Andhra HC (Pre-Telangana)
Bharat Heavy Plate And Vessels Ltd. Rep. ... vs State Of A.P. Rep. By Its Secretary ... on 26 April, 1991
Equivalent citations: 1991(2)ALT639
JUDGMENT P. Venkatarama Reddy, J.
1. Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by authority of law The petitioners in these writ petitions complain that in violation of the said constitutional mandate, the respondents are seeking to collect land cess and education cess in addition to the non-agricultural land assessment or the lands held by the petitioners.
2. The petitioner in W.P. Nos. 12423/85 and 4964/90 is Bharat Heavy Plate and Vessels Ltd., which is an undertaking of the Government of India. It is stated that the petitioner-undertaking holds lands situate within the limits of four Gram Panchayats in Gajuvaka Mandal of Visakhapatnam District. The office building, factory, etc. of the petitioner are located therein. It is stated that the petitioner has been paying the non-agricultural land assessment under the provisions of the Andhra Pradesh Non-Agricultural Land Assessment Act, 1963 as per the demands raised by the concerned revenue officials from time to time. On 4-10-1985, the Mandal Revenue Officer, Gajuvaka, addressed a communication to the petitioner stating that in the assessment fixed earlier by the then Tahsildar, Visakhapatnam--"the cesses chargeable at 37 paise per rupee" have not been included. The Mandal Revenue Officer therefore required the petitioner to pay Rs. 2,38,675/- towards cesses for the period 1970 to 1984 on or before 20-10-1985 failing which, he threatened action under the Revenue Recovery Act. In the said communication, the Mandal, Revenue Officer mentioned that the Government in their Memo No. 2880/Q-70-3 dated 19-2-1987 issued clear instructions for the levy of cess at 0.37 paise. per rupee in non-municipal areas under the provisions of the A.P. (Andhra Area) District Boards Act, 1920 although the Non-Agricultural Land Assessment Act, as such, does not provide for the addition of cesses. The petitioner thereupon filed this writ petition questioning the action of the Mandal Revenue Officer in demanding the cesses. In W.P. 4964/90 the same petitioner has questioned the notice issued by the Mandal Revenue Officer, Gajuvaka demanding the cesses to the tune of Rs. 1,44,252/- for the period 1394 to 1399 Faslis.
3. In W.P.No. 14297/86, the petitioner is a Company engaged in the business of manufacturing of fertilizers. The petitioner holds an extent of 10.04 acres at Tadepalli village, Guntur District, the said land having been assigned by the Government for an industrial purpose. The petitioner is seeking a direction not to collect cess at the rate of 0.37 paise per rupee of tax paid under the A.P. Non-Agricultural Land Assessment Act and for refund of the same collected by way of cess. The petitioner has also questioned the action of the respondent in reopening the assessments and applying the revised rates for the period 1964 to 1975.
4. The learned Counsel for the petitioners M/s. C. Purnaiah and K.G. Kannabhiran have contended that the demand of land cess and education cess in addition to the amount assessed under the A.P. Non-Agricultural Land Assessment Act has no sanction of law and the relevant provisions of the A.P. (Andhra Area) District Boards Act in so far as they purport to levy of land cess at a prescribed rate on the annual rent value of the land are in any case, unconstitutional. On the other band it is contended by the learned Advocate-General that the levy of land cess and education cess is fully supported by legislation which clothes necessary authority on the respondents who demanded the cess and there is no constitutional infirmity in the levy. The stand taken in the additional counter-affidavit filed by the respondent is sought to be substantiated by the learned Advocate-General and the learned Government Pleader for Revenue. We shall now proceed to deal with the rival contentions advanced before us.
5. The Andhra Pradesh Non-Agricultural Lands Assessment Act, 1963 (hereinafter referred to as 'NALA Act') was enacted by the State Legislature to provide for the levy of assessment on lands used for non-agricultural purposes. The legislature has derived competence to enact this legislation primarily by virtue of Entry 49 of List II of the Seventh Schedule to the Constitution which reads "axes on lands and buildings." The word 'land' embraces within its ambit both agricultural and non-agricultural land. Vide Jagannath Bukshsingh v. State of U.P., The other Entries of relevance in List II are Entries 18 and 45.
