15 January 1970
Supreme Court


Case number: Writ Petition (Civil) 135 of 1969






DATE OF JUDGMENT: 15/01/1970


CITATION:  1970 AIR 1133            1970 SCR  (3) 383  1969 SCC  (1) 633  CITATOR INFO :  D          1972 SC 828  (20,25)  R          1972 SC 845  (15)

ACT: Kerala  Plantation  (Additional Tax) Act, 1960  (Act  17  of 1960)  and the Kerala Plantation  (Additional  Tax)Amendment I   Act  1967 (Act 19 of 1967),s. 3-Constitution  of  India, Art.l4-Charge of uniform tax from plantations  alleged to be defferently  situated-Validity of tax-Competency  of  Kerala legislature to levy land tax in absence of enabling  entries in  Seventh Schedule, Constitution of India.

HEADNOTE: 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 out the extent of  the;  Plantation  in acres held by a person a method of calculation is laid  down in Schedule 11.  Act 17 of 1960 was -amended by the Kerala Plantation (AdditionalTax) Amendment Act  1967 (Act of 1967).  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. 501- per  hectare.   The tax is payable in respect of plantations of two hectares  or more with an exemption for the first 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 the amendments  made. by  Act 19 of 1967 the company field the  present  petitions under Art. 32 of the Constitution.  The challenge was  based mainly  on Art. 14 of the Constitution.  It was  urged  that there  were  differences of fertility and  rainfall  in  the different   areas  where  the  plantations  were   situated. Figures  cornpiled by the Tea Board were submitted  to  show the difference in yield between different estates.   Relying on Moopil Nair’s case it was argued that the uniform tax  on unequals  resulted in discrimination (a) as between the  tea plantations themselves and (b) as between different kinds of plantations.   The competence of the Kerala  Legislature  to levy a land tax was also challenged. 384 HELD:  Per  Hidayatullah, C.J., and  Vaidialingam  and  Ray, JJ.--The Petitions must be dismissed. (i)  The  legislature  has  a wide range  of  selection  and freedom in appraisal not only in the objects of taxation and the manner of taxation but also in the determination of  the rate  or rates applicable.  If production were always to  be taken  into account there will have to be a  settlement  for every year and the tax will become a kind of income-tax. The  burden  of proving discrimination is always  heavy  and heavier  still when a taxing statute is under  attack..  The burden is on the person complaining of discrimination.   The burden  is  proving not possible  ’inequality’  but  hostile ’unequal’ treatment.  This is more so when uniform taxes are levied.  The State cannot be asked to demonstrate equality. Simply stated the law is this : Difference in treatment must be capable of being reasonably explained in the light of the object  for which 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  a  charge  of discrimination,  a person must" establish conclusively  that persons  equally circumstanced have been  treated  unequally and vice versa. [393 C-D, H; 394 E-G] (ii) Applying  the above. principles the impugned  law  does not  single  out any particular plantation  for  hostile  or unequal  treatment.  The Legislature thinks that Rs. 50  per hectare  in the case of cardamom and tea is reasonable  levy and  this  is  equal to other plantations,  where  the  crop yielding plants and trees have to be converted into hectares according to a formula.  It is obvious that the  legislature has  made  an  attempt at equalisation  of  tax  burden  for different plantations. [395 C] In Moopil Nair’s case this Court considered the tax  therein impugned  to  be discriminatory because it paid no  heed  to quality or productive capacity of land and the tax was  also held  to be confiscatory since owners of  unproductive  land were  liable to be eliminated by slow degrees.  The  present was  however  not  a  case  where  barren  lands  have  been



subjected  to equal tax with productive lands.  The  tax  is only levied on crop yielding land.  In some cases where  the crop  may  be  scattered  over a  wide  area,  there  is  an elaborate  mechanism  to determine the: extent of  the  crop yielding plantation. [389 E-F, 391 F] As between different tea gardens it was not possible to  say that  the  difference in yield was entirely due  to  natural circumstances and no other cause. It may be conceded that a uniform tax falls more heavily  on some  plantations  than on others because  the  profits  are widely  discrepant.   But  that  by  itself  cannot  involve discrimination,  for then hardly any tax direct or  indirect would  escape the same sensure.  The rich and the -poor  pay the  same  taxes  irrespective  of  their  incomes  in  many instances such as the sales-tax and profession tax etc. [389 H-390 B] Nunnathat  Thathunni  Moopil Nair v. The  State  of  Kerala, [1961]  3 S.C. R. 77, State of Andhra Pradesh v. Nalla  Raja Reddy,  [19671  3  S.C.R. 28, New Mank  Chowk  Spinning  and Weaving Mills Co. Ltd. v. Municipal Corporation of the  City of Ahmedabad, [1967] 2 S.C.R. 679 and The State of Kerala v. Haji   K.  Haji  K.  Kutty  Naha  A.I.R.  1969   S.C.   378, distinguished. 385 Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar  and Others,  [ 1 9591 S. C. R. 279, Fast Indian Tobacco  Co.  v. Stute  of Andhra Pradesh, [1963] 1 S.C. R. 404 and  Khandige Sham  Bhat  and  Others,  v.  The  Agricultural  Income  Tax Officer, [1963] 3 S.C.R. 809, applied. Thuttampara Planting Co. v. Tahsildar, Chittur, 1964  Kerala L.T.  47,  Essa Ismail and another v. State  of  Kerala  and others,  I.L.R.  (1965) Kerala 619 and States in  Madden  v. Kentucky, (1940) 309 U.S. 83; 84 L.Ed. 590, -referred to. (iii)     immediately  after the Travancore-Cochin Land  Tax Act,  1955 as amended by the Travancore-Cochin Land Tax  Act 10  of  1957 was declared invalid by this  Court  in  Moopil Nair’s  case,  the  Kerala  Land Tax  Act  1961  was  passed following  an ordinance.  That Act was included in  the  9th Schedule  to  the Constitution at No. 38  and  received  the protection  of  Art.  31-B.  The competency  of  the  Kerala Legislature to impose land tax was therefore no longer  open to dispute. Per Shelat 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 reference to the productive capacity of the  lands. [406 D-F] As  regards  tea plantations, the tax  is  uniformly  levied merely  on  the footing of the land being used  for  growing tea, without any regard to its potentiality, situation,  the kind  of  tea which can suitably 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 reason either of classification or its alsence, such a provision would’be hit by the equality clause of Art. 14. 1408 DI Even  among the selected plantations inequality as 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 extent 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. [408 D-F] Moopil Nair’s case applied Case-law referred to.

