Summary
- Building Fee Struck Down: In Abad Builders Pvt. Ltd. v. State of Kerala [2025 (1) KHC 306], the High Court of Kerala held the fee under Rule 12(9) of the Kerala Conservation of Paddy Land and Wetland Rules, 2008, which levied ₹100 per sq. ft. on building area above 3,000 sq. ft., to be ultra vires the parent Act and contrary to Articles 265 and 300A of the Constitution.
- Buildings Constructed Before 30.12.2017: Section 27A does not reach a building lawfully constructed, with permission, before 30.12.2017 (the date from which Section 27A operates) on land already in lawful use (State of Kerala v. Shaji N.T., W.A. No. 152 of 2024, decided 15 October 2025). Applying this, the High Court has quashed building fee demands of ₹100 per sq. ft. for such buildings in Form 6 proceedings (Dr. A. Giridhar v. State of Kerala [2026:KER:26236]).
- Land Conversion Fee Remains Payable Above 25 Cents: While the building fee is nil, the land conversion fee (10% of Fair Value for holdings above 25 cents up to 1 Acre; 20% above 1 Acre) is payable on the entire land extent without deducting the first 25 cents, as held by the Supreme Court on 20 February 2025 in State of Kerala v. Moushmi Ann Jacob [2025 INSC 255].
1. Background
For commercial developers, institutional builders, and individual landowners in Kerala, regularizing "unnotified land" (land described as Nilam or Nanja in the Basic Tax Register (BTR) and Revenue records, but excluded from the notified Data Bank) is governed by Section 27A of the Kerala Conservation of Paddy Land and Wetland Act, 2008 ("the Act"), which operates from 30 December 2017.
While Section 27A was enacted to unlock thousands of parcels of dry, converted land for legitimate development upon payment of a statutory land conversion fee via a Form 6 application, revenue authorities and Local Self-Government Institutions (LSGIs) began imposing a heavy secondary levy: ₹100 per square foot for every square foot of building plinth area exceeding 3,000 sq. ft. For commercial complexes, warehouses, hospitals, apartment projects, and large residential villas, this demand routinely ran into lakhs or crores of rupees, often halting Form 6 processing before the Revenue Divisional Officer (RDO) or blocking Building Permits on the K-SMART portal.
2. The Impugned Provision: Note 1 to the Schedule under Rule 12(9)
The demand for ₹100 per sq. ft. did not originate in the parent statute passed by the Kerala State Legislature. Instead, it was introduced through subordinate legislation, specifically Note 1 appended to the Schedule under Rule 12(9) of the Kerala Conservation of Paddy Land and Wetland Rules, 2008, read with the Government Order dated 25.02.2021.
Under this rule, even after a landowner remitted the prescribed percentage of the land's Fair Value to alter the BTR entry from Nilam to Purayidam (Dry Land), either the RDO (at the stage of Form 6 adjudication) or the Secretary of the Municipality/Panchayat (at the stage of issuing a Building Permit or Occupancy Certificate) demanded an additional ₹100 per sq. ft. for any proposed or existing building area exceeding 3,000 sq. ft.
3. The Ruling Striking Down the ₹100/Sq. Ft. Levy
Held: The levy under Rule 12(9) of the Kerala Conservation of Paddy Land and Wetland Rules, 2008 of a fee on building area above 3,000 sq. ft. is ultra vires Section 27A of the parent Act and contrary to Articles 265 and 300A of the Constitution of India.
In Abad Builders Pvt. Ltd. v. State of Kerala, the High Court of Kerala scrutinized the legislative competence and statutory architecture of the 2008 Act and struck down the building fee levy on three grounds:
- Absence of Statutory Authority in the Parent Act: Under Article 265 of the Constitution of India, no tax or compulsory fee can be levied or collected except by authority of law. A careful reading of Section 27A(1) and 27A(3) reveals that the Legislature only authorized the collection of a fee for changing the nature of unnotified land, calculated strictly with reference to the extent and Fair Value of the land. The parent Act contains no enabling provision authorizing an impost on the building or its plinth area.