6. Section 3 of the aforesaid Act is the charging section. It provides that in the case of non-agricultural land in a local area with the population specified in Column (1) of the Schedule, an assessment at the rates specified in Columns (2), (3) and (4) shall be levied and collected by the Government. The rate depends upon the user of the land--for industrial, commercial and other non-agricultural purpose including residential purpose. The expression 'non-agricultural land' has been defined to mean land other than the land used exclusively for the purpose of agriculture, but does not include the land used exclusively for cattle-sheds and hay-ricks. The determination of assessment on non-agricultural land shall be made by the Revenue Inspector and an appeal lies to the Tahsildar (now, Mandal Revenue Officer) The Revenue Divisional Officer is vested with the power of revision either suo motu or on an application. The proviso to the charging section viz., Section 3, deserves to be noticed. It says that where assessment is levied and collected in respect of such non-agricultural land, no land revenue shall be collected.
7. We shall now take up the question about the legality of levy of land cess in respect of the land subjected to an agricultural land assessment. The genesis of 'land cess', as far as the Andhra area is concerned, is to be found in the Madras District Boards Act, 1920, re-named as the Andhra Pradesh (Andhra Area) District Boards Act, 1920 (hereinafter, referred to as 'the District Boards Act'). Chapter VI of the District Boards Act deals with taxation. Section 74-B which forms part of Chapter VI enjoins that in every district, land-cess being a tax on the annual rent value of lands shall be levied in accordance with the provisions contained in the Act. Section 78 lays down that the kind cess shall be levied on the annual rent value of all occupied lands on whatever tenure held and shall consist of a tax of two annas in a rupee of the annual rent value of such lands in the district. Section 79 lays down the criteria for calculation of annual rent value. Sections 80 to 85 lay down the procedure for the fixation of annual rent value and assessment by the District Collector in relation to inam lands and lands held on any other tenures, with which we are not, concerned in the present case. Section 88 enjoins that every landholder and sub-landholder shall pay to the district collector or other officer empowered by him to receive it, the land-cess due in respect of lands held by him on or before such dates and in such instalments as the district collector under the general orders of the Board of Revenue may, by notification, declare. Section 91 provides for the recovery of cess under the Revenue Recovery Act in case the cess is not paid on the date fixed under Section 88. Section 92 provides for crediting the land cess collected in any panchayat area to the District Fund and Panchayat Fund.
8. Thus it could be seen that the land cess, if otherwise payable, is payable to the district collector or an officer empowered by him. The revenue department is placed in-charge of collection of land-cess leviable under the District Boards Act which goes for the benefit of the local bodies.
9. The Andhra Pradesh Panchayat Samithis and Zilla Parishads Act was enacted by the Slate Legislature in the year 1959. Section 60 of the said Act empowers the Government to abolish any District Board in the State. Pursuant to this Act, the District. Boards were abolished and replaced by Zilla Parishads At the middle level between the Zilla Parishads and Gram Panchayats, the Panchayat Samithis also came into existence. The powers and function of the erstwhile District Boards became vested in the , Zilla Parishads and Panchayat Samithis to the extent and in the manner Specified by notification issued by the Stale Government. Section 61 (1) of the Panchayat Samithis and Zilla Parishads Act enables the Government to apply such of the provisions of the District Boards Act including the provisions relating to the lavy and collection of any tax or fees as may be specified in a notification issued by the Government to apply to the Panchayat Samithis and Zilla Parishads constituted under the Act. the same sub-section also enables the Government to make suitable adaptations and modifications for the purpose of facilitating the application of those provisions to the Panchayat Samithis and Zilla Parishads. Sub-section (2) of Section 61 has been enacted by way of abundant caution for the purpose of ensuring the application of the specified provisions of the District Boards Act to the Panchayat Samithis and Zilla Parishads notwithstanding that no provision or insufficient