Revised Property Tax for Past 3 Years to be paid by Building Owners Liable after Adjusting Already Paid Amount: Kerala HC [Read Order]

The Kerala High Court ruled that after deducting  the amount of property tax already paid, building owners may be held accountable for paying the annual property tax requested in the corresponding demand notifications at the updated rates for a period three years prior to the date of demand.

Buildings located inside Kochi Corporation's boundaries are owned by the Gateway Hotels, the assesses, and the petitioners. They have contested the demand notices that were sent to them, requesting property taxes for the buildings they own from 2016 to 2017 up until the demand notice date. Additionally, a declaration that the Kerala Municipality Act of 1994's provisions do not allow for the retroactive enhancement of property taxes is sought.

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The assessee is the owner of a room in an Ernakulam business building. The building's property tax has already been paid through the first half of 2020–21. 2009 saw an amendment to the Act's property tax provision.

The Municipal Council failed to establish the minimum and maximum rates for the basic property tax, despite the fact that regulations were drafted in 2011. On June 24, 2021, however, property tax was sought for the period from April 1, 2016, to March 31, 2021, calculated using the revised rates. The assessee has contended that the property tax was levied in violation of the Act's and the Rules' requirements and that the necessary deductions were not taken into account while determining the tax.

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The bench held that even though the Limitation Act stipulates a 12-year statute of limitations for recovering the amounts owed, the special statute's specified period of limitation must take precedence over the Limitation Act's general period of limitation once it becomes a charge on the property.

The bench ruled that the statute of limitations for recovering money owed to the Municipality is not extended by either Section 237 or Section 538B of the Kerala Municipality Act, 1994. Municipalities are subject to section 539 of the Act, which states that the statute of limitations is not extended by the establishment of a charge on the property or the recovery of tax arrears as arrears of public income.

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The bench added that building owners in Kochi Corporation cannot be negatively impacted for failing to pay property taxes for the three years prior to the demand date, nor can any money under the corresponding demand notices at the updated rates be recovered for those periods.

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The bench rejected the petition and ordered that, if not paid voluntarily, the property tax demands made in accordance with the demand notifications in each of these cases from 2016 to 2017 up to three years before the demand notice dates would not be enforced.

To Read the full text of the Order CLICK HERE

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