# Nair v. Stale of Kerala

- **Citation:** [1961] 3 S.C.R. 77
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Bench:** B. P. Sinha, Jafer Imam, A. K. Sarkar, K. Subba Rao, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/nair-v-stale-of-kerala-2094
- **Pages:** 31

## Headnote

Land Tax-Constitutional validity of enactment-Uniform
basic tax on all lands-Classification-Tax on forest areas-Legislative competence of State-Govcrnment"s power to exempt-Provisional assessment-Validity-Travancore-Cochin Land Tax Act,
I955 (Travancore-Cochin IS of r955), as amended by Act ro of z957,
ss. 4, 5-A, 7-Constitution of India, Arts. r4, r9(r)(j), 3r, 265.
Schedule 7, List II, Entries z9, 49.
The Travancore-Cochin Land Tax Act, 1955, was passed· by
the legislature of the State of Travancore-Cochin and was
amended by Act IO of 1957, by the State of Kerala. By s. 4 of
the Act all lands in the State of whatever description and held
under whatever tenure were t.o be charged and levied a uniform
rate of tax to be called the basic tax. Section 7 gave power to
tne Government to exempt from.the operation of the Act such
Shah].
December 9.
T<. T. Moopil
Nair
v.
Stale of Kerala
78
SUPREME COURT REPORTS
[1961)
lands or class of lands which the Government may, by notification, decide. Section 5A which was introduced into the Act by the
Amending Act enabled the Government to make a provisional
assessment of the basic tax in respect of the lands which had
not been surveyed by the Government and provided that the
Government after conducting the survey shall make a regular
assessment ·and make the necessary adjustments in respect of the
amounts paid already. There was, however, no time fixed for
the conduct of the survey.
The petitioners who owned forest in the State, challenged
the constitutional validity of the Act on the grounds that the
provisions of the Act contravened Arts. r4, r9(1)(f) and 31(1) of
the Constitution of India inasmuch as (1) the Act did not have
any regard to the quality of the land or its productive capacity
and the levy of a tax at a fiat rate of Rs. 2 per acre imposed
very unreasonable restrictions on the right to hold property,
(3) the Act did not lay down any provision calling lor a return
from the assessee for an enquiry or investigation of facts before
the provisional assessment was made or any right of appeal to
any higher authority and, in fact, did not make any provision for
hearing the assessee at any stage, (3) s. 7 gave arbitrary power to
the Government to pick and choose in the matter of grant of
total or partial exemption from the provisions of the Act, and
(4) the tax proposed to be levied had absolutely no relation to
the production capacity of the land sought to be taxed or to the
income they could derive, and therefore the Act had been conceived with a view to confiscating private property, there being
no question of any .compensation being paid to those who may
be expropriated as a result of the working of the Act.
The petitioners also challenged the legislative competence of
the legislature of the State to levy a tax on lands on which
forests stood. The case on behalf of the State of Kerala, inter
alia, was that the Act had its justification in Art. 265 of the
Constitution of India, which was not subject to the provisions of
Part III of the Constitution and that, therefore, Arts. 14, rg and
31 could not be pressed in aid of the petitioners.
Held, (Sarkar, J., dissenting), that the Travancore-Cochin
Land Tax Act, 1955, infringed the provisions of Art. r4 of the
Constitution of India.
The Act obliged every person who held land to pay the tax
at the fiat rate prescribed, whether or not he made any income
out of the property, or whether or not the property was capable
of yielding any income. Consequently, there was no attempt at
classification in the provisions of the Act-and it was one of those
cases where the Jack of classification created inequality. It was
therefore hit by the prohibition to deny equality before the law
contained in Art. r4.
Section 5A of the Act which enabled the Government to
make a provisional assessmeqt of the basic tax payable by the
r
•
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i
I \.
r
3 S.C.R. SUPREME COURT REPORTS
79
holder of unsurveyed land imposed unreasonable restrictions on
1960
the rights to ho

## Text

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3 S.C.R. SUPREME COURT REPORTS
77
The Tribunal had come to the conclusion that no pay.
r96o
ment in addition to the salary, annual bonus and rh c
. .
· 1 b
·
"fi d
d
.
f
'
ommirnoner
specia
onus was JUStI e
an
any express10n 0
of Exms Profits
opinion to the contrary in the supplementary stateJax, Madras
ment pursuant to the order for statement of case
v.
could not in our judgment affect the conclusion origiN. M. 11ayaloo
nally recorded.
Iy" & Sons
In our view the answer to the question whether the
disa.llowance by the Excess Profits Tax authorities of
the commission paid to branch managers was justified
under r. 12, Sch. 1, of the Excess Profits Tax Act
should have been answered in the affirmative. On the
view taken by us, Appeal No. 494/1958 will be allowed, but there will be no order as to costs.
Appeal No. 495 of 1958 will be allowed with costs.
Appeals allowed.
KUNNATHAT THATHUNNI MOOPIL NAIR
v.
