# TWYFORD TEA CO. LTD. AND ANOTHER v. THE STATE OF KERALA AND ANOTHER - **Citation:** [1970] 3 S.C.R. 383 - **Court:** Supreme Court of India - **Decided:** 1970-01-15 - **Bench:** M. Hidayatullah, J. M. Shelat, C. A. Vaidialingam, A. N. Grover, A. N. Ray - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/twyford-tea-co-ltd-and-another-v-the-state-of-kerala-and-another-5013 - **Pages:** 26 ## Headnote Kerala Plantation (Additional Tax) Act, 1960 (Ac! 17 of 1960) and the Kerala Plantation (Additional Tax) Amendment Act 1961 (Act 19 of 1967) ,s. 3-Con.rtitution aJ India, Art. 14--Charge of unlfotm tax from plantauons alleged to be differently situated-Validity of tax-C~mpetency <>f Kerala legislature to levy land tax in absence of enabling entries in · S.venth Schedule, Constitution of India. In the Kerala Plantation (Additional Tax) Act 1960 (Act 17 of 1960) there is a levy of additional tax on plantations. "Plantations" mean land used for growing cocoanut, Arecanut, Rubber, Coffee, Tea, Cardamom and Pepper. Under s .. 3 of the Act, for each financial year a plantation tax additional to the basic tax charged on land tax under the Land Tax Act 1955 is payable at the rate mentioned in Schedule I of the Act, the said rate being Rs. 8 per acre. Plantations of 5 acres or below held by a person do not attract tax. For the purpose of finding oot the extent ot the plantation in acres held by a person a method of , calculation is laid down in Schedule II. Act 17 of 1960 was amended by the Kerala Plantation (Additional Tax) Amendment Act 1967 (Act. 19 of 1%7). By the amending Act the word 'additional' is removed from all places and it is declared that the tax is additional to land revenue or any tax in lieu thereof, if any, payable in respect of such land. The unit of assessment is charged from acre to hectare, and the rate of tax in ·Schedule I is raised to Rs. 50/· per hectare. The tax is payable in respect of plantations of two hectares or· more with an exemption ior the lirst hectare. According to the new Schedule II the extent of the plantation for the purpose of tax in the case Of cocoanut, arecanut, rubber, coffee and pepper plantations is arrived at by dividing the total number of trees, plants or vines standing thereon by a number, specified in each case. In the case of tea and cardamom the extent of the plantation is the extent of lands on which these plants are grown and have begun to yield crops. The petitioner cOmpany was incorporated in India and the majority of its share-holders were Indians. It owned a tea estate in the Kuttikenam area .in the Peermade Hills in Kerala State. The company paid without protest the additional tax levied on plantation by Act 17 of 1960. When the rate became heavier as a result of th'l amendments made by Act 19 of 1967 the company field the present petitions under Art 32 of the Const:tution. The challenge was based mainly on Art. 14 of the Constiut· lion. It was urged that there were differences of 'fertility and rainfall in the different areas where the plantations were situated. Fiqurcs compiled by the Tea Board. were submitted to show the difference in yield between different estates. Relying on Moopi/ Nair'•<:ase it was argued that the uniform tax ·on·unequals resulted in discrimination (a) as between the tea plantations themselves and .(b) as between f Kerala legislature to levy land tax in absence of enabling entries in · S.venth Schedule, Constitution of India. In the Kerala Plantation (Additional Tax) Act 1960 (Act 17 of 1960) there is a levy of additional tax on plantations. "Plantations" mean land used for growing cocoanut, Arecanut, Rubber, Coffee, Tea, Cardamom and Pepper. Under s .. 3 of the Act, for each financial year a plantation tax additional to the basic tax charged on land tax under the Land Tax Act 1955 is payable at the rate mentioned in Schedule I of the Act, the said rate being Rs. 8 per acre. Plantations of 5 acres or below held by a person do not attract tax. For the purpose of finding oot the extent ot the plantation in acres held by a person a method of , calculation is laid down in Schedule II. Act 17 of 1960 was amended by the Kerala Plantation (Additional Tax) Amendment Act 1967 (Act. 19 of 1%7). By the amending Act the word 'additional' is removed from all places and it is declared that the tax is additional to land revenue or any tax in lieu thereof, if any, payable in respect of such land. The unit of assessment is charged from acre to hectare, and the rate of tax in ·Schedule I is raised to Rs. 50/· per hectare. The tax is payable in respect of plantations of two hectares or· more with an exemption ior the lirst hectare. According to the new Schedule II the extent of the plantation for the purpose of tax in the case Of cocoanut, arecanut, rubber, coffee and pepper plantations is arrived at by dividing the total number of trees, plants or vines standing thereon by a number, specified in each case. In the case of tea and cardamom the extent of the plantation is the extent of lands on which these plants are grown and have begun to yield crops. The petitioner cOmpany was incorporated in India and the majority of its share-holders were Indians. It owned a tea estate in the Kuttikenam area .in the Peermade Hills in Kerala State. The company paid without protest the additional tax levied on plantation by Act 17 of 1960. When the rate became heavier as a result of th'l amendments made by Act 19 of 1967 the company field the present petitions under Art 32 of the Const:tution. The challenge was based mainly on Art. 14 of the Constiut· lion. It was urged that there were differences of 'fertility and rainfall in the different areas where the plantations were situated. Fiqurcs compiled by the Tea Board. were submitted to show the difference in yield between different estates. Relying on Moopi/ Nair'•<:ase it was argued that the uniform tax ·on·unequals resulted in discrimination (a) as between the tea plantations themselves and .