Municipality Must Accept Only Tax Component, Penal Charges Not Required For Filing Appeal Under Municipal Act: Kerala High Court

Section 509(11) of the Municipality Act, 1994, provides that no appeal or revision shall be filed against the levy of tax unless the full tax amount shown in the demand notice has been paid beforehand.

Justice Ziyad Rahman A.A. opined that the obligation of the assessee while submitting an appeal is only to make the payment of the tax component in the demand and nothing more. As far as the penal interest and other charges are concerned, the same can be enforced by invoking the appropriate proceedings, subject to the orders to be passed by the Tribunal.

In the case at hand, the assessee/petitioner is the owner of a building of the 1^st respondent/ Pala Municipality.

The assessee filed an appeal before the Municipality against the Order of assessment of property tax in respect of the building.

As against the same, the assessee submitted a Revision Petition before the Tribunal for Local Self Government Institutions, Thiruvananthapuram.

As per Section 509 (11) of the Kerala Municipality Act, the payment of tax is mandatory for entertaining an appeal, and hence the assessee approached the Pala Municipality and the Secretary, Pala Municipality, for paying the tax.

However, the tax was not accepted by them on the reason that, unless the said payment is accompanied by the penal charges and interest, the same cannot be accepted.

In such circumstances, the assessee submitted a revision petition before the Tribunal for Local Self Government Institutions seeking a direction to the Municipality to accept the tax, so as to enable the assessee to comply with the statutory condition imposed for submitting an appeal.

However, as per the order, the said application was rejected, stating that no direction can be issued to the Municipality to receive the said amount, and if there is a delay, the assessee is liable to pay penal interest as per the rules.

The assessee argued that, going by the statutory stipulations contained in Section 509 (11) of the Kerala Municipality Act, what is made mandatory for the purpose of submitting an appeal is payment of the tax component in the Demand Notice alone, and it would not include the penal interest or other charges.

The issue before the bench was whether the assessee is bound to make the payment of any amount other than the tax component in the demand notice, for the purpose of entertaining an appeal.

The bench, after going through Section 509 (11) of the Kerala Municipality Act, noted that the same provides that no appeal or revision shall be filed against the levy of tax if the tax shown in the demand notice has not been paid. Thus, the provision is very clear.

The bench agreed with the assessee that what is referred to is only the tax element and not the penal interest or other charges payable by the assessee.

Of course, the demand notice, respondents have demanded tax along with the penal interest. However, as the requirement to make the payment for the purpose of entertaining an appeal/revision is only the tax element of the demand, the assessee can avail the said benefit and make the payment of the tax for the purpose of submitting an appeal, added the bench.

In view of the above, the bench directed the Pala Municipality and the Secretary, Pala Municipality/respondents, to accept the tax component in the demand notice from the assessee and enable the assessee to pursue the Revision Petition.

Case Title: James Varghese v. Pala Municipality

Case Number: WP(C) NO. 44912 OF 2025

Citation: 2025 LiveLaw (Ker) 818

Counsel for Petitioner/Assessee: Liji J. Vadakedom

Counsel for Respondent/Department: Sujith Mathew Jose

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