KOCHI: Commercial tax cannot be levied on a residential building rented out for residential purposes, a high court bench of Justice Shaji P Chaly held after considering a petition (WP-C No. 30074/2016) filed by PK Shanmughan of Kodungallur through advocate AA Ziyad Rahman. The petitioner had challenged the demand for higher tax by the revenue authorities saying that renting out a residential building amounts to commercial activity.
In the judgment, the court said, “Residential building is defined under Section 2(l) of the Act, 1975 to mean a building or any other structure or part thereof built exclusively for residential purpose including outhouses or garages... But what is excluded therefore is hotels, boarding places, lodges and the like. Suppose, a building is constructed as a residential building and the same is given on rent, that will not change the characteristics of the residential building...”
Therefore, the re-assessment done by the tahsildar levying a building tax of Rs 18,000, is not a correct, the high court added.
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