(b) as between se land tax was therefore no longer open to dispute. Per Shela! and Grover, JJ. (dissenting) .--The petitions must be allowed. Like MOOPil Nair's case the present case also was one where inequality emerged as a result of imposing an ad hoc tax uniformly levied without making any rational or intelligible classification. There is no indication in the Act and none was sought to be shown as to how and on what basis the uniform rate of Rs. 50 per hectare was fixed and whether it had any re!ference to the productive capacity of the lands. [406 D-FJ . As regards tea plantations, the tax is uniformly levied merely on the footing of the land being used for growing tea, witiJsut any regard to its potentiality, situation, the kind of tea which can s,ititably be grown at a particular place, its geographical and other features etc. No doubt, the State in exercise. of the taxing power can select persons and objects for taxation but if it is found that within the range" of that selection the law operates unequally by reaJ;on either of classification or its absence, such a provision would be hit by the equality clause of Art. 14. [408 DJ Even among the selected plantations inequality a.s a result of uniformity of tax must result because it is possible that the user of the land for one specified purpose may give a better and a more valuable yield than the user of another land though situated in the same area for another specified purpose. This had happened in the case of tea plantation with which alone the present petitions were concerned. Therefore to the ex.tent that Act 17 of 1960 as amended by Act 19 of 1967 imposes the tax on holdings of tea plantations, it is violative of Art. 14 and therefore void. i408 D-F] Moopil Nair's case applied. Case-Jaw referred to. ORIGINAL JURISDICTION: Writ Petitions Nos. 135-137 of 196se this tax and even if it did have the competence it has followed a wrong method in im- -posin11: . addiiional land revenue without effecting proper settle- '(1) (1961) 3 S.C.R. 77. B c D E F G H A B c D E F G H TWYFORD TEA co. v. KERALA (Hidayatul/ah, C.J.) 389 menL The next contention is that the Act is discriminatory in that it takes no account of differences in situation, fertility and yield between the plantations belonging to the same category. Lastly it is contended that it is discriminatory inasmuch as it seeks to treat plantations of different kinds as if they were equal in all respects by reducing them to a common measure of hectares when it is not possible to do so regard being had to the different incomes derived from th.~se plantations. We shall take up these questions one by one. The first question is of the competence of the State Legislature. There is no specific entry in the legislative Lists, Nos. 2 and 3 in the Seventh Schedule to the Constitution. The Land Tax Act 1955, as amended by the Travancore-Ccchin Land T;ix (Amendment) Act, X of 1957, was declared unconstitutional in its operative sections in K. T. Moopi/ Nair's( 1 ) case. Immediately afterwards the Kerala Land Tax Act, 196 l was passed following an Ordinance and that Act is now included in the 9th Schedule to the Cc~titution at No. 38 and receives the protection of Art. 31-B. The competency to impose land tax thus is no longer open to dispute. The present Act is challenged on the same lines as the former Act and the argument is rested upon the principles accepted in K. T. Moopil Nair's(') case. It is, therefore, necessary to recall what was decided there. Under the Land Tax Act, 1955 all lainds of whatever description and · held under whatever tenure were to be charged and levied a uniform tax per acre. known as· the basic tax. Section 7 of the Act, however, conferred a power on Government to exempt wholly or in part any land. This Court considered the tax to be discriminatory because it paid no heed to quality or productive capacity of land and the tax was also Jield to be confiscatory since owners of unproductive land were liable to be eliminated by slow stages. The power of exemption was also considered unreasonable because it enabled Government to pick and choose lands arbitrarily for grnnt of exemption. The Jack of classification was considered to cr~at~ inequality. Sarkar, J. who dissented held that there was an attempt at classification according to areas, and the tax was levied because land in the State was held. and not because of its productivity. In dealing with this case the arguments have been moulded round the observations in that case. In support of his contention that yield of tea varies from estate to estate and district to district (of which figures are already quoted in the petition) The Tea Statistics (1967-68) compiled by the Tea Board of India were also cited. It is hardly necessary to refer to the findings of the Tea Board because it may be assumed without discu~sion that there are differences. It may also be conceded that the uniform tax falls (1) [t961! 