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The Kerala High Court has recently ruled that businesses established or proposed to be established in the notified industrial zones will be exempted from obtaining any kind of permits from the municipalities or Grama Panchayats for such construction.

Judge Shaji P. Chaly added that such an exemption is intended to promote industries in the state and to facilitate an easy mechanism to start such establishments without being encumbered by legal complexities.

“I am satisfied that where a law exempts or grants advantages to industrial establishments located in notified industrial zones, the local body is excluded from any action on the basis of the provisions of the law applicable to other industrial establishments. I am also of the view that the exemption is granted by law as well as by the government in order to promote industries within the state and to facilitate an easy mechanism for an industrialist to start establishments without having to grapple with the complexities contained in various laws, using the single window customs clearance methodology provided for in the 1999 law.”

The petition was filed by a private company that owns an industrial manufacturing unit in a state-declared industrial development zone. The petitioner argued that he had obtained all legal permissions and licenses from the municipality.

In 2013, the petitioner constructed a new factory building in accordance with the law, and the municipal clerk classified the factory building as an unauthorized building for the purpose of municipal property tax collection and issued formal notices. Disputing the legality and accuracy of the levy and the claim, the claimant appealed to the High Court.

Lawyers Joby Cyriac and Sanjay Tampi appeared for the petitioner and argued that according to Section 450(i) of the Kerala Municipality Act as well as Section 6 of the Kerala Industrial One Stop Shop Act, all companies established or proposed to be established in the industrial zones declared by the government are exempted from obtaining a building permit from the local self-government institutions, the town planning department and other authorities.

Even before these promulgations, a government decree dated 1994 had exempted these industrial units from obtaining authorizations from local bodies, which was also specified by another circular. Therefore, their argument was that the petitioner, who works in the notified industrial zone, is exempted from obtaining a building permit to establish or construct a factory building or any other building in the industrial zone.

Senior Government Advocate KP Harish agreed with the petitioner’s observations and argued that in accordance with the GO and the Industrial One Stop Clearance Zones Development Act of Kerala and Industrial Townships, all industrial companies established or proposed to be established in industrial areas will be exempted from obtaining any kind of permits from municipalities or Grama Panchayat etc. for the construction of a building for the start-up of an industrial enterprise.

Standing Council MK Aboobacker made various arguments, including that the state or the District Industries Center did not object to the exemptions granted to industrial establishments by the state.

The Court noted that the government order exempted industrial establishments from obtaining licenses from local bodies operating in the industrial zone declared by the government.

The decree clearly specifies that the industrial units located in the Industrial Zones / Development Zone / Mini Industrial Zone / of which a consolidated list is annexed to the decree, are exempt from obtaining authorizations from the local authorities.

Further, it was found that Section 450 of the Kerala Municipality Act provides an exemption for industrial establishments operating in the notified industrial zone from the requirement to obtain permits from local bodies.

Therefore, on reading the government order together with the relevant provisions of the law, it is clear that the Panchayat was not justified in levying a property tax against the petitioner and demanding the same.

As such, the motion was granted and the property tax collection order and notices of demand issued to the petitioner were set aside.