JUDGMENT: ORIGINAL JURISDICTION : Writ Petitions Nos. 135-137 of 1969. Petitions under Art. 32 of the Constitution of India for en- forcement of the fundamental rights. M.   C. Setalvad, Joy Joseph, B. Datta, J. B. Dadachanji, O.   C. Mathur and Ravinder Narain, for the petitioners. Sarjoo Prasad and M. R. K. Pillai, for respondent No. 1. 386 The  Judgment of M. HIDAYATULLAH, C.J., C.  A.  VAIDIALINGAM and A. N. RAY, JJ. was delivered by HIDAYATULLAH, C.J.  Dis- senting  Opinion of J. M. SHELAT and A. N. GROVER,  JJ.  was delivered by SHELAT, J. Hidayatullah, C.J. These are three petitions by Twyford  Tea Company  and  one  of its directors under  Art.  32  of  the Constitution seeking appropriate writ, order or direction to declare  the  Kerala Plantation (Additional Tax)  Act,  1960 (Act  XVII  of 1960) and the Kerala  Plantation  (Additional Tax) Amendment Act, 1967 (Act XIX of 1967)  unconstitutional and void.  In addition the petitioners ask that the  notices annexures  B, C and D demanding payment of the tax  be  also quashed and a sum’ of.  Rs. 1,02,106.02 already paid as  tax to  the  Kerala  Government ordered to  be  refunded.   They further seek a mandamus restraining the State of Kerala  and Tehsildar  Peermade  from  using the two  Acts  against  the petitioners. The  petitioner  company is incorporated in  India  and  the majority  of  its shareholders are Indians.  It owns  a  tea estate  in Kuttikanam area in the Peermade hills  in  Kerala State.   The estate consists of 1006 hectares equal to  2486 acres  of  which 491 hectares equal to 1214  acres  are  tea plantations.   According to the petitioners  Peermade  hills are  in  the  Western Ghats and are divided  into  two  main parts.  Kuttikanam area roughly 33 sq. miles is situated  at an  altitude  of 3400 to 3700 ft. and receives  150  to  200 inches  of  rainfall  annually.   The  Periyar  valley  area roughly  60 sq. miles is situated at an altitude of 2800  to 3200  ft. and receives 100 to 150 inches rainfall  annually. The Periyar valley area is more fertile than the  Kuttikanam area.  According to the petitioners’ statement M/s.  Parkins Private Ltd., are the Managing Agents of Twyford Tea Company and  also  the  Haileyburia Tea Estate.  The  former  is  in Kuttikanam  and the latter in Periyar area.  The  extent  of produce from these two areas is very different.  Between the years 1963 to 1967 Twyford Tea Company produced 959 to  1211 kgs.  per  hectare while Haileyburia produced 1461  to  1845 kgs. per hectare.  The other tea-estates disclosed the  same differences in production.  Examples are given of Penshurat, Karimtharuvi  estates  under  the  same  management  and  of Stagbrook  and Cheenthalaar and other estates.  The  Twyford Tea  Company’s net profits have declined from  Rs.  2,28,222 (1963) to Rs. 59,938 (1967).  The net profits of Twyford Tea



Company  after taxation per hectare ranged from  Rs.  122.00 (1967)  to  Rs. 465.00 (1963) with loss in 1966,  while  the profits of Heileyburia ranged from Rs. 909.00 (1963) to  Rs. 770.00  (1967) with Rs. 245.00 in 1966.  This difference  is attributed  to  the  differences in  fertility  between  the Kuttikanam  and Pariyar areas.  The petitioners  state  that similar   differences   exist  in   the   Vandiperiyar   and Nelliampathy areas.  The petitioners point cut 387 that  for  purposes  of excise duty these  areas  have  been formed  into different zones and different rates  of  excise duty are leviable in these zones. The  two statutes which are impugned here imposed a  tax  on plantations.   In the Act XVII of 1960 there is a levy of  " additional tax" on plantations.  The Act came into force  on April  1,  1960.  "Plantations" mean land used  for  growing seven kinds of crops.  They are (1) Cocoanut, (2)  Arecanut, (3)  Rubber,  (4)  Coffee, (5) Tea,  (6)  Cardamom  and  (7) Pepper.   Section  3  of Act XVII of 1960  is  the  charging section.   Under  that  section for each  financial  year  a plantation  tax additional to the basic tax charged as  land tax  under  the Land Tax Act, 1955 is payable  at  the  rate mentioned  in Schedule I of the Act.  This  Schedule  states that   no  tax  is  payable  if  the  aggregate  extent   of plantations  held by a person is below five acres.   But  if the plantations held by a person is 5 acres or more, -a  tax of Rs. 8/- per acre is payable with exemption for the  first two  acres.  For purposes of finding out the extent  of  the plantations   in  acres  held  by  a  person  a  method   of calculation is added in Schedule II.  It is not necessary to quote  this schedule because it has been amended by Act  XIX of 1967 and that schedule will be quoted presently.  By  the Amended  Act  the  name of the tax  is  changed.   The  word "additional"  is  removed in 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 rate of tax is altered in Schedule I to Rs. 501/per  hectare which  is payable in respect of plantations of two  bectares or  more  with  an exemption for the  first  ’hectare.   The method  of  calculation  of  the  extent  of  plantation  in hectares is restated in, Schedule II as follows                         "Schedule II For the purposes of the assessment of plantation tax payable by a person, the extent of plantations held by him shall  be deemed  to be the aggregate of the following,  expressed  in hectares, namely :- (i)  the  quotient obtained by dividing the total number  of bearing cocoanut trees standing on all lands held by him  by 200; (ii) the  quotient obtained by dividing the total number  of bearing arecanut trees standing on all lands held by him  by 1500; (iii)     the quotient obtained by dividing the total Dumber of yield in rubber plants standing on all lands held by  him by 450: (iv) the  quotient obtained by dividing the total number  of yielding coffee plants standing on all lands held by him  by 1500; 388 (v)  the  quotient obtained by dividing the total number  of yielding  pepper vines standing on all lands held by him  by 1000; (vi) the extent of lands on which tea plants are grown which have begun to yield crops; (vii)     the extent of lands on which cardamom plants  -are