3 S.C.R. 77. L7Sup./70-t0 390 SUPREME COURT REPORTS [1970] 3 S.C.R. more heavily on some plantations than on others because the profits are widely discrepant. But does that involve a discrimination? If the answer be in the affirmative hardly. any tax direct or indirect would ·escape the same censure for taxes touch purses of different lengths and the very uniformity of the tax and its equal treatment would become its undoing. The rich and the poor pay the same taxes irrespective of their incomes in many i11stances such as the sales-tax and the profession tax etc. It may be remembered that in K. T. Moopil Nair's(') case the majority accepted the observations of S. R. Das C.J. in Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar and others(') at page 299 to the following effect : "A statute may not make any classification of the persons or things for the purpose of a]Jplying its provisions but may leave it to the discretion of the Government to select and classify persons or things to whom its provisions ail! to apply. In determining the question of the validity 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 the exercise of discretion by the Government in the matter of the selection· or classification. After such scrutiny the Court will strike down the statute if it does not lay down any principle or policy for ~uiding 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." We have always to see what the statute does to make for equality of tr.~atment. B c D It F The contention here is that there is a uniform rate of tax per G hectare which every owner of a named plantation has to pay irrespective of the extent or value of the produce and, therefore, the law imposes a uniform tax burden on unequals. In our opinit fr.eedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivab_le basis which might support it.'' As Rcttschaefer said in his Constitutional Law at p. 668 : '"A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal pro1ec1ion even when both are subject to the same rate of tax. The decisions of the Supreme Court in this field have permitted a State Legislature to exercise an exlremely wide discretion in classifying property for tax purposes so long as ii refrained from clear and hostile discrimination against particular persons or classes." (Emphasis added). The burden is on a person complaining of discrimination. The burden is provinl! not possible 'inequality' but hostile "unequal" treatment. This is more so when uniform taxes are levied. It is (1) \19631 IS.C.R. 404. (2) (1940) 309 U.S. 83;84 L.Ed. 590. 394 SUPREME COURT REPORTS [1970]"3 S.C.R not proved to us how the different plantations can be said to be 'hostilely or unequally' treated. A uniform wheel tax on cars does not take into account the value of the car, the mileage it runs, or in the case of taxis, the profits it makes and the miles per gallon it delivers. An Ambassador taxi and a Fiat taxi give dilierent outturns in terms of money and mileage. Cinemas pay the. same show fee. We do not take a doctrinaire view of equality. The Legislature has obviously thought of equalising the tax through a method which is inherent in the tax scheme. Nothing has been said to show that there is inequality much less 'hostile treatment'. All that is said is that the state must demonstrate equality. That is not the approach. At this rate nothing can ever be proved to be equal to another. There is no basis even for counting one tree as equal to another. Even in a thirty years' settlement. the picture may change the very next year for some reason but the tax as laid continues. Siwai income is brought to land ievenue on the basis of number of tre.~s but not on the basis of the produce. This is worked out on an average income per tree and not on the basis of the yield of any particular tree er trees. What is meant by th.~ power to classify without unreasonably discriminating between persons similarly situated, has been stated in several other cases of this Court. The same applies when the legislature reasonably applies a uniform rate after equalising matters between diversely situated i>~rsons. Simply stated the Jaw is this: Differences in treatment must be capable c~ being reasonably explained in th.: iight of the object for ~hich the particular legislation is undertaken. This must be based on some reasonable distinction between the cases differentially treated. When differential treatment is not reasonably explained and justified the treatment is discriminatory. If different subjects are equally treated there must be some basis on which the differences have been equalised otherwise discrimination will be found. To be able to succeed in the charge of discrimination. a person must establish conclusively that persons equally circumstanced have been treated unequally and vice versa. However. in Khandige Sham Bhat and others v. The Agric11/t11ral Income Tax Officer. at page 817 it was observed : A B c D E F G "If there is equality and uniformity within each group. the Jaw will not be condemned as discriminative though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others. so long as they are not singled out for special treatment. Taxation Jaw is not an excepHI tion to this doctrine: vide Purshottam Govindji Ha/ai --------- (I) [1963] J S.C.R. 800. .... B c D E r G H TWYFORD TEA co. v. KERALA (She/at, I.) 395 v. Shree B. N. Desai, Additional Collector of Bombay(') and Kunnathat Thatunni Moopi/ Nair v. State of Kera/a('). But in the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to. the Legislature in the matter of classification, so long it adheres to the fundamental principl.es underlying the said doctrine. 