Roy Joseph vs The Thrickodithanam Grama Panchayat & Ors.

The petitioner is the owner of a building with door Nos.19A, 19B, 19C, 19D, 19E, 19F, 19G, 19H, and 19I in Ward No.V. of the 1^st respondent Panchayat. The challenge raised in this writ petition is against the demand of property tax, in respect of the said building, at three time of the normal rates for the entire construction, alleging that the petitioner had carried out certain additional construction on the said building, without obtaining necessary permits in this regard. According to the petitioner, imposing the tax liability at three times, which is penal in nature, could not have been made for the entire building, since the allegation of unauthorised construction is confined to a limited portion of the building.

The facts that led to the filing of this writ petition are as follows:

The said building was purchased by the petitioner along with the property, as per Ext.P1 sale deed dated 28.01.2014. After the purchase of said property, the petitioner had carried out certain additional constructions on the existing building. In respect of the said construction, the 2^nd respondent-Secretary to the 1^st respondent Panchayat, initiated proceedings under Section 235W of Kerala Panchayat Raj Act, by issuing a provisional order, alleging that, the petitioner had carried out constructions without obtaining any proper building permit and therefore, unauthorized. The petitioner submitted an application for regularization of the building under Kerala Panchayat Building (Regularisation of Unauthorised Construction) Rules, 2018. and later a further application was submitted under the similar Rules promulgated for 2024.

Ultimately, the question of regularization was considered by the District Town Planner, Kottayam as evidenced by Ext.P4. In Ext.P4 proceedings of the District Town Planner, while ordering regularization of the construction, the total plinth area of the building was determined as 956.79 Square Meters, whereas, the existing construction was reckoned as 271.74 Square Meters. The regularization was ordered as per Ext.P4 with certain conditions, and the condition regarding the payment of the composition fee payable by the petitioner was to the effect that, the same can be paid by the petitioner only upon removing the encumbrance in the property records, based on an attachment ordered against that property in a civil suit or subject to the final decision to be taken in the said litigation.

According to the petitioner, even though an order of regularization was passed as evidenced by Ext.P4, the petitioner could not get the building regularized, as the composition fee stipulated therein could not be remitted on account of the conditions imposed as per Ext.P4. As of now, the building is remaining as unauthorized construction, despite Ext.P4 order, for all practical purposes. Ext.P4 order was passed on 03.07.2025. In the meantime, the petitioner was issued with Exts.P6 and P7 demand notices, by which, an amount of Rs.18,14,312/- was demanded, which consists of the normal tax for the entire building, along with twice the rate of tax, as contemplated under Section 235AA of the Act. The said demand was made, by treating the entire building of the petitioner as unauthorized. Based on Exts.P6 and P7, revenue recovery proceedings are also initiated as per Ext.P8, by the respondents 4 and 5. This writ petition is submitted by the petitioner in such circumstances, challenging Exts.P6, P7 demand notices and Ext.P8 revenue recovery notices.

A detailed counter affidavit is submitted by the respondents 1 and 2, explaining the circumstances under which, Exts.P6 and P7 were issued. According to the respondents, as the petitioner had carried out the construction without any authorization as required under law, the entire building was treated as unauthorized and the property tax along with twice the rate of tax was demanded, as contemplated under Section 235AA of the Kerala Panchayat Raj Act. Thus, the respondents 1 and 2 sought dismissal of the writ petition.

I have heard Sri.Liji J Vadakkedom, learned counsel for the petitioner, Sri.K.Mohanakannan, learned standing counsel for the respondents 1 and 2 and Sri.Sayed Mansoor Bafakhy Thangal, learned Government Pleader for the respondents 3 to 5.