THE STATE O:E' KERALA AND ANOTHER
(with connected petitions)
(B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR,
K. SUBBA RAO and J.C. SHAH, JJ.)
Land Tax-Constitutional validity of enactment-Uniform
basic tax on all lands-Classification-Tax on forest areas-Legislative competence of State-Govcrnment"s power to exempt-Provisional assessment-Validity-Travancore-Cochin Land Tax Act,
I955 (Travancore-Cochin IS of r955), as amended by Act ro of z957,
ss. 4, 5-A, 7-Constitution of India, Arts. r4, r9(r)(j), 3r, 265.
Schedule 7, List II, Entries z9, 49.
The Travancore-Cochin Land Tax Act, 1955, was passed· by
the legislature of the State of Travancore-Cochin and was
amended by Act IO of 1957, by the State of Kerala. By s. 4 of
the Act all lands in the State of whatever description and held
under whatever tenure were t.o be charged and levied a uniform
rate of tax to be called the basic tax. Section 7 gave power to
tne Government to exempt from.the operation of the Act such
Shah].
December 9.
T<. T. Moopil
Nair
v.
Stale of Kerala
78
SUPREME COURT REPORTS
[1961)
lands or class of lands which the Government may, by notification, decide. Section 5A which was introduced into the Act by the
Amending Act enabled the Government to make a provisional
assessment of the basic tax in respect of the lands which had
not been surveyed by the Government and provided that the
Government after conducting the survey shall make a regular
assessment ·and make the necessary adjustments in respect of the
amounts paid already. There was, however, no time fixed for
the conduct of the survey.
The petitioners who owned forest in the State, challenged
the constitutional validity of the Act on the grounds that the
provisions of the Act contravened Arts. r4, r9(1)(f) and 31(1) of
the Constitution of India inasmuch as (1) the Act did not have
any regard to the quality of the land or its productive capacity
and the levy of a tax at a fiat rate of Rs. 2 per acre imposed
very unreasonable restrictions on the right to hold property,
(3) the Act did not lay down any provision calling lor a return
from the assessee for an enquiry or investigation of facts before
the provisional assessment was made or any right of appeal to
any higher authority and, in fact, did not make any provision for
hearing the assessee at any stage, (3) s. 7 gave arbitrary power to
the Government to pick and choose in the matter of grant of
total or partial exemption from the provisions of the Act, and
(4) the tax proposed to be levied had absolutely no relation to
the production capacity of the land sought to be taxed or to the
income they could derive, and therefore the Act had been conceived with a view to confiscating private property, there being
no question of any .compensation being paid to those who may
be expropriated as a result of the working of the Act.
The petitioners also challenged the legislative competence of
the legislature of the State to levy a tax on lands on which
forests stood. The case on behalf of the State of Kerala, inter
alia, was that the Act had its justification in Art. 265 of the
Constitution of India, which was not subject to the provisions of
Part III of the Constitution and that, therefore, Arts. 14, rg and
31 could not be pressed in aid of the petitioners.
Held, (Sarkar, J., dissenting), that the Travancore-Cochin
Land Tax Act, 1955, infringed the provisions of Art. r4 of the
Constitution of India.
The Act obliged every person who held land to pay the tax
at the fiat rate prescribed, whether or not he made any income
out of the property, or whether or not the property was capable
of yielding any income. Consequently, there was no attempt at
classification in the provisions of the Act-and it was one of those
cases where the Jack of classification created inequality. It was
therefore hit by the prohibition to deny equality before the law
contained in Art. r4.
Section 5A of the Act which enabled the Government to
make a provisional assessmeqt of the basic tax payable by the
r
•
\
l
i
I \.
r
3 S.C.R. SUPREME COURT REPORTS
79
holder of unsurveyed land imposed unreasonable restrictions on
1960
the rights to hold property safeguarded by Art. 19(1)(!) of the
Constitution, inasmuch as (1) the Act did not impose an obligaK. T. Moopil
tion on the Government to undertake survey proceedings within
1Vair
any prescribed or ascertainable period, with the result that a
v.
landholder might be subjected to repeated annual provisional State of Kerala
assessments on more or less conjectural basis and liable to pay the
tax assessed, and (2) the Act being silent as to the machinery and
procedure to be followed in making the assessment left it to the
Executive, completely ignoring the legal position that the assessment of a tax on a person or property was at least of a quasijudicial character.
Section 7 of the Act which vested the Government with the
power wholly or partially to exempt any land from the provisions of the Act did not lay down any principle or policy for the
guidance of the exercise of discretion by the Government in
respect of the selection contemplated by the section, and was,
therefore, discriminatory in effect and offended Art. 14. The
section was not severable from the rest of the Act as both the
charging sections, s. 4 and s. 7, authorising the Government to
grant exemptions from the provisions of the Act were the main
provisions of the statute.
Shri Ram Krishna Dalmia v. Sri Justice S. R. Tendolkar,
[1959] S.C.R. 279, relied on.
