2021-TIOL-156-SC-MISC
Government of Kerala Vs Mother Superior Adoration Convent
Miscellaneous - Kerala Building Tax Act, 1975 - Appeals pertain to an exemption provision contained in the Kerala Building Tax Act, 1975 - Under Section 3(1)(b), buildings that are used principally for religious, charitable or educational purposes or as factories or workshops are exempted from building tax under the Act - Both judgments decided to exempt the buildings in question - State of Kerala is in appeal against a judgment dated 22.11.2007 & dated 21.12.2010 passed by a Division Bench/Full Bench of the Kerala High Court - In both cases, the State claims that no exemption should be granted as residential accommodation for nuns and hostels for students would be for residential as apart from religious or educational purposes and would not, therefore, be covered by the exemption contained in Section 3(1)(b) of the Act.
Held:
++ It is important to first analyse Section 3(1)(b). First and foremost, the subject matter is "buildings" which as defined, would include a house or other structure. Secondly, the exemption is based upon user and not ownership.
++ Third, what is important is the expression "principally", showing thereby that the legislature decided to grant this exemption qua buildings which are "principally" and not exclusively used for the purposes mentioned therein. Dominant object therefore is the test to be applied to see whether such building is or is not exempt.
++ Fourthly, religious, charitable or educational purposes are earmarked by the legislature as qualifying for the exemption as they do not pertain to business or commercial activity.
++ Fifthly, what is important is that even factories or workshops which produce goods and provide services are also exempt, despite profit motive, as the legislature obviously wishes to boost production in factories and services in workshops. What is important to note is that the expression "used principally for" is wider than the expression "as" which precedes the words "factories or workshops". [para 11]
++ A reading of the provision would show that the object for exempting buildings which are used principally for religious, charitable or educational purposes would be for core religious, charitable or educational activity as well as purposes directly connected with religious activity. [para 12]
++ If nuns are living in a neighbouring building to a convent only so that they may receive religious instruction there, or if students are living in a hostel close to the school or college in which they are imparted instruction, it is obvious that the purpose of such residence is not to earn profit but residence that is integrally connected with religious or educational activity.[para 12]
++ Bench cannot countenance a plea by the State that buildings which are used for purposes integrally connected with religious or educational activity are yet outside the scope of the exemption contained in Section 3(1)(b) of the Act.[para 13]
++ It is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes.
++ This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. Consequently, we agree with the conclusions reached by the impugned judgments of the Division Bench and the Full Bench. [para 24]
++ Where a High Court construes a local statute, ordinarily deference must be given to the High Court judgments in interpreting such a statute, particularly when they have stood the test of time. This is all the more applicable in the case of tax statutes where persons arrange their affairs on the basis of the legal position as it exists. [para 25]
++ Appeals filed by the State of Kerala are dismissed.
++ Only appeal by an assessee namely, Administrator, Jos Giri Hospital (Civil Appeal No.204 of 2012) , is from a judgment of the Division Bench of the Kerala High Court deciding the case in favour of the State. However, this judgment was referred to the Full Bench which decided the judgment in State of Kerala & Ors v. Unity Hospital (P) Ltd. (Civil Appeal No. 207 of 2012) and has been stated to have reached an incorrect conclusion. The appeal filed in Civil Appeal No.204 of 2012 is allowed and the judgment of the Division Bench is set aside. [para 26]
- Appeals of State dismissed/Appeal of assessee allowed :SUPREME COURT OF INDIA