One of the main contentions raised by the learned counsel for the petitioners, while challenging Exts.P6 to P8 is that, the said demand was raised in violation of the statutory stipulations contained in Section 235AA of the Kerala Panchayat Raj Act. It is pointed out that, the said provision contemplates for imposition of tax at penal rates, i.e., two times of the tax along with regular rates. According to the petitioner, as per the relevant statutory provisions, such a demand is permissible only in respect of the plinth area/part of the building which is constructed unlawfully, whereas, in the present proceedings, merely because of the reason that, some portion of the area was found to be constructed unauthorized, the entire building, inclusive of the building which is constructed with valid permission, was treated as unauthorized and tax was imposed on penal rates. According to the petitioner, such an assessment and imposition of tax is not something contemplated under Section 235AA of the Act. The learned counsel for the petitioner places reliance upon the stipulations contained in Section 235W of the Kerala Panchayath Raj Act to show that, the authority granted to the Secretary to remove the construction is strictly confined to the unauthorized portion of the construction alone, by following the procedure contemplated under the said provision. Thus, the sum and substance of the contentions of the learned counsel for the petitioner is that, the Panchayat is not authorized to collect property tax at penal rates for the entire building, inclusive of the portion of the building which is constructed with valid permits and other sanctions.

The learned standing counsel appearing for the 1^st and 2^nd respondents as well as the learned Government Pleader, stoutly oppose the contentions raised by the learned counsel for the petitioner by pointing out that, the petitioner had derived undue benefits by enjoying unauthorized construction along with the building, which is constructed with authorization, and therefore, the entire building is to be treated as unauthorized. This submission is made mainly because, a portion of the building has already been issued an occupancy certificate and assigned a building number, which enable the petitioner to put the additional construction, made by way of unauthorized construction, to his beneficial use, by availing the services available to the main building. Therefore, it is pointed out that, the penalty imposed on the entire building is justified.

I have carefully gone through the statutory provisions contemplated under the Kerala Panchayat Raj Act, 1994 and also the contentions raised by all the parties. Before proceeding to determine the issue, it is profitable to refer to the relevant statutory provisions. Section 235AA of the Kerala Panchayat Raj Act deals with the levy of tax for the building constructed unlawfully, and the said provision reads as follows:

Malayalam version of the relevant provision reads as follows:

Section 235W deals with the demolition or alteration of the building works unlawfully commenced, carrying on or completed; the said provision reads as follows:

While evaluating the scope of the aforesaid provisions, the stipulations contained in Section 235V of the Kerala Panchayat Raj Act is also relevant, which deals with the application of the provisions to alterations and additions, and the said reads as follows:

On carefully going through the statutory stipulations contained in Section 235AA of the Act, it is to be noted that, Sub Section (1) thereof, specifically uses the expression “without prejudice to any action that may be taken against that person, be liable to pay the sum of property tax that could have been paid, had the said building been constructed lawfully, together with twice the amount towards property tax of the building so constructed unlawfully with effect from the date of completion or utilization of that for any purposes mentioned in Sub Section (2) of Section 203, whichever is earlier, till the date of demolition of that building.”

Thus, a careful reading of the aforesaid provision would clearly indicate that, the authority provided as per the said provision to impose tax along with the additional tax at twice the rate of tax, is in respect of the building “so constructed unlawfully”. While trying to understand the real purport and intention of the said provision, the expression “so constructed unlawfully” will have to be given due emphasis, which would lead to a definite conclusion that, the purpose of the same is to enable the statutory authority of the Panchayat to impose tax in respect of the unauthorized portion of the building, i.e. constructed unlawfully. In this regard, the word meaning of ‘so’ becomes crucial and is discussed in Corpus Juris Secundum, Words and Phrases, (Vol 39, pg. 542), which reads thus;

Similarly Prem & Saharay's Judicial Dictionary of Words And Phrases ( Vol. IV, 2nd Edn 2016, pg. 4539), reads thus;

Thus, in the light of the specific stipulations contained in Section 235AA of the Act, it may not be possible for the Panchayat to impose tax liability with additional tax at the rate of two times of the tax, in respect of the portion of the building, which is constructed with valid permit and is already subjected to assessment under the provisions of the Act. It is to be noted in this regard that, while the liability of additional tax is imposed on the building “so constructed unlawfully”, nowhere in the Act, it is stipulated, either specifically or with necessary implication, that, if any portion of the building is found to be constructed without authorisation, the entire building has to be treated as unauthorized.