The Act was also confiscatory in character inasmuch as the
provisions of the Act had the effect of eliminating the private
owners through the machinery of the Act, without proposing to
acquire the privately owned forests in the State after satisfying
the conditions laid down in Art. 31 of the Constitution.
~r Sinha, C.J., :{roam, Subba Rao and Shah, JJ.-Article
265 of the Constitution which provided that the State shall not
levy or collect a tax except by authority of law referred to a
valid law, and in order that the law might be valid, the tax proposed to be levied must be within the legislative competence of
the Legislature imposing a tax and authorising the collection
thereof and, secondly, the tax must be subject to the conditions
laid down in Art. 13, by which all laws inconsistent with or in
derogation of the fundamental rights in Part III shall be void.
Per Sarkar, J.-(1) The object of the Act was to tax land in
the State for raising revenues by prqviding for a low and uniform rate of basic tax replacing all other dues payable to the
Government and the tax payers were classified according to the
area of lands held by them. Such a classification had an intelligible basis and had a rational relation to the object of the Act. As
tax was to be levied not because the land was productive but
because the land was held in the State, the classification did not
offend Art. 14 of the Constitution, even though it might impose
unequal burden of the tax on the owners of land on account of
owners of less productive land being put on a larger burden.
80
SUPREME COURT REPORTS
[1961]
1960
(2) Section 5A did not offend Art. r4 and in the absence
of express provisions laying down the procedure accordini; to
J(. T. Moopil
which the provisional assessment was to be made, the Act could
Nair
not be held invalid on the ground that it was against the rules
v.
of natural justice.
State af Kerala
(3) Section 7, even if it were considered invalid on the
ground that it gave arbitrary power to the Government and
offended Art. r4, was severable from the rest of the Act and
would not affect the other provisions of the Act.
(4) The Act did not infringe the fundamental rights in
Art. rg(r)(f) as the rate of tax fixed by the Act was a very low
rate and the restrictions on those rights were reasonable.
(5) The Act was not in its nature expropriatary and did
not offend Art. 3r. As there was no want of legislative competence, the Act could not be assailed as a piece of colourable
legislation on the ground that though in form a taxing statute
it, in effect, was intended to expropriate lands by imposing a tax
too heavy for the land to bear.
(6) The word "land" in Entry 49 of List II, Sch. 7, of the
Constitution, included "land on which a fo1est stands" and, therefore, under that Entry taxation on land on which forests stood
was permissible and legal. The Act, therefore, could not. be
challenged as being beyond the legislative competence of the
State Legislature.
ORIGINAL JURISDICTION: Petitions Nos. 13 to 24,
42 and 46 to 54 of 1958.
Petitions under Article 32 of the Constitution of
India for enforcement of Fundamental Rights.
M. 0. Setalvad, Attorney-General for India, Syed
Mahmud, J.B. Dadachanji, S. N. Andley, Rameshwar
Nath and P. L. Vohra, for the petitioners in petitions
Nos. 13-18, and 46-54 of 1958.
C.' K. Daphtary, Solicitor-General of India, Syed
Mahmud, J.B. Dadachanji, S. N. Andley, Rameshwar
Nath and P. L. Vohra, for the petitioners in Petitions
Nos. 19-24 of 1958.
S. N. Andley, Rameshwar Nath, J. B. Dadachanji.
and P. L. Vohra, for the petitioner in petition No. 42
of 1958.
K. V. Suryanarayana Iyer, Advocate General, of
KeroJ,a and Sardar Bahadur, for the respondents.
1960. December, 9. The Judgment of Sinha, C.J.,
Jafer Imam, Subba Rao and Shah, JJ., was delivered
_\
\
)
3 S.C.R. SUPREME COURT REPORTS
81
by Sinha, C. J. Sarkar, J., delivered a separate Judgment.
SINHA, C. J.-In this batch of 22 petitions under
Art. 32 of the Constitution, the petitioners impugn the
constitutionality of the Travancore-Cochin Land Tax
Act, XV of 1955, as amended by the TrantncorcCochin Land Tax (Amendment) Act, X of 1957, which
hereinafter will be referred to as the Act. The Act
came into force on June 21, 1955, and the Amending
Act on August 6, 1957.
The petitioners are owners
of forest areas in certain parts of the State of Kerala,
which, before the reorganisation of States, formed
part of the State of Madras. The respondents to the
petitions are: (1) the State of Kerala and (2) the District Collector, Palghat:
These petitions are based on allegations, ,._, hich are,
more or less, similar, and the following allegations
made in Writ Petition No. 42 of 1958 may be taken
as typical and an extreme case, which was placed
before us in detail to bring into bold relief the foll
significance and effect of the legislation impugned in
these cases.
The petitioner in Petition 42of1958 is
a citizen of India, who owns forests in certain parts
of Palghat Taluk in Palghat District, which was part
of the State of Madras before the reorganisation of
States. These forests are now in the State of Kernla.
