive the luxury tax and evidence of the ration card cannot be accepted. 3 rd respondent further held that the staircase constructed by the petitioner is only to outsmart the authorities. Accordingly, 3 rd respondent assessed and directed to pay luxury tax on or before 15.01.2016. However, this order was kept pending allegedly clandestinely till 14.01.2016. According to the petitioner, even going by the approved plan, the total plinth area is 272.74 sq. meters for the entire building. Ext.P12 impugned order was passed without considering the actual facts in Ext.P13 building plan. Since the panchayat had given separate numbers to the building, the petitioner approached this Court once again by preferring WP(C) No.2521 of 2016. By judgment dated 22.01.2016, a direction was given to keep in abeyance the recovery proceedings for one month so as to enable the petitioner to prefer the statutory remedy available. In compliance with the afore-mentioned judgment, the petitioner preferred an appeal before the 2 nd respondent on 18.03.2016. By judgment dated 22.01.2016, a direction was given to keep in abeyance the recovery proceedings for one month so as to enable the petitioner to prefer the statutory remedy available. In compliance with the afore-mentioned judgment, the petitioner preferred an appeal before the 2 nd respondent on 18.03.2016. It is further contended by the petitioner that though he has sought an opportunity for a personal hearing, no opportunity was afforded to the petitioner and without adverting to the facts with the correct perspective, passed an adverse order. Hence this writ petition. 7. Though counter affidavit was not filed, the learned Government Pleader has produced before this Court certain documents that includes notice dated 27.06.2017, which was issued under the provisions of Kerala Building Tax Act , 1975. On the basis of the application dated 20.04.2016, whereby it was intimated to the petitioner that a hearing was fixed on 15.07.2017 at 11 a.m., at the office of the 2 nd respondent, and the petitioner was directed to come with the necessary documents. Another document that was note file pertains to Ext.P17 wherein it is noted that on 15.07.2017 petitioner appeared for a hearing and that the petitioner’s application had already been rejected. The Tahsildar has conducted a personal inspection and submitted a report. Moreover, it is contended that the action of the petitioner assigning the first floor in the name of his son is only to evade the tax. This issue has already been considered by this Court in Kottila Veetil Krishnakumar v. State of Kerala [ 2024 (7) KHC 186 ]. 8. I have heard the counsel for the petitioner as well as the learned Government Pleader. 9. Going by the impugned order, it appears that the building in question was originally assessed in the year 2001. On realising that the building was assessed for luxury tax, in order to evade the same, the petitioner has assigned the first floor of the building to his son in the year 2002. The property was measured on the basis of the direction by this Court in WP(C) No. 2779/2011 and found that including the car porch, the total plinth area of the building is 317.67 sq. meters. His earlier appeal was dismissed, and he preferred a writ petition before this Court and obtained an order to measure out the building by the Tahsildar in person in compliance with Circular No.11302/SC3/13/Rev. Dated 21.03.2016. meters. His earlier appeal was dismissed, and he preferred a writ petition before this Court and obtained an order to measure out the building by the Tahsildar in person in compliance with Circular No.11302/SC3/13/Rev. Dated 21.03.2016. Further it was found that though the first floor was assigned to the petitioner’s son, no separate electric connection was taken and there is a conveniently large staircase from the ground floor to the first floor within the building, as is reported by the Tahsildar, and a single kitchen is used by the occupants. Only a temporary partition has been effected which could easily be removed to separate both the floors. To create an impression that a separate kitchen is functioning, a gas stove is kept inside the bedroom and a temporary staircase is constructed outside in order to give an impression that there is an external staircase. Those measures are taken only to evade the luxury tax. 10. In these circumstances, the findings in Kottila Veetil Krishhnakumar (supra) appears to be relevant. In that case this Court relied on the concurrent judgment of Justice Chinnappa Reddy in M/s.McDowell and Company Limited v. Commercial Tax Officer [ 1985 (3) SCC 230 ]. Paragraphs 17 & 18 of M/s.McDowell Company read as follows: “17. We think that time has come for us to depart from the Westminster [1936 AC 1 : 1935 All ER Rep 259] principle as emphatically as the British Courts have done and to dissociate ourselves from the observations of Shah, J. and similar observations made elsewhere. The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a Welfare State like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of black-money, directly causing inflation. Then there is “the large hidden loss” to the community (as pointed out by Master Wheatcroft [18 Modern Law Review 209] ) by some of the best brains in the country being invloved in the perpetual war waged between the tax-avoider and his expert team of advisers, lawyers, and accountants on one side and the tax-gatherer and his perhaps not so skilful, advisers on the other side. Then again there is the “sense of injustice and inequality which tax avoidance arouses in the breasts of those who are unwilling or unable to profit by it”. Then again there is the “sense of injustice and inequality which tax avoidance arouses in the breasts of those who are unwilling or unable to profit by it”. Last but not the least is the ethics (to be precise, the lack of it) of transferring the burden of tax liability to the shoulders of the guideless, good citizens from those of the “artful dodgers”. It may, indeed, be difficult for lesser mortals to attain the state of mind of Mr Justice Holmes, who said, “Taxes are what we pay for civilized society. I like to pay taxes. With them I buy civilization”. But, surely, it is high time for the judiciary in India too to part its ways from the principle of Westminster and the alluring logic of tax avoidance. We now live in a Welfare State whose financial needs, if backed by the law, have to be respected and met. We must recognise that there is behind taxation laws as much moral sanction as behind any other welfare legislation and it is a pretence to say that avoidance of taxation is not unethical and that it stands on no less moral plane than honest payment of taxation. In our view, the proper way to construe a taxing statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it. A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. and Bengal Hotels Limited, In re [47 Com Cas 597 (Guj HC)] where the learned Judge refused to accord sanction to the amalgamation of companies as it would lead to avoidance of tax. 18. It is neither fair nor desirable to expect the Legislature to intervene and take care of every device and scheme to avoid taxation. 18. It is neither fair nor desirable to expect the Legislature to intervene and take care of every device and scheme to avoid taxation. It is up to the Court to take stock to determine the nature of the new and sophisticated legal devices to avoid tax and consider whether the situation created by the devices could be related to the existing legislation with the aid of “emerging” techniques of interpretation (sic as) was done in Ramsay [ 1982 AC 300 : (1981) 1 All ER 865], Burmah Oil [ 1982 STC 30 ] and Dawson [(1984) 1 All ER 530], to expose the devices for what they really are and to refuse to give judicial benediction.” In that case, it was held that the tax planning made by the petitioner was only with the intention to evade tax. Therefore, the relief was not granted. 11. Going by the impugned order, the same method is adopted by the petitioner in this case as well. The primary contention of the petitioner was that prior to the issuance of the impugned order, he was not given with an opportunity to be heard. However, the documents produced by the learned Government Pleader, as stated earlier, the petitioner was given sufficient opportunity, and he had appeared before the authority on 15.07.2017, thereby such contention cannot be sustained. Hence, I do not find any ground to interfere with the impugned order as the authority has considered the matter on its merits and passed an appropriate order. Accordingly, the writ petition is dismissed.