Panchayat:Repo18/Law Manual Page0255

What is applicable is Rule 6(4) of the Kerala Panchayat Raj (Building Tax and the Surcharge Thereon) Rules and not Rule 4(ii) for the reason that Rule 6(4) is expressly made applicable to establishments let out on daily rent like lodges and the petitioner's hotel building cannot come under the category of those that are not ordinarily let out insofar as admittedly rooms of the building are in fact let out on daily rent. Although the counsel for the petitioner feebly argued that the building is not a lodge, the court is satisfied that Rule 6(4) is the most appropriate provision applicable to the petitioner's building for assessment of building tax, and in the context in which the word 'lodge' is used, the same applies to buildings where rooms are let out on daily rent. (Para 5) - M-Far Hotels Ltd. v. State of Kerala and Others – 2012 (1) KHC 9.

For the assessment of building tax in a Five Star Hotel, it was held that there is no illegality in assessing building tax separately for rooms as well as for public utility areas like bar, restaurant etc. While making such assessment, Panchayat has to reveal the basis on which such assessment is made. - M-Far Hotels Ltd. v. State of Kerala and Others – 2012 (1) KHC 9.

Statutory compensatory interest is payable, notwithstanding whether the delay in payment of the same was on account of stay granted by appellate authorities and Courts for the obvious reason that it is compensatory in nature. Just because the assessee was able to protract payment of the same by obtaining stay from appellate authorities and Courts, such compensatory interest does not cease to become payable. It may also be noted that the Income Tax Act provided for interest both compensatory and penal separately unlike the Panchayat Raj Act and the Supreme Court upheld demand for the compensatory interest and set aside demand for penal interest provided for, separately. (Paras 10 & 11) - M-Far Hotels Ltd. v. State of Kerala and Others – 2012 (1) KHC 9.

Going by the proviso to Rule 6(2) of the Kerala Panchayat Raj (Building Tax and the Surcharge) Rules, for the year 2001-02, the due date for payment is 31-10-2001. Of course, the petitioner thereafter filed appeals and a writ petition against the demand. But at no time was there any challenge against the liability to pay building tax and the challenge was solely against the method of assessment and the quantum. Therefore, the due date for payment of the building tax arose every year on the 31st of October. Simply because the petitioner challenged the quantum, the tax was revised and ultimately demand was raised for the revised tax only on 10-03-2006, does not make the due date 10-03-2006. As such, the liability to pay interest for the tax due every year arises from the 1st day of November of that year. Therefore, there is no merit in the contention of the petitioner on the question as to the date from which the liability to pay interest arises.- M-Far Hotels Ltd. v. State of Kerala and Others – 2012 (1) KHC 9. [Consolidated Coffee Ltd. v. Agricultural Income Tax Officer, 2001 KHC 1342. [2001 (1) SCC 278 : AIR 2000 SC 3731 : 2001 (248) ITR 417; (Paras 2, 11); Hindustan Steel v. State of Orissa, 1969 KHC 71 : AIR 1970 SC 259 : 1969 KLT 312: 1969 (1) SCC 863; (Para 11) - Referred to).

In a dispute regarding measurement and calculation of plinth area and in the absence of procedure or guidelines for reckoning plinth area, it was held that definitions provided or the parameters prescribed with respect to 'plinth area' in the Kerala Building Rules or in the Kerala Municipality Building Rules or those contained in the Engineers' Manual Books, can be adopted for arriving at an appropriate decision. - Nehrad Naina v. District Collector, Ernakulam and Others – 2011 (2) KHC 623 : 2011 (2) KLT 810 : ILR 2011 (2) Ker. 752 : 2011 (3) KLJ 1. In Nehrad Naina v. District Collector, Ernakulam and Others, the order of Assessing Authority was confirmed by Appellate Authority and further in revision. However, the assessee raised dispute with regard to measurement of plinth area. It was held on facts that the measurement can be carried out through an expert authority of the State Government and expenses in this regard to be borne by assessee. - Nehrad Naina v. District Collector, Ernakulam and Others – 2011 (2) KHC 623 : 2011 (2) KLT 810 : ILR 2011 (2) Ker. 752 : 2011 (3) KLJ 1.

In Thomas John Muthoot v. State of Kerala and Others, the assessment of property tax and the nexus with rental income was considered. When the Act stipulated that the annual rental value has to be fixed on the basis of gross annual rent at which the building is reasonably be expected to be let, the Municipality cannot fix the property tax on the basis of the actual rent received by the owner. The Municipality cannot fix property tax on the basis of actual rent recovered by owner and Property tax cannot be a tax on rent. - Thomas John Muthoot v. State of Kerala and Others - 2010 (1) KHC 708: 2010 (1) KLT 705 : ILR 2010 (1) Ker. 708.

Corresponding to S.203 of the Panchayat Raj Act, 1994] - Panchayats (Building Tax) Rules, 1963 (Kerala), R.4 – The fixation of the tax on the basis of the capital value can be adopted only when there is an 'opinion' by Executive Authority that the gross annual rent of the building cannot be estimated - Reasons for formation of 'opinion' shall be recorded - That 'opinion' shall be formed on cogent materials because it may result in adopting a different mode of fixation of annual rental value in the case

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