The Kerala High Court has struck down the Rules 9(4A) and 9(4C) of the Kerala Municipality (Property Tax, Service Tax, and Surcharge) Rules which prescribe fixation of property tax at a minimum of 25% over and above the tax levied for the previous year.
The petitioner, K.P.Muhammed Asraf who is the owner in possession of a building in Taliparamba Municipality, seeks to declare that Rule 9(4A) and Rule 9(4C) of the Kerala Municipality (Property Tax, Service Tax, and Surcharge) Rules, 2011 which prescribes fixation of Property Tax at a minimum of 25% over and above the tax levied for the previous year even if Property Tax arrived at on computation as per the said Rules is less than the tax levied for the previous year, is ultra vires Section 233 of the Kerala Municipality Act, 1994. The petitioner also seeks a refund of excess tax levied from the petitioner in respect of his building.
These Rules are ultra vires, contends the petitioner. Section 233 does not empower the Government and Municipalities to fix property tax at a minimum of 25% over and above the tax levied for the previous year unless the property tax so computed falls within the minimum and maximum slab prescribed, urges the petitioner.
The single bench of Justice N.Nagaresh held that Section 233 does not give power to the authorities to make property tax fixation in such a manner. As per Section 233(2)(a) for the purpose of levying a property tax, the Government shall, by notification, fix the minimum and maximum limits of rates of basic property tax applicable to one square meter plinth area of the categories of building in accordance with the use and the date on which they shall come into force. Therefore, there should be a minimum and maximum limit of rates of basic property tax.
The court declared that Rules 9(4A) and 9(4C) of the Kerala Municipality (Property Tax, Service Tax and Surcharge) Rules, 2011, which prescribe fixation of property tax at a minimum of 25% over and above the tax levied for the previous year, if property tax arrived at on computation as per the Rules, 2011 is less than the tax levied for the previous year, is ultra vires the Kerala Municipality Act, 1994. Rule 9(4A) and Rule 9(4C) are therefore set aside to that extent.
K.P.MUHAMMED ASHRAF vs THE TALIPARAMBA MUNICIPALITY REPRESENTED BY TH SECRETARY, TALIPARAMBA MUNICIPALITY, TALIPARAMBA, KANNUR DISTRICT
CITATION: 2022 TAXSCAN (HC) 174
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