# STATE OF KERALA v. HAJI K. HAJJ K. KUTIY NAHA & ORS. ETC

- **Citation:** [1969] 1 S.C.R. 645
- **Court:** Supreme Court of India
- **Decided:** 1968-08-13
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-kerala-v-haji-k-hajj-k-kutiy-naha-ors-etc-4461
- **Pages:** 6

## Headnote

Kera/a Buildings Tax Act, 1961, s. 4 and Constitution of India, Art,
14-Tax on buildings levied· solely on basis of fioor area-Taxing statute
must not be inconsistent with Constitution or
violative of fundamental
rights-Lack of rational classification when results in discrimination.
Under s. 4 of the Kerala Buildings Tax Act, 1961, buildings construct.
C - M after the coming into force of the Act and having a floor area of one
thousand square feet or more were subjected to tax on a graduated scale.
The tax was levied on the basis of floor area only and no classification
was attempted.
The High Court in writ petitions filed by the present
respondents held the charge to be. invalid because of violation of the
equality clause of the Constitution. The State appealed.
HELD : (i) The law by which a tax is levied must not only be within
D
the competence of the legislature concerned but it must also not be inconsistent with any provision df the C.Onstitution.
The validity of a taxing
statute is open to question on the ground that it infringes the fundamental
rights. [648 B-C]
E
F
G
H
K. T. Moopil Naix v. State of Kera/a, [1961] 3 S.C.ll. 77 and Khandige
Sham Bhat v. Agricultural Income-tox Officer, [1963]
3
S.C.R.
809,
relied on.
(ii) In the application of the principles expounded by this Court for
derennining whether there has been denial of equal protection of the
laws, the Courts. in view of the inherent complexity of fiscal legislation
admit a larger discretion to the Legislature in the matter of classification,
so 'long as it adheres to 'the fundamental principles underlying the doctrine
of equality. The power of the legislature to classify is of 'wide range and
flexibility' so that it can adjust its system of taxation in all proper · and
·reasonable ways. [648 HJ
But when objects persons or transactions
treated by the imposition of a unifdrm tax,
for,. refusal to make a rational classification
result in denial of equality. [649 CJ
essentially
dissimilar are·
discrimination may result.
may itoolf in some cases
In enacting the Kerala Building Tax Act no attempt at any rational
classification has been made by the Legislature. The Legislature has not
taken into consideration in imposing tax the class to which a building
belongs, the nature of construction, the purpose for which it is used, its
situation, its capacity for profitable use'r and other relevant circumstances
which have a bearing on matters of taxation. They have adopted merely
the floor area of the building as the basis of tax irrespective of all other
considerations.
The High Court was therefore right in holding that the
charging section of the Act was violative of the equality clause of the
Constitution. [649 BJ
Shri Ram Krishna Dalmia v. Shri Justice S.R.
Tendo/kar &
Ors.
[1959] S.C.R. 279, referred to.
646
Sl,!PREME COURT REPORTS
[ 1969] I S.C.R.
New Ma11ek Chowk Spinning & W'·aving Mills Co. Ltd. v. M1111icipa/
A
Corporation of the City of Alrmedabad, (1967] 2 S.C.R. 679, applied.
[Question whether imposition of a tax only on buiJd:ngs constructed
after the coming into force of the Act and exempting build:ngs complcll!d
before that date would violate Art. 14 of the Constitution
left open.]
[650 AJ
CIVIL ApPJoLLATE JURISDICTION : Civil Appeals Nos. 1052,
1054 to 1058, 1060 to 1087, 1089 to 1095, 1097, 1100 to 1112,
1114 to 1118, 1120 to 1129, 1131and1133 to 1145 of 1968.
Appeals by special leave from the judgment and order, dated
July 7, 1966 of the Kerala High Court in Writ Appeals Nos. 35,
B
38 to 40, 43. 44, 46, 47, 57, 59 60 to 69, 71 to 77, 79 to 82,
c
84 to 86, 88, 89, 92 to 95, 97, 99, 102, 184 to 186, 190 to 195,
202, 217, 218, 222 to 224, 226, 227, 231 to 240, 242, 245, 247,
249 to 252, 257, 273, 274, 305 to 307, and 312 of 1965 respectively and Civil Appeals Nos. 1146 and 1147 of 1968.
Appeals by special leave from the judgment and order. dated
0
September 19, 1966 of the Kerala High Court in Writ Appeals
Nos. 42 and 246 of 1965.
B. R. L. Iyengar and A.G.

## Text

645
A
STATE OF KERALA
v.
