Shah, J. - (1.) 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 of Kerala has appealed against the decision with special leave granted by this Court.
(2.) 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:Sec. 1 (2), and shall be deemed to have come into force with effect from March 2, 1961:Section 1 (3). An "assessee" is defined by Section 2 (b) 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 2 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 2 (e) as meaning the area included in the floor of a building, and where a building has more than one floor of 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.
(3.) The Act, on a bare perusal, discloses some singular provisions. The liability to tax in respect of buildings having total floor area between 1000 and 2000 sq. ft. varies between Rs, 100 to Rs. 200; for buildings with a floor area between 2000 to 4000 sq. ft. it varies between Rs. 400 to Rs. 800; for buildings having total floor area between 4000 to 8000 sq. ft. it varies between Rs. 1200 to Rs. 2400; for buildings with total floor area of 8000 to 12000 sq. ft. it varies between Rs. 3200 to Rs. 4800; and in respect of buildings having total floor area exceeding 12000 sq. ft. a rate of 50 np. per sq. ft. i. e. Rs. 6000 or more per annum. For determing 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. Under the Seventh Schedule List II 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 qestion on the ground that it infringes fundamental rights. In K. T. Moopil Nail vs. State of Kerala, (1961) 3 SCR 77 Sinha, C. J. delivering the judgment of the majority observed at page No. 89 of SCR : "Article 265 imposes a limitation on the taxiing 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 comptence 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 13 (2) is that the Legislature shall not make any 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 vs. Agricultural Income-tax Officer, (1963) 3 SCR 809 , ;