- End of Revenue Jurisdiction Post-Conversion: Once an applicant satisfies the conditions under Section 27A and obtains permission to change the nature of unnotified land in the revenue records, the land ceases to be governed by the restrictions of the Paddy Land Act (subject to the 10% water conservation reservation where extent exceeds 20.23 Ares). Subsequent construction on that land is regulated exclusively by the Kerala Municipality Building Rules (KMBR) or the Kerala Panchayat Building Rules (KPBR), under which permit fees are already collected by the local body.
- Lack of Quid Pro Quo: As a regulatory fee rather than a tax, any levy under delegated legislation must bear a reasonable nexus to a service rendered or regulatory burden borne by the State. The Revenue Department performs no special service proportional to the square footage of a building constructed on converted land.
The State's Appeal and the 2026 Decisions
Aggrieved by the Single Bench decision in Abad Builders, the State of Kerala preferred a Writ Appeal bearing W.A. No. 495 of 2025 before the Division Bench. However, because the rule stands declared unconstitutional, the High Court has consistently protected landowners and developers throughout 2025 and 2026.
In later decisions, including Jomon K.D. v. State of Kerala [2026:KER:21103], Farsana Ali v. State of Kerala (March 2026), Shabeer Y v. State of Kerala [2026:KER:47284], and Abhilash Melodan v. State of Kerala (July 2026), the High Court has repeatedly set aside RDO fee notices and K-SMART defect notices, directing authorities to process Form 6 applications and issue Building Permits without collecting any fee for building area exceeding 3,000 sq. ft., clarifying that such issuance shall remain subject to the final outcome of W.A. No. 495/2025.
4. Buildings Constructed Before 30 December 2017
A critical distinction must be drawn where a commercial or residential building exceeding 3,000 sq. ft. was already constructed on the property prior to 30 December 2017 (the date from which Section 27A operates), and the owner now applies in Form 6 merely to regularize the underlying land description in the BTR for loan, transfer, or reconstruction purposes.
Held: Section 27A is a mechanism for future changes in land use and does not reopen past lawful conversions. Where a building was constructed with permission, and the land was lawfully in use, before 30.12.2017, Section 27A does not apply to it. The High Court has applied this to quash fee demands for existing buildings exceeding 3,000 sq. ft. in Form 6 proceedings.
In Dr. A. Giridhar v. State of Kerala (decided in March 2026, following Shaji N.T. and the earlier decision in Reeta John v. State of Kerala [2023 (6) KLT 472]), the Deputy Collector had issued a notice demanding ₹11,37,300/- for an existing building exceeding 3,000 sq. ft. as a precondition to allowing a Form 6 application. Quashing the demand, the High Court held that a building lawfully constructed prior to 30.12.2017 cannot be subjected to a retroactive levy under Section 27A.
5. Fees Payable Under Section 27A
The following table summarizes the current statutory and judicial position for land and building categories. Fee slabs should be confirmed against the Government Order dated 25.02.2021 before a payment is made.
