M. Divya Vs Senior Revenue Officer (Madras High Court)
Conclusion: Hostel properties used as residences by inmates could not be treated as commercial properties. The levy of property tax, water tax, water charges and electricity charges under commercial tariff was unsustainable. Assessee’s properties must be treated as residential premises and residential tariff was to be applied.
Held: Assessee owned and operated hostels providing accommodation to working men and women belonging to economically weaker sections who used the hostel rooms as sleeping apartments after work. Authorities treated assessees’ properties as commercial premises and levied taxes and charges under commercial tariff. Assessee contended that the hostel rooms were used only for residential purposes and therefore the premises ought to be classified as residential units. Asssesee argued that no commercial activity was conducted by the inmates inside the premises; the hostels were used only for residential living and sleeping facilities similar to residential apartments. Imposing commercial tariff would unfairly burden hostel residents and amount to discrimination violating Articles 14 and 19(1)(g) of the Constitution. Respondent relied on Regulation 4(ii) of the Chennai Metropolitan Water Supply and Sewerage Board, contending that “private hostels” fell under commercial premises. It was held that classification for levy of taxes and charges must depend on the nature of activity carried on inside the premises by the recipients of the service. Merely because the property owner earned rental income or carried on a business activity did not convert the property into a commercial unit. If the premises were used as sleeping accommodation and living space, they were residential premises. Applying different yardsticks for apartment owners and hostel owners results in discrimination against economically weaker residents. Definitions of “residence” under the relevant Municipal Acts treated any place used as a sleeping apartment as a residence. Regulation 4(ii) relating to commercial premises applies only where private hostels engage in commercial usage; otherwise Regulation 7 (Domestic Residential Premises) applies. Assessee’s properties must be treated as residential premises and residential tariff was to be applied.