Up to the time that these forests were in the State of
Madras, as it then was, the Madras Preservation of
Private :Forests Act, Madras Act XXVII of 1949,
governed these forests.
Even after these areas were
transferred to the State of Kerala, the said Madras
Act, XXVII of 1949, continued to apply to these
forests.
Under the said Madras Act the owaers of
forests, like the petitioner, could not sell, mortgage,
lease or otherwise alienate any portion of their forests
without the previous sanction of the District Collec.
tor; nor could they, without similar permission, cut
trees or do any act likely to denude the forest or
diminish its utility, as such. The District Collector,
in exercise of the powers under the Act, does not
ordinarily permit the cutting of more than a small
11
ry6o
K. T. A1ovpil
J..Tat'r
v.
State of J(erala
Sinha C. ].
K. T. Moopil
Nair
v.
82
SUPREME COURT REPORTS
[1961)
number of trees in the forest. Thus the petitioner has
not the right fully to exploit the forest wealth in his
forest area and has to depend upon the previous permission of the Collector. In exercise of the powers
State of [(erata given to the Collector under the Madras Act aforeSinha C. j.
said, the petitioner's lessee was given permission to
cut certain trees in his forest, which brings to the
petitioner by way of income from the forest, a sum of
Rs. 3,100 per year. Under the Act, a tax called land
tax at a flat rate of Rs. 2 per acre has been imposed
on the petitioner. In pursuance of the provisions of
the Act, as amended as aforesaid, the District Collector of Palghat, purporting to act under the provisions
of s. 5A of the Act, issued a notice to ·the petitioner
provisionally assessing the petitioner's forest under
the said Act to a sum of fifty thousand rupees per
annum and informing the petitioner that, if no representation was made within thirty days, the said provisional assessment would be confirmed and a demand
notice would be issued. As there has been no survey
of the area of forest land in the petitioner's possession, the District Collector has conjectured the said
area to be twenty-five thousand acres. The Petitioner
had made, an application to the District Collector
under the Madras Preservation of Private Forests
Act for felling trees in an area of one thousand acres,
but the Collector was pleased to grant permission to
cut trees from 450 acres only in the course of five
years at the rate of 90 acres a year. The petitioner
has leased out that right to another person, who made
the highest bid of Rs. 3,100 per year, as the landlord's
fee for the right to cut and remove the trees, and
other ~in or produce. Besides the demand aforesaid,
the revenue authorities have levied about four thousand rupees as tax on the surveyed portions of the
forest. The petitioner's forest has large areas of arid
rocks, rivulets and gorges. The petitioner, in those
circumstances, questions the constitutional validity of
the Act, the provisions of which will be examined
hereinafter.
These petitions have been opposed on behalf of the
first respondent and the allegations and submisiiions
3 S.C.R. SUPREME COURT REPORTS
83
made in the petitions are sought to be controverted
by a counter affidavit sworn to by an Assistant Secreh
/(. T. Moopil
tary of the Kerala Government in t e
Revenue
Nafr
Department. It is in similar terms, as a matter of
v.
fact printed in most. of these cases. It is contended State of T<.rala
therein on behalf of the respondent that the petitions
are not maintainable in as much as no fundamental
rights of the petitioners have been infringed; that the
allegations about the income from the forest lands are
not admitted; and by way of submission, it is added,
they are irrelevant for the purposes of these petitions.
It is stated that the Act was passed with a view to
unifying the system of land tax in the whole of the
State of Kerala. It is submitted that the validity of
the Act has to be determined in the light of Art. 265
of the Constitution and that Arts. 19 and 31 were
wholly out of the way. It is denied that the tax imposed was harsh or arbitrary, or has the effect of
violating the petitioner's right of holding property;
and it was asserted that the allegations in respect of
income from the forests are entirely irrelevant, as the
tax was not a tax on income, but was an "impost on
land''. It is equally irrelevant whether the land is
productive or not. It is also contended that, in view
of the provisions of Art. 31(5)(b)(i) of the Constitution,
Art. 31(2) could not be relied upon by the petitioners.
The allegation of the petitioners that the Act is a
device to confiscate private forests is denied. It is
admitted that, except in certain cases, the entire area
is unsurveyed and that steps are being taken for surveying those areas. It is also stated that the areas
shown in the notices served on the petitioners are
based on information available to the Collector of the
District.; and lastly, it is stated that only notice has
been issued calling upon the petitioners to make their
representations, if any, to the proposed provisional
assessments.
The assessments have not yet been
made, and, therefore, there is no question of demand
of tax being enforced by coercive processes.
Finally,
it is suggested that the Act has been enacted for the
legitimate revenue purposes of the State.
Before entering upon a discussion of the points in
Si11ha C. j,
K. T. Jl,Joopil
~Vair
·
v.
State of Kera/a
Sinha C. j.