grown which have begun to yield crops; Provided  that  where  the total extent of land  held  by  a person,  which  is cultivated with the aforesaid  crops,  is less  than  the aggregate calculated as  above,  the  actual extent alone shall be deemed to be the extent of plantations held by him." The   petitioners  paid  tax  under  the  old  Act   without objections  -They state that they did so  without  realising their  rights.   They  were issued  three  demands  for  the assessments  years 1960-61 to 1968.  They had  already  paid between  April  10, 1961 and October 18, 1968 a sum  of  Rs. 1,02,106.02. It is because of this additional demand arising from  the increase in the rate of tax from Rs. 8/- per  acre or  Rs. 20/- per hectare to Rs. 501- per hectare  that  they have challenged the constitutionality of the two Acts. The  contention  of  the petitioners is  that  there  is  no rational :classification of plantations; that unequals  have been treated as equal and that a flat rate imposed upon  all the  plantations irrespective of their yield  is  arbitrary. According to them some of the plantations cannot make enough profit  to  be  able to pay tax and in their  case  the  tax became  confiscatory.  They also complain of  discrimination and  question  the  legislative  competency  of  the  Kerala Legislature  to  impose plantation tax in the absence  of  a specific  entry  in  the 7th Schedule  to  the  Constitution either  in List II or III enabling the State Legislature  to impose  it.  They also say that the land tax  imposed  under the  Land  Tax Act was successfully challenged  before  this Court  in  Kunnathat Thathunni Moopil Nair v. The  State  of Kerala  and another(’) and the change making  it  additional land   revenue  imposed  an  obligation  upon  the--   State Legislature  to make assessment on the basis of the  produce from  the  land  in much the same way  as  land  revenue  is calculated  after taking into account the fertility  of  the soil, its yield and such other factors. Stated  simply  there are three contentions.  The  first  is that  the State Legislature lacks competence to impose  this tax and even if it did have the competence it has followed a wrong  method  in imposing additional land  revenue  without effecting proper settle- (1)  [1961] 3 S.C.R. 77. 389 ment.  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 it 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  these 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-Cochin  Land Tax (Amendment) Act, X of 1957,  was declared unconstitutional in its operative sections in K. T. Moopil  Nair’s(1) case.  Immediately afterwards  the  Kerala Land  Tax  Act, 1961 was passed following an  Ordinance  and that  Act  is  now  included in  the  9th  Schedule  to  the Constitution at No. 3 8 and receives the protection of  Art. 3 1 -B.  The competency to impose land tax thus is no longer open  to  this pute.  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(1) case.   It is,  therefore, necessary to recall what was decided  there. Under  the  Land  Tax  Act,  1955  all  lands  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  held to be confiscatory since  owners  of  unpro- ductive  land were liable to be eliminated by  slow  stages. The  power  of exemption was also  corisidered  unreasonable because  it  enabled  Government to pick  and  choose  lands arbitrarily   for   grant  of  exemption.   -The   lack   of classification was considered to create 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 discussion that there  are differences.   It may also be conceded that the uniform  tax falls (1) [19611 3 S.C.R. 77. Sup./70-10 390 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 marry instances such as the sales-tax and the profession tax etc.  It may be; remembered that  in K. T. Moopil Nair’s(1) 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 applying its provisions  but  may leave  it to the discretion of the Government to select  and classify  persons or things to whom its, provisions  are  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 exececise 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 guiding 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 treatment. The  contention here is that there is a uniform rate of  tax per  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 opinion this is a wrong way to look at the provisions of the Act. The  Act,  no  doubt, deals with seven  different  kinds  of plantations  and  imposes  a uniform rate of  Rs.  50/-  per hectare but itlays down principles on which equal  treatment is ensured.  In the (1) [1961] 3 S.C.R.77. (2) [19591 S.C.R. 279.   391 case  of  cocoanut,  arecanut,  rubber,  coffee  and  pepper plantations,  plants capable of yielding produce are  to  be counted and then the hectares are determined by dividing the total  number  of  plants  by a  certain  figure.   This  is intended to equalise the different plantations for  purposes of  taxability.   In the remaining two cases the  extent  of land  yielding crop is itself taken as the measure  for  the tax  because  it is considered fair and just  to  treat  one actual  hectare of crop yielding plantation as equal to  the other  areas  converted into hectares on the  basis  of  the number of plants or trees.  Differences in yield between one plantation and another having the same crop, no doubt, arise from  situation, altitude and rainfall but they are not  the only factors.  Otherwise how is it that the same areas  give different  yield in different years.  The  respondents  have given the figures of yield of Glemmari estate contiguous  to Twyford estate.  The produce in that estate ranges from 1427 to  1571 kilograms per hectare which is almost equal to  the estates in Periyar area.  The yield of Cardamom also  varies similarly.   In the Highland Produce Co. Ltd. the  per  acre yield varied from 5770 1bs. in 1965 to 26,890 lbs. in  1962. In  1961  the per ’acre yield was 91 lbs. and in  1962,  254 lbs.  It is obvious that there are circumstances other  than situation, rainfall etc. which have made the yield almost  2 1/2 times as much. The legislature thinks that Rs. 501- per hectare in the case of Cardamom and Tea is reasonable levy and this is equal  to other plantations, where the crop yielding plants and  trees have  to be converted into hectares according to a  formula. It  is obvious that the legislature has made an  attempt  at equalisation of tax burden for different plantations.   This is  not  a case where barren lands have  been  subjected  to equal tax with productive lands.  The tax is only levied  on crop  yielding  land.  In some cases where the crop  may  be scattered over a wide area, there is an elaborate  mechanism to  determine  the extent of the crop  yielding  plantation. The  differences  which  have been pointed out  may  be  the result   of  some  fortuitous  circumstance  and  even   bad husbandry.    The  Court  cannot  regard  the  law   to   be discriminatory on the evidence produced in the case. may  refer  to a few cases which were also  brought  to  our notice.  In State of Andhra Pradesh & Another v. Nalla  Raja Reddy & Ors.(1) the Andhra Pradesh Land Revenue  (Additional Assessment)  and Cess Revision Act (22 of 1962) was held  to offend Art. 14.  That Act was passed to bring uniformity  in assessment of Land Revenue in the Telengana and Andhra areas of the State of Andhra Pradesh.  An additional assessment at the rate of 75% of the yearly assessment was imposed on  dry land and the



(1)  [19671 3 S.C.R. 28. 392 total  assessment was not to be less than 50 n.p. per  acre. On  wet lands the additional-assessment was to be  100%  for lands irrigated from a Government source and 50% in the case of  other  wet  lands and a minimum total  demand  was  also prescribed.  This Act was considered to be discriminatory as the minimum had no relation to the fertility of land,  there was no relationship between the land and the ayacut to which it belonged and the procedure for determining the applicable rate   was  arbitrary.   This  Court  examined  the   matter critically  and came to the conclusion that  the  assessment was  left to the arbitrary discretion of an officer  without any  opportunity  to  question  his  findings.   This  Court compared the procedure for assessment at proper  settlements and  found  that those equitable and reasonable  methods  of assessment were abandoned.  That case is peculiar to -itself and  cannot be called in aid since in this case there  is  a reasonable attempt to-make the burden equal. Two  other  cases  were  referred  to  but  they  bear  upon different  topic.  In New Manek Chowk Spinning  and  Weaving Milts  Co. Ltd. and others v. Municipal Corporation  of  the City  of Ahmedabad and others(’) and The State of Kerala  v. Haji  K. Haji K. Kutty Naha and others(’) the  question  was one  of rating.  The proposition laid down was  that  taking only  the  floor  area  of  a  building  as  the  basis  for determination  of  the  tax was  an  arbitrary  method  when buildings  must have different rental values depending  upon the  nature of the construction, the kind of  buildings  and the  purpose  for which they can be used.  These  were  held vital  considerations in the rating of buildings  and  could not  be  ignored.   These cases were  decided  on  different principles and no analogy can be found merely because  equal tax was imposed in diverse conditions.  As   against   these  cases  the  otherside   relies   upon Thuttampara  Planting Co. v. Tehsildar, Chittur(3) and  Essa Ismail  and another v. State of Kerala and others (4)  where this  tax  was upheld. in the second of these cases  it  was held that the tax was not related to the productivity of the land but to its user and the method of calculation was found to be fair and equitable. We  may now state the principles on which the  present  case must be decided.  These principles have been stated  earlier but  are often ignored when the question of the  application of  Art. 14 arises.  One principle on which our  Courts  (as indeed  the Supreme Court in the United States) have  always acted,  is  nowhere  better stated then  by  Willis  in  his "Constitutional Law" page 587.  This is how he put it: "A  State  does not have to tax everything in order  to  tax something.  It is allowed to pick and choose dis- (1)  11 9671 2 S.C.R. 679. (2)  A.I.R. 1969 S.C. 378. (3)  [19641 Kerala L.T. 47. (4)  I.L.R. [1965] Kerala 619. 393 tricts,  objects, persons, methods and even rates for  taxa- tion  if it does so reasonably...... The Supreme  Court  has been  practical  and has permitted a very wide  latitude  in classification for taxation." This  principle  was approved by this Court in  East  Indian Tobacco  Co.  v.  State of Andhra Pradesh(’)  at  page  409. Applying it, the Court observed: "If  a State can validly pick and choose one  commodity  for taxation  and that is not open to attack under Art. 14,  the same  result  must  follow  when the  State  picks  out  one



