No Tax on Buildings providing Free Housing to Aged, disabled persons who served Religious/Charitable Institutions: Kerala HC [Read Order]

Marthoma Syrian Church, the petitioner, is a church challenged the order passed by the Government by which the exemption sought by the petitioner from payment of building tax under Section 3(1)(b) of the Kerala Building Tax Act, 1975 was rejected.

The petitioner had constructed a building, mainly intended for using it as a housing complex for retired and aged clergymen and their families. The same was constructed with the charitable and religious aim of conducting worship and providing shelter and care for retired , aged and indigent clergymen and families of the deceased clergymen, who have no other means of livelihood and protection in their old age. The applications submitted by the petitioner, seeking exemption. However, the Government considered the said application, and rejected the claim, after hearing the authorized representative of the petitioner.

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A statement has been submitted on behalf of the 1st respondent, wherein, the relief sought by the petitioner is rejected. It was averred in the said statement that, the subject buildings are constructed as residential apartments for the retired priests and widows of the deceased clergymen. There are 20 apartments and each apartment consists of a living room, bedroom, kitchen, balcony and a bathroom. This is not a building attached to any Church.

It was also averred that even according to Form II return submitted by the owner, it is only shown as a residential building. Therefore, it was contended that, the finding entered into by the Government is correct and thus, dismissal of the writ petition was sought.

The question that arises for consideration is whether the rejection of the claim for exemption for the building of the petitioner is justifiable or not. When it comes to the claim of the petitioner, it is discernible from the application submitted by the petitioner in this regard that, the building according to them, was constructed for the purpose of providing accommodation to retired priests, aged clergymen and their near relatives including the families of the deceased clergymen who have no other means.

The counsel for the petitioner vehemently contested that as far as the building in question is concerned, as the same is being used for providing accommodation to old aged priest and clergymen of the petitioner's church, it should be treated as a charitable activity within the meaning of exemption contemplated under Section 3(1)(b) of the Kerala Building Tax Act, 1975.

As far as the statutory stipulations contained under Section 3(1)(b) of the Kerala Building Tax Act, 1975 is concerned, the same provides for exemption from payment of building tax in respect of buildings used principally for religious, charitable or educational purposes or as factories or workshops. What is relevant for granting exemption is the principal use of the building and it must be either for religious, charitable or educational purposes or as factories or workshops.

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In this case, the specific case of the petitioner, while seeking exemption, is that the building is constructed for the purpose of accommodation for the care of retired aged and indigent clergymen and the families of the deceased clergymen. From the application submitted by the petitioner and the pleadings in the writ petition, it is evident that the accommodation to the building in question is being provided by the petitioner, only to the persons attached to the petitioner or who were attached to the petitioner at some point of time.

Nowhere in the writ petition or in the application submitted by the petitioner, they have a case that the accommodation is being provided to any other persons who are not related to the petitioner institutions or not attached with the petitioner institution at any point of time.

However, a different yardstick needs to be applied in a case where, an institution is providing accommodation in a building in respect of only persons who had rendered their services, to the institution concerned at some point of time. In such a situation, the same could be treated as part of remuneration to the services rendered by such persons concerned, to the institution at the time when they were in active service. Therefore, the same cannot be treated as a charity which has to be performed without any remuneration.

The court observed that, as the predominant activity of the hospital was to provide treatment by collecting charges and the free treatment was extended only to a limited number of patients, it was held that, no exemption could be granted to them. Therefore, in the light of the decisions referred to above, the term ‘charity’ has to be understood to be a service, which is extended to all without any remuneration collected from the parties concerned. Of course, even though some of the inmates are making any payment, that by itself would not disentitle the person concerned from claiming exemption.

The bench held that, if the building is utilized for the benefit of the persons who have rendered their services to the institution alone, the same cannot be treated as a charity. However, even while holding so, a distinction has to be drawn by taking the nature of the institution which is operating the activities in the building in question.

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It is evident that the building is utilized for free accommodation of the aged and disabled persons who rendered their services to establishments exclusively engaged in charitable/religious activities and managed by the institution owning the building in question, a different yardstick needs to be applied.

In other words, if the accommodation is provided without collecting charges, for the persons who rendered their services to the charitable/religious institutions managed by the owner of the building, it has to be treated as a charitable purpose within the meaning of section 3(1) (b) of the Act. The claim of the petitioner in this regard has to be verified by the authority concerned, for determining the eligibility of the petitioner for exemption.

Justice Ziyad Rahman A.A. disposed of the petition by quashing with a direction to the 1st respondent to reconsider the application for exemption, in the light of the observations made in this judgment. It is clarified that, in case it is found that, the building is used for providing free accommodation to aged and disabled persons, who rendered their services to the petitioner in the charitable/religious institutions of the petitioner, and their dependent family members who have no other means, the benefit of section 3(1) (b) of the Kerala Building Tax Act shall be extended.

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