The Supreme Court held that the exemption under the Notification applies only to lands up to 25 cents and cannot be extended to larger holdings.

The High Court erred in allowing the exemption for the first 25 cents of land exceeding 25 cents.

The respondent is liable to pay conversion fees on the total extent of the land, without any deduction for the first 25 cents.

Major Acts:

• Constitution of India (COI), Article 14 – Reasonable classification and non-arbitrariness in State actions.

• Kerala Conservation of Paddy Land and Wetland Act, 2008 – Section 27A and Rule 12(9) – Fees for change of nature of unnotified land.

• Kerala Conservation of Paddy Land and Wetland Rules, 2008 – Rule 12(9) – Exemption of fees for land up to 25 cents.

Facts:

• The respondent owned 14.57 acres of land, originally classified as 'paddy land' under the Kerala Conservation of Paddy Land and Wetland Act, 2008.

• The respondent applied for reclassification of the land to secure an education loan.

• The Revenue Officer directed the respondent to pay 10% of the land's fair value as a conversion fee, amounting to Rs. 1,74,840/-.

• The respondent challenged this demand, citing a Government Notification dated 25th February 2021, which exempted lands up to 25 cents from conversion fees.

• The High Court ruled that the fee should be calculated only for the land exceeding 25 cents, exempting the first 25 cents.

• The State appealed, arguing that the exemption applies only to lands up to 25 cents, and not to larger holdings.

Issues:

1. Whether the exemption of conversion fees under the Notification applies only to lands up to 25 cents, or whether it can be deducted from larger holdings.

2. Whether the High Court erred in interpreting the Notification to allow exemption for the first 25 cents of land, even when the total landholding exceeds 25 cents.

Submissions/Arguments:

• Appellant (State of Kerala):

  • The exemption is intended for small landowners with holdings up to 25 cents, to facilitate residential construction.

  • The Notification creates two distinct classes: lands up to 25 cents (exempt) and lands exceeding 25 cents (fee payable).

  • The High Court’s interpretation defeats the purpose of the exemption by allowing larger landowners to benefit.

  • Rule 12(9) of the Kerala Conservation of Paddy Land and Wetland Rules, 2008, clearly states that fees are payable for lands exceeding 25 cents.

• Respondent:

  • The Notification allows for a graded scale of fees, and the exemption should apply to the first 25 cents of any landholding.

  • The respondent’s land was mistakenly classified as paddy land, and the application for reclassification was made before the Notification.

  • The High Court’s interpretation is consistent with the purpose of the Notification, which is to reduce the burden on landowners.

Ratio:

1. Strict Interpretation of Exemption Clauses: Exemptions must be interpreted strictly, and the burden of proving entitlement lies on the claimant. (Para 15, C.C.E. v. Hari Chand Shri Gopal).

2. Literal Rule of Interpretation: The plain meaning of the Notification creates two distinct categories: lands up to 25 cents (exempt) and lands exceeding 25 cents (fee payable). (Para 16, Dilip Kumar & Co.).

3. Reasonable Classification: The State’s classification of lands into two categories based on size has a rational nexus with the object of promoting small residential constructions. (Para 20, Natural Resources Allocation, In re).

4. Clarification of Notification: The subsequent clarification dated 23rd July 2021 reaffirmed that the exemption is only for lands up to 25 cents, and larger holdings cannot bifurcate to claim the benefit. (Para 22).

Subjects:

• Kerala Conservation of Paddy Land and Wetland Act, 2008

• Conversion Fees

• Exemption Notification

• Reasonable Classification

• Strict Interpretation

• Literal Rule of Interpretation