provision has been made under Sub-section (1) for the adaptation of the provisions of the District Boards Act or the rules made thereunder. In exercise of the powers conferred by Section 61, the State Government issued G.O. Ms. No. 624, Planning & Local Administration, dated 27th April, 1960, under the title "Andhra Pradesh Adaptation and Application of District Board Laws Order, 1960'. The First Schedule to the Order states that Section 74-B of the District Boards Act shall be made applicable to the Zilla Parishads. The third schedule sets out the provisions of the District Boards Act which shall have effect subject to adaptations and modifications as directed by the Schedule, until repealed or amended by a competent legislature or authority. By the said Order, Section 78 was modified so as to substitute '12 Naye paise' for the words 'two annas., is slated in the Order that the word 'District' occurring in Section 74-B shall stand unmodified. The term 'district fund' occurring in Section 92 was substituted by the words 'Zilla Parishads fund' and the proviso thereto has been suitably modified in order to provide for apportionment of the cess collected in any panchayat area amongst the Zilla Parishad, Panchayat Samithis and Panchayat. By the District Boards and Panchayats (Andhra Pradesh Amendment) Act, 1961, an amendment was introduced to Section 78 of the District Boards Act by substituting the words '31 Naye paise' for the words '12 Naye paise'. A new section--Section 92 was substituted for the old section providing for the mode of apportionment of land cess amongst the Zilla Parishads, Panchayat Samithis and Panchayats. However, this enactment was a short-lived one. By the Andhra Pradesh Land Revenue (Additional Assessment and Cess Revision) Act, 1962, Section 78 of the District Boards Act was amended by substituting the words '18 paise' for the words '31 Naye paise'. The said Act of 1962 was struck down by the Supreme Court. In fact, it was repealed by the Andhra Pradesh Land Revenue (Enhancement) Act, 1967. In that Act, the same amendment was reiterated with result the rate of land cess continues to be 18 paise in a rupee of the annual rent value of the land.
10. A division Bench of this Court in Mori Setty v. State of A.P.,( 1972-II A.L.T. 134) held that the State was not entitled to levy land-cess at more than 12 paise per rupee on the annual rent value of occupy lands. According to the Division Bench, the amendment to the District Boards Act by various enactments referred to above which had the effect of enhancing the cess initially to 31 Naye paise and thereafter to 18 paise were of no effect having regard to the fact that there was no corresponding amendment to the Andhra Pradesh Adaptation and Application of District Board Laws Order, 1960. The learned Judges observed: "Section 78 as applied to the Panchayat Samithis and Zilla Parishads still stands unamended. It could not be doubted that the amendment of Section 78 of the 1920 Act would not automatically bring about any amendment in Section 78 as was applied to the Panchayat Samithis and Zilla Parishads. .. .. .. The result is that amendment of section 78 as such in 1920 Act is not of direct benefit to the Panchayat Samithis and Zilla Parishads......." In order to get over the situation created by this judgment, the State Legislature passed the Andhra Pradesh Cess Validation Act in the year 1974. It came into force with retrospective effect from 21-1-1961. This Act was meant to give statutory basis for the enhancement of land cess under the District Boards Act and to validate the levy and collection of the cess in the interregnum, notwithstanding anything contained in any judgment, decree or order of the Court of other authority. As already notice, the land cess demanded in the instant case is 18 paise in a rupee calculated with reference to non-agricultural land assessment.
11. The Andhra Pradesh Panchayat Samithis and Zilla Parishads Act was repealed by the Andhra Pradesh Mandala Praja Parishads, Zilla Praja Parishads and Zilla Pranalika Abhivrudhi Mandals Act, 1986 (Act 31 of 1986). Zilla Praja Parishads and Mandala Praja Parishads took the place of Zilla Parishads and Panchayat Samithis. The said Act contains the provisions corresponding to Sections 59 and 61 of its predecessor Act. Section 70 of Act 31 of 1986 provides for transfer of powers and functions of District Boards to Mandala Praja Parishads and Zilla Praja Parishads. It corresponds to Section 69 of 1959 Act. Section 71 deals with the application of the relevant provisions of the District Boards Act to Mandala Praja Parishads and Zilla Praja Parishads. It is on the same lines as Section 61 of 1959 Act.
