Kerala Paddy Land Act | No Exemption From Conversion Fee If Land Exceeds 25 Cents : Supreme Court

The Supreme Court held that exemption from conversion fee as per Section 27A of the Kerala Conservation of Paddy Land & Wetlands Act, 2008 will not apply to properties exceeding 25 cents.

The Court set aside the judgment of the Kerala High Court which held that the conversion fee for a land, which has an extent of more than 25 cents, should be computed after reducing 25 cents.

A bench comprising Justice Sanjay Karol and Justice Manmohan held that the Kerala High Court erred in interpreting the true intent of the notification issued by the Kerala Government on 25th February 2021 granting exemption from paying reclamation fee in respect of lands up to 25 cents. As per Section 27A, conversion fee is 10% of the fair value of the land. The Supreme Court held that the notification's intent was to exempt small landholdings, which are less than 25 cents, from conversion fee. The notification cannot be interpreted as holding that conversion fee need not be paid for land up to 25 cents when a large landholding in excess of 25 cents is sought to be converted.

"The interpretation of the High Court is that such calculation of 10% fair value of total land, which exceeds 25 cents, shall be computable after having reduced the 25 cents, as exempted from the total. We are unable to accept such a view," the Supreme Court held.

The Supreme Court applied the principle that exemption notifications have to be interpreted literally and strictly. The Court also observed that the State was empowered to make a classification based on the extent of the land to provide exemption.

"The appellant(State) has sought to create two separate classes, one of people having land 25 cents or less; and the second, where people have land in excess of 25 cents. It has been submitted that the object of the exemption of fee for the people belonging to the former class is to enable them to have ease in constructing either housing of small buildings, etc., without being burdened with having to pay a fee for conversion of the land. The respondent has not brought anything on record nor has advanced any submissions to put forward a position holding that the State did not have the necessary competence to do so. When that is the case, we are unable to understand as to how the two distinct categories were fused into one by the High Court. Further, due care has been taken by the competent authority to specify the different categories of fees to be paid proportionate to the land. This signifies the intent to form different classes and categories. One does not flow into the next."

The Court also noted that through a subsequent notification dated 23rd July 2021, the Government had clarified that exemption is not available to lands in excess of 25 cents.

Reference was also made to Rule 12 Clause 9 of the Kerala Conservation of Paddy Land and Wetland Rules, 2008, which reads as, “Fees to be remitted for sanction of change of nature of unnotified land”. The Rule clarified that when the extent is up to 25 cents no fee is to be remitted. The second column of the Rule categorically stated that when the land is above 25 cents up to 1 Acre or less 10% of the fair value, is to be paid as a fee

"This, in our view, further clarifies that the learned Single Judge as also the Division Bench fell in error in holding that land up to 25 cents is exempted from payment of fees in all cases," the judgment authored by Justice Karol stated.