Property Tax Revision Invalid Without Mandatory Publication Compliance: Kerala High Court

The Kerala High Court on 2 June quashed enhanced property tax demands issued by the Haripad Municipality, holding that revised property tax rates cannot be enforced without compliance with the mandatory notification and publication requirements prescribed under the Kerala Municipality (Property Tax Services and Surcharge) Rules, 2011.

Justice Ziyad Rahman A.A. was deciding a batch of writ petitions challenging enhanced property tax demands issued in respect of various buildings within the Municipality's jurisdiction. He held:

“Since it is an admitted position that the final notification was not made as on the date of the issuance of the orders and demands impugned in these writ petitions, those orders/demands are liable to be interfered with.”

The dispute arose after the Haripad Municipality issued notices and orders in 2024 demanding enhanced property tax from building owners who had been regularly remitting tax at the earlier rates, as acknowledged through official receipts issued by the Municipality.

The Municipality had taken a council decision on 23 August 2017 revising property tax rates. However, the revised rates were not finally notified through publication in two newspapers having circulation within the municipal area, as required under Rule 4 of the Kerala Municipality (Property Tax Services and Surcharge) Rules, 2011.

The petitioners contended that the enhanced demands were illegal since the revised rates had not been validly notified and that some of the demands also pertained to periods beyond the permissible statutory period.

During the proceedings, the Municipality informed the Court that steps had subsequently been initiated for publication of the revised rates. The Court had earlier passed an interim order directing that, until compliance with the prescribed procedure, taxpayers would remain liable only at the pre-revised rates.

On consideration, the Court observed that it was an admitted position that no final notification had been issued in accordance with the statutory requirements at the time the impugned notices and demand orders were issued. It held that the mandatory procedure under the Rules had not been followed, and that the enhanced demands were legally unsustainable.

Accordingly, The High Court quashed the impugned orders and demand notices and directed that any excess amount collected during the pendency of the proceedings be adjusted against future tax liabilities.

For Appellant: T.S. Harikumar and P.B. Sahasranaman, Advocates 

For Respondent: M.R. Arunkumar, Advocate