12. After the Act came into force, no Adaptation Order similar to the one issued in the year 1960 under the 1959 Act has been issued. However, the other provisions of 1986 Act seem to take care of the situation. Subsection (2) of Section 71 of 1986 Act (corresponding to Sub-section (2) of Section 69 of 1959 Act) provides as follows:
"Notwithstanding that no provision or insufficient provision has been made under Sub-section (1) for the adaptation of the provisions of the relevant District Boards Act, or the rules made thereunder, any court, tribunal or authority required or empowered to enforce those provisions may for the purpose of facilitating their application to any Mandala Praja Parishad or the Zilla Praja Parishad construe these provisions in such manner, without affecting the substance, as may be necessary or proper in regard to the matter before the Court, tribunal or authority."
( Italics is ours ) In view of this provision, the provisions of the District Boards Act as adapted and applied to the Zilla Parishads and Panchayats can be so construed us to apply to Mandal Praja Parishads or Zilla Praja Parishads without in any way affecting the substance of she matter and the intendment of the new Act. The fact that the Act of 1986 wanted to continue the taxes and duties leviable under the provisions of 1959 Act and to preserve the rights and assets vested in a Zilla Parishad at the time of its abolitior is made clear by Section 98 of Act 1986. That apart Section 97 of the new Act, while repelling the 1959 Act, has ordained under Sub-section (2): ''On such repeal the provisions of Sections 8 and 18 of the Andhra Pradesh General Clauses Act 1989, shall apply." Under the second pan of Section 18 (General Clauses Act), if notifications have been published, proclamation issued and powers conferred under the provisions of the repealed Act, the same shall be deemed so far as the same are consistent with the provisions reenacted, to have been respectively published, issued, conferred or done under the re-enacted provisions. Therefore, the Adaptation Order issued under the repealed Act under which the Zilla Parishads became vested with the power to levy land cess under the District Boards can be pressed into service for the purpose of the new Act as well. Hence it follows that the power to levy land cess in accordance with the provisions of the District Boards Act became vested in the Zilla Praja Parishads. The district collector or his nominee continues to have the authority to collect the same for the benefit of Zilla Praja Parishad and other local bodies.
13. The legislative history set out above gives sufficient basis for the levy and collection of land-cess for the benefit of Zilla Parishads, Panchayat Samithis, and Gram Panchayats till 1986 and thereafter Zilla Praja Parishads, Mandal Praja Parishads and Gram Panchayats. Incidentally it may be noticed that Section 69 (3) of the A.P. Gram Panchayats Act, 1964 empowers the Gram Panchayats to levy in the village a land-cess at the rate of two naye paise in the rupee on the annual rent value of all occupied lands which are occupied by or adjacent or appurtenant to buildings subject to such rules as may be prescribed by the Government. The rules framed by the Government in G.O. Ms. No. 1958, Panchayat Raj, dated 8-10-1965 lay down prerequisites and conditions subject to which the land cess can be levied by Gram Panchayat. However, in the instant cases, we are not concerned with the collection of the land cess by the Gram Panchayat.
14. Regarding the nature and character of land cess, it cannot be seriously disputed that it is a tax. As observed by the Supreme Court in Kumar Ram Nath v. Municipal Board, Pilibhit, , a cess may either be a tax or a fee. Whether a cess in a given context is a tax or fee depends upon the purpose for which it is levied. An impost in the nature of cess is normally levied for a specific purpose and the proceeds thereof are earmarked for the purpose of development of a local area or for the betterment of health, education and communication facilities in an area or for promotion of the welfare of workmen, and the like. The term 'taxation' has been defined by Article 366 (28) of the Constitution, to include the imposition of any tax or impost, whether general or local or special, and 'tax' shall be construed accordingly. Section 74-B of the District Boards Act itself describes the land cess as a 'Tax' on the annual rent value of the land. That apart, the relevant provisions of the District Boards Act do not convey the idea of any quid pro quo for the payer of the cess. Thus, the impugned levy viz., land cess is undoubtedly a tax on land. The annual rent value is taken as a measure or criterion for the levy of this Tax.
