S.S. Sandhawalia, J. - (1.) THE constitutional validity of Section 3(2) and Section 4 of the Produce Cess Act, 1966 and of Rule 6 of the Rules framed under Section 20 thereof has been the primary and indeed the sole subject, matter of challenge in this set of forty -three connected writ petitions.
(2.) AS is manifest the issue is pristinely legal and the barest reference to the facts would hence be adequate. It would suffice to advert to the averments made in C.W.P. No. 35 of 1974 Dhanpat Oil and General Mills v. Union of India and Ors. which are typical, if not identical with those in the others. The Petitioners therein carry on the business of oil extraction from groundnut, cotton -seeds, Sarson and other oil seeds and are also dealers in vegetable and other essential oils. The Superintendent, Central Excise, issued a notice, annexure 'A', dated the 29th of September, 1972, requiring the Petitioners to produce necessary documents and to further attend personally before him apparently with regard to an enquiry pertaining to the cess leviable under the Produce Cess Act, 1966, (hereinafter called the Act). However, the Petitioners failed to comply with the same in the alleged bona fide belief that their business did not fall within the purview of the Act. Later on the 22nd of December, 1972, the Superintendent Central Excise issued a notice (vide annexure 'B') to the Petitioners requiring them to show cause as to why a penalty for their failure to file a return and to deposit the cess be not imposed on them. To this the Petitioners replied, - -vide annexure C questioning the jurisdiction of the Respondents to levy the cess upon them. However, another communication, annexure 'D' dated the 3rd of September, 1973, was then received from the Assistant Collector, Central Excise by the Petitioners to appear before him with regard to the aforesaid proceedings in which the Petitioners sought various adjournments thereafter. However, it is the admitted stand that the Petitioners did not deposit the cess nor did they file the return as required by the show -cause notices on the ground that the Respondents had no jurisdiction to levy and recover the cess on the products manufactured by and dealt in by them in their business. The Petitioners thereafter preferred the present writ petition laying challenge to the very constitutionality of the provisions under which the cess is levied. Inevitably the argument and the controversy must necessarily revolve around the impugned provisions of the Act and these may first be set down for facility of reference: 5.3. Imposition of cess: (1) * * * * (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. Section 4. Persons who shall be liable to pay duty : Every duty of customs leviable under this Act on any produce shall be payable by the person by whom such produce is exported from India and every duty of excise leviable under this Act on any produce shall be payable by the occupier of the mill in which such produce is consumed or extracted.
(3.) NOW the spear -head of the challenge to the constitutionality raised by Mr. R.L. Batta is first directed primarily against Section 3(2) of the Act. Herein the core of the argument is that in pith and substance the levy under Section 3(2) of the Act though styled as a duty of excise is in essence a fee for services rendered. It was sought to be pointed out that the quid pro quo for the services rendered for this cess are spelled out by Section 5(1) and (2) of the Act which provides for the application of the proceeds of the cess. Therefore, it was contended with some vehemence that mere labelling of this levy as a tax or a duty of excise is patently misleading and cannot be decisive, the true test being the real nature of the levy. On these premises, Mr. Batta then built the argument that the cess being in the nature of a fee which is to be utilised for the specific purposes given in Clauses (a) to (n) of Section 5(2) of the Act, Parliament has no legislative power to impose the same. According to counsel the levy being in the nature of a fee primarily on agricultural produce the power to legislate with regard thereto was exclusively vested in the State legislature by virtue of entry 14 of the State List pertaining to agriculture including agricultural education and research, protection against pests and prevention of plant diseases.;