LexSTATE OF KERALA versus HAJI K. HAJI K. KUTTY NAHA & ORS. ETC.
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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 incon- sistent 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 respec- tively 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).
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