The Kerala High Court has set aside Rule 9(4A) and Rule 9(4C) of the Kerala Municipality (Property Tax, Service Tax and Surcharge) Rule 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.
Justice N. Nagaresh passed the judgment recently while disposing of a writ petition filed by K.P. Mohmmed Asharaf from Kannur challenging the rule.
Ultra vires
The court declared that Rules 9(4A) and 9(4C) of the Kerala Municipality (Property Tax, Service Tax and Surcharge) Rules, 2011, were ultra vires the Kerala Municipality Act, 1994.
The court pointed out that as per Section 233(2)(a) of the Kerala Municipality Act, the government shall, by notification, fix the minimum and maximum limits of rates of basic property tax applicable to one square metre plinth area of the categories of building in accordance with the use and the date on which they would come into force. Therefore, there should be a minimum and maximum limit of rates of basic property tax .
Subject to limits
Section 233(3) provides that the council of the respective municipality shall fix the tax subject to the limits fixed by the government in accordance with the category of buildings referred to in sub-section (2).
The court also pointed out that Section 233(4) provides that the property tax fixed for the first time under sub-section (3) shall be in force for a period of five years and the 25% increase provided is applicable only after the expiry of first five years period, during revision. There was nothing in Section 233(4) to assume that a 25% increase on the pre-existing tax levied on annual value of building is provided while fixing the property tax under Section 233(3) of the Act, the court added.