The said intention is also clear from the stipulations contained in Section 235W of the Act, that deals with demolition or alteration of the building works unlawfully commenced, carried on or completed. It is to be noted that, in Sub section (2) of Section 235AA of the Act, it is specifically stipulated that, nothing contained in sub section (1) shall preclude the Secretary from proceeding against such person under Section 235W of the Act and the owner shall not have right to get any compensation due to any action taken by the Secretary in this Section. Therefore, while incorporating Section 235AA, the legislature was conscious about the rights available to the Secretary/Panchayath to initiate appropriate proceedings for demolishing the building by invoking the powers under Section 235W. On examining the stipulations contained in Section 235W, particularly sub Section (1) (iii), it can be seen that, the same specifically provides that, the demolition of the building or the work contemplated under the said provision, is confined to the work done or any part of it, as in the opinion of the Secretary, has been unlawfully executed or to make such alteration as may be necessary to bring the work in conformity with the provisions of this Act, by-laws, rules, direction, order or requisition as aforesaid or with the plans and specifications on which such permission or decision was based, and may also direct until the said order is complied with, the owner or such person shall refrain from proceeding with the work. Thus, such provision specifically envisages demolition of the area which is unlawfully constructed. Therefore, it is clear that, the actions proposed in Section 235AA and 235W of the Act were in respect of the portion of the building which is constructed without any authorization and in violation of the provisions of the Kerala Panchayat Raj Act and the Rules framed thereunder. Therefore, I find merits in the submission made by the learned counsel for the petitioner that, imposing tax liability at penal rates on the entire building, inclusive of the authorized portion of the building, is not supported by any statutory provision, either specifically or impliedly, and hence, not sustainable.

There is yet another aspect that fortifies the aforesaid view. As far as the tax and the additional tax contemplated under Section 235AA of the Act is concerned, the same is penal in nature and therefore, it requires very strict interpretation. The effect of the same is that, unless there is a specific provision enabling the authorities concerned to impose a tax at penal rates on the authorized portion of the building as well, such liability cannot be imposed, in respect of that portion of the building. As rightly pointed out by the learned counsel for the petitioner, the principles enshrined in Article 265 of the Constitution of India are also to be pressed into service, while considering such question, as the said Article clearly stipulates that, without any authority of law, no tax can be imposed. Here in this case, in respect of the property that is constructed by the petitioner with authorization, the petitioner has paid tax as per the rates stipulated, since it was already subjected to valid assessment as per the provisions contemplated under the Act. Therefore, the mere reason that, additional constructions were carried out along with the said building, by itself would not enable the respondents to subject the authorized portion of the building again, for assessment, in the absence of any specific provision authorizing the authorities to do so. As mentioned above, there is no stipulation in the Kerala Panchayat Raj Act that, making additional construction without authorization, on the building constructed with authorization, would enable the Panchayat to treat the entire building as unauthorized.

In this regard, the statutory stipulations contained section 5(4) in Kerala Building Tax Act, 1975 is also relevant and the said provision reads as follows:

From the above, it is clear that, whenever the additional construction enables the authorities to have a reassessment of the entire building inclusive of the area of the building constructed already, the same has been specifically stipulated in the enactment itself, apparently in fulfillment of the requirement of Article 265 of the Constitution of India. However, when it comes to the relevant provisions of the Kerala Panchayat Raj Act, such a statutory provision that authorizes such reassessment is absent, which is very conspicuous.

Another important aspect to be noticed in connection with the above is that, as pointed out by the learned counsel for the petitioner, Section 235V of the Kerala Panchayat Raj Act specifically stipulates that, the provisions of the Act or any rule or bye-law made thereunder relating to construction and re-construction of buildings shall also be applicable to any alteration thereof or addition thereto. Since all the provisions of the Act and the Rules were made applicable to the alterations and additions to the building as well, there cannot be any dispute that, even for initiating proceedings for imposing tax in respect of the additional construction, the excluded area which is constructed without authorization will have to be identified, assessed and demanded tax as contemplated under the Act. Such an identification is absolutely necessary for invoking powers under Section 235W also, since the said provision enables the authority concerned to remove the construction which is made without authorization. Therefore, by virtue of Section 235V of the Act, the provisions including the provisions relating to assessment of tax would also be applicable to the additional construction, irrespective of the question whether the same was constructed with authorization or not.