category of goods and subjects it to taxation." This  indicates  a wide range of selection  and  freedom  in appraisal not only in the objects of taxation and the manner of  taxation  but also in the determination of the  rate  or rates  applicable.  If production must always be taken  into account  there will have to be a settlement for  every  year and the tax would become a kind of income-tax. The   next   principle  is  that  the  burden   of   proving discrimination  is  always heavy and heavier  still  when  a taxing  statute is under attack.  This was also observed  in the same case of this Court at page 411 approving the dictum of  the  Supreme  Court of the United States  in  Madden  v. Kentucky(’) : "In  taxation even more than in other  fields,  Legislatures possess the greatest freedom in classification.  The  burden is  on  the  one attacking the  legislative  arrangement  to negative every conceivable basis which might support it." As Rottschaefer 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  protection 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 extremely wide discretion in  classifying  property  for tax purposes so  long  as  it refrained  from  clear and  hostile  discrimination  against particular persons or classes.)) (Emphasis added). The  burden  is on a person complaining  of  discrimination. burden  is  proving 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 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 different out turns 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 levenue on the  basis  of number of trees 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 or trees. What is meant by the 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 persons.   Simply  stated the law is  this:  Differences  in treatment must be, capable of being reasonably explained  in the light of the object for which 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 Agricultural Income Tax Officer,  at page 817 it was observed "If there is equality and uniformity within each group,  the law  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  law  is  not  an  exception  to  this doctrine: vide Purshottam Govindji Halai (1) [1963] 3 S.C.R. 809. 395 v.   Shree  B. N. Desai, Additional Collector  of  Bombay(’) and  Kunnathat Thatunni Moopil Nair v. State of Kerala  (  2 ) . 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 principles under lying 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 different 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  notwithstanding 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. 1, a public limited  company,  of which  the  second  petitioner is a  shareholder,  owns  the Twyford  Estate situate in Kuttikanam area in Kerala  State. The  estate  is a tea plantation admeasuring  1006  hectares (2486  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 1960, 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(l)(f) and (g) and 31(l). Before  we  set  out the facts  and  the  contentions  based thereon,  it is necessary to recite briefly the  history  of the legislation pertaining to land taxation in the State. In  1955, the Legislature of the then State  of  Travancore- Cochin  passed  the Travancore-Cochin Land Tax, Act,  XV  of 1955  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



(1)  [19551 2 S.C.R. 887. (2) [1961] 3 S.C.R. 77. 396 State  Legislature  passed the  Travancore-Cochin  Land  Tax (Amendment)  Act,  X of 1957 by which the  expressions  "the State of 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  added  a new section, S. 5A,  which  inter  alia, provided  for  provisional assessment of the basic  tax  for lands  so far not surveyed.  The constitutional validity  of Act XV of 1955, as amended by Act X of 1957, was  challenged in this Court in Moopil Nair v. The State of Kerala(’).  The Act was struck down by this Court, inter alia, on the ground of  its   being  violative of Arts. 14  and  19(1)(f).   The judgment of this Court striking down the Act was  pronounced on December 9, 1960. Before  the case of Moopil Nair(’) was decided,  the  Kerala Legislature passed the impugned Act, XVII of 1960, which on, receiving  the  Governor’s  assent,  was  published  in  the Gazette  Extraordinary of August 24 ,1960.  Section 2(6)  of the Act defined a "plantation" to mean land used for growing one  or more of the seven categories of trees on plants  set out therein, category 5 thereof being tea plants.  Thus, the land used for growing any trees, plants or corps other  than these seven categories is not subject to the -additional tax under  the  Act.   Section 3 provides that  there  shall  be charged,  in respect of the lands comprised  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 be liable to pay the plantation tax.   Sch. I to the Act lays down that the additional tax would not  be payable if the aggregate 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.   Sub-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 charged 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  assessment,  notice  of  dem  and,  appeal  and revision  against  assessment orders, recovery of  the  tax, refund etc.  Sch. 11 provides that the extent of  plantation held by a person shall be deemed to be the aggregate of  the following expressed in acres, namely (1)  the quotient obtained by dividing the total  number  of bearing cocoanut trees standing on all lands held by him  by 85; [1961] 3 S.C.R. 77. 397 (ii) the  quotient obtained by dividing the total number  of bearing arecanut trees standing on all lands held by him  by 600; (iii)     the quotient obtained by dividing the total number of yielding rubber plants standing on all lands held by  him by 180; (iv) the  quotient obtained by dividing the total number  of yielding coffee plants standing on all lands held by him  by 600;



