M\S.
R.S. Rekhchand Mohotaspinning & Ors Weaving Mills Ltd. Vs. State of
Maharashtra [1997] INSC 517 (7 May 1997)
K.
RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK
ACT:
HEADNOTE:
O R D
E R This appeal by special leave arises from the judgment of the Division Bench
of Bombay High Court passed in Writ Petition No. 1509 of 1981 on November 8, 1989. The primary question is: whether
the state legislature has power to levy rates of cess on use of flowing water
from the river "Wana'.
The
facts are as under. The appellant had installed a mill in the year 1898 and has
been drawing water for industrial purpose from the said river by installing
water pumps at its bank with the help of artificial contrivance.
Under
section 70 of the maharashtra Land Revenue Code, 1966, (for short, 'the Code'),
The Government of Maharashtra passed the following Resolution on June 5, 1972 thus;
"In
exercise of the power conferred in it by section 70 of the Maharashtra Land
Revenue Code, 1966, the Government is pleased to sanction the following rates
for the use of water (the right to which vest in Government and in respect of
which no rate is liable under any law in force in any part of the state) for
non-agriculture purpose.
NON-
AGRICULTURE PURPOSE Rate Unit
1.
Industrial purpose (a Rs.8/- for the Per ten first two years thousand cft. of
water (b) Rs. 10/- for -do- the third & fourth year (c) Rs. 12.50 for -do-
the fifth and subsequent year
2.
Purpose for the Rs. 5/- -do- Municipality
3.
Purpose for the Rs. 12.50 -do- Railways
4.
Domestic use (i.e. for drinking water) Nil The Collector or such other officers
as may be authorised in that behalf should fix the water rates in accordance
with rates sanctioned above.
These
orders supersede all the prevalent orders or practice in regard to the quantum
or the rates chargeable under Section 70 of the Maharashtra Land Revenue Code,
1966.
These
orders were issued with the concurrence of the Finance Department vide in
official reference No. 7041 dated 29th April, 1972." The Tehsildar of Hinganghat
on the appellant levied cess in the sum of Rs. 18,348.30 for the period from
1967-68 to 1973-74 on the use of water for industrial purpose. The appellant,
feeling aggrieved, filed an application under Section 20(2) of the Code before
the Sub-Divisional officer, Hinganghat, challenging the demand of cess, dated
December 19, 1974, inter alia, contending that he had easementary right to draw
flowing water from the river, wane, uninterruptedly and continuously since he
had been so drawing the water for over 70 years; that it had perfected as his
prospective right to draw water from the flowing river, and the Government is,
therefore, devoid of any power to levy cess on the use of water.
The
Sub-Divisional officer dismissed the application after consideration after
considering necessary evidence.
The
appeal filed by the appellant against the order of the Sub-Divisional officer
also was dismissed. The commissioner, Nagpur dismissed the revision. Thereafter, the appellant after filing
unsuccessful revision petition before Revenue Tribunal, filed a writ petition
in the High court. The High court has found that the Government has power to
levy cess on water; the resolution, therefore, passed by the Government under
Section 70 of the Code is within the legislative competence under Article 246
of the Constitution of India. Accordingly, it upheld the action of the
respondent. On leave being granted and a reference having been made to
three-Judge Bench, the matter has come up before us.
Shri
Sanghi, learned counsel for the appellant contends that the code envisages
collection of land revenue from agriculturists for use of water for cultivation
purpose. admittedly, the use of water by the appellant, is for industrial
purpose. By operation of Section 70 read with Section 20 of the code, land
revenue is relatable to levy on land of cess on the water used for agricultural
purpose.
Even
if it is construed that the Resolution is valid, the legislature lacks
competence to enact law since neither Entry 18 nor entry 45 or Entry 49 of List
are available to sustain the demand under Section 70; therefore, it cannot be
construed that section 70 is law made under any of the Entries. As a
consequence, he is entitled to the relief.
He
further contends that in view of the fact that the High court has recorded a
finding that the appellant has a natural right to draw water from the flowing
river, the appellant cannot be made to make payment which has no legislative
sanction. Alternatively, as the last straw on the camel's back, learned counsel
for the appellant contends that the collector has no power to levy cess with
retrospective effect.