In this regard, it is to be noted that, sub Section (3) to Section 235AA specifically stipulates that, a special number shall be assigned to the building constructed without authorization and it is also provided therein that, any delay in giving special number shall not be a bar to levy property tax retrospectively under sub section (1). Thus, assigning a special number to the building is necessary for imposing liability as contemplated under sub section (1) of Section 235AA of the Act. This would mean that, when an authority detects an unauthorized alteration of a building by way of additional construction to the existing building which is constructed with authorization, such additional construction will have to be identified and a special number will have to be assigned to the same. Evidently, going by the scheme of Section 235AA, read along with the other provisions as referred to above, it can be seen that, the special number is being assigned, not to enable the building owner to avail any services for the said building, but the purpose of it is confined to the imposition of tax, with additional tax as contemplated under sub section (1) of Section 235AA and also to initiate proceedings to demolish that portion of the building under section 235W of the Act.

Therefore, when all these provisions are read together, the only conclusion possible is that, the assessment will have to be carried out in respect of the additional area constructed without authorization, by following the procedure contemplated in this regard and thereafter, the authority shall proceed to determine the tax, as contemplated under sub Section (1) of Section 235AA, inclusive of the additional tax at the rate of two times of the tax along with normal rate in respect of the portion of the building so constructed unlawfully. To be precise, the procedure as mentioned above, which is revealed through various provisions referred to above, would clearly indicate that, an assessment by adding the plinth area of the building unauthorizedly constructed to the authorized portion of the building and making an assessment for the entire building at penal rates/additional rates as contemplated under sub section (1) of Section 235AA is something which is not envisaged in the Act and therefore, not legally sustainable.

Of course, the learned Government Pleader pointed out that, since the petitioner had availed the benefits of the authorized building, after making the unauthorized constructions, the demand is justified. It is true that the petitioner may have availed undue benefits on account of such unauthorized construction. However, as far as the assessment of tax and imposition of tax at penal rates are concerned, the same is governed by the stipulations contained in Section 235AA of the Act. So long as the said provision does not contemplate any specific authorization upon the authorities concerned, to impose tax at penal rates, in respect of the authorized portion of the building, no tax can be collected for the same, irrespective of the question whether the petitioner had derived any benefit out of it, on account of additional construction being attached to the authorized portion of the building. To be precise, such a criterion is not something relevant for the purpose of assessment of tax with additional tax as contemplated in Subsection (1) of Section 235AA of the Act, in the absence of any specific enabling provision. Therefore, I am not inclined to accept the said contention of the learned Government Pleader.

Another aspect to be noticed is the question regarding the requirement of the punishment being proportionate to the wrong committed. As observed above, since section 235AA provides for tax at the rate of two times of the normal rates along with the normal rate of tax, it is penal in nature. In other words, a wrong committed by the owner of the building is to be imposed with a penalty. It is an accepted principle of law that punishment should be proportionate to the wrong committed and there must be a rational nexus between the two. What could be the relevant factors for determining the proportionality, is depending upon the facts and circumstances of each case. In Bhagat Ram v. State of H.P., (1983) 2 SCC 442, , Hon’ble Apex Court held;

However, under normal circumstances, unless specifically authorized by a provision of law, it may not be possible for the statutory authorities to impose a penalty, in respect of an act, which the party had carried out with proper sanction of law, as rightly held in a catena of decisions including Commissioner of Wealth Tax, Gujarat III Ahmedabad v. Ellis Bridge Gymkhana [(1998) 1 SCC 384], Commissioner of Income-tax, Madras v. Kasturi and Sons Ltd., [AIR 1999 SC 1275], Hansraj and Sons v. State of Jammu & Kashmir and others, [AIR 2002 SC 2692],The State of Bombay v. Automobile and Agricultural Industries Corporation, Bombay, [(1961) 12 STC 122]. In Vijay Singh v. State of U.P., [(2012) 5 SCC 242], it was observed as;

Similarly in A.V. Fernandez v. State of Kerala, [(1957) 1 SCC 560] it was observed as:

While adopting the views as expressed above, this court has taken note of the well settled principles of law that, as far as the taxation statutes and penal statutes are concerned, it require strict interpretation, and what can be levied by the authorities is the tax specifically provided in the relevant Act, without any additions and deletions. In Commr. of Customs v. Dilip Kumar & Co., [(2018) 9 SCC 1] it was observed as:

If the aforesaid principles are made applicable to this case, it has to be held that, as section 235AA of the Act does not specifically contemplate for assessment of tax at additional/penal rates in respect of the authorized portion of the building, no demand of tax for such portion of building can be made.

