Persons From Whom Amounts Were Collected Based On An Unconstitutional Levy Entitled To Refund: Kerala High Court

The Kerala High Court has ruled that persons from whom a fee was collected under a State Circular calling for applications for use of unnotified land for other purposes were entitled to refund of the amount since the circular was struck down as unconstitutional. 

Justice T.R. Ravi observed that the issue of whether the claim for refund of amounts which have been collected based on the unconstitutional levy either in the form of fee or in the form of tax or in the form of duty is no longer res integra.

"In a series of decisions, the Hon'ble Supreme Court has held that the person from whom such amount is collected is entitled to refund of the amount whether the claim is made in a suit or whether it is made in an application under Article 226 of the Constitution of India."

The Government of Kerala amended the Conservation of Paddy Land and Wetland Act, 2008 by introducing Section 27A, whereby applications for use of unnotified land for other purposes were permitted. A fee was prescribed for granting permission for such use. On 25.7.2021, the Government issued a Circular whereby a cut off date was fixed for applications seeking permissions for use of unnotified lands for other purposes.

The said Circular was later challenged before this Court and a Division Bench in Baby v. District Collector [2021 (6) KLT 316] held that the Circular was unconstitutional since when the State Government intended to classify and exclude farmers holding up to 25 cents of unnotified paddy land from payment of fee/charge for utilisation of the same for other purposes, there cannot be a further reclassification based on the date of submission of the application.

The petitioners herein are all persons from whom fee was collected which they were otherwise not liable to pay, solely based on the Circular which has now been held to be unconstitutional. Thereby, they approached the Court claiming a refund of the amounts which have been collected from them illegally based on the unconstitutional Circular. 

Special Government Pleader appearing for the State argued that at the time when the amounts were paid, the Circular had not been declared unconstitutional and it was valid for all purposes at that point of time. It was hence submitted that the collection of the amounts or the payment of the amount which was made voluntarily cannot hence be held as an illegal levy liable to be refunded.

The Court upon noting that this was a settled position in law, and placing reliance on several Supreme Court decisions held that the petitioners were entitled to refund of the respective amounts since the fee was collected based on the unconstitutional levy. 

As such, the petitions were allowed and the concerned respondents were directed to make the refunds within two months

Advocates K. Mohanakannan, P. Sathisan, V.N. Haridas, C. Ajith Kumar, A.R Pravitha and C. A Chacko appeared for the petitioners in the matter. 

Case Title: Jaganadhan v. State of Kerala & connected matters. 

Citation: 2022 LiveLaw (Ker) 194

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