- (1.) The validity of the levy of education cess and rural employment cess created by the West Bengal Taxation Laws (Second Amendment) Act, 1989 is called in question in these writ petitions preferred by several tea estates in West Bengal.
(2.) For a proper appreciation of the questions arising herein, it is necessary to have a glimpse of the legislative history behind the impugned Amendment Act. The West Bengal Legislature enacted the West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976 to provide for primary education throughout the State and to provide employment in rural areas respectively. For raising funds for the said purposes, the State Legislature imposed two cesses upon certain lands and buildings in the State. Since the relevant provisions of both the enactments are similar, it would be sufficient to notice the relevant provisions of the West Bengal Rural Employment and Production Act, 1976. Section 4 (1 of the 1976 Act levies rural employment cess on all immovable properties on which road or public work cess is assessed or liable to be assessed according to the provisions of the Cess Act, 1880. Section 4 (2, as originally enacted, prescribed different rates in respect of lands, coal mines and other mines on an annual basis. By virtue of the West Bengal Taxation Laws (Amendment) Act, 1981, tea estates were carved out as a separate category and a separate rate prescribed therefor. Ss. (2 of Section 4, as amended in 1981, read as follows: "4.(2 The rural employment cess shall be levied annually- (A) in respect of lands, other than a tea estate, at the rate of six paise on each rupee of development value thereof; (Aa) in respect of a tea estate at such rate, not exceeding rupees six on each kilogram of tea on the despatches from such tea estate of tea grown therein, as the State government may, by notification in the Official Gazette, fix in this behalf: Provided that in calculating the despatches of tea for the purpose of levy of rural employment cess, such despatches for sale made at such tea auction centres as may be recognised by the State government by notification in the Official Gazette shall be excluded: Provided further that the State government, may fix different rates on despatches of different classes of tea. Explanation.- For the purpose of this section, 'tea' means the plant Camelia Sinensis (L) O. Kuntze as well as all varieties of the product known commercially as tea made from the leaves of the plant Camelia Sinensis (L) O. Kuntze, including green tea and green tea leaves, processed or unprocessed. "ss. (4 was introduced in Section 4 which empowered the State government to exempt "such categories of despatches or such percentage of despatches from the liability to pay the whole or any part of the rural employment cess or reduce the rate. . ". By another amendment effected in 1982, the first proviso to clause (aa) in Section 4 (2 was omitted. Several notifications were issued by the government from time to time as contemplated by Section 4 (2.
(3.) The levy of the said cess was questioned by a number of tea estates by way of writ petitions filed in this court. Certain writ petitions filed in the High court were transferred to this court to be heard along with the said writ petitions, all of which were disposed of on 12/5/1989 by a bench comprising R. S. Pathak, C. J. and M. H. Kania, J. (reported as Buxa Dooars Tea Co. Ltd. v. State of w. B. ). The challenge to the levy was based upon violation of Article 14 and Article 301 of the Constitution as also on the ground of lack of legislative competence on the part of the State Legislature. This court examined the attack based upon Article 301 in the first instance. It held that the levy was really on the despatches of tea from the tea estates. It noted that the first proviso to Section 4 (2 (aa) , since deleted, excluded the despatches of tea for sale made at such tea auction centres as may be recognised by the State government by notification in the Official Gazette from the levy. It further pointed out that the second proviso empowered the State government to fix different rates on despatches of different classes of tea. Section 4 (4, it noted further, empowered the government to exempt such categories of despatches or such percentage of despatches from levy as the government may think appropriate. Having regard to the said features, the bench held, the levy was essentially upon despatches though purporting to be a levy upon the tea estates. The entire structure of the levy, the bench pointed out, led to the conclusion that it was a levy on despatches and not on tea estates and that there was no nexus between the levy and the tea estates. The learned Judges rejected the argument that the mode of levy was merely a measure of the tax. They pointed out further that the quality of tea produced in all tea estates in the State was not uniform and that the benefit of exemption or reduction in levy has no relation to the need of a particular tea estate for exemption from the levy. The learned Judges concluded: "When the provisions before us are examined in their totality, we find no such relationship or nexus between the tea estate and the varied treatment accorded in respect of despatches of different kinds of tea. It seems to us that having regard to all the relevant provisions of the statute, 716 including Section 4 (2 (aa) and Section 4 (4, in substance the impugned levy is a levy in respect of despatches of tea and not in respect of tea estates. "accordingly, the levy was held to be violative of Article 301 of the Constitution, The learned Judges then proceeded to consider the question of legislative competence and held that if the levy is, in substance, on despatches of tea, it cannot be held to be tax on lands. They referred to the declaration by Parliament in Section 2 of the Tea Act, 1953 to the effect that it was expedient in public interest that Union should take under its control the tea industry and observed that Parliament has thereby assumed control of the tea industry including the tea trade and has also imposed a cess on tea produced in India under Section 25. The learned Judges observed: "it appears to us that the impugned legislation is also void for want of legislative competence as it pertains to a covered field. ";