When coming to the facts and circumstances of the case, it is to be noted that, as of now, the petitioner is aggrieved by Exts.P6, P7, and P8, which are the demand notices and revenue recovery notices. Exhibit P6 and P7 were issued by the 2^nd respondent, whereas, Ext.P8 was issued by the 4^th and 5^th respondents as part of revenue recovery proceedings for realizing the amounts specified in Exts.P6 and P7. In the light of the findings and observations made by this Court in this judgment, the assessment of tax along with the additional tax as contemplated under Subsection (1) of Section 235AA of the Act, so far as it relates to the authorized portion of the building is not correct and hence the matter requires reconsideration.

In such circumstances, this writ petition is disposed of, quashing Exts.P6, P7 and P8, by declaring that, the statutory stipulations contained in section 235AA of the Kerala Panchayat Raj Act, 1994, does not enable the 1^st respondent Grama Panchayat to impose any additional tax liability upon the authorized portion of the building. Consequently, the 2^nd respondent is directed to initiate fresh proceedings for reassessment, under Section 235AA of the Act, confining the assessment to the unauthorized portion of the building of the petitioner. However, as there is some dispute with regard to the actual authorized plinth area, in view of the fact that, in Ext.P3, the total authorized area is specified as 116 Sq.M., whereas in Ext.P4, the existing area is specified as 271.74 Sq.M, it is ordered that, while making a fresh assessment, it shall be open to the 2^nd respondent to determine the actual plinth area of the authorized construction as well, and the liability upon the petitioner shall be fixed accordingly. The assessment as referred to above shall be finalized after issuing notice to the petitioner and giving him an opportunity for being heard.

Exhibit P1 THE COPY OF THE SALE DEED NO. 262/2014 DATED 28.1.2014 OF THE SRO, THENGANA

Exhibit P2 THE COPY OF THE RENEWED LICENSE NO.SC04/4659/2023-24/109 DATED 1.5.2023 GRANTED TO THE PETITIONER BY THE 2ND RESPONDENT -SECRETARY

Exhibit P3 THE COPY OF THE PROVISIONAL ORDER NO. 4394/2020/(6) DATED 19.8.2024 ISSUED BY THE 2ND RESPONDENT

Exhibit P4 THE COPY OF THE ORDER NO. LSGD/JD/KTM/2200/2025-HI DATED 3.7.2025 OF THE DISTRICT TOWN PLANNER, KOTTAYAM

Exhibit P5 THE COPY OF THE POSSESSION CERTIFICATE NO. 91861709 DATED 28.2.2025 ISSUED BY THE 3RD RESPONDENT-VILLAGE OFFICER, THRICKODITHANAM

Exhibit P6 A COPY OF THE NOTICE NO. 4394/2020 DATED 25.9.2024 ISSUED BY THE 2ND RESPONDENT

Exhibit P7 A COPY OF THE NOTICE NO.4394/2020 DATED 19.10.2024 ISSUED BY THE 2ND RESPONDENT

Exhibit P8 THE COPY OF THE REQUISITION NO.2024/9756/05 DATED 22.6.2025 ISSUED BY THE 2ND RESPONDENT

Exhibit P9 A COPY OF THE APPLICATION DATED 12.8.2025 (SUBMITTED ON 14.8.2025) BY THE PETITIONER

Exhibit P10 A COPY OF THE COMMUNICATION NO. 3855089-2025 DATED 9.9.2025 ISSUED BY THE 2ND RESPONDENT

Exhibit P11 A COPY OF THE REPRESENTATION DATED 30.7.2025 SUBMITTED BY THE PETITIONER

Exhibit P12 THE COPY OF THE NOTICE NO. LSGD/JD/KTM/7088/2024-D1 DATED 9.9.2025 ISSUED BY THE JOINT DIRECTOR OF PANCHAYAT TO THE PETITIONER