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Kitex Garments Ltd., represented by its Managing Director-Sabu M. Jacob v/s State of Kerala, represented by Principal Secretary To Government, Taxes (H) Department & Another

    WP(C) No. 3231 of 2012 (D)
    Decided On, 17 January 2017
    At, High Court of Kerala
    By, THE HONOURABLE MR. JUSTICE K. VINOD CHANDRAN
    For the Petitioner: Sumathy Dandapani, Senior Advocate, Millu Dandapani, Advocate. For the Respondents: N.M. Jasmine, Government Pleader.


Judgment Text
1. The petitioner is aggrieved with Exhibit P8 order passed by the Government, on directions issued by this Court in Exhibit P5, after conducting an inspection through Tahsildar; the report of which is produced at Exhibit P7.

2. The petitioner was assessed under the Kerala Building Tax Act, 1975 [for brevity "Building Tax Act"]. The petitioner claimed that the entire building is to be exempted from payment of tax, as a factory, for reason of the same being used for ancillary activities of the factory; which are a mandate under The Factories Act, 1948 [for brevity "Factories Act"]. Earlier the petitioner, after the statutory remedies, had been before this Court [O.P.No.20032 of 1999], in which Exhibit 5 judgment was passed on 24.02.2009.

3. In Exhibit P5, this Court noticed that the petitioner was granted exemption as a factory only in respect of a part of the building. Certain other buildings allegedly used as canteen, toilets, shelter and washing room were not granted exemption as part of the factory on the ground that they do not form part of the factory. This Court specifically noticed the exemption granted under Section 3(1)(b) of the Building Tax Act and found that the exemption is for buildings which are principally used as a factory. Referring to Sections 42 to 48, of The Factories Act, it was found that any facility provided therein was a mandatory requirement for obtaining licence as a factory, the absence of which would invite penal proceedings against the petitioner. On an interpretation of the exemption granted under Section 3 of the Building Tax Act and the definition of 'factory' read in conjunction with Sections 42 to 48 of the Factories Act, it was held that the buildings provided by the owner of a factory to satisfy the statutory requirements under Sections 42 to 48 would also be eligible for exemption under Section 3 of the Building Tax Act.

4. The learned Government Pleader then pointed out that the contention of the petitioner itself was not with respect to any canteen, toilets, shelters, washing room, etc. as required under Sections 42 to 48 and the specific averment was with respect to a hostel for accommodating its employees. It was also the contention that such hostel was provided free of cost to house its employees. This Court noticed the contention and found that if anybody is running a factory, then the provision of the facilities as mentioned in Sections 42 to 48 of the Factories Act is integral, immediate and proximate to the running of the factory and therefore would be entitled to exemption. But considering the specific contention of the Government that the petitioner themselves referred to the building in question as a 'hostel' for accommodating their employees, this Court found against the exemption claimed. Having held so, this Court directed an inspection to be carried out by the Tahsildar to examine as to whether the buildings are constructed for satisfying the statutory requirements under Sections 42 to 48 of the Factories Act or whether the same are buildings used as hostel for accommodating the petitioner’s employees.

5. An inspection was conducted by the Tahsildar, report of which is produced at Exhibit P7. The Tahilsdar found that the employees are recruited through advertisements; which specifically provided that the Company would provide free accommodation and food to those who required it. This was not a statutory mandate. It was also found that women employees of the company work only at day time and then spend the rest of the time inside this building which was sought to be exempted. The building in question, which was inspected, was reported to be consisting of well-furnished halls with beds arranged in dormitory style. Personal cupboards were attached to every bed and the key of each cupboard is kept by the person who regularly uses that bed. On facts so noticed, it was found that the attachment of a personal cupboard near to the bed with locking facility makes it very clear that it is being used by a person who regularly uses that bed and the building is used as a hostel. The toilets provided therein were also not that provided under the Factories Act, but for use of the inmates housed in the hostel. It was also reported that the management had been deliberately trying to term the building as a shelter by stating that no registers are maintained to record the details of the employees staying therein.

6. On the basis of the report at Exhibit P5, Exhibit P8 order was passed. It was categorically found in Exhibit P8, relying on the report, that major portion of the building is used for the accommodation of the female staff of the Company and that facilities for canteen, places for washing, drying and storing of cloths, dormitory with beds and lockers, etc. are also provided. The canteen so provided also was not one which is mandatorily required under the Factories Act and is one attached to the hostel wherein the female employees are housed. The Government also relied on the advertisements made by the petitioner as revealed from the report of the Tahsildar. The Government having examined the facts in detail with the records, found that the building does not have the facilities as provided under Sections 42 to 48 of the Factories Act and is clearly a hostel, which does not come under the exemption clause. This Court had also in Exhibit P5 specifically held that a hostel building for accommodating the employees of the petitioner would not be eligible for exemption from building tax. In such circumstances, this Court does not find any reason to interfere with the impugned order.

7. The petitioner has also relied on two decisions, one by a Full Bench of this Court and another by the Hon'ble Supreme Court. Unity Hospital Vs. State of Kerala [2011 (1) KLT 236 (F.B.)] was a case in which the hostel attached to nursing schools was claimed to be exempted. The Full Bench of this Court found that the nursing schools and other medical institutions, which require compulsory hostel facility for students, for their approval, are entitled to exemption and that the mere fact that fees are recieved from the students for their residence would not negative the claim for exemption. This was the contention taken at the first point also and answered in favour of the petitioner insofar as the mandatory provisions of facilities under the Factories Act and not any other facility.

8. The argument addressed, relying on Chameli Singh Vs. State of UP [(1996) 2 SCC 549] is that the right to shelter means something more than a mere protection of one's life and limb or a roof over one's head. The said declaration was made in the context of analysing the right to life and the components of the fundamental right so enshrined in the Constitution and the duty of the State to provide housing facilities to its citizens, especially the impoverised and the socially and financially marginalised sections of society. There can be no an adoption of the said principle and the shelters as provided for in the Factories Act cannot be said to be residential accommodations. An enlightened employer could definitely provide for free accommodation for its employees; but that cannot result in an automatic exemption, so long as it is covered under the exemption clause.

9. The decisions relied on by the petitioner hence are not applicable on facts. The earlier decision of this Court produced as Exhibit P

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5, puts the issue in the correct perspective allowing exemption only to those mandatory requirements as provided under the Factories Act, without which the running of a factory would lead to penal proceedings against the occupier of such factory. It was also held in the earlier instance, that a hostel facility provided for the employees would not come under the exemption granted to a building principally used as a factory; which binds the petitioner too. The subsequent order passed by the Government, was after obtaining a factual report from the Tahsildar, as directed by this Court. There is no cause or warrant for any interference to the said order, the facts of which are explicit; calling for no dispute and the law stated is unassailable and unexceptionable. The writ petition would stand dismissed. No costs.
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