The Supreme Court has ruled that landowners cannot claim an exemption from conversion fees under the Kerala Conservation of Paddy Land & Wetlands Act, 2008 if their property exceeds 25 cents. This decision overturns a Kerala High Court ruling that had previously allowed a reduction in conversion fees by excluding the first 25 cents from the total landholding.
A bench comprising Justices Sanjay Karol and Manmohan found that the High Court misinterpreted a February 2021 government notification. The notification was intended to provide relief for small landowners but did not imply that larger properties could subtract 25 cents from their taxable land before calculating fees. As per Section 27A of the Act, landowners converting paddy fields or wetlands must pay 10% of the fair value of the land as a fee.
The Supreme Court emphasized that exemption laws must be interpreted strictly. The Kerala government had explicitly created two categories: one for properties of 25 cents or less, which qualify for the exemption, and another for larger properties, which must pay the full conversion fee. The court found no legal basis for blending these two classifications.
A subsequent government notification in July 2021 further clarified that properties exceeding 25 cents do not qualify for any exemption. Additionally, Rule 12 Clause 9 of the Kerala Conservation of Paddy Land and Wetland Rules, 2008 confirmed that fees apply to land above 25 cents.
The case arose when a landowner with 36.65 cents of land challenged a government demand for a conversion fee of ₹1.74 lakh. The High Court had ruled in favor of the landowner, instructing officials to apply the exemption to the first 25 cents and calculate fees only on the remaining portion. The Supreme Court has now reversed that decision, reinforcing the government’s authority to impose the full conversion fee on larger landholdings.