Decided on May 23,1968



- (1.) The petitioners in these writ petitions, assail the validity of S.3(2) of the Produce Cess Act 1966, (Central Act 15 of 1966). The section reads: "3(1). x x x 3(2) There shall be levied and collected as a cess, for the purposes of this Act, on every produce specified in column 2 of the second schedule, a duty of excise at such rate, not exceeding the rate specified in the corresponding entry in column 3 thereof, as the Central Government may, by notification in the Official Gazette, specify: Provided that until such rate is specified by the Central Government, the duty of excise shall be levied and collected at the rate specified in the corresponding entry in column 4 of the said Schedule." The Act is entitled: "An Act to provide for the imposition of a cess on certain produce for the improvement and development of the methods of cultivation and marketing of produce and for matters connected therewith." Column 2 of the Second Schedule lists cotton copra and oils. Clause (1) of the section states that an amount equivalent to the proceeds of the cess shall, after due appropriation by Parliament by law be utilised by the Central Government, to meet the expenditure incurred in connection with measures, which, in the opinion of the Government, are necessary or expedient to promote the improvement, development, and marketing of produce. Sub clause 2 of S.5 provides that without prejudice to the generality of the provisions of sub-s.(1) the proceeds of the duty levied and collected may be utilised by the Central Government for all or any of the purposes, listed in clauses (a), to (n) of the said sub clause.
(2.) I shall assume with the petitioner's counsel that clauses (a) to (n) of the sub clause are concerned with the improvement and development of methods of cultivation and marketing of produce set out in the preamble to the Act and that the items of produce specified in Schedule.2 are all agricultural. On these provisions, the petitioner's counsel built the argument that the cess levied by the Act is not a tax or an excise duty but only a fee to be utilised for, the specific purposes in clauses (a) to (n) of S.5(2) of the Act" and if a fee Parliament had no legislative power to levy the same. Alternatively, viewed as tax, the earmarking of the impost for specific purposes, was claimed to be unjustified and inconsistent with the character of a tax which ought to go to the consolidated fund of India and be merged with the general revenues instead of being dealt with for specifically enumerated purposes. As an excise duty, it was argued that, there was no provision for the States to get their share of the duty under Art.272 of the Constitution. Besides negatively disclaiming the impost as beyond the legislative powers of Parliament whether as a fee or as a tax, a positive claim was made that the subject matter of the legislation fell squarely Within Entry 12 of List 2 of Schedule 7 of the Constitution.
(3.) None of these arguments carry conviction to me. It is well settled that the nature of the impost is to be judged on a conspectus of the whole provisions of the enactment concerned, and not by reference to, the words or the language used for describing the levy. In The Hingir Rampur Coal Co. Ltd. v. The State of Orissa ( AIR 1961 SC 459 ), on the provisions of the statute the cess imposed by the. Orissa Mining Areas Development Fund Act (27 of 1952) was held to be neither a tax nor a duty of excise but a fee. On the other hand, in Ahmedabad Manufacturing and Calico Printing Co. Ltd., Ahmedabad etc. v. State of Gujarat and others ( AIR 1967 SC 1916 ) the cess imposed by the Gujarat Education Cess Act, Was held to be a tax and not a fee. In M/s Shindo Brothers etc. v. Deputy Commissioner, Raichur & Others ( AIR 1967 SC 1512 ) it was admitted before the High Court that the cess imposed by the Mysore Health Cess, Act was a tax though called a cess. The nomenclature as 'cess' is certainly not decisive of the character of the levy, S.3(2) is clear that a duty of excise' is to be levied and collected as cess for the purpose of the Act. Going by the language of the section and the description of the levy, the indication is that the levy is a tax by way of excise duty.;

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