15. The next question is whether the land cess can be levied in respect of land subjected to assessment under the A.P. Non-Agricultural lands Assessment Act, 1963 (NALA Act). The contention of the learned Counsel for the petitioner is that NALA Act docs not provide for the levy of any cess including land cess. It is argued that the collection of land cess at 18 paise per rupee of the assessment made under the provisions of the NALA Act has no authority of law. We cannot agree with this contention. It is useful to extract the provisions of the District Boards Act, 1920 as adapted and applied to the Zilla Parishads and Panchayat Samithis (now Zilla Parishads and Mandala Praja Parishads). Section 78 reads thus:
"78. Land cess : The landless shall be levied on the annual rent value of all occupied lands on whatever tenure held and shall consist of a tax of eighteen paise in the rupee of the annual rent value of all such lands in the District."
Section 79 deals with fixation of annual rent value. The relevant part of Section 79 reads thus:
"79. (1) The annual rent value shall, for the purposes of Section 78, be calculated in the following manner:
(i) In the case of lands held direct from Government on ryotwari tenure or on lease or licence, and also in the case of lands situated in the district of Malabar on whatever tenure held, the assessment, lease amount, royally or other sum payable to Government for the lands, together with any water-rate which may be payable for their irrigation, shall be taken to be the annual rent value.
(ii) In the case of mam lands held wholly or partially free from assessment, the full assessment which such lands would bear if they were not inam, together with any water rate which may be payable for their irrigation, shall be taken to be the annual rent value ; and such full assessment and water-rate shall be determined by the district collector under the general orders of the Board of Revenue.
(iii) In the case of lands held on any other tenure, .. ..
There could be no doubt that the lands in question are held directly from the Government on ryotwari tenure. The mere fact that the land was assigned to the petitioner in W.P.No. 14297/85 on payment of the market value does not detract from the character of the land being ryotwari. In fact the deed of assignment contemplates payment of annual assessment on the land subject to periodical revision. In the case of lands held direct on ryotwari tenure or on lease or licence, the annual rent value is calculated with reference to the assessment, lease amount, royally or other sum payable to the Government for the lands together with any water rate which may be payable for their irrigation. As far as the petitioners' lands are concerned, the question of payment of lease amount royalty or water-rate does not arise However, the petitioners are liable to pay the assessment. Quite obviously the word 'assessment' in Section 28 is not used in the limited sense of quantification of the liability. The word 'assessment' may mean either assessment of land revenue or assessment under the NALA Act. As already noticed, in the case of non-agricultural lands, the assessment under NALA Act is in lieu of land revenue (Vide proviso to Section 3 of NALA Act). What immediately becomes clear is that the assessment under NALA Act represents the annual rent value of the land and the land cess is leviable at the rate of 18 paise per rupee of the amount assessed on non-agricultural land. This follows from a combined reading of Section 78 and 79 of the District Boards Act. Thus, the legal basis for the levy and collection of land cess calculated at 18% of the amount assessed under the NALA Act is to be found not in the NALA Act but in the District Boards Act as adapted and applied to Zilla Parishads and Zilla Praja Parishads. It is immaterial that the land cess is for the sake of convenience collected along with the tax under NALA Act.
16. The argument that the land cess amounts to double taxation on the lands held by the petitioners does not appeal to us. There is no taboo against such double taxation. The Supreme Court in Avinder Singh v. State of Punjab, observed that: ''There is nothing in Article 265 from which one can spin out constitutional vice called double taxation. If on the same subject-matter the legislature chooses to levy tax twice over, there is no inherent invalidity in the fiscal adventure save where other prohibitions exist."
