LexTHE AMALGAMATED TEA ESTATE CO. LTD. ETC. versus STATE OF KERALA
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820
THE AMALGAMA'MlD TEA ESTATE CO. LTD. ETC.
A
v.
STATE OF KERALA
April 2, 1974
[A. N. RAIY, C.J., P. JAGANMOllAN REDDY, s. N. DWJVEDI,
P. K. GOSWAMI AND R. S. SARICARIA, 1J,J
Constit11tion of India. A.rt. 14-Classificati"n test if inflexible and doctrlnairi.
Kera/a Agric11/t11ral Income Tax Act, 1950-lf imposition of graduated .ta.T
betwttll don1t.stic and foreign companies violates Art. 14.
The petitioners, two foreign companies, had been assessed
to agricultural
income tax under the Kerala Agricultural Income-tax Act, 1950 ,M amended by
the Amendment Act of 1970. ·n1e Act has fixed a graJ\1ated scaJe on 3Ji:ri:ul-
htral income tax to a minimum of 65% on domestic companies anJ a flat rate:
of 75% of. the total incorne on foreign companies. The petitioner.1 contended
that this discrimination between a domestic company and a foreign company was
violative of Art. 14 of the Constitution because the classification was not b~sed
on any intelligible differentia and the differentia. if any, had no rational relation
to the purpose sought to be achieved by the taxing statute .and that it treats as
unequal, companies which are equally circumstanced.
Dismissing the petitions,
HELD : (I) The impugned provisions of the Amending Act, 1970 were not
violative of Art. 14.
The impuJ!;ned legislation, in order to get tht: green light
from Art 141 should satisfy the classification test evolved by this Court namely
(I) the classification should be passed on an intelligible differenlia and (2) the
differentia should bear a rational relation to the purpOse of the
legislation.
[822 F]
(2) The classification test is, however. not inflexible and doctFinuire.
Jt
gives do.1e regard to the complex necessities and intricate -problems of government.
As revenue is the first necessity of the State and as· taxes arc l'aised for various
purposes and bv an adiustment of diverse elements, the Court grants the State
greater choice of classification in the field of taxation than in other spheres.
[822 G]
Kl1andi1:e Sham Bhat \'. Auricu/tura/ /11conie-tax Officer, 1\.l.R. 1963 S.C.
591 and Kasargod Ravi Ver1na Rajall v. Union of /11dia [19691 3 S.C.R. 827,
referred to.
(3) On a challenge to a statute on the ground of Art. 14 the court would
raise a presumtion in_ favour of its constitutionality. Consequently one
who
challenged the salute h!ars th: burden of eitab'.ishing that the statu~. is clearly'
violative of Art. 14. [823 BJ
Cl1ara11jl1 Lal v. Union of India, [1950] S.C.R. 869 at p. 879 per Fazal Ali
J. and State of West Bengal v. Anwar Ali Sarkar, [1952] S.C.R. 284 at p. 303.
referred to.
( 4) It is not possible to hold on the meagre facts pre!iented before the court
that domestic companies and foreign companies carrying on agriclllture in the
S'tate of Kerala are equaly circumstanced. [823 0]
D. P. Jo.~lii v. State of 1'1Cldlir11 l}lwrat, [1955], 1 S.C.R .. 1215, at p. 1228,
Hu11x. Muller of Nurenburg v. Super1111e11dent Pre.ndencJ. Jail, Calcutla, [1955]
1 S.C.R. 1284, K. T. Moopil Nair v. State of Kerala t1961] 3 S.C,R. 77 and
~late of Kerala, v. Haji K. K11tty Nalw, A.l.R. 1959 S.C. 378, referred to.
ORIGINAL JURISDICTION: Writ Petitions Nos. 2 and 9 of 1971.
Under Article 32 of the Constitution for the enforcement of funda-
mental rights.
B
c
F
G
H
AMAL. TEA ESTATE\', KER.ALA (Dwivtdi, /.)
821
A
G. B. Pai, 0. C. Mathur, D. N. Misra, J. B. DaJaclw11ji and
Rm·irider Narain, for the petitioners
L. N. Misra, Solicitor General of India and A. G. P11dissary, for
the respondent.
The Judgment of the Court was delivered by
B
Dw1vE01, J.-Thc two petitioners have been assessed to Agricul-
tural Income-tax by the State of Kerala under the Agricultural Income-
ta• Act, 1950 (hereinafter called the Act) as amended by the Agri-
cultural Income-tax (Amendment) Act, 1970. The assessment
is
made at the rate of 75 per cent of their total income. They challenge
the assessment on the ground that s. 2(hh) and (kk) and clauses (2) .
and \3) of Pan I to the Schedule of the Kcrala Agricultural Jncome-
C
tax (Amendment) Act,
1970 are violative
of Art.
14
o{
the
Constitution.
D
E
f
G
H
it will facilitate appreciation of the facts and the constitutional
qu .... ·stlon in this case if the taxing provisions are noticed at this stage.
The Agricultural Income-tax Act was passed in 1950. In the
beginning, the Act was known as the Travancorc-Cochin Agricultural
Income-tax Act.
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