HAJI K. HAJJ K. KUTIY NAHA & ORS. ETC.
August 13, 1968
B
(J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.]
Kera/a Buildings Tax Act, 1961, s. 4 and Constitution of India, Art,
14-Tax on buildings levied· solely on basis of fioor area-Taxing statute
must not be inconsistent with Constitution or
violative of fundamental
rights-Lack of rational classification when results in discrimination.
Under s. 4 of the Kerala Buildings Tax Act, 1961, buildings construct.
C - M after the coming into force of the Act and having a floor area of one
thousand square feet or more were subjected to tax on a graduated scale.
The tax was levied on the basis of floor area only and no classification
was attempted.
The High Court in writ petitions filed by the present
respondents held the charge to be. invalid because of violation of the
equality clause of the Constitution. The State appealed.
HELD : (i) The law by which a tax is levied must not only be within
D
the competence of the legislature concerned but it must also not be inconsistent with any provision df the C.Onstitution.
The validity of a taxing
statute is open to question on the ground that it infringes the fundamental
rights. [648 B-C]
E
F
G
H
K. T. Moopil Naix v. State of Kera/a, [1961] 3 S.C.ll. 77 and Khandige
Sham Bhat v. Agricultural Income-tox Officer, [1963]
3
S.C.R.
809,
relied on.
(ii) In the application of the principles expounded by this Court for
derennining whether there has been denial of equal protection of the
laws, the Courts. in view of the inherent complexity of fiscal legislation
admit a larger discretion to the Legislature in the matter of classification,
so 'long as it adheres to 'the fundamental principles underlying the doctrine
of equality. The power of the legislature to classify is of 'wide range and
flexibility' so that it can adjust its system of taxation in all proper · and
·reasonable ways. [648 HJ
But when objects persons or transactions
treated by the imposition of a unifdrm tax,
for,. refusal to make a rational classification
result in denial of equality. [649 CJ
essentially
dissimilar are·
discrimination may result.
may itoolf in some cases
In enacting the Kerala Building Tax Act no attempt at any rational
classification has been made by the Legislature. The Legislature has not
taken into consideration in imposing tax the class to which a building
belongs, the nature of construction, the purpose for which it is used, its
situation, its capacity for profitable use'r and other relevant circumstances
which have a bearing on matters of taxation. They have adopted merely
the floor area of the building as the basis of tax irrespective of all other
considerations.
The High Court was therefore right in holding that the
charging section of the Act was violative of the equality clause of the
Constitution. [649 BJ
Shri Ram Krishna Dalmia v. Shri Justice S.R.
Tendo/kar &
Ors.
[1959] S.C.R. 279, referred to.
646
Sl,!PREME COURT REPORTS
[ 1969] I S.C.R.
New Ma11ek Chowk Spinning & W'·aving Mills Co. Ltd. v. M1111icipa/
A
Corporation of the City of Alrmedabad, (1967] 2 S.C.R. 679, applied.
[Question whether imposition of a tax only on buiJd:ngs constructed
after the coming into force of the Act and exempting build:ngs complcll!d
before that date would violate Art. 14 of the Constitution
left open.]
[650 AJ
CIVIL ApPJoLLATE JURISDICTION : Civil Appeals Nos. 1052,
1054 to 1058, 1060 to 1087, 1089 to 1095, 1097, 1100 to 1112,
1114 to 1118, 1120 to 1129, 1131and1133 to 1145 of 1968.
Appeals by special leave from the judgment and order, dated
July 7, 1966 of the Kerala High Court in Writ Appeals Nos. 35,
B
38 to 40, 43. 44, 46, 47, 57, 59 60 to 69, 71 to 77, 79 to 82,
c
84 to 86, 88, 89, 92 to 95, 97, 99, 102, 184 to 186, 190 to 195,
202, 217, 218, 222 to 224, 226, 227, 231 to 240, 242, 245, 247,
249 to 252, 257, 273, 274, 305 to 307, and 312 of 1965 respectively and Civil Appeals Nos. 1146 and 1147 of 1968.
Appeals by special leave from the judgment and order. dated
0
September 19, 1966 of the Kerala High Court in Writ Appeals
Nos. 42 and 246 of 1965.
B. R. L. Iyengar and A.G. P11di.1:5ery, for the appellant (in all
.the appeals).
Sardar Bahadur. Vishnu Bahadur and Yougindra Khushalani,
for the respondent (in C.As. Nos. 1080 and 113 i o[ 1968).
fl. R. Gokhale and J. B. Dadachanji, for the respondent (in
C.As. Nos. I 094 and 1144 of 1968).