(v)  the  quotient obtained by dividing the total number  of yielding  pepper vines standing on all lands held by him  by 400. (vi) the extent of lands on which tea plants are grown which have begun to yield crops; and (vii)     the  extent of lands on which cardamom plants  are grown which have begun to yield crops. Provided  that  where  the total extent of land  held  by  a person,which is cultivated with the aforesaid crops, is less than  the aggregate calculated as above, the  actual  extent alone  shall be deemed to be the extent of plantations  held by  him.  Though the Schedule lays down different  quotients in  respect of lands cultivated with cocoanut  and  arecanut trees,  rubber  and  coffee plants and  pepper  vines,  they cannot  achieve equality of the burden of the tax as  yields of even the same crop cannot be equal or approximately equal by  reasons  of differences in the lands in  one  area  from those in other areas depending on their soil, situation  and a   number   Of’  other  such  factors.    Furthermore,   no explanation  is forthcoming about the principle, if any,  on which  the  quotient for each of the  said  categories  was- fixed and whether they inter se work out reasonable equality among the plantations cultivating the said trees and plants. In  the case of tea plants, the holder is liable to pay  tax on the extent of lands on which they are grown  irrespective of the number of tea plants which are or can be grown, their quality Dr their possible yield. The  Act  was amended, as aforesaid, by Act XIX of  1967  by which the expression ’additional tax’ was substituted by the word ’tax’, and in s. 4 instead of the measure for  changing the tax being 5 acres or more, the, measure now adopted  was 2  hectares  and more.  The two new  Schedules,  which  were substituted  for those in Act XVII of 1960 provided by  Sch. I  that no tax would be payable if the aggregate  extent  of plantation was below 2 hectares, but where it is 2  hectares or more, there would be no tax on the first one hectare  but the  rest of the land would be taxed at Rs. 50 per  hectare. With the substitution of hectare as the measure in 398 place  of  acre,  the quotients were  suitably  modified  in proportion  of a hectare being equal to 2.475 acres.   Thus, under  the Act, as amended by Act XIX of 1967, a  holder  of land,  whose land is plantation, is now required to pay  Rs. 50 per hectare instead of Rs. 20 per hectare, over and above the  basic tax payable by him under the Land Tax Act,  1955, as  amended in 1957.  The petitioner-company thus is  liable to  pay Rs. 24,500/- as additional tax on its  491  hectares cultivated  for  tea  plants over and above  the  basic  tax payable by it.  It will be noticed that notwithstanding  the reasons  on which in Moopil Nair’s(1) decision the Land  Tax Act, XV of 1955 was struck down, no changes in the light  of that decision were made in Act XVII of 1960 even when it was amended in 1967. In consequence of Act XV of 1955 having been struck down  as aforesaid,  the Kerala Legislature passed a new Act,  called the  Kerala  Land  Tax  Act,  XIII  of  1961  giving  it   a retrospective  effect  by  s. 1(3)  thereof.   The  Act  was obviously  passed in the light of the observations  made  by this  Court  in Moopil Nair’s case(’).  Section  5  provided that there shall be charged a tax called "basic tax" on  all lands of whatever description and tenure.  Sub-s. 3 of  that section  provided  that the basic tax so  charged  shall  be deemed to be public revenue due on lands within the  meaning of  the  Revenue Recovery Act.  Section 6(1) laid  down  the rate  of the basic tax.  The basic tax was first.  fixed  at



Rs. 2/- per acre Per annum, but subsequently changed to  Rs. 9.94   P.  per  hectare.   Section  6  (2)   provided   that notwithstanding  anything  contained in sub-s.  1,  where  a land-holder   liable  to  pay  basic  tax  proved   to   the satisfaction  of  the prescribed authority  that  the  gross income from any land was less than Rs. 10 per acre per annum (now  changed  to Rs. 24-70 P. per hectare), the  basic  tax payable  on  such  land  shall be at a  rate  fixed  by  the prescribed authority calculated at 1/5th of the gross income from  such land.  The second proviso to sub-s. 2  laid  down that  the  Government may, having regard  to  the  potential productivity  of  any  land  used  principally  for  growing cocoanut,  arecanut, pepper, tea, coffee, rubber,  cardamom, or cashew or any other special crop, plant or tea that might be  specified  by the Government by notification,  levy  and collect  basic tax at the rate of two, rupees per  acre  per annum on such land notwithstanding the fact that such crops, plants or trees have not begun to yield or bear and that for time  being  no  income is made from the land  or  that  the income  made  is less than ten rupees per  acre  per  annum. Explanation (I) to s. 6 laid down that for the purpose of s. 6  gross  income shall mean the actual gross income  or  the gross  income  that  would be made from the  land  with  due diligence, whichever was higher.  Thus, S. 6(2), the  second proviso  thereto  and Explanations I and 3  to  the  section clearly disclose that this time the Legis-                             399 lature   taxed  the  land  on  the  standard  of   potential productivity instead of the ad hoc levy originally  provided in the Act of 1955 and also removed the objection as to  the absence of any remedy against assessment by providing appeal and  revision.   The position, therefore,  is  that  whereas under  the Kerala Land Tax Act, XIII of 1961, as amended  in 1968 and 1969, the basic or land tax is levied on the  basis of  potential productivity and yield, the tax as imposed  by the impugned Act as a tax in-addition to the basic tax is  a uniform  tax  at  a  flat rate without  any  regard  to  the productivity of the land, potential or actual. According  to the petitioners, Peermade Hills,  where  their estate  is  situate,  falls  roughly  into  two  areas,  the Kuttikanam  area .and the Periyar valley area.  Though  both these  areas are situate in high ranges, they differ in  the extent  of their productivity and quality, the reason  being that the Periyar valley area is the basin of Periyar  river. The  difference in the fertility and the quality of soil  in these two areas is sought to be illustrated by showing  that Twyford  estate situate in Kuttikanam area  and  Haileyburia estate  situate in Periyar valley area, though under  common management,  give  different average  yields.   The  average yield  in  1967 per hectare in Twyford estate was  959  Kgs. while that of Haileyburia estate was 1542 Kgs.  To show such differences  also in other areas in the State and  elsewhere the  petitioners have furnished various  statistics.   These statistics  first,show  that the average  annual  yield  per hectare  in  the  tea-growing areas in  Madras,  Mysore  and Kerala  for  the  year 1967 was 1394,  1178  and  1076  Kgs. respectively.   The  all India average  yield  according  to these  figures  was I 1 00 Kgs. per hectare per  year.   The average  of tea production per hectare in Kerala State  thus compares  favourably  with  that of the  other  tea  growing regions as also with the all India average.  Therefore,  the tea planters in Kerala cannot be said to be backward or less forward-looking or less venturesome than those in the  other regions.  Secondly, these figures also show that the average yield  in thee different districts in Kerala  itself  varies



