LexSTATE OF KERALA & ORS. versus A. P. MAMMIKUTIY
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A B [2015] 7 S.C.R. 764 STATE OF KERALA & ORS. v. A. P. MAMMIKUTIY (Civil Appeal No. 1640 of 2015) JULY01, 2015 [DIPAK MISRA AND PRAFULLA C. PANT, JJ.] Kera/a Building Tax Act, 1975 - ss.2(e) Explanation c II, 2(k) and 5A - Imposition of 'luxury tax' - On a residential buildings, consisting of 13 residential apartments- Whether Revenue entitled to levy tax, by clubbing the plinth area of the 13 apartments, or plinth area of individual apartment should have been taken into consideration - Held: Each D residential building owned by single owner could be subjected to luxury tax, if it has plinth area which exceeds 278. 7 sq. mts. - However, Explanation to s.2(e) has to be read harmoniously with proviso to s.2(k) and s.5A - Purposive interpretation has to be given to Explanation II to s.2(e) - E Thus, when the owner parts with the apartments of the building, each apartment will be segregable for the purpose of luxury tax - Taxation - Luxury tax. Words and Phrases: 'Building', 'Residential Building' F and 'Plinth Area' -Meaning of, in the context of Kera/a Building Tax Act, 1975. Allowing the appeal, the Court HELD: 1. Explanation II to s.2(e) of Kerala Building G Tax Act, 1975, would apply when there is a building; that the building must consist of different flats or apartments; that each apartment or flat must be owned by different persons and cost of construction of the building must H have been met jointJy, and in such cases plinth area 764 STATE OF KERALA & ORS. v. A. P. MAMMIKUTTY 765 cannot be clubbed. Thus, Explanation II to Section 2(e) A takes care of a situation where the building is constructed and there are different owners who have paid the purchase price for their respective apartments. The Explanation should not be read as a negative provision, detrimental and fatal to cases where there are B separate owners of the apartments, for that is not the basic object and purpose behind the Explanation II to Section 2(e) of the Act. It is a benevolent and beneficial provision which has not been enacted to curtail and nullify what is logical and apparent to reason. [Para 13] C [774-F-H; 775-A-B] 2 .. The expression "residential building" cannot be interpreted without reference to the term "building" and Explanation II to Section 2(e) of the Act. Therefore, D each residential building owned by single owner would· be subjected to luxury tax, if it has the plinth area which exceeds 278.7 sq.mts. Jt makes no difference whether the residential building consists of one floor or it is two- storied or three-storied or consists of multiple flats or E apartments. The entire plinth area in the residential building owned by a singular owner is required to be aggregated. Section SA does not refer to aggregate plinth area of all the floors. The intention of the legislature is F apparent that if a person is the owner of the plinth area of 278.7 sq.mts or more in one building, even if it consists of separate or distinct apartments, he would be liable to pay the luxury tax under Section SA of the Act. Section 2(k) clearly postulates that "plinth area" means the area G included in the floor of the building and where building has more than one floor aggregate area included in all the floors are taken together. The proviso to the said definition lays down that in case of a building referred to in the Explanation II to clause (e), the "plinth area" shall H 766 SUPREME COURT REPORTS [2015] 7 S.C.R. A be calculated separately. Thus, Section 2(k) has an insegragable nexus with the definition of "building". [Para 14] [775-D-H; 776-A-B] 3. The definitions have to be given a proper B construction. The Explanation II to Section 2(e) has to be read harmoniously with proviso to Section 2(k) and Section 5A of the Act. The intention of the legislature is that ownership of different flats and the cost of construction of building are met by all such persons. C The meeting of the cost jointly is not to be narrowly construed to mean that there has to be an investment before the commencement of the construction of the building. The persons who purchase afterwards they really share the value of the construction cost apart from D the profit margin due to the builder or the seller. Unless such an interpretation is placed, the original owner of flats when he ceases to be the owner of the building or the purchaser of a small apartment less then 278.7 square meters would
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