Hindustan Organic Chemicals Ltd. vs State of Kerala and Another

J.B. Koshy, J.—Petitioner is a company registered under the provisions of the Companies Act, 1956 and it is fully owned by the Government of India. It constructed residential flats in 24 multi-storeyed flats and one building for telephone exchange. In the return tiled by the company under the Kerala Building Tax Act and Ext. F2 objections, company contended that it is a company fully owned by the Government of India and, therefore, buildings are owned by Government and it is exempted u/s 3(1) of the Act and before assessment this question should be referred to the Government u/s 3(2). Second contention raised was that each flat in the residential complex is built to provide accommodation to the employees and, therefore, each flat is separate. Since most of the flats arc below 75 square metres they arc exempt and in any event assessment should be made on each flats separately.

First, I may take the contention that each flat should be considered as separate buildings. ''Building'' is defined u/s 2(e) of the Act which is as follows :

"''building'' means a house, out-house, garage, or any other structure or part thereof, whether of masonry, bricks, wood, metal or other material but does not include any portable shelter or any shed constructed principally of mud, bamboos, leaves, grass or thatch or a latrine which is not attached to the main structure."

However, Explanation 2 to Section 2(e) provides as follows :

"Where a building consists of different apartments or flats owned by different persons and the cost of construction of the building was met by all such persons jointly, each such apartment or flat shall be deemed to be a separate building." Only when apartments or flats are owned by different persons, a part of the building like flats etc. can be assessed separately. Here, admittedly, all the 184 flats in the 24 buildings are owned by the company and not owned by different persons. Hence petitioner company is not entitled to get the benefit of the above explanation.

Next contention is that petitioner is a company owned by the Government of India and therefore exempt from building tax u/s 3(1)(a). Section 3(1)(a) is quoted below :

"3(1) Nothing in this Act shall apply to (a) buildings owned by the Government of Kerala or the Government of India or any local authority;"

The building constructed by the petitioner is owned by the company. It cannot be called a Government building. It is true that shares of the company are now fully with the Government of India. But, building owned by a Government company cannot be treated as a building owned by Government of India. An incorporated company is a separate independent personality and, therefore, it is not Government itself. (See Heavy Engineering Mazdoor Union Vs. State of Bihar and Others, ); Hindustan Aeronautics Ltd. Vs. The Workmen and Others, ) and Rashtriya Mill Mazdoor Sangh, Nagpur Vs. Model Mills, Nagpur and Another, ). Hence petitioner is not entitled to the benefit u/s 3(1)(a).

Recently, Supreme Court in Hindustan Steel Works Construction Ltd. Vs. State of Kerala and others, ) held that similar Government companies cannot be treated as Departments of Government. It was held as follows :

"19. After giving our careful consideration to the facts of the case and the respective contentions made by the learned counsel for the parties, it appeal''s to us that the appellant company cannot be held to be a department of the Government. There may be deep and pervasive control of the Government over the appellant company and the appellant company. On such account may be an instrumentality or agency of the Central Government and as such a ''State'' within the meaning of Article 12 of the Constitution. Even though the appellant company is an agency or instrumentality of the Central Government, it cannot be held to be a department or establishment of the Government in all cases..... The establishment of a Government only connotes in its plain meaning, an establishment directly run by the Government and not through-the agency or instrumentality of the Government....."

Here also, the question raised is not infringement of fundamental rights but only regarding the eligibility to exemption in a taxing statute. What is exempted from taxation isonly buildings owned by the Government. Building of a company incorporated under the Companies Act cannot be held a Government building merely because shares of that company arc fully owned by the Government, [t is well accepted principle that while considering exemption provisions of a taxing Statute, literal and strict construction should be adhered to in the absence of ambiguity, unless such interpretation brings arbitrary or irrational results contrary to the objects of the Act. Here, it is clear that only Government building is exempted from taxation and not Government company''s building.

Since I have found that petitioner''s buildings arc not buildings owned by the Government, on merit after hearing both sides, there is no point in referring the matter to the Government u/s 3(2). Further, an unconditional slay of collection of tax was granted as early as on 23-9-1993 and after more than five years it is not fair to relegate the parties for another round of litigation. For a reference u/s 3(2) a ''question'' should arise. Here, no prima facie question arises for reference to the Government u/s 3(2) of the Act in view of clear language used in the (sic) and undisputed facts.

Lastly, it was contended that petitioner is entitled to exemption under Explanation I to Section 2(c). Explanation I to Section 2(e) is as follows :

"In the ease of buildings constructed for providing housing accommodation for workers and their families residing in plantation, in pursuance of Section 15 of the Plantations Labour Act, 1951 (Central Act 69 of 1951) or buildings constructed under the Government of India subsidised Housing Scheme for industrial workers, each part of a building providing or intended to provide accommodation for a worker or a worker and his family shall be deemed to be a separate building."

Petitioner is not a plantation. There is no averment that the building was constructed under the Government of India Subsidised Housing Scheme. No evidence is produced to that effect even in the original petition. No such contentions were raised in Ext. P2 objection also. Hence the above-contention also fails.

I also note that Section 11 of the Act provides a statutory remedy of appeal and hence writ petition will not normally lie as effective alternate statutory remedy is provided for. Now, the alternate remedy is time-barred. Having admitted the writ petition and as the matter was pending for more than five years in the Court and since the matter was argued in detail by both sides, original petition is disposed of on merit.

The original petition lacks merit and it is dismissed. No costs.