from  district to district ranging from about 350  Kgs.  for the  district  of  Ernakulam to as much  as  1850  Kgs.  for Trichur  district.  The production figure for the  whole  of the Kerala State appears to have remained steady  throughout 1965  to  1967 as it varies from about 43000 Kgs.  to  44000 Kgs.   These  figures indicate that different areas  in  the State  where  tea  is grown differ in a very  large  way  in productivity  and fertility.  These figures are  taken  from the  Reports of the Tea Board, and therefore, can be  safely regarded as reliable. In   the   counter-affidavit  filed  by  the   State   these differences, no doubt, are not admitted.  To show that  such differences  do not exist only. the example of  one  estate, Glennmari near Kuttikanam, is taken.  It is urged that  that estate  has  a  larger  production  per  hectare  than   the petitioners’ estate though-both happen to be situate 400 in  the same area.  The respondents, however,  have  frankly conceded that the fertility of the land and the  differences in  productivity  of  estates in  different  areas  are  not relevant, for, the impugned tax is levied with reference  to the  specified user to which the land is put and not to  its productivity, potential or actual. Counsel for the, petitioners contended that the tax  charged under   the  Act  is  discriminatory  and   arbitrary,   and therefore, violates Art. 14. The argument was that the  tax, being an ad hoc levy uniformly imposed, merely on the  basis of  the  use of the land for any one or more  of  the  seven kinds  of  trees and plants selected by s 2(6) of  the  Act, without any classification and without any consideration  to the situation, the kind of land, its potential productivity, water-supply,   natural  or  artificial,  and   geographical features,  falls unequally on the holders of the  land.   It was submitted that this inequality arises as a result of the absence  of  any rational classification, and the  Act,  for that  reason, suffers from the same infirmity for  which  in the  Moopil  Nair’s  case(’)  this  Court  struck  down  the Travancore-Cochin Land Tax Act, 1955, as amended by Act X of 1957.  The contention urged, on the other hand, on behalf of the  State was that by selecting the seven kinds of  planta- tions  in s. 2(6), the Legislature has made an  intelligible classification   amongst   holders  of   land,   that   that classification has a reasonable nexus with the object of the Act, namely, to obtain additional revenue by imposing tax in addition  to  the  basic tax, that the  Legislature  in  the matter  of  taxation  has a  wide  discretion  in  selecting persons and properties for imposing a tax, that in  exercise of its power to tax, it was entitled to levy the tax , based on certain kinds of user of land and was not bound to make a further   classification  of  the  land  according  to   its potential  productivity,  its  situation,  its  geographical features, income and other such considerations. Before we examine these contentions we think it expedient to consider  first the principle-, laid down by this  Court  in the  matter of the power to levy taxes of the kind  we  have before  us.  In Moppil Nair’s case(’), this Court laid  down the  following principles : (1) that Art. 14 read with  Art. 13(2)  applies  to  a taxing statute as  much  as  to  other statutes, and therefore, if he impugned statute, even though a taxing one, violates Art. 14, it has to be struck down  as unconstitutional;  (2)  that  the  statute  there  impugned, namely, the Travancore-Cochin Land Tax Act, 1955, as amended by  Act  X  of 1957, imposed a uniform  tax  on  all  lands, whether  productive  or not, and without  any  reference  to their income, actual or potential; (3) that since the Act in



terms  claimed  by  s. 3 thereof to  be  a  general  revenue settlement  of the State, the tax being one on land or  land revenue  had  to  be assessed and levied on  the  actual  or potential pro activity of the land sought (1)  [1961] 3 S.C.R. 77.                             401 to  be taxed : in other words, such a tax has  reference  to the income actually made or which could have been made, with due  regard  to its incidence, and (4) that  the  inequality writ large on the Act arose by reason of the absence of  any classification  of  the land on which the tax  was  imposed. The  argument which appears to have appealed to the  learned dissenting Judge that the Act made a classification  between holders  of  land according to the quantum of land  held  by them and that that classification was reasonably linked with the object of the Act to raise revenue for the State, failed to receive the approval of the rest of the Court.  The  fact that  a  person  holds a large area of  land  and  is  taxed according to the area he holds cannot by itself mean that in taxing him he is meted out equal treatment as compared to  a person  who holds a lesser quantity of land but of a  better and more productive quality, merely on the ground that  both hold  land and are taxed according to the quantity  each  of them  holds.   A uniform tax without  consideration  of  its incidence,   when  actually  implemented  must   result   in inequality of treatment amongst persons similarly  situated, and therefore, would be violative of Art. 14. In  The State of Andhra Pradesh v. Nalla Raja  Reddy(1)  the relevant  facts were as follows : Originally  two  different revenue  systems prevailed in Andhra and Telengana.  In  the former,  the principles of Ryotwari system  prevailed  which meant that lands were classified under two principal  heads, wet  and dry.  Lands of similar grain values were  bracketed together  in orders called "tarams", each with its own  rate of assessment, which was further adjusted in the case of dry lands  with  reference to the nature and  quality  of  water supply.  This system prevailed since times immemorial and by reason  of  its being equitable had  general  approval.   In Telengana,  the  relative scale of soils was  classified  in terms  of  annas.  The existing or former rates used  to  be taken as the basis for the purpose of resettlements and were adjusted  having regard to altered conditions, such  as  the rise  and  fall  of  prices,  increase  in  population  etc. Besides, the settlement officers used to fix the rates after ascertaining  what profit would be left to the  cultivators. Thus, under the system of assessment which prevailed in both the  areas, the land revenue fixed varied according  to  the classification of soil based upon productivity.  Later,  the Andhra  Pradesh  Land Revenue  Assessment  (Standardisation) Act,   1952   and  the  Hyderabad  Land   Revenue   (Special Assessment)  Act, 1952 were passed to standardize the  rates on  the basis of price level.  These two Acts increased  the rates  by way of surcharge on the existing rates.  In  1958, the  State Government appointed a Committee to  examine  the existing system of rates of assessment.  The Committee inter alia  suggested  that  assessment should  be  based  on  the quality  and  productivity  of soils, the  nature  of  water supply (1)  [1967] 3 S.C.R. 28. 402 and  the  prices.  The State Legislature  then  -passed  the impugned  Act,  Andhra  Pradesh  Land  Revenue   (Additional Assessment)  and Cess Revision Act,XXII of 1962,  which  was amended by Act XXIII of 1962.  Under ss. 3 and 4 of the Act, as  amended, a new scheme was laid down in  accordance  with



which  an  additional  assessment  at  75%  of  the  earlier assessment  was charged.  But the proviso thereto laid  down that  the  total assessment should not in any case  be  less than  50 nP. per acre per year, irrespective of the  quality and_productivity  of the soil.  Every acre of dry  land  had thus  to  bear a minimum assessment of 50 nP. per  acre  per year.   For wet lands also, a scheme was adopted which  took no account of the quality and productivity of the soil.  The Act  was challenged on the ground of discrimination  arising from the absence of classification as in the case of  Moopil Nair(1).  In considering the challenge the Court observed : "A   statutory   provision  may  offend  Art.  14   of   the Constitution  both  by finding differences where  there  are none  and  by  making  no difference  where  there  is  one. Decided  cases  laid down two tests to ascertain  whether  a classification   is  permissible  or  not,  viz.,  (i)   the classification   must   be  founded   on   an   intelligible differentia  which distinguishes persons or things that  are grouped together from others left out of the group; and (ii) that  the differential must have a rational relation to  the object  sought  to be achieved by the statute  in  question. The  said  principles  have been applied by  this  Court  to taxing statutes.  This Court in Kunnathat Tha thunni  Moopil Nair  v. The State of Kerala [(1961)3 S.C.R. 77]  held  that the Travancore-Cochin Land Tax Act, 1955, infringed Art.  14 of  the  Constitution, as it obliged every person  who  held land to pay the tax at the flat rate prescribed, whether  or not  he made any income out of the property, or  whether  or not the property was capable of yielding any income.  It was pointed out that that was one of the cases where the lack of classification created inequality." The  Court  observed that in the case before  it  the  whole scheme of ryotwari system was given up so far as the minimum rate  was concerned.  A flat rate was fixed in the  case  of dry lands without any reference to the quality or  fertility of  the soil, and in the case of wet lands, a  minimum  rate was  fixed and it was sought to be justified by  correlating it  to  the  ayacut.  The Court held  that  that  scheme  of classification  was adopted without any reasonable  relation to  the objects sought to be achieved, namely, fixation  and rationalisation  of rates, and therefore,  clearly  offended the equal protection clause. (1)  [1961] 3 S.C.R. 77. 403 In Khandige Sham Bhat v. The Agricultural Income  Officer(1) the  Court  reaffirmed the principles laid  down  in  Moopil Nair’s  case(1) and observed with regard to  the  provisions there impugned : "In order to judge whether a law was discriminatory what had primarily to be looked into was not its phraseology but  its real  effect.  If there was equality and  uniformity  within each group, the  law could not be discriminatory, though due to  fortuitous  circumstances in a peculiar  situation  some included in a class might get some advantage over others, so long  as  they were not sought out  for  special  treatment. Although  taxation laws could be no exception to this  rule, the  courts  would, 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 as there was no transgression of  the fundamental   principles   underlying   the   doctrine    of classification.   The power of the Legislature  to  classify must necessarily be wide and flexible so as to enable it  to adjust  its system of taxation in all proper and  reasonable ways."