17. It was then argued that the impugned levy is in the nature of a tax on tax which is not within the competence of the State legislature to impose. The learned Counsel Sri Kannabiran highlighted a facet of this argument by submitting that if at all, the land cess is in the nature of a surcharge imposed on the non-agricultural land assessment for which no provisions exists under the NALA Act. He contends t hat the State legislature has no power to levy such surcharge on tax in the absence of an express provision in the Constitution like Article 271 (Surcharge on income-tax) enabling it to do so. We do not see any merit in this contention. In Shinde Brothers v. Dy. Commissioner, Raichur, the Supreme Court repelled the argument that 'health cess' levied by the Mysore Health Cess Act on certain items of State revenue or tax calculated at the rate of nine Naye paise in the rupee on the State revenue or the tax was tax on tax. The Supreme Court held that:
"It seems to us clear that the legislature was levying a health cess on a number of items of Slate revenue or tax and it adopted the form of calling it a cess and prescribed the rate of nine Naye paise in the rupee on the State revenue or tax. In the context, the word 'on' in Section 3 does not indicate that the subject-matter of taxation is land revenue or State revenue, but that 9 per cent of the land revenue or State revenue is to be levied and collected, the subject-matter remaining the same as in the law imposing land revenue or any duty or tax. If we read Sections 3 and 4 together the fact that the words surcharge or 'additional duty' have not been mentioned does not detract from the real substance of the legislation."
The mere fact that for the purpose of calculation of land cess the assessment on land is to be taken into account does not mean that it is a tax or it is a surcharge on tax. Land cess is an independent levy imposed under a different enactment adopting the annual rent value or the assessment on land as the basis for working out the tax. It is as much a tax as the tax imposed under NALA Act. That apart, even if land cess is to be viewed as a surcharge on the land revenue or non-agricultural land assessment, it cannot be said that the Legislature lacks competence to levy such surcharge unless the provision is made in the parent Act itself. There are instances where the levy of surcharge on sales-tax by a separate enactment has been upheld by the Supreme Court though it is not expressly provided for by the Constitution. (Vide S. Kodar v. State of Kerala) . In our view, the levy of surcharge is only incidental to the power of taxation. There is nothing in Article 271 which precludes the surcharge on taxes other than income being levied.
18. It was then submitted that land cess is really not a tax on land within the meaning of Entry 49 of List II because it is sought to be collected with reference to the annual rent value. The learned Counsel . placed reliance on the judgment of the Supreme Court in India Cement Ltd. v. State of Tamil Nadu, wherein the Supreme Court held that cess on royalty was not a tax on land and declared the same to be beyond the competence of State legislaure to levy.. The Counsel for the petitioners placed particular reliance on the following observations (at para 23) :
"Mr. Nariman is right that royalty which is indirectly connected with land cannot be said to be a tax directly on land as a unit.......It appears that in the instant case also no tax can be levied or is leviable under the impugned Act if no mining activities are carried on. Hence, it is manifest that it is not related to land as a unit which is the only method of valuation of land under Entry 49 of List II, but is relatable to minerals extracted. Royalty is payable on a proportion of the minerals extracted. It may be mentioned that the Act does not use dead rent as a basis on which land is to be valued. Hence, there cannot be any doubt that the impugned legislation in its pith and substance is a tax on royalty and not a tax on land..." Reliance was also placed on the observations at para 22. The Supreme Court observed : "There is a clear distinction between tax directly on land and tax on income arising from land." The ratio of the judgment of the Supreme Court is clearly spelt out from para 34 of the judgment, which reads:
"In the aforesaid view of the matter, we are of the opinion that royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because Section 9 of the Central Act covers the field and the Slate Legislature is denuded of its competence under Entry 23 of List II. In any event, we are of the opinion that cess on royalty cannot be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral right is not a tax on land but a payment for the user of land."
We are not in a position to appreciate as to how the judgment of the Supreme Court helps the petitioners. The question of conflict between a Central Act covering the field of a State law does not arise in the instant case. The analogy of royalty and cess thereon is wholly extraneous to the concept of cess. Whether it be land-revenue, non-agricultural land assessment or and cess, they are nothing but taxes on land. The annual rent value which in turn depends upon the quantum of assessment is chosen as the basis or criterion for calculating the land cess. On that account, the character of land cess being a tax on land does not materially alter nor can it be impressed with the character of tax on income from land. As observed by the Supreme Court in R.R. Engineering Co. v. Zilla Parishad, Bareilly, "the measure of the tax is not a true test of the nature of the tax. While determining the nature of a tax, though the standard on which the tax is levied may be a relevant consideration, it is not a conclusive consideration."