Shri
Andhyarujina, learned solicitor General, on the other hand, contends that
though the appellant has been using the water for industrial purpose, he is
using the water by artificial contrivance, drawing water from the flowing
river; the levy of cess stands vested in the state;
and,
therefore, the state has power to regulate the payment of cess. The Resolution
came to be passed in exercise of the power under section 70 of the Code
relating to the mode of payment and the manner in which the land revenue or
cess can be computed. Sub-sections (2) & (3) of section 20, are the
essential provisions providing for the appellate remedy which the appellant has
availed of. List II Entries, namely, Entries 18, 45 and 49 are to be read with
reference to the use to which land and water are put. Water is nothing but
integral part of land; without land, water does not exist. Section 70 would
come within Entry 45 since it relates to the use of land or water regulated in
the rural India. Entry 49 relates to use of land or
water in the urban area. since the factory of the appellant is situated in a
rural area, Entry 45 is the appropriate Entry and is required to be broadly
interpreted so as to bring back within the legislative competence under Article
246 of the Constitution. He further contends that though the appellant had been
using the water for a period of 70 years, he does not have a natural right
which right is exercised with the help of artificial contrivance for carrying
on industrial activity. That finding of the High Court is not correct since the
appellant has been using the water for industrial purpose. The levy as land
cess can be used by operation of section 70 read with section 20 and the
definition of the word 'land' and 'and revenue' respectively under the code. He
also contends that though the demand can be made under section 70 read with the
Resolution passed by the Government, since the Legislature has authorised under
section 70 the Collector to levy and collector having made the impugned demand
in the year 1972, the demand could only be prospective and it cannot be given
retrospective effect.
In
view of the respective contentions, the question that raises for consideration
is: whether the appellant has a natural right to use water form flowing river
and whether the water used by it is exigible to land cess? Entry 17 of List II
of the seventh schedule to the constitution reads as under:
"Whether,
I.e. to say, water supplies, irrigation and canals, drainages and embedments,
water storage and water power, subject to the provisions of Entry 56
List-I" Entry 56 of List I reads as under:
"Regulation
and development of Entry states rivers and river valleys to the extent to which
such regulation and development under the control of the Union is declared by Parliament by law to be expedient in
the public interest." Entry 97 of list I which was relied upon by Mr.
Sanghi reads as under :
"Any
other matter not enumerated in List II or List III including any tax not
mentioned in either of those lists.:
Entry
45 of List II reads as under :
"Land
revenue, including the assessment and collection of revenue, the maintenance of
land records, survey for revenue purposes and records of rights, and a
lienation of revenues." Section 70 of the code reads as under:
"70.
Rates for use of water.
The
State Government may authorise thus collector or the officer in charge of a
survey or such other officer as it deems fit, to fix such rates as it may from
time to time deem fit to sanction, for the use, by holders and other persons,
of water, the right to which vests in no rate is leviable under any law
relating to irrigation in force in any part of the state.
Such
rates shall be liable to revision at such periods as the state Government shall
from time to time determine, and shall be recoverable as land revenue;
Provided
that, the rate for use of water for agricultural purposes shall be one rupee
only per year per holder." Section 20 of the Code reads as under :
"Title
of state in all lands , public roads, etc. which rate nor property of others.
(1)
All public roads, lanes and paths, the bridges, ditches, dikes and fences, on ,
or beside, the same, the bed of the sea and of harbours and creeks below the
high watermark, and of rivers, streams, nallas, lakes and tanks and all canals
and water-courses, and all lands wherever situated, which are not the property
of persons, legally capable of holding property, and except in so far as any
rights of such persons may be established, in or over the same, and except as
may be otherwise provided in any law for the time being in force, are and are
hereby declared to be, with all rights in or over the same, or appertaining
thereto, the property of the State Government and it shall be lawful for the
collector, subject to the orders of the Commissioner, to dispose of them in
such manner as may be prescribed by the state Government in this behalf,
subject always to the rights of way, and all other rights of the public or of
individuals legally subsisting.
Explanation
:- In this section, "high watermark" means the highest point reached
by ordinary spring tides at any season of the year.
(2)
Where any property or any right in or over any property is claimed by or on
behalf of the Government or by any person as against the Government, it survey
officer, after formal inquiry of which due notice has been given, to pass an
order deciding the claim.
(3) An
order passed by the Collector or survey officer under sub-section (1) or sub-section
(2) shall be subject to one appeal and revision in accordance with the
provisions of this code.
