State can't levy fee based on plinth area of construction on converted paddy land: Kerala High Court

The Kerala High Court recently ruled that Kerala Conservation of Paddy Land and Wetland Act of 2008 does not give the State the power to levy a fee based on the extent/ plinth area of building constructed on converted land [Abad Builders Private Limited v State of Kerala & ors and connected cases] .Justice Mohammed Nias CP declared Note 1 to Rule 12(9) of the Kerala Conservation of Paddy Land and Wetland Rules, 2008 as ultra vires the Paddy Act, 2008 to the extent it allowed imposition of a fee of ₹100 per sq. feet exceeding 3,000 sq. ft."Even if the government's objectives are commendable, without an enabling statutory provision, the fee cannot be collected. Consequently, the argument that the levy is ultra vires is to be upheld, as the Act's intent and the scope of rule-making authority under Section 30 do not permit such fees," the Court held..The single-judge was hearing a batch of petitions challenging the levy of a fee for the construction of apartments after conversion of land under the Paddy Act. It was argued that imposing a fee based on building area was inconsistent with legislative intent and unjustifiable. However, the State in response said that Section 27A(3) of the Paddy Act doesn't restrict the government from levying fees based on the plinth area or area of the building.The authority to levy fees is grounded in the legislative intent to regulate land conversion responsibly, ensuring compliance with ecological standards and safeguarding agricultural interests, the State said..However, the Court found that after land conversion, construction or other activities on those lands are permissible, and the Paddy Act does not apply to them anymore.The only fee contemplated for regularizing the records is one under Section 27A(3), which is based on the extent of the land and not on the construction or its size, the Court noted."Since the Act does not regulate building construction, such a levy cannot be justified," it added.The Court rejected the government's argument that the fee serves as a mechanism to discourage large-scale developments and that it is intended to fund a "Paddy Cultivators Relief Fund." It further held that the levy was hit by Article 265 of the Constitution of India which states no tax shall be levied or collected except by authority of law."I hold that the levy is opposed to Article 265 of the Constitution of India as no statutory provision enabled the Government to collect a levy like the one impugned in the writ petition.".Hence, it declared the levy inconsistent with the provisions of the statute and directed the authorities to refund any amounts collected from the petitioners within four months."No demand for the above fee shall be made against the petitioners and their applications for building permits shall be considered without insisting on the payment referred above and subject to the provisions of the relevant Building Rules. The pending applications for building permits, if any, shall be considered within six weeks," the Court further ordered..Senior Advocate BG Harindranath and advocates Amith Krishnan, PK Soyuz, KC Vincent, Jacob Sebastian, P Sathisan and Shanavas Khan appeared for the petitioners.Special Government Pleader S Renjith represented the State..[Read Judgment]