The Supreme Court in that case repelled the argument that the tax on 'circumstances and property' levied under Section 191 of the U.P. Kshetra Samithis and Zilla Parishads Act is a (ax on income and held that such levy is covered by Items 49 and 60 or List of Seventh Schedule. The Supreme Court observed at para 16 : "It may be, and is often so, that the tax on circumstances and property is levied on the basis of income which the assessee receives from his profession, trade, calling or property. That is, however, not conclusive of the nature of the tax. It is only as a matter of convenience that income is adopted as a yardstick or measure for assessing the tax. As pointed out in Re a Reference under Govt. of Ireland Act, 1936 AC 352, the measure of the tax is not a true test of the nature of the tax." The same view was reiterated by the Supreme Court in Union of India v. Bombay Tyre International Ltd. , The Supreme Court cited with approval a passage from Seervai's Constitutional Law of India, Second Edition, Vol. 2, at page 1258 which was also referred to in an earlier decision, namely, D.G. Gouse & Co. v. State of Kerala, "Another principle for reconciling apparently conflicting tax entries follows from the fact that a tax has two elements : the person, thing or actively on which the tax is imposed, and the amount of the tax. The amount may be measured in many ways; but decided cases establish a clear distinction between the subject matter of a tax and the standard by which the amount of tax is measured. These two element!; are described as the subject of a tax and the measure of a tax."
19. Lastly it was argued that the procedure prescribed by Sections 80 to 85 of the District Boards Act for fixation of annual rent value has not been followed in the present case and therefore the purported demand of cess is violativc of Article 265 of the Constitution. When it was pointed out to the learned Counsel that the said sections apply only to fixation of rent value of the lands referred to in Clause (iii) of Section 79, the learned Counsel then developed an alternative argument that the provisions of the District Boards Act as adapted and modified, do not provide for any machinery to fix the annual rent value in respect of the lands falling under Clause (i) of Section 79 and for the determination of the disputes connected therewith and therefore the provision authorising the levy and collection of land cess is ultravires Article 14 and 19 (1) (g)of the Constitution of India. We do not think that there is any such vice in the impugned provisions. The assessment whether it be on agricultural or non-agricultural lands is a fixed figure arrived at by the revenue officials in-charge of the collection of land revenue or non-agricultural land assessment. Particularly, in regard to non-agricultural land assessment, the assessment is worked out by following the procedure laid down under the NASA Act and the Rules made thereunder. When the assessment figure is thus definitely known, what remains to be done is only to calculate the amount of land cess by applying the multiplier of 18%. Thus, what is involved is nothing more than an arithmetical calculation. For this purpose, there is no need to provide any elaborate procedure under the Act or the Rules. The authority competent to collect and recover the land cess has been specified by Section 88 and 91. The District Collector or his nominee is the authority designated for this purpose. With regard to collection of land cess, if any representation is made to them, they are bound to consider the same. The absence of a provision for appeal against the levy of land cess in regard to lands falling under Clause (i) of Section 79 does not also make the impugned levy unconstitutional. As already stated, the land cess is inextricably mixed up with non-agricultural assessment though the power to levy each of them is derived from a different enactment. If for any reason the assessment is altered or revised under the provisions of NALA Act, the authorities concerned are under a duty bound to revise the land cess and refund or adjust the excess amount, if any.
20. For the foregoing we are of the view that the land cess demanded by the respondents in addition to non-agricultural land assessment is in no way illegal or invalid and we uphold the same.
21. The next question is about the education cess which has been demanded at the of 19 paise per rupee of the non-agricultural land assessment. This levy is sought to the justified by the respondents on the basis of the provisions of the A.P. Elementary Education Act, 1920 and A.P. Education Act, 1982. At the outset it may be clarified that the said Acts do not 'use the expression 'education cess' but the expression used is 'education tax'. The use of wrong phraseology is of course not of much significance.