(4)
Any suit instituted in any civil court after the expiration of one year from
the date of any order passed under sub-section (1) or sub-section (2) or, if
appeal has been made against such order within the period of limitation, then
from the date of any order passed by the appellate authority, shall be
dismissed (through limitation has not been set up as a defence ) if the suit is
brought to set aside such order or if the relief claimed is inconsistent with
such order, provided that in the case of an order under sub-section (2) the
plaintiff has bad due notice of such order.
(5)
Any person shall be deemed to have had due notice of an inquiry or order under
this section if notice thereof has been given in accordance with rules made in
this behalf by the state Government." A conjoint reading of the provisions
of the code and the respective Entries would indicate that the land revenue
including the assessment and collection of revenue, the maintenance of land
records, survey for revenue purposes and records of rights, and alienation of
revenue lie under the broad-head 'land revenue'. It is well settled legal
position that the land has been widely interpreted. In Navinchandra Mafatlal
vs. The Commissioner of Income-tax, Bombay city [(1965) 1 SCR 829 at 836] a
Constitution Bench had observed that the question before this court related to
the correct interpretation of a word appearing in a Constitution Act which, as
has been said , must not be construed in a narrow and pedantic sense. The
interpretation of the statute would apply to the interpretation of the Entries
subject to reservation that their application is of necessity conditioned by
the subject matter of the enactment itself. It should be remembered that the
problem before us is to construe a word appearing in Entry 54 which is a head
of legislative power. It cannot be read in a narrow or restricted sense and
that each general word should be held to extend to all ancillary or subsidiary
matters which can fairly and reasonably be said to be comprehended to it, It
is, therefore, clear that in construing an Entry in a List conferring
legislative powers, the widest possible construction , according to their
ordinary meaning, must be put upon the words used therein. Reference to
legislative practice may be admissible for cutting down the meaning of a word
in order to reconcile two conflicting provisions in two legislative lists. The
cardinal rule of interpretation, however, is that words should be given their
ordinary, natural and grammatical meaning subject to the rider that in
construing words in a constitutional enactment, conferring legislative power
under Article 246, the most liberal construction should be put upon the words
in the Entries in the respective Lists in the Seventh Schedule so that the same
may have effect in their widest amplitude. The same principle was reiterated in
Kunnathat Thatcunni Moopil Nair vs. The state of Kerala & Anr. [(1961) 3 SCR
77 at 106] by Sarkar, J. though in a dissenting tone but on this principle
there is no dissent by majority and it cannot be dissented. It was said thus:
"It
is well known that entries in the legislative lists have to be read as to cut
down the plain meaning of the word "land" in entry 49 to give full
effect to the word "forest" in entry 19. In my view, the two entries,
namely, entry 49 and entry 18 deal with entirely different matters. Therefore,
under entry 49 taxation on land on which a forest stands is permissible and
legal.
In the
case of Synthetics and chemicals & Ors. vs. State of U.P. & ors. [(1990) 1 SCC 109], a Bench of seven
Judges of this court constitution and legislative Entries in paragraph 67 which
reads as under:
"
It is well to remember that the meaning of the expressions used in the
Constitution must be found from the language used. We should interpret the
words of the Constitution on the same principle of interpretation compel one to
take into account the nature and scope of the Act which requires
interpretation. A Constitution is the mechanism under which laws are to be made
and nor merely an Act which declares what the laws is to b. It is also well
settled that a constitution must not be construed in any narrow or pedantic
sense and that construction must not be construed in any narrow or pedantic
sense and that construction which is most beneficial to the widest possible
amplitude of its power, must be adopted. An exclusionary clause in any of the
entries should be strictly and, therefore, narrowly construed. No entry should,
however, be so read as nor to rob it of entire content, A broad and liberal
spirit should, therefore, inspire those whose duty it is to interpret the
Constitution, and the courts are nor free to stretch or to courts are nor free
to stretch or to pervert the language of an enactment in the interest of any
legal or constitutional theory.
Constitutional
adjudication is not strengthened by such an attempt but it must not try to give
meaning on the theory of what the law should be but it must so look upon a
organic thing and must adapt itself to the changing situations and pattern in
which it has to be interpreted. It has also to be borne in mind that where
division of powers and jurisdiction in a is desirable to read the Constitution
in harmonious way. It is also necessary that in deciding whether any particular
enactment is within the purview of one legislature or the other, it is the pith
and substance of the legislation in question that has to be looked into. It is
well settled that the various entries in the three lists of the Indian
constitution are not powers but fields of legislation.