A. V. V. Nair, for the respondents Nos. 2 and 3 (in C.As.
Nos. 1053, 1112 and 1139 of 1968).
U/y Thomas, for the respondent (in C.As. Nos. 1056, 1087
and 1128 of 1968).
A. Sreedharan Nambiar, for the respondent (in C.As. Nos.
1067, 1075, 1091and1136 of 1968).
M. C. Chagla, J. B. Dadac/zanji and Thomas Val/apally for
intervener. (in C. A. No. 1144 of 1968).
The Judgment of the Court was delivered by
E
G
Shah, J,
This group of appeals arises out of an order
passed by the High Court of Kerala holding that
the
Kerala
Buildings Tax Act 19 of 1961 fa ultra vires the Legislature in that
it infringes the equality clause of the Constitution. The State of
H
Kerala has appealed against the decision with special leave granred
by this Court.
.
-
A
B
c
D
E
F
KERALA V. HAJI K. KUTTY (Shah, J.)
647
The material provisions of the Kerala Buildings Act, 1961,
may be briefly set out.
The Act extends to the whole of the
State of Kerala· s. 1(2), and shall be deemed to have come into
force with effect from March 2, 1961; s. 1 ( 3). An "asse.ssee" is
defined by s. 2(b) as meaning a person by whom buildin~ tax or
any other sum of money is payable under the. Act and mcludes
every person in respect of whom any proceedmg under the Act
has been taken for the assessment of building tax payable by him.
Section 2(d) defines "building" as meaning a house, out-house,
garage or any other structure or part thereof whether of masonry,
bricks, wood, metal, or other material, but does not include any
portable shelter or any shed const:J;ucted principally of mud,
bamboos, leaves, grass or thatch or a latrine which is not attached
to the main structure. "Floorage" is defined by s. 2 ( e) as meaning the area included in the floor of a building, and where a
building has more than one floor of a building, the aggregate area
included in all the floors together. By s. 3 buildings owned by
the State Government, the Central Government or any local authority and buildings used principally for religious, charitable or educational purposes or as factories or workshops are exempt fro_m
payment of tax under the Act. By s. 4 it is provided that there
shall be a charge to tax in respect of every building the construction of which is completed on or after March 2, 1961, and which
has a floor area of one thousand square feet or more, and that the
building tax shall be payable by the owner of the building. The
Schedule to the Act sets out the rates of building tax. Buildings
having a total floor area of less than 1,000 sq. ft. are not liable
to pay tax.
The Act, on a bare perusal, discloses some singular provisions.
The liability to tax in respect of buildings having total floor area
between 1,000 to 2,000 sq. ft. varies between Rs. 100 to Rs. 200·
for buildings with a floor area between 2,000 to 4,000 sq. ft. varie;
between Rs. 400 to Rs. 800; for buildings having total floor area
between 4,000 to 8,000 sq. ft. it varies between Rs. 1,200 to
Rs. 2,400; for buildings with total floor area of 8,000 to 12 000
sq .. ft: it varie~ between Rs. 3,200 to Rs. 4,800; and in resp~t of
,buildmgs having total floor area exceeding 12,000 sq. ft. a rate
G
of 50 ~!'.· per sq. foot i.e., Rs. 6,000 or more per annum. For
deterrommg the quantum of tax the sole test is the area of the
floor of the building.
The Act applies to the entire State of
Kerala, and whether the building is situate in a large industrial
town or in an insignificant village, the rate of tax is d"termined
H
by the floor area : it does not depend upon the purpose for which
the building is used, the nature of the structure, the town and
locality in which the building is situate, the economic rent which
may be obtained from the building, the cost of the buildincr and
other related circumstances which may appropriately be take~ into
648
SUPREME COURT REPORTS
(1969) I 5.C.R.
consideration in any rational system of taxation of building. Under
the Seventh Schedule List II Entry 49, the State Legislature has
the power to legislate for levying taxes on lands and buildings.
But that power cannot be used arbitrarily and in a manner inconsistent with the fundamental rights
guaranteed to
the
people
under the Constitution. No tax may be levied or collected under
our constitutional set-up except by authority of law :
and the
law must not only be within the legislative competence of the
State, but it must also not be inconsistent with any provision o[
the Constitution.
It has been frequently said by this Court that
the validity of a taxing statute is open to question on the ground
that it infringes fundamental rights.
In K. T. Moopil Nair v.
