Appeals Nos 1052 1054 to 1058 1060 to 1087 1089 to 1095 1097 1100 to 1112 1114 to 1118 1120 to 1129 1131 and 1133 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 38 to 40 43 44 46 47 57 59 60 to 69 71 to 77 79 to 82 84 to 86 88 8992 to 95 97 99 102 184 to 186 190 to 195 202 217 218 222 to 224 226 227 231 to 240 242 245247 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 September 19 1966 of the Kerala High Court in Writ Appeals Nos
42 and 246 of 1965
BRL lyengar and A G Pudissery for the appellant in all the appeals
Sardar Bahadur Vishnu Bahadur and yougindra Khushalani for the respondent in CAs
1080 and 1137 of 1968
HR Gokhale and J B Dadachanji for the respondent in CAs
Nos 1094 and 1144 of 1968
AVV Nair for the respondents Nos 2 and 3 in CAs
1053 1112 and 1139 of 1968
Lily Thomas for the respondent in CAs
1056 1087 and 1128 of 1968 A Sreedharan Nambiar for the respondent in CAs
Nos 1067 1075 1091 and 1136 of 1968
MC Chagla 1
B Dadachanji and Thomas Vallapally for intervener in CA No 1144 of 1968
 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 is ultra
vires the Legislature in that it infringes the equality clause of the Constitution
The State Kerala has appealed against the decision With special leave granted by this Court
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 section 1 2 and shall be deemed to have come into force with effect from March 2 1961 section 13
An assessee is defined by section 2b as meaning a person by whom building tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceeding under the Act has been taken for the assessment of building tax payable by him
Section 2d 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 constructed principally of mud bamboos leaves grass or thatch or a latrine which is not attached to the main structure
Floorage is defined by section 2e 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 section 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 from payment of tax under the Act
By section 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 1000 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 1000 to 2000 sq
ft varies between Rs 100 to Rs 200 for buildings with a floor area between 2000 to 4000 sq
ft varies between Rs 400 to Rs 800 for buildings having total floor area between 4000 to 8000 sq
it varies between Rs 1200 to Rs 2400 for buildings with total floor area of 8000 to 12000 sq
it varies between Rs 3200 to Rs 4800 and in respect of buildings having total floor area exceeding 12000 sq
a rate of 50 np
per sq
foot ie Rs 6000 or more per annum
For determining 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 determined 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 winch may be obtained from the building the cost of the building and other related circumstances which may appropriately be taken into 648 consideration in any rational system of taxation of building
Under the Seventh Schedule List H 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 of 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 KT Moopil Nair V State of Kerala1 Sinha CJ 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 that 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 article 13 of the Constitution
One of such conditions envisaged by article 132 is that the Legislature shall not make an  law which takes away or abridges the equality clause in article 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 article 14 of the Constitution
it must be struck down as unconstitutional
 Similar observations were made in Khandige Sham Bhat V Agricultural Income tax Officer
2 The principles which have been expounded by this Court in determining whether there has been denial of equal protection of the laws are also well settled see Shri Ram Krishna Dalmia V Shri Justice SR Tendolkar and Ors3
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 1  2  3  649 range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways Khandige Sham Bhat V Agricultural Income tax Officer1
But in enacting the Kerala Building Tax Act no attempt at any rational classification is made by the Legislature
As already observed 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 user and other relevant circumstances which have a beating on matters of taxation
They have adopted merely the floor area of the building as the basis of tax irrespective of all other considerations
Where objects persons or transactions essentially dissimilar are treated by the imposition 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 City of Ahmedabad2
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 article 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 Case2
In that case the Rules under which the tax was sought to be levied on the basis of floor area were restricted in their operation to factory buildings within the Corporation limits 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 user 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  2 1967 2 SCR 679
650 after March 2 1961 and exempting buildings completed before that date may not violate article 14 of the Constituiton
The High Court was in our judgment fight in holding that the charging section of the Act is violative of the equality clause of the Constitution
The appeals therefore fail and are dismissed with costs
Parties appearing in different groups of appeals through the same Advocate in tiffs Court will be entitled to one hearing fee
GC Appeals dismissed


Summary:
Under section 4 of the Kerala Buildings Tax Act 1961 buildings constructed 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 the competence of the legislature concerned but it must also not be inconsistent with any provision of the Constitution
The validity of a taxing statute is open to question on the ground that it infringes the fundamental rights
648 B C KT Moopil Nair vs State of Kerala  and Khandige Sham Bhat vs Agricultural Income tax Officer   relied on
ii In the application of the principles expounded by this Court for determining 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 k 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 H But when objects persons or transactions essentially dissimilar are treated by the imposition of a uniform tax discrimination may result for refusal to make a rational classification may itself in some cases result in denial of equality
649 C 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 user 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 B Shri Ram Krishna Dalmia vs Shri Justice SR Tendolker  Ors   referred to
646 New Manek Chowk Spinning  Weaving Mills Co Ltd V Municipal Corporation othe City of Ahmedabad   applied
Question whether imposition of a tax only on buildings constructed after the coming into force of the Act and the exempting building completed before that date would violate article 14 of the constitution left open 650 A