Grover, J. - (1.) These appeals by certificate arise from a judgment of the Mysore High Court delivered in certain petitions filed under Article 226 of the Constitution challenging the demand of a cess levied in exercise of the powers conferred by Section 11 (1) of the Madras Commercial Crops Market. Act, 1933 - hereinafter called the 'Act'- the provisions of which were applicable to the Bellary district of the State of Mysore.
(2.) The respondents were served a notice by the Secretary of the Bellary Market Committee established under the Act to pay the cess on groundnut seeds bought or sold in the notified area of the Committee. As the respondents failed to comply with the demand complaints were filed against them for contravention of Section 11 (1) of the Act and of certain rules and bye-laws framed thereunder. The respondents filed petitions under Article 226 of the Constitution challenging the validity of the levy of cess. The High Court quashed the demand on the ground that what was being really demanded was the payment of sales tax and since the maximum rate of sales tax authorised by Section 15 of the Central Sales Tax Act, 1956 read with Section 5 (4) of the Mysore Sales Tax Act, 1957 had already been imposed the Market Committee could not make any further or additional levy. A direction was also made for refund of the cess collected during a period of three years preceding the date of the presentation of the writ petition.
(3.) For the purpose of determination of the points which have been raised it is necessary to set out the background and the history of legislation insofar as it is relevant concerning Bellary district. By the Andhra State Act (Central Act 30 of 1953) a Part A State to be known as "Andhra" came into existence. By Section 4 of that Act there was added to the State of Mysore the territory which immediately before the appointed day was comprised in the Taluks of Bellary district other than Alur, Adoni and Rayadrug in the State of Mysore and the said territories thereupon ceased to form part of the State of Madras. By virtue of Section 53 of the Central Act 30 of 1953 all laws which were in force immediately before the appointed day in the territories which became a part of the State of Mysore were to continue to be in force until otherwise provided by the legislature of that State. The Act became applicable to that area of the Bellary District which became a part of the State of Mysore. Section 11 (1) of the Act as it originally stood empowered the Market Committee to levy fees subject to such rules as might be made on the notified commercial crop or crops bought and sold in the notified area at such rates as it might determine. In certain decisions of the Madras High Court the view was expressed that the fee levied under Section 11 (1) as it originally stood was not for services rendered but was really a tax levied for raising funds for constructing the market. With a view to avoid the legality of the levy being questioned the Madras legislature amended Section 11 (1) by Madras Act 33 of 1955. It was stated in the object and reasons of the Bill which was introduced in the legislative assembly of that State, that it was proposed to make it clear that the levy was a cess by way of sales tax and that it was in addition to the sales tax levied under the Madras General Sales Tax Act, 1939 and was also subject to the provisions of Article 286 of the Constitution. The following sub-section was substituted for sub-section (1) of Section 11 of the Act: "Notwithstanding anything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) , the Market Committee shall subject to such rules as may be made in this behalf, levy a cess by way of sales tax on any commercial crop bought and sold in the notified area at such rates as the State Government may by notification, determine. Explanation ........................" Since that part of Bellary district which had been included in the Mysore State by virtue of the Central Act 30 of 1953 was no longer a part of the State of Madras the above amendment made in 1955 did not apply there. The amended section, however, was applicable to South Kanara district which then formed part of the State of Madras. By the States Reorganisation Act 1956 the district of South Kanara, with the exception of the Taluk of Kollegal and certain other areas became part of the new State of Mysore. Section 7 (a) of that Act contained a provision similar to Section 53 of the Central Act 30 of 1953. The laws operating in the State of Madras became applicable to areas which were formerly in that State. Thus Section 11 of the Act, as amended, in the year, 1955 by the legislature of the State of Madras continued to apply to the South Kanara district of the State of Mysore. The situation on that date was that in the district of Bellary which became part of the former State of Mysore Section 11 of the Act was in force as it stood before its amendment in 1955 by the Madras legislature. But Section 11, as amended, was in force in the district of South Kanara.;