84
SUPREME COURT REPORTS
[1961)
controversy, it is convenient at this stage to indicate
briefly the relevant provisions of the Act . which is
impugned by the petitioners as ultra vires the State
Legislature. Tbe preamble of the Act is in these
terms:-
"Whereas it is deeI.IJ.ed necessary to provide for
the levy of a low and uniform rate of ba,sic tax on
all lands in the State of Travancore-Cochin."
Basic tax has been defined as "the tax imposed under
the proviHions of this Act". Section 3 lays down tbat
the arrangement made under the Act for the levy of
the basic tax shall be deemed inter alia to be a gene-
. ral revenue •ettlement of the State, notwithstanding
anything in any statute, grant, deed or other transaction subject to certain provisos not material for our
present purposes. The charging section is s. 4, which
is in these terms:-
"Subjcct to the provisions of this Act, there shall
be charged and levied in respect of all lands in the
State, of whatever description and held under whatever tenure, a uniform rate of tax to be called the
basic tax."
Section 5 l1tys down the rate of the tax which, by the
Amendment, has been raised to Rs. 2 per acre (two
pies per cent. of land. per annum) and the basic tax
charged and levied at that rate shall be the tax payable to the Government in lieu of any existing tax in
respect of land. Section 6 lays down that any stipulation in any contract or agreement or lease or other
transaction to pay land revenue assessment of a11y
land shall be construed as stipulation for the payment
of the amount of basic tax, as charged and levied
under the Act.
Section 7 is in these terms:-
"This Ad is not applicable to lands held or leased by the Gon'rnment or any land or class of lands
which the Government may, by notification in the
Gazette, either wholly or partially exempt from the
provisions of this Act."
Sections 8 and 9 provide for the contimrnnce of the
liability to pay certain dues in respect of existing
tenures in addition to the basic tax in respect of iands
covered by those tenures. Section 10 abolishes the
3 S.C.R. SUPREME COURT REPORTS
85
irrigation assessment charged on certain tank beds
and other water reservoirs named and described therein. Section 11 preserves the right ofthe Government
to levy certain irrigation and water cesses and lays
down that the Act shall not affect the power of the
Government to levy any rate or alter any existing
rate of irrigation or water cess on itny land, as they
deem fit.
Cesses, other than those mentioned in s. 11,
are also abolished by s. 12.
Section 13 authorises the
Government to appoint such officers as they deem
necessary for the purpose of the Act.
Section 14 Jays
down the bar of suits against the Government in respect, of anything clone or any order passed under the
Act. Section 15 saves the right of the Government
which accrued to it·before the Act came into force as
also the conditions of any agreement, grant or deed
relating to any land, except to the extent indicated in
the Act. Section 16 vests the Government with the
power to make rules for carrying into effect the provisions of the Act, with parlicu Jar reference to the
power to make rules for the apportionment of the basic
tax charged on certain kindK of holdings, for defining the powers and duties of the officers apjJointed
under the Act and for determining the kist instalments
and the due date for the pa,yment thereof.
These in
short are the provisions of tho Act. The Act, as indicated above, was amended by Act X of 1957, which
substituted the words "State of Kerala" for the words
"State of Travancorc-Cochin" and made certain other
consequential changes.
The Amending Act introduced section 5A, which Im~ bceu very much assailed in
the course of the argument b<:fore us and it is, therefore, necessary to set it out in full. It is in these
terms:-
"S. 5A. Provisional assessment of basic tax in the
case of unsurveyed lands.-( I) It shall be competent
for the Government to make a provisional assessme.nt of the basic tax payable by a person in re8pect
of the lands held by him and which have not been
surveyed by the Government, and upon such assessment such person shall be liable to pay the a.mount
covered in the provisional assessment.
K. T. Moopil
Nair
v.
Stale of T<erala
Sinha C. J.
Ig6o
K. T. Moopil
Nair
v.
Stale of Kera/a
Sinha C. ].
86
SUPREME COURT REPORTS
[1961)
(2) The Government after conducting a survey of
the lands referred to in sub-section (1) shall make
a regular assessment of the basic tax payable in
respect of such lands. After a regular assessment
has been made, any amount paid towards the provisional assessment made under sub-section (1) shall
be deemed to have been paid towards the regular
assessment and when the amount paid towards the
provisional assessment exceeds the amount payable
under the regular assessment, the excess shall be
refunded to the person assessed."
By s. 9, s. 3 of the Madras Revenue Recovery Act,
1864, has been substituted in these terms:
"3. Landholder when and to whom to pciy kist.-
Every landholder shall pay to the Collector or other
officer empowered by him in this behalf the land
tax due from him on or before the day fixed for
payment under the rules framed under s. 16 of the
Land Ta.x Act, 1955."
:From a review of the provisions of the Act, as amended as aforesaid, it will be clear that the provisions of
the Act lay down in barest outline the policy to impose a uniform and, what is asserted to be, a low rate
of land tax on alt lands in the State of Kera la. Unlike
other taxing statutes, it does not make any provision
for is.sue of notice to the assessee, nor is there any
provision for submission of a return by the assessee.