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." Taking these principles into consideration we are satisfied that the law does not single out any particular plantation for hostile or unequal treatment. In fact it is nowhere proved in this case that tea has been discriminated against deliberately as between differ· ent tea gardens, it is not possible to say that the differences in the yield is entirely due to natural circumstances and no other cause. It is, therefore, not possible to say that there is discrimination not· withstanding the uniform rate for each plantation based on the actual crop yielding area. The petitions must therefore fail. . They will be dismissed with costs. Shelat, J. Petitioner No. l, a public limited company, of which the second petitioner is a shareholder, owns the Twyford Estate situate in Kuttikanam area in K.~rala State. The estate is a tea plantation admeasuring 1006 hectares (248(J acres). out of which 491 hectares (1214 acres) have tea plants. In these petitions, the petitioners challenge the constitutional validity of the Kerala Plantations (Additional Tax) Act, XVII of I 960, as amended by the Kerala Plantations (Additional Tax) Amendment Act, XIX of 1967 (hereinafter reffered to as the Act). The challenge is on the ground that the Act violates the petitioners' guaranteed rights under Arts. 14. 19 (1 )( f) and I g) and 31 ( 1 ) . Before we set out the facts and the cantention; based thereon, it is necessary to recite briefly the hi!)lory of the legislation penaining to land taxation in the State. In 1955, the Legislature of the .ln State of Travancore· Cochin passed the Travancore-Cochfu. Land Tax Act, XV of \ 955 which by ss. 4 and 5 imposed in respect of all lands, of whatever description and tenure, a uniform rate to be called the basic tax at the rate of 3 pies per cent per amnum in lieu of any existing tax in respect of the said land. With the formation of the present State of Kerala under the reorganisation of States, the (I) (1955] 2 S.C.R. 887. (2) [1961] J S.C.R. 77. 396 SUPREME COURT REPORTS (1970] 3 S.C.R. State Legislature passed the Travancore-Cochin Land Tax (Amendment) Act, X of 1957 by which the expressions ··the State cf Kerala" and "the Land Tax Act'" were substituted for the ·words "the State of Travancore-Cochin" and "the TravancoreCochin Land Tax Act" respectively. The amendment Act also addecl a new section, s. SA, which imer a/ia, provided for provisional assessment of the basic tax for lands so far not surveyed. The constitutional validity of Act XV of I 955. as amended by Acr X of I 957. was challenged in this Court in Moopil Nair v. The Sta:e of Kera/a(1). The Act was struck down by this Court, inter a/ia, on the ground of it> being violative of Arts. 1-l and 19 ( 1) (f). The judgment of this Court strikin~ down the \ct was pronounced on December 9. 1960. Befor.e the case of Moopil Nair(') was decided. the Kerala Legi;lature passed the impugned Act. XVII of 1960. which on receivin.g the Governor's assent. was published in the Gazette Extraordinary of August 24. 1960. Section 2!6) of the Act defineJ a "plantation" to mean land used for growing one or more of the seven categories of trees or plants set out therein. categC'r~ 5 ther.eci being tea piants. Thus. the land used for growing a11y trees, pbnts or corps other than these seven categories is not suhject to the additional tax under the Act. Section 3 provides that there ~hall be charged. in respeot of the lands comprisd in plantations held by a person. an additional tax or plantation tax at the rate specified in Sch. I and the person holding such plantation shall te liab~e to pay the plantation tax. Sch. I to the Act lays down that the additional tax would not be payable if the agizregate extent of the plantation held by a person is below 5 acres. But if it is 5 acres or more. the first two acres thereof would be exempt from· the tax. and the remainder would be chargeable at the rate of Rs. 8 - per acre. Suh-s. 4 of s. 3 provides that for purposes of the assessment of plantation tax payable by a person under this Act. the extent of plantation held by him shall be determined in the manner specified in Sch. II. Section 3 ( 5) declares that the tax char~ed under this section shall be in addition to the basic tax payable under the Land Tax Act. 1955. Sections 4 and 5 deal with the returns relating to the plantations. the determination of the extent of plantation and the assessment of the tax. The rest of the provisions of the Act provide for such subjects as the provisional assessn1ent. notice of den1and. appeal and revision against asscssmen! orders. recovery of the tax. refund etc. Sch. II provides that the extent of plantation held bv a person shall be deemed to be the aggregate of the following expressed in acres. namely :- ( i) thf.! quotient obtained by dividing the total number of bearin_g cocoanut trees standing on all lands held by him by 85: ft9611 J S.C.R.