The  principle emerging from these decisions is thus  fairly wellsettled.  While granting a fairly wide discretion to the legislature  in the matter of fiscal adjustment, the  Court- will  at the same time insist that the statute in  question, like  any other statute, should not infringe Art. 14  either by  introducing  unreasonable or  irrational  classification between  persons  or properties similarly situated or  by  a lack of classification.  Further, in examining the objection under  Art.  14 the Court has not to go by  the  phraseology only  of the provision under challenge, but its real  impact on persons or properties. The challenge urged on behalf of the petitioners may now be examined  in the light of these principles.  Both the  title and the preamble of Act XVII of 1960 in clear terms call the tax  one in addition, as s. 3(5) declares it, to  the  basic tax,  payable  on  lands falling under  its  purview,  i.e., plantations,  as  defined  by s.  2(6).   A  plantation,  as defined by s. 2(6), means the land used for any one or  more of the seven types,of trees and plants set out therein.  The tax  is  thus  chargeable  in respect  of  lands  which  are plantations and not the rest of the lands however much their income  may be.  Apart from that, as stated in  the  State’s counter-affidavit,  the tax is imposed on the ground of  the particular use to which the land is put and not on the basis of its productivity or income, actual or potential.  This is so,  although it is a tax in addition to the basic  or  land tax levied under the Kerala Land Tax Act, XIII of 1961, (1) [1963] 3 S.C.R. 809, 817, (2) [1961] 3 S.C.R. 77. 404 and  although that basic-tax under s. 6 of that Act  depends upon the gross income yielded by the particular land.  It is true  that under the second proviso to that section, if  the land is used for growing any of the crops therein mentioned, the  Government can impose, having regard to -its  potential productivity; the basic tax at Rs. 2/- per acre, even though the land has not yet begun to yield or bear the crop and  no income  has yet begun to be made therefrom.   By  subsequent amendment the rate was changed to Rs. 4.94 per hectare,  but the principle of potential productivity was maintained.  The additional  tax  imposed by Act XVII of 1960, on  the  other hand,  is on the same land provided it is used  for  growing any one or more of the specified trees or plants, originally at the uniform rate of Rs. 8/- per acre but now enhanced  by Act  XIX of 1967 to Rs. 501/- per hectare, i.e., Rs. 20  per acre.  As already stated, the Amendment Act deleted the word ’additional’ but the deletion makes no difference as the tax is  still  in addition to the basic or land  tax  and  must, therefore, partake its character, both taxes being taxes  in respect  of  the  same land, where the  land  is  plantation within s. 2(6).  Thus, so far as such ’lands are  concerned, the  basic  tax  on  them is  assessed  according  to  their productivity or income.  But the tax under Act XVII of 1960, as amended by Act XIX of 1967, is imposed in respect of them as an ad hoc uniform tax, irrespective of the kind of  their soil or their capacity etc. and only for the reason of their particular user. Prima facie, the incidence of such a tax by reason  of its uniformity is bound to be unequal on  persons similarly  situated  and would, therefore,, be  hit  by  the equality  clause in Art. 14.  Even assuming that  the  basic tax  is a revenue assessment and the additional tax is  not, it  would still make no difference in its unequal  incidence on   these  whose  lands  by  their  particular   user   are plantations.   In  other  words, the burden of  the  tax  on persons situated in similar circumstances, i.e., those whose



lands are plantations, would be unequal. depending upon  the kind  of  soil, the geographical  situation,  water  supply, elevation and other relevant factors touching the lands they hold.  The additional tax is by no means low as it is, after the  passing  of the amendment Act XIX of 1967, Rs.  50  per hectare,  equivalent to Rs. 20 per acre.  A  person  holding 1,000  acres  of land of inferior soil would, by  reason  of such, an ad hoc tax, be bound to be hit harder than the  one holding  1,000 acres of superior land with higher  fertility or productivity.  Such a result would not occur if the  land is  classified  and  the  incidence of  the  tax  is  graded according, to its productivity and other relevant factors, In  support of the Act it was argued that the  impugned  Act not only makes a classification between those who hold lands which are plantations and those who hold lands which are not plantations, but also makes a further classification  within that  classification by the method provided for  calculating the  extent of plantations in Sch. 11.  That  argument  does not appear to be 405 correct.   The  Schedule  only  provides  the  methods   for calculating the extent of the plantations : (1) by means  of quotients  and  (2)  where  tea  and  cardamom  plants   are cultivated  by the actual extent of the land used for  those purposes.   But the Schedule does not solve the  difficulty. A  piece  of land in one area may have a certain  number  of trees  or plants of one or more of the specified  categories to  make it a plantation.  But the incidence of the  tax  in respect of it would be unequal as compared to an-other  land situate elsewhere by reason of the latter’s better situation or  fertility even if the number of plants or trees  of  the specified  kind are the same, depending upon  the  situation and the capacity of the two lands.  In such a case the  very uniformity  of the tax is bound to result in  discrimination on account of the relative potentiality of the two lands not being taken into account, and the lands not being classified accordingly.   It is, therefore, difficult to say  that  the Schedule,  intended only for calculating the extent  of  the plantations, seeks to achieve equality of treatment  between one kind of plantation and another or between plantations of the  same kind, if the principle of their yield  or  income, actual  or potential, is not taken into account.  How is  it possible  to  say that the uniform burden of  Rs.  50/-  per hectare  in  the  case,  say of  cocoanut,  tea,  coffee  or cardamom   plantations,  is  reasonably  equal,   when   the potential  yield of each such plantation is not  taken  into consideration  ? The’ same result must also  follow  amongst holders of the same kind of plantations if the principle  of yield  or income is discarded.  Thus, Sch. 11 only  provides the two methods, of calculating the extent of the plantation and does, not make a Classification within a  classification as  urged.   The only classification made is  between  those whose  lands fall under the definition of  ’plantation’  and those  whose lands do not.  All those who held  lands  which are  plantations  are  made liable to pay  the  tax  at  the uniform  rate of Rs. 501/- per hectare, no matter what  kind of  crop,  out of the seven kinds mentioned in the  Act,  is cultivated by them. without regard to the fact that one kind may  be  more valuable than the other  and  irrespective  of their  situation, their income-yielding capacity  and  other factors. The result of such uniform imposition is that tea  planters, who hold lands in Ernakulam, Trichur and Kottayam districts, would  pay the same amount of tax per hectare  although  the average  yield per hectare in these districts for the  years