Stale oj Kera/a,(') Sinha, C.J., delivering the judgment of the
majority observed at p. 89 :
"Article 265 imposes a
limitation on the
taxing
power of the State in so far as it provides thaL the State
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 has to be done by authority of law,
which must
mean valid law. In order that the law may 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 of the
Constitution.
One of such conditions
envisaged
by
Art. 13 (2) is that the Legislature shall not make any
law which takes away or abridges 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 dispu1cd that
if the Act infringes the provisions of Art. 14 of 1he
Constitution. it must be struck down as unconstitutional."
Similar observations were made in Khandige Sham Bhat v. Agric11/-
1ural Income-tax Officer.(')
The principles which have been expounded by this Court in
determining whether there has heen denial of equal protection Clf
the laws are also well settled : see Shri Ram Krishna Dalmia v.
Shri Justice S. R. Tendolkar and Ors.('). It is true that in the
application of the principles, the Courts, in view of the inherent
complexity of fiscal legislation admit a larger discretion to the
Legislature in the matter of classification. so long as it adheres
to the fundamental principles underlying the doctrine of equality.
·The power of the Legislature to classify is, it is said, of ''wide
...
-
(!) [1961) J S.C.R. 77.
(~) [1%JJ 3 S.C.R. 809.
(3) [1959] S.C.R. 279
A
B
c
D
E
F
G
H
·' '
\
KERALA V. HAJI K. KUTTY (Shah, J.)
649
A
range and flexibility" so that it can adjust its system of taxatio~
in all proper and reasonable ways Khand1ge Sham Bhat v. Agrzcultuml Income-tax Officer(').
B
c
D
E
F
G
H
But in enacting the Kerala Building Tali: Act, no attempt at
any rational classification is made by the Le_gislature .. As ~lrea~y
observed, the Legislature has not taken mto consideratton m .
imposing tax the class to which a. bu~ding belon~s, t~e. n~ture .of
construction, the purpose for which it is used, its situation, .1ts
capacity for profitable user and other relevant circumstances which
have a bearing on matters of taxation. ~ey have ll;dopted mere!~
the floor area of the building as the basis of tax irrespective of
all other considerations.
Where objects, persons or transactions
essentially dissinlilar are treated by the inlposition of a uniform
tax, discrimination may result, for, in our view, refusal to make a
rational classification may itself in some cases operate as denial
of equality.
This Court in a recent judgment has decided that
the levy of tax in exercise of the power under Entry 49 List II of
the Seventh Schedule in respect of factory buildings in a municipal
area based on floor area was illegal : New Manek Chowk Spinning and Weaving Mills Co. Ltd. v. Municipal Corporation of the
Ci1y of Ahmedabad( 2 ). The Court held in that case that the
method of adopting a flat rate for a floor area for determining the
annual value adopted by the Corporation of Ahmedabad in exercise of the powers conferred upon it by the Bombay Provincial
Municipal Corporation Act 49 of 1949 was against the provisions
of the Act and the Rules made thereunder as well as all recognized principles of valuation for the purpose of taxation. If levy
of tax in a municipal district based on floor area in respect of a
factory building violates Art. 14 of the Constitution when the
tax is sought to be levied by the Municipal Corporation, we see
no reason to uphold the tax imposed under the impugned Act
when the State, in exercise of legislative authority conferred by
Entry 49 List II Sch. VII, imposes liability to tax buildings solely
on floor area. The vice of the Act in the present case is more
pronounced than it was in New Manek Chowk Spinning & Weaving Mills case( 2 ). In that case the Rules under which the tax
was sought to be levied on the basis of floor area were restricted
i? !heir operation to factory buildings within
the
Corporation
lnmts of Ahmedabad, whereas Act 19 of 1961 which is challenged in the present case applies to the whole State of Kerala in
respect of buildings completed on or after March 2, 1961, whatever may be the nature or class of the building, the use to which
it is put, materials used in its construction and the extent of profitable i;ser to which the building may be put, its. cost and its
economic rental. It is unnecessary in the circumstances to consider whether imposition of a tax only on buildings constructed
(1) [1963] 3 S.C.R. 809.
(2) [1967] 2 S.C.R. 679.
__,_,
650
SUPREME COURT REPORTS
[1969] J SCR,
after March 2, 1961, and exempting buildings complclcd befor~
that dale may not violate Art, 14 of the Constituiton,
The High Court was, in our judgment, right in holding cha:
the charging section of the Act is violative of the equality clause of
the Constitution,
A
The appeals therefore fail and arc
dismissed
with
costs.
B
Parties appearing in different groups of appeals through the same
Advocate in this Court will be entitled to one !tearing fee,
G.C.
A ppea/s dismissed,
I