The
power to legislate is given by Articles of the Constitution. The three lists of
the Seventh Schedule to the Constitution are legislation. These demarcate the
area over which the appropriate legislature can operate. It is well settled
that widest amplitude should be given to the language of the entries in three
Lists but some of these entries in different lists or in the same list may
override and sometimes may appear to be in direct conflict with each other,
then and then only comes the duty of the court to find the true intent and
purpose and to examine the particular legislation in question. Each genera
world should be held to extend to all axillary or subsidiary matters which can
fairly and reasonably be comprehended in it. In interpreting an entry it would
not be reasonable to import any limitation by comparing or import ay limitation
by comparing or contrasting that entry with any other in the same list. It has
to be interpreted as the Constitution must be interpreted as an organic
document in the light of the experience gathered. In the constitutional scheme
of division of powers under the legislative lists, there are separate entries
pertaining to taxation and other laws. The aforesaid principles are fairly well
settled by various decisions of this court and other courts. Some of these
decisions have been referred to in the decision have been referred to in the
decision of this court in civil Appeal No. 62 (N)/70 India cement Ltd. v. state
of Tamil Nadu (1990) 1 SCC 12.
In
recent judgment, this court, by a Bench of two Judges, to which K. Ramaswamy
and G.P. Pattanaik,JJ. were members, in Indian Aluminium co. & Ors. vs.
State of Kerala & Ors. [(1996) 7 SCC 637], considered the same question in
paragraphs 12 and 20 which read as under:
"
The primary question, therefore, is: whether the impugned Act enacted by the
state Legislature is one under Entry 53 of the state List, viz., "Taxes on
the consumption or sale of electricity". Indisputably, the title of the
Act as well as the charging section 3 Employ the words "duty on supply of
electricity".
Under
Article 246(3) of the Constitution, every state legislature has explicit power
to make law for that stat with respect to the matters enumerated in List II
(state List) to the seventh Schedule to the constitution. The entries in the
three lists of the Seventh Schedule are not power of legislation but merely
fields of legislation. The power is derived under Article 246 and other related
articles of the constitution. The legislative fields are of enabling character
designed to define and delimit the respective areas of legislative competitive
areas of legislative competence of the respective legislature. There is neither
implied restriction imposed on the legislature nor is any duty prescribed to
exercise that legislative power in a particular manner. But the legislation
must be subject to the limitations prescribed under the Constitution.
When the
vires of an enactment is challenged, its is very difficult to ascertain the
limits of the legislative power. Therefore, the controversy must be resolved as
far a possible, in favour of the legislative body putting the most liberal
construction upon there relevant legislative entry so that it may have the
widest amplitude.
The
court is required to look at the substance of the registration.
It is
an equally settled law that in order to determine whether a tax statute is
within the competence of the legislature, it is necessary to determine the
nature of the tax and whether the legislature had power to enact such a law.
The power to enact such a law. The primary guidance for this purpose is to be
gathered from the charging section. It is the substance of the impost and not
the form that determines the nature of tax." Thus, it is settled principle
of interpretation that legislative Entries are required to be interpreted
broadly and widely of as to give power to the legislature to enact law with
respect to matters enumerated in the legislative Entries. Substantive power of
the legislature to enact law is under Article 246 of the Constitution and
legislative Entries in the respective Lists 1 to 3 of the Seventh Scheduled are
of enabling character, designed to define delimit the respective areas of
legislative competence of the respective legislature. the substantive power in
Article 246 and all other related articles.
In Province of Madras vs. Lady of Dolours Convent, Trichinopoly , represented by
Mother Superior & Ors. [Air 1942 Madras 719] , the word 'land' was interpreted to include land cess. In
Kandukuri Bala Suryaprasada Raw & Anr. vs. secretary to state for India [AIR 1971 PC 42], the privy council
had also interpreted "charge" on water in the nature of land cess. It
was followed by the Madras High Court, similarly, water cess is land revenue as
was held in K.S. Ardanareeswarar Gounder vs. Tahsildar, Bhavani & Anr. [Air
1976 Madras 318 at 320]. With regard to the
incidence of cess on the use of water in the urban area. the Division Bench of
the Andhra Pradesh High court in Nizam Sugar Factory Ltd. vs. city Municipality
Bodhan & Anr. [AIR 1965 AP 91] had held that it is land revenue under Entry
49. Similarly, Allahabad High court in Raza Buland Sugar Company Ltd., Rampur
vs. Municipal Board, Rampur [AIR 1962 All. 83] rates of cess on water under the
municipal limits was held to be the cess of land revenue in the urban area.