1965 to 1967 was about 350, 1825 and 1050 Kgs. respectively. The  difference in yield in these different  districts  must clearly be due to the difference in the soil, situation  and such  other factors, for, it is nobody’s case (at least  not made  out in the counter-affidavit of the respondents)  that the  cultivators in Ernakulam district use inferior seed  or are  less  venturesome than those in  Kottayam  and  Trichur districts.  Such a difference in the average yield per  hec- L7Sup.CI(NP)/70-11 406 tare  occurs  also in other tea growing  districts,  namely, Cannanore, Palghat, Kozhikode, Trivandrum and Quilon,  whose average yield per hectare during the years 1965 to 1967  was 950,  1490,  1575, 975 and 650.  Kgs.  respectively.   Since these  figures are from the statistics prepared by  the  Tea Board,  they cannot be disputed.  That such  differences  in the  average yield occur also in the different districts  of the States of Madras and Mysore is also clear.  Surely, they cannot  arise  because the cultivators of one  district  are more adventurous or more technology-minded than those of the other  districts.   The  differences  in  the  yield   must, therefore,  be  attributed to the differences in  the  soil, situation, water supply, rainfall etc. Imposing a uniform rate of tax in respect of lands where tea is grown, without classifying them on the basis of their pro- ductivity, actual or potential, and without  differentiating the  inferior  from  the superior kind of  soil  or  without taking  into consideration the fact of some of  these  lands being situated in more advantageous position than the  rest, must,  therefore, inevitably result in unequal incidence  of the tax on those who hold those lands.  Therefore as in  the case  of Moopil Nair(1) the present case is also  one  where inequality  emerges 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 even sought to be shown as to how and on what basis  the uniform  rate of Rs. 501- per hectare was fixed and  whether it had any relation to the capacity of those who hold  lands with  different  average yields ranging from  350  Kgs.  per hectare  in  Ernakulam  to about 1850 Kgs.  per  hectare  in Trichur, in addition to the basic tax also payable by  them. Obviously,  the tax imposed in the manner pointed out  above must  result in inequality among the holders who  use  their lands  for tea growing though they are  similarly  situated. The  principles laid down in Moopil Nair’s case(1)  approved and confirmed in subsequent decisions and which are  binding upon us, apply to the impugned statute. But  in Thuttampara Planting Co. v. Tahsildar(2)  a  learned Single   Judge  of  the  Kerala  High  Court  repelled   the contention as to the invalidity of Act XVII of 1960 and held that the decision in Meopil Nair’s case(3) did not apply  as by  adopting  the quotients in Sch. 11 the impost  had  been related  to  the potentiality of the land and  its  possible yield.   As already pointed out, even the  counter-affidavit filed by the State in the present petitions, does not  claim that  the additional tax imposed under this Act  takes  into account  the potentiality of the land or is possible  yield. It,  on the other hand, asserts in -plain language that  the tax is levied by reason only of the particular use to  which the land is put and (1) [1961] 3 S.C.R. 77. (2) [1964] K.L.T. 47. 407 which makes it fall within s. 2(6).  If potentiality of  the land   and   its  possible  yield  had   been   taken   into



consideration, the amount of tax could not have been uniform as its quantum would have depended on its quality, situation and  other  factors.   Indeed, in Essa Ismail  v.  State  of Kerala(1) a Division Bench of that very High Court held that what  Act  XVII of 1960 did was to tax  lands  comprised  in plantations,  not on the basis of their productivity but  an the  basis of their user.  But the Division Bench held  that the Act was "just and equitable", and therefore, was not hit by  Art. 14.  At page 623 of the Report, the learned  Judges observed  that  the yield would vary from crop to  crop  and place to place, but "it is not the productivity of the  soil that  forms  the  foundation of the tax but its  user  in  a specific  way  for a specific purpose".   Though  these  two decisions  cited  Moopil Nair’s case (2) , neither  of  them considered  the  result of the lands being  uniformly  taxed without classifying them according to their potentiality  so that  the  incidence of the tax may be just  and  equitable. How   a  tax  imposed  uniformly  without  regard   to   the potentiality   of  the  property  taxed  and   without   any classification  on any other just basis works inequality  is illustrated  by  the scrutiny by this Court  of  the  Kerala Building Tax Act, XIX of 1961 in the State of Kerala v. Haji K.  Kutty(3).   After  noting the uniform rate  of  the  tax levied according to the floor area of a building but without taking  into  account its kind or its potential  yield,  the Court observed : "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 which may be obtained from  the  building,  the cost of  the  building  and  other related circumstances which may appropriately be taken  into consideration   in  any  rational  system  of  taxation   of building." At page 380 the Court further observed : "But in enacting the Kerala Buildings Tax Act no attempt  at any rational classification is made-As already observed, the Legislature has not taken into consideration in imposing the tax  the class to which the 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 (1) I.L.R. [1965] 2 Ker- 619     (2) [1961] 3 S.C.R. 77. (3)A.I.R. 19 S.C. 378. 408 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.   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." On  this reasoning the charging section of the Act  impugned in  that  case was held violative of Art. 14  and  therefore bad. The  same reasoning is, in our view, apposite so far as  the impugned tax is concerned, for, the tax is uniformly  levied merely  on  the footing of the land being used  for  growing tea, without any regard to its potentiality, situation,  the kind  of  tea which can suitably 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 reason either  of classification or its absence, such  a  provision would  be hit by the equality clause of Art. 14.  (see  East India  Tobacco  Co.  v. State  of  Andhra  Pradesh.(1)  Even amongst  the selected plantations inequality as 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, in our view, has happened in so far as  the tax on tea plantations, with which only we are concerned  in these petitions, is concerned, and therefore, to the  extent that  Act  XVII  of 1960, as amended by  Act  XIX  of  1967, imposes  the  tax  on  holders of  tea  plantations,  it  is violative of Art. 14 and is, therefore, void. Accordingly, the petitions are allowed with costs.                            ORDER In  accordance  with  the  opinion  of  the  majority,   the petitions are dismissed with costs. (1) [1963] 1.S.C.R. 404. 409