By s. 5A, it authorises the Government to make a
"provisional assessment" in respect of land, which
has not been surveyed, and such provisional assessment is made payable by the person made liable under
the Act. It does not make any provision for any
appeals in cases where the asscssee may feel dissatisfied with the assessment. The Act does contemplate
the making of "a regular assessment of the basic tax".
But it does not indicate as to when the regular assessment would be made, except indicating that it can be
made only after a survey has been made in respect of
the land assessed. The Act could not ha,-c been cast
in more general terms and the proceedings under the
Act could not have been more summary. It has thus
the merit of brevity as also of simplicity, derived
.3 s.c.R. SUPREME COURT REPORTS
87
from the fact that a tax is levied at a flat rate, irresE<. T. Moopil
Nair
pective of the quality of the land and consequently of
its productive capacity. Under the Act, the charge
has to be levied, whether or not any income has been
v.
derived from the land. The Legislature was so much Stute of K"ala
in earnest about levying and realising the tax that
it could not even wait for a regular survey of the
lands to be assessed with a view to determining the
extent and character of the land.
Such are the provisions and the effect of the Act,
which has been assailed on a number of grounds on behalf of the petitioners. It is contended, in the first
instance, that inequality is writ large in the provisions
of the Act, which is clearly discriminatory in character
and effect and thus infringes Art. 14 of the Constitution. As the Act does not ,have any regard to the
quality of the land or its productive capacity, and a
tax at a fl.at rate of Rs. 2 per acre is proposed to be
levied under the Act, it is further contended, it imposes very unreasonable restrictions on the right to
hold property and is thus an invasion on the rights
guarnnteed to the petitioners under Art. 19(l)(f) of
the Constitution. The Act does not lay down any
provision calling for a return from the assessee, for
any enquiry or investigation of facts before the provisional assessment is made or for any right of appeal
to any higher authority from the order of provisional
assessment; in fact, there is no provision for hearing
the assessee at any stage. The Act is of an arbitrary
character and is thus wholly repugnant to the guaranteed rights of the petitioners. Section 7 quoted above
gives uncanalised, unlimited and arbitrary power to
the Government to pick and choose in the matter of
grant of total or partial exemption from the provisions of the Act. It also suffers from the vice of discrimination. It has also been vehemently argued that
the Act, though it purports to be a tax on land, is
really a law relating to forests in possession of the
petitioners and would not come within the purview
of entry 18 read by itself or in conjunction with entry
45 of List II, but is law relating to forests under
entry 19. If we tear the veil in which the real
Sinha C. ].
•
J(. T. JY!<Jopil
~Vair
v.
State .of Kerala
Sinha C. J,
88
SUPREME COURT REPORTS
[1961]
purpose and effect of the Act has be-en shrouded, it will
appear that the true character and effect of the Act is
not to levy a tax on land, but to expropriate the
private owners of the forests without p:1yment of any
compensation whatsoever. Lastly, it has been urged
that the whole Act has been conceived with a view to
confiscating private property, there being no question
of any compe:isation being paid to those who may be
expropriated as a result of the working of the Act.
This last argument is based on the assertion that the
tax proposed to be levied on private property in
the State ofKerala has absolutely no relation to the
paying capilcity of the persons sought to be taxed,
with reference to the income they could derive, or
actually did derive from the property.
On behalf of the State \lf Kera!a, the learned Ad vocate.General has argued that, though in most of the
cases, that is to say, except in seven petitions (Petitions 21, 22, 47, 49, 50, 51 and 5!) the lands have not
been surveyed, the areas mentioned in the notices
proposing provisional assessment have been ascertained through the local agencies of the Government. It
was further contended that the State had only declared the liability to the payment of the tax at a fiat
rate of Hs. 2 per acre in respect of land, inespecti ve
of the income to be derived therefrom. Hence there
was no necessity for making provision for a detailed
enquiry or investigation. The rate of th'-" t:J.x being
known, and the are& of the land to be taxed having
been loeally ascertained, even thongh without any
regular survey, what remained was merely quantifying the tax, which was of a pnrely administrative
character. The local agencies estimated the land in
possession of particular persons.
Those persons were
called up0n to pay provisionally at the rate fixed by
the statut.0.
The State has, by execut.ivc act.ion,
appointed authoritic.> who are expected to act in
accordance with the principle of natural justice. Th0re
was, therefore, no need for htying down any elaborate
procedure '1.R in other instances of taxing statutes.
There is a presumption t.hat the anthority appointed
by the Government would act bona fide and in a
j
3 S.C.R. SUPREME COURT REPORTS
89
proper manner. If there was any case of unfair deal.
