[Kerala Building Tax Act 1975] Remaining Area Used For Ancillary Purposes Of Factory Also Exempted From Payment Of Building Tax: High Court

Justice Dinesh Kumar Singh observed that the term ‘principally’ under Section 3(1)(b) means ‘predominantly’ and held if the building was predominantly used as a factory, then remaining area used for ancillary purposes of the factory would also be exempted from payment of building tax.

“The authority has to assign the correct meaning to the word ‘principally’. In my view, ‘principally’ means predominantly. If the predominant purpose is running the factory, the area in which ancillary purposes related to the factory are being carried out is also liable for exemption under Section 3(1)(b) of the Act.”

The petitioner, Mathrubhumi Printing & Publishing Co. Ltd., approached the Court challenging the building tax imposed upon it. The building that was used for printing purposes, was granted license under the Factories Act and they had applied for exemption from building tax under Section 3(1)(b) of the Act.

The allegation was that the respondent divided the factory building of the petitioner into two parts for the imposition of building tax. The first part of 14503.03 sq m was taken as factory and the remaining 6159.97 sq m was taken as area used for ‘other purposes’. The second part, that is, 6159.97 sq m, shown as area for other purposes was imposed with building tax. Aggrieved with this, the petitioner has approached the High Court.

The counsel for the petitioner, Advocate Biju Abraham submitted that if a building was mainly used for factory purposes and if some remaining area was used ancillary to the main purposes, then that area cannot be excluded from exemption from payment of the building tax under Section 3 (1)(b) of the Act. It was also submitted that godown, security room and news bureau office were part of the main factory unit of the printing press itself, and the work was carried out in the factory premises and it cannot be excluded from building tax exemption.

On the other hand, Government Pleader Jasmine M.M. argued that the area used as the news bureau office, security room, and godown cannot be considered as part of the factory for claiming building tax exemption under Section 3 (1)(b) of the Act.

The Court examined Section 3 (1)(b) of the Act which reads thus: “buildings used principally for religious, charitable or educational purposes or as factories or workshops or cattle/pig/poultry farms or poly houses.” The Court noted that the term ‘principally’ means predominantly. It held that if the building was predominantly used as a factory, then the area used for ancillary purposes of the factory cannot be excluded from exemption for payment of building tax.

“If the predominant purpose of the building is the factory, in my considered view, the ancillary purposes carried out in relation to the factory, in a part of the building which houses the factory, cannot be excluded from the exemption of payment of building tax.”

Perusing the factual matrix, the Court noted that the factory was used as the printing press and the godown, security room and news bureau were used for related works of printing and publishing which were carried out from factory premises.

On the above observations, the Court allowed the writ petition and set aside the order issued by the respondent imposing building tax.

Citation: 2023 LiveLaw (Ker) 631

Case title: Mathrubhumi Printing & Publishing Co. Ltd v State of Kerala

Case number: WP(C) NO. 10799 OF 2023

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