The Kerala High Court has ruled that the absence of a formal demand notice for property tax during ongoing litigation does not exempt an assessee from the responsibility of paying the tax.
“The liability to pay the tax once assessed is on the assessee. Even if the Corporation did not issue a demand notice due to pending litigation, it does not mean the tax is not payable,” observed the Division Bench comprising Dr. Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj.
The case pertained to Vinu Koshy Abraham, who challenged the demand notices issued by the Corporation of Cochin for property tax dues from 2009–10 to 2021–22, citing ongoing legal disputes related to unauthorized constructions in areas marked for recreational and parking use.
The appellant argued that since no formal demand notice was issued during the said period, and such notices issued later violated Section 539 of the Kerala Municipality Act, the tax could not be legally enforced.
However, the Court pointed out that:
“The mere absence of a formal demand notice, particularly in a scenario where the assessee has continuously paid tax in prior years and occupied the property with a valid occupancy certificate, does not entitle them to default on tax dues.”
While the Single Judge had quashed the impugned demand notices and removed the liability of penal interest, he had directed the assessee to pay simple interest at 12% per annum from each due date.
The Division Bench modified this by deleting the 12% simple interest directive, reasoning that if penal interest was waived due to delay in issuing notices, simple interest also could not be separately imposed.
“The non-issuance of a formal demand notice for disputed areas can only result in deprivation of penal interest, not the principal tax liability,” the Bench clarified.
Additionally, the Court directed the Corporation to adjust the property tax amounts already paid for 2019 to 2022 and issue a fresh dues statement. The assessee is to clear the remaining dues within six weeks from receipt of that statement.
The judgment thus makes it clear that pending litigation or absence of demand notice cannot be misused to escape the basic duty of paying property tax once a valid assessment and occupancy exists.
Quote:
“It would be unconscionable and inequitable for the assessee to deny liability for tax on the grounds of litigation or technical delay in notice issuance,” stated the Bench.
Case Title: Vinu Koshy Abraham v. Corporation of Cochin
Case No.: WA No. 2085 of 2023
Bench: Dr. Justice A.K. Jayasankaran Nambiar and Justice P.M. Manoj
Counsel for Appellant: P.G. Jayashankar, P.K. Reshma, S. Rajeev, Sajana V.H, Shaiju George, Aadersh R.S. Panicker
Counsel for Respondents: C.N. Prabhakaran