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Issues Involved
1. Vires of the Kerala Land Tax Act (Act 13/1961). 2. Validity of tax demand and recovery steps under the Act. 3. Confiscatory nature of the Act. 4. Compliance with Article 265 of the Constitution. 5. Machinery for assessment and apportionment of tax liability. Detailed Analysis 1. Vires of the Kerala Land Tax Act (Act 13/1961) The Kerala Land Tax Act, 1961, was challenged on the grounds of being a colorable piece of legislation and violating Article 265 of the Constitution. The legislative history traces back to the Travancore Cochin Land Tax Act, 1955, which was struck down by the Supreme Court in Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552 for being discriminatory and confiscatory in nature. 2. Validity of Tax Demand and Recovery Steps Under the Act The demand and recovery of basic tax were challenged on the basis that no authority is specified by Section 5 of the Act for levying the tax. The court observed that without specifying an authority to levy the tax, the mere delineation of an authority for collection or recovery would be of no avail. Consequently, the court declared the demand, levy, and collection of basic tax unauthorized and illegal. 3. Confiscatory Nature of the Act The Act was scrutinized to determine if it was confiscatory in character. The court noted that the confiscatory nature of the Act could spring from violations of Articles 14, 19, and 31 of the Constitution. The court found that the amendments made to the Act, such as the exemption of land below a certain size and the introduction of appeals and revisions, softened the rigors of the Act. Therefore, the Act was not deemed confiscatory in its current form. 4. Compliance with Article 265 of the Constitution Article 265 mandates that no tax shall be levied or collected except by authority of law. The court observed that the Act did not specify the authority to levy the tax, which is a critical requirement under Article 265. The absence of a specified authority for tax assessment rendered the levy and collection of the tax illegal. 5. Machinery for Assessment and Apportionment of Tax Liability The court highlighted the lack of machinery for assessing and apportioning tax liability between the landholder and the tenant. The Act failed to provide a mechanism for investigating the particulars of the lands held or the extent and measure of liability, thereby making it unworkable. The court emphasized that the absence of such machinery could lead to arbitrary and capricious tax demands. Conclusion The court quashed the steps taken to demand or recover the basic tax due to the absence of a specified authority to levy the tax, thereby declaring the levy and collection unauthorized and illegal. The court also pointed out the need for the Government to review the provisions of the Act and frame a fresh set of rules to address the identified anomalies and inconsistencies.
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