| Category of Asset / Extent | Prior Administrative Demand | Current Legal Liability | Governing Judicial Authority |
|---|---|---|---|
| Unnotified Land up to 25 Cents (Held as 25 cents or less as on 30.12.2017) | Nil | Nil (Exempt) | Statutory Exemption under Schedule to Rule 12(9) & GO dated 25.02.2021 |
| Unnotified Land > 25 Cents up to 1 Acre (10.12 Ares to 40.47 Ares) | 10% of Fair Value | 10% of Fair Value on Entire Extent (No slab deduction for first 25 cents) | State of Kerala v. Moushmi Ann Jacob [2025 INSC 255] (Supreme Court) |
| Unnotified Land Exceeding 1 Acre (Above 40.47 Ares) | 20% of Fair Value | 20% of Fair Value on Entire Extent (Plus 10% water conservation area if > 20.23 Ares) | Section 27A(2) & Moushmi Ann Jacob [2025 INSC 255] (SC) |
| Proposed / Post-2017 Building (Plinth area exceeding 3,000 Sq. Ft.) | ₹100 per sq. ft. on area above 3,000 sq. ft. | Nil (Struck Down) Subject to final disposal of W.A. No. 495 of 2025 | Abad Builders Pvt. Ltd. v. State of Kerala [2025 (1) KHC 306] |
| Existing Building Constructed Prior to 30.12.2017 (Plinth area exceeding 3,000 Sq. Ft.) | ₹100 per sq. ft. on area above 3,000 sq. ft. | Nil (Exempt) | State of Kerala v. Shaji N.T. (DB, 15 October 2025) and Dr. A. Giridhar [2026:KER:26236] |
Take 35 cents of unnotified land (about 14.16 Ares) with a Fair Value of ₹2,50,000 per Are, and a building of 8,500 sq. ft. constructed after 30.12.2017. The land conversion fee at 10% of Fair Value on the entire extent is about ₹3,54,100. The building fee is nil, because the levy was struck down, so the demand of ₹5,50,000 that would otherwise have been raised (5,500 sq. ft. above the 3,000 sq. ft. threshold at ₹100 per sq. ft.) is not payable. The figures are illustrative and use the slabs in the table above.
6. Steps Open to Landowners and Developers
Notwithstanding the binding judgment in Abad Builders, Revenue Divisional Officers, Deputy Collectors (LR/RR), and Municipal/Panchayat Secretaries operating through the K-SMART portal frequently continue to generate automated fee demand notices or defect memos citing the pendency of W.A. No. 495/2025. When confronted with such a demand, applicants may consider the following steps:
A. Stage 1: Demand Raised by RDO / Deputy Collector in Form 6 Proceedings
If the RDO or Deputy Collector issues an intimation notice demanding ₹100 per sq. ft. for an existing or proposed building exceeding 3,000 sq. ft. along with the land conversion fee:
- Remit Only the Undisputed Land Fee (If Applicable): To avoid delay in the BTR correction process, the applicant may remit the statutory land fee (10% or 20% of Fair Value, if land exceeds 25 cents) while challenging the building fee component.
- Approach the High Court under Article 226: File a Writ Petition (Civil) before the High Court of Kerala seeking a Writ of Certiorari to quash the building fee demand and a Writ of Mandamus directing the RDO to issue final orders in Form 6 forthwith without insisting on the ₹100/sq. ft. levy.
- Documentary Evidence for Pre-2017 Structures: If the building existed prior to 30.12.2017, produce the Occupancy Certificate, Building Age Certificate, or pre-2017 Property Tax Assessment Register extracts in support of a challenge based on State of Kerala v. Shaji N.T. and Dr. A. Giridhar.
B. Stage 2: Objection Raised by Municipality / Panchayat on K-SMART Portal
Where the Form 6 order has already been obtained (or the land was converted earlier), and the LSGI Secretary issues a return note on the K-SMART portal refusing to process a Building Permit or Occupancy Certificate without proof of payment of ₹100/sq. ft. for area exceeding 3,000 sq. ft.:
- File a formal legal representation enclosing the ratio in Abad Builders Pvt. Ltd. v. State of Kerala [2025 (1) KHC 306], or immediately move the High Court of Kerala to direct the Secretary of the Local Self-Government Institution to process the Building Permit application on K-SMART without insisting on the invalidated fee.
C. Stage 3: Claiming Refund of Fees Paid Under Protest
Where an applicant was compelled to pay the ₹100/sq. ft. building fee due to commercial urgency or project financing timelines, the constitutional invalidity of Note 1 to Rule 12(9) under Article 265 entitles the payer to seek restitution, particularly where the payment was remitted "under protest" or where the building was a pre-2017 structure wholly outside the ambit of Section 27A.