Thus, we hold that the legislative Entry 45 of List II of the seventh Schedule
of the Constitution brings within the ambit power of the legislature under
Article 246 to levy cess on use of the water even from flowing river.
Therefore,
section 70 of the code comes within Entry 45 of List II of the Seventh Schedule
to the Constitution.
Mr.
Sanghi, learned counsel for the appellant has relied upon a judgment of this
court in Shankar Narayan Ranade vs. Union of India [(1964) 1 SCR 885 at 893]
contending that this court made distinction between still water and flowing
water. Water for the purpose of cess and the impost thereof are not referable
of cess and the impost thereof are nor referable to flowing water of the river
and the river water is nor amenable to land cess; therefore, it is contended
that the flowing water is nor exigible to regulation of the land cess. We find
no force in the contention. The use of the word "water" in the sand
property was construed to exclude the running water of the river and it could
nor be said that the title to the flowing water.
There
existing words of difference between still water in the land like in the pound
and flowing water in a river.
This
court negatived the contention and held that the flowing water vests in the
state. In that context, at page 894, the title to the bed of the river was
negatived and, therefore, it was held that there were two difficulties in
accepting the contention. The first difficulty was that the use of the word
"water" in the sand, excluded the running water of the river.
Besides, it is by no means clear that the title to the flowing water of the
river necessarily goes with the title to the bed of the river.
Shri
Sanghi further contends that this court made distinction between the cess on
sale of goods in state of Madras vs. Cannon Dunkerley & Co. (Madras) Ltd.
[(1959) 1 SCR 379] which is popularly known as first Cannon Dunkerley's case.
Therein, the question was whether the material supplied to the company was
exigible to sales cess under the Madras sales Tax Act. This Court held that
since sale of goods is clearly covered in different legislative Entries, it is
nor exigible to sales cess. The ration therein, therefore, has no application
to the facts of the present case. It is seen that Section 20 of the Code
clearly includes flowing water, as investing title thereof in the State as integral
part of the land. The definition 'land' includes the right to the water flowing
therefrom as in the definition in the Transfer of Property Act.
Therefore,
when the cess has been imposed by virtue of power vested under Section 70 of
the Code by the state Government by way of legislation, the power of the state
is traceable to the legislation, the power of the state is traceable to the
legislative Entry under Entry 45 of List II of the Seventh Schedule to the
Constitution. Therefore, the demand made is with in the legislative competence
and the legislature i s competent to enact law in exercise of the power under
Article 246. The Government have power under Section 70 read with section 20 of
the Code to levy water cess on the use of water by the Resolution which came to
be passed by the state Government determining the rate at which water cess is
cessable on use of water for industrial purpose. It is true that the appellant
has been using the water for over 70 years but that cannot be construed to mean
that it has a right to draw water by artificial contrivance from the flowing
river for use in its factory for industrial purpose. Having used the water for
industrial purpose, it is taxable as incidence on cess on water as land cess
and, therefore, it is liable to pay water cess at the rates prescribed by the
Government.
Mr.
Sanghi, learned counsel for the appellant, lastly submits that no guidelined
have been fixed for demand of cess levied on use of water from flowing river.
we find that the manner in which the prescription of the rates has been based,
is sufficient guideline for determining the rates at which the demand can be
assessed to revenue cess.
It is
already seen that the machinery provision under sub-section (2) of Section 20
was adopted by the Tehlsildar and after demand was made, the appellant
approached the appellate authority and the reversional authority who complied
with the principles of natural justice. In view of the fair stand taken by
learned solicitor General that the executive cannot make any demand
retrospectively, the demand must be construed to operate from the date of the
Resolution passed by the Government and from that date, the appellant is liable
to pay the land cess for use of the water at the rates specified therein. The
respondents are directed to compute the rate on that basis and make a fresh
demand; on making such demand, the appellant shall pay the amount of cess
within a period of 30 days from the date of receipt of the demand.
The
appeal is accordingly disposed of. No costs.
Back