1960
ing9, the matter could be brought to the Court. It was K. T. Moopil
greatly emphasised that as a flat rate of taxation had
Nair
been envisaged by the Act and as ultimately the tax
v.
at that rate would be realised from land found to be Stat~ of K .. al•
in possession of particular persons after a regular survey, the regular survey to be ultimately made would
Siftha c. J.
automatically determine the a.mount of tax to be pa.id
and the adjustment of the taxes already paid could
be made on that basis. On the legal aspect of the
controversy raised on behalf of the petitioners, it was
argued that the Act has its justification in Art. 265 of
the Constitution, which was not subject to the provisions of Part III of the Constitution and that, therefore, Arts.14, 19, 31 could not be pressed in aid of the
petitioners. It was also contended that even if the
Act is, in effect, confiscatory, it cannot be questioned,
being a taxing statute. Finally, it was urged that
the question of the amount of income derived by the
petitioners from tlie property sought to be taxed is
w)lolly .. irrelevant, because the Act was not a tax on
income but it was a tax on the property itself.
The most important question that arises for consideration in these cases, in view of the stand taken by
the State of Kera.la, is whether Art. 265 of the Consti.
tution is a complete answer to the attack against the
constitutionality of the Act. It is, therefore, necessary to consider the scope and effect of that Article.
Article 265 imposes a limitation on the taxing power
of the State in so far as it provides that the Sta.te
shall not levy or collect a tax, except by authority of
law, that is to say, a tax cannot be levied or collected
by a mere executive fiat. It ha.s to be done by a.utho.
rity of la.w, which must mean valid la.w. In order that
the law may be valid, the tax proposed to be levied
must tie· within the legislative competence of the
Legislature imposing a tax and authorising the collection thereof and, secondly, the ta.x must be subject .to
the conditions la.id down in Art. 13 of the Constitution. One of such conditions envisa.ge<l by Art. 13(2)
is tha.t the Legislature she.II not make any law which
,.
I<. T. Moopil
Nair
v.
State of Ke,ala
Sinha C. ].
90
SUPREME COURT REPORTS
[1961)
takes away or a:bridges the equality clause in Art. 14,
which enjoins the State not to deny to any person
equality before the law or the equal protection of the
laws of the country. It cannot be disputed that if the
Act infringes the provisions of Art. 14 of the Constitution, it must be struck down as unconstitutional.
For the purpose of these cases, we shall assume that
the State Legislature had the necessary competence
to enact the law, though the petitioners have seriously
challenged such a competence.
The guarantee of
equal protection of the laws must extend even to taxing statutes. It has not been con tended otherwise. It
does not mean that every person should be taxed
equally. But it does mean that if property of the
same character has to be taxed, the taxation must be
by the same standard, so that the burden of taxation
may fall equally on all persons holding that kind
and extent of property. If the taxation, generally
speaking, imposes a similar burden on every one
with reference to that particular "kind and extent of
property, on the same basis of taxation, the law shall
not be open to attack on the ground of inequality,
even though the result of the taxation may be that
the total burden on different persons may be unequal.
Hence, if the Legislature has classified persons or
properties into different categories, which are subjected to different rates of taxation with reference to
income or property, such a classification would not be
open to the attack of inequality on the ground that
the total burden resulting from such a classification is
unequal. Similarly, different kinds of property may
be subjected to differeμt rates of taxation, but so long
as there is a rational basis for the classification, Art.
14 will not be in the way of such a classification resulting in unequal burdens on different classes of properties. But if the same class of property similarly situated is subjected to an incidence of taxation, which
results in inequality, the law may be struck down as
creating an inequality amongst holders of the same
kind of property. It must, therefore, be held that a
taxing statute is not wholly immune from attack on
the ground ~hat it infringcR the equality clause in
4
.,..
..
>·
)
l
..
.....
I
3 S.C.R. SUPREME COURT REPORTS
91
Art. 14, though the Courts are not concerned with the
policy underlying a taxing statute or whether a particular tax could not have been imposed in a different
way or in a way that the Court might think more
just and equitable.. The Act has, therefore, to be
examined with reference to the attack based on Art.
14 of the Constitution.
It is common ground that the tax, assuming that
the Act is really a taxing statute and not a confiscatory measure, as contended on behalf of the petitioners, has no . reference to income, either actual or
potential, from the property sought to be taxed.
Hence, it may be rightly reI\larked that the Act obliges every person who holds land to pay the tax at
the flat rate prescribed, whether or not he makes any
income out of the property, or whether or not the pro-
·perty is capable of yielding any income. The Act, in
terms, claims to be "a general revenue settlement of
the State" (s. 3).
Ordinarily, a tax on land or land
revenue is assessed on the actual or the potential productivity of the land sought to be taxed. In other
words, the tax has reference to the income actually
made, or which could have been made, with due diligence, and, therefore, is levied with due regard to the
incidence of the taxation. Under the Act in question
we shall take a hypothetical case of a number of persons owning and possessing the same area of land.
• One makes nothing out of the Janq, because it is arid
desert. The second one does not make any income,
but could raise some crop after a disproportionately
large investment of labour and capital. A third one,
in due course of husbandry, is making the land yield
just enough to pay for the incidental expenses and
labour charges besides land tax or revenue. The
fourth is making large profits, because the land is
very fer~ile and capable of yielding good crops. Under
the Act, it is manifest that the fourth category, in
our illustration, would easily be able to bear the burden of the tax. The third one may be able to bear
the tax. The first and the second one will have to
pay from their own pockets, if they could afford the
tax. If they cannot afford the tax, the property i8
1960
K. T. 11doopil
Nair
v.
