The Supreme Court on Monday said that residential accommodation for nuns and students' hostels attached to educational institutions are eligible for exemption from building tax under Section 3(1)(b) of Kerala Building Tax Act, 1975.
Justices Rohinton Nariman and BR Gavai held that the beneficial purpose of the exemption contained in Section 3(1)(b) of the Kerala Building Tax Act (Act) must be given full effect and a literal formal interpretation of the provision must be eschewed.
“We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted,” the Court ruled.
Section 3(1)b) grants exempts buildings used principally for religious, charitable or educational purposes or as factories or workshops from building tax.
Senior Advocate Jaideep Gupta, representing the State government, contended that exemption provision contained in a fiscal statute must be construed strictly and in the case of doubt or ambiguity, it must be construed in favour of the State.
In the instant case, it was his argument that a building used principally for religious or educational purposes can only be a building that is used for religious/educational activity and not for activity which has no direct connection with religious/educational activity, such as residential quarters for nuns, priests or hostel accommodation for students.
The Court, therefore, dismissed the appeals filed by the State of Kerala and upheld the exemptions granted.