“Municipality Could Have Recovered Only for a Period of Three Years”: Kerala High Court Holds Building Owners Liable to Pay Revised Property Tax Only After Adjusting Previously Paid Amounts
Isabella Mariam
The High Court of Kerala Single Bench of Justice Bechu Kurian Thomas held that the Kochi Municipal Corporation cannot recover property tax dues beyond three years prior to the date of demand. While upholding the basic property tax fixation carried out by the Corporation, the Court directed that “the owners of buildings can be made liable to pay the annual property tax demanded in the respective demand notices at the revised rates from a period three years prior to the date of demand, after deducting the property tax already paid.” The writ petitions were disposed of with the clarification that the Corporation shall not enforce demands for periods older than three years preceding each respective notice, unless voluntarily paid.
The batch of writ petitions was filed by building owners within the territorial limits of the Kochi Municipal Corporation, who challenged the validity and enforceability of multiple demand notices issued for property tax dues calculated for periods extending back to the financial year 2016–17. The primary grievance raised by the petitioners was that these demands amounted to an unlawful retrospective levy, in violation of the Kerala Municipality Act, 1994 and the Kerala Municipality (Property Tax, Service Cess and Surcharge) Rules, 2011.
It was contended by the petitioners that they had already discharged their property tax obligations up to the first half of FY 2020–21. The demand notices, however, sought enhanced amounts calculated at revised rates for previous periods without compliance with statutory requirements such as issuance of notices under Rules 12(1) and 12(6), site inspections under Rules 12(4) and 12(6), and notification under Section 233(5) of the Act.
The petitioners also submitted that there was no valid notification published under Section 279 of the Act to support retrospective enhancement of tax. Additionally, the claim was made that the procedure under Section 233 had not been strictly followed, and that any revision of property tax must be in conformity with mandatory statutory formalities, failing which the demand would stand vitiated.
In response, the Kochi Municipal Corporation submitted that the Government of Kerala had by G.O. (Rt.) No.540/2019/LSGD dated 06.03.2019 authorized local self-government institutions to implement the revised property tax structure from 01.04.2016, considering delays in implementation that followed a policy change originally intended for 01.04.2013.
It was further submitted that the Corporation had published the required public notices, fixed the rates of basic property tax through Council resolutions, and issued demands in line with the revised structure after dividing the Corporation’s divisions into prime, secondary, and tertiary zones. The Corporation maintained that there was no retrospective revision but only a delayed implementation due to procedural bottlenecks, and relied upon Section 282 of the Act to support issuance of delayed notices within four years of the relevant assessment period.
The Government's stand was that the revised rates had long been in effect and the demand notices were delayed only because of administrative reasons, not retrospective intent. Referring to Rule 10 and Sections 233 and 282 of the Act, the respondents stated that public notices had been published and an adequate inquiry had been conducted for levy of tax. The compliance with statutory obligations, it was argued, was substantial even if not in strict procedural sequence.
The Court recorded that “there can be no quarrel with the proposition that procedure for imposing tax has to be strictly complied with, there can be instances of procedure whose strict compliance need not be insisted.” It further stated that “publication of the entire Form-1 in the newspaper in the circumstances has to be treated as sufficient compliance with the requirement of public notice.” Regarding the site inspection requirement under Rule 12, the Court noted that “while an inquiry regarding the building and collection of particulars of the building is a mandatory requirement, a site inspection, however desirable it be, cannot be regarded as a mandatory procedure.”
Addressing the question of limitation, the Court referred to Section 539 of the Act and recorded: “the Municipality could have recovered only amounts as arrears for a period of three years.” The Court stated that “even the Government had understood section 539 of the Act as restraining recovery of arrears beyond three years, as is noted from the Government Order dated 06.03.2019.”
Further, on the issue of escaped assessments under Section 282, the Court clarified: “the power under section 282 of the Act cannot be exercised to levy any additional quantum of tax that was omitted from assessment earlier.” The provision could only apply “to proceed against persons who were wholly omitted from assessment.”
On the question of whether an intimation under Rule 12(1) or 12(6) was mandatory, the Court noted that “though the words used are ‘shall’, it is seen from Form-5 that the intimation is to be sent along with the demand notice.” It added: “while a demand notice gives a cause of action for an appeal, intimations under rule 12(1) or 12(6) do not result in any consequence.”
Addressing concerns of a lack of assessment orders, the Court observed that the levy system under the Act does not contemplate detailed orders but only entries in the property tax assessment register. “A reasoned order of assessment has no significance or purpose in the context of the levy,” it said.
Lastly, addressing the appeal remedy, the Court pointed out that “the appellate body… can even suo motu or on a complaint, verify whether the assessment has been carried out contrary to the criteria.”
The Court issued the following final directives:
“The basic property tax fixation in respect of Kochi Corporation needs no interference.”
“The owners of buildings can be made liable to pay the annual property tax demanded in the respective demand notices at the revised rates from a period three years prior to the date of demand, after deducting the property tax already paid.”
“No amount under the respective demand notices at the revised rates can be recovered for the periods till three years prior to the date of demand and the owners of buildings in Kochi Corporation cannot be put to any prejudice for non-payment of property tax for those periods.”
“The demand of property tax as per the respective demand notices in all these cases from 2016-17 till three years prior to the date of demand notices shall not be enforced, if not paid voluntarily.”
The writ petitions were accordingly disposed of, and no orders were passed as to costs.
Advocates Representing the Parties
For the Petitioners: C.K. Sreejith, M. Ramesh Chander, K. Arun, D. Santhosh Kumar, J. Rajesh, Babu S. Nair, K.K. Suresh, N. Sasidharan Unnithan, R. Rajesh (Standing Counsel), K. Jayanarayan, R. Lakshmi Pradeep, S. Nanda Kumar, K. Harilal, M. Roshni
For the Respondents: P. Vijayakumar (Assistant Solicitor General), R. Santhosh Kumar (Senior Government Pleader), V. Vinod (Standing Counsel for Kochi Corporation), B. Raghunath, C.S. Ajayan, S.V. Parvathi, K. Rajan
Case Title: RE: Kochi Municipal Corporation & Others
Neutral Citation: 2025:KER:31602
Case Number: W.P.(C) No.16984/2020 & Connected Cases
Bench: Justice Bechu Kurian Thomas
[Read/Download order]