State of Kijralo
Sinha C. ].
-
·:-·:--:_r,:_,>--:-·~ :\
.
..
92 '-'.'. '' SUPREI\IE COURT REPORTS
. [1961)
~ .\ .. \
•,
. \
\
.-
-
·,. ,. '9~•
liable to be sold, in due process oflaw,-for-realisation
·
· ·
· ·of the· public. demand. It is clear, therefore, that
. K. T:. •Moopil
l
.
N•ir
inequa ity is writ large on the Act and is inherent in .
.. - v.
. . th·e very provisions of the taxing section. It is also
stall.of K ... 1. clear that there is no attempt at classification· in the
· provisions of the Act •. Hence, no more need be said
Sinha _c. J; as to what could have been the basis for a valid classifi-
-·---- cation. It is one of those cases where the lack of classification creates inequality. It is, therefore, clearly hit
by the p~ohibition.to deny equality before the law con-
- tained in Art. 14 of the Constitution. Furthermore,
sec. 7 of the Act, quoted above, particularly the latter
part, which vests the Government with the power
wholly or partially to exempt any land from the provisions of the Act, is clearly. discriminatory in its
effect and, therefore, infringes Art. 14 of the Consti-
. tution. The Act does· not lay down . any· principle or
policy for the guidance of the exercise of discretion. by
•the Government in respect of the selection contemplated bys. 7. This Court has examined the .cases decided by it with reference to the provisions of Art. 14 of
the Constitution, in the case of Shri Ram Krishna
Dalmia v. Shri Justice S. R. Tendolkar and others(').
S. R. Das, C. J., speaking for the Court has deduced a
number of propositions from those decisions. The
present case is within the mischief of the third propo-
- sition laid down at. pages 299 and 300 of the Report,
the relevant portion of which is in these terms:-
. · "A statute may not make any classification of the
persons or things for the purpose of applying its
provisions but may leave it to the discretion of the
··. Government to select and classify persons or things
·to whom its provisions are to apply. In determining the question of the yalidity•or otherwise of such
a statute the Court will not strike down the law
out 'Of. hand only because no classification ·appears
on its face or because a discretion is given to the
· Government to make the selection or classification
_ .-
_but will· go on ·to examine and ascertain if the
. statute has laid down any principle or policy for the
guidance of th!l exercise of discretion by the Govern-
• ment in the matter of the selection or classification.
(1) [1959] S.C.R. 279 •.
,
I
J
3 S.C.R. SUPREME COURT REPORTS
93
After such scrutiny the Court will strike down the
statute if it does not lay down any principle or
. policy for guiding the exercise of discretion by the
Government in the matter of selection or classification, on the ground that the statute provides for
the delegation of arbitrary and uncontrolled power
to the Government so as to enable it to discriminate between persons or ·things similarly situate .
and that, therefore, the discrimination is inherent
in the statute itself." (p. 299 of the Report).
The observations quoted above from the unanimous
judgment of this Court apply with full force to the
provisions of the Act. It has, therefore, to be struck
down as unconstitutional.
There is no question of
severability arising in this case, because both the
charging sections, s. 4 and s. 7, authorising the
Government to grant exemptions from the provisions
of the Act, are the main provisions of the Statute,
which has to be declared unconstitutional.
The provisions of the Act are unconstitutional
viewed from the angle of the provisions of Art.
19( I)( f) of the Constitution, also.
A part from the
provisions of ss. 4 and 7 discussed above, with reference to the test under A.rt. 14 of the Constitution,
we find that s. 5(A) is also equally objectionable
because it imposes unreasonable restrictions on the
rights to hold property, safeguarded by Art. 19(1)(f)
of the Constitution. Section 5(A) declares that the
Government is competent to make a provisional
assessment of the basic tax payable by the holder of
unsurveyed land. Ordinarily, a taxing statute lays
down a regular machinery for making assessment of
the tax proposed to be imposed by the statute. It
lays down detailed procedure as to notice to the proposed assessee to make a return in respect of property
proposed to be taxed, prescribes the authority and the
procedure for hearing any objections to the liability
for taxation or as to the extent of the tax proposed
to be levied, and finally, as to the right to challenge
the regularity of assessment made, by recourse to proceedings in a higher Civil Court. The Act merely
declares the competence of the Government to make
•
K. T. Moopil
Nai11
v.
State of J(erala
Sinha C. ].
K. T. Moopil
Nair
v
State oj J(erala
Sinha C. ].
94
SUPREME COURT REPORTS
[1961]
a provisional assessment, and by virtue of s. 3 of the .
Madras Revenue Recovery Act, 1864, the land-holders
may be liable to pay the tax.