22. Section 32 of the Andhra Pradesh (Andhra Area) Elementary Education Act, 1920 enjoins the constitution of an elementary education fund for each local authority in every district. To this fund shall be credited proceeds of any tax levied within the jurisdiction of such authority under the provisions of the Act. Section 34 of the aforesaid Act provides for the levy of Education tax by the Municipal Council or District Board subject to certain Conditions. We ate not concerned here with the Municipal Council. Hence let us see the relevant portion of Section 34 concerning levy of education tax by the District Board. It reads thus :
"34. Education taxes :
(1) Any municipal Council may,........... ...
(2) Any district board may with the previous sanction of the State Government and shall, if so directed by them, levy within us area or part thereof taxes at such rates as may be considered suitable as an addition to the taxation levied in such area or part under the taw for the time being in force governing district boards, under all or any of the following heads, namely, land-cess, profession tax and house-tax.
Section 35 deals with rates of levy of taxes under Section 34 and it says :
(1) I he rates of levy of any tax under Section 34 shall be determined--
(a) by the local authority with the previous sanction of the State Government, in case the tax is levied by the local authority of its own motion and
(b) by the State Government, in case the tax is levied at their direction.
Provided that. ..... ...... ......
Provided further that ..... ...... ......
Provided also that the tales of any such tax levied by a district board as an addition to the taxation under the head of land-cess shall not exceed three annas in the rupee of the annual rent value of the land.
(2) subject to the provisions aforesaid, the local authority may, with the previous sanction of the State Government and shall, if so directed by them, alter the rates of any such tax. Section 36 reads thus :
"36. Assessment and realization of taxes :
(1) Every tax levied in any area under any head of taxation mentioned in Section 34 shall be deemed to be an addition to a tax levied under the same head in such area under the law for the time being in force governing municipalities or local boards, as the case may be, and all the provisions of such law relating to the incidence, assessment or realization of such tax or in any manner connected therewith shall be applicable accordingly Provided that the State Government may direct that the said provisions shall apply subject to such modifications and restrictions as may be prescribed.
(2) In particular any such tax levied in a panchayat area under any head of taxation other than land-cess, shall be realised by the president of the panchayat as an addition to a tax levied under the same head under the Andhra Pradesh (Andhra Area) District Boards Act, 1920. Out of the proceeds of the tax so realized such per cent age as may be prescribed shall be credited to the village fund of the panchayat on account of the cost of collection and the balance shall be paid to the credit of the elementary education fund under the control of the district board concerned".
23. It may be seen from the provisions extracted above that the education tax could be levied by the then District Board within its area with the previous sanction of the State Government or on a direction given by the Slate Government. In either case, the rate of tax is as determined by the State Government subject to the ceiling limit prescribed by the third proviso to Section 35. The rate of levy can be altered by the local authority again with the previous sanction of the State Government or if so directed by them. The tax is levied as an addition to the taxation leviable in the concerned area as per the law governing the District Boards under the head of land-cess, profession tax and house-tax. We have already noticed that the land cess is leviable under the District Boards Act. Education tax leviable under Section 34 (2) is thus in the nature of an additional land cess and it is to be assessed and collected in the same manner us land cess.
24. On behalf of the respondents no legal provision has been brought to our notice such as the notification issued under Section 61 of the A.P. Panchayat Samithis and Zilla Parishads Act empowering the Zilla Parishads or Panchayat Sam it his as the case may be to continue to levy the tax under Section 34 in the place of the District Boards Act. However, our attention was drawn to G.O. Ms. No. 986, Planning & Development (Samithi-IV) dated 22nd October, 1959 by which the Government framed certain rules prescribing the powers and functions of the Standing Committees of the Panchayat Samithis. The functions and powers entrusted by the Government and the powers and functions of the District Board including levy of tax exercisable under Section 18 (1) of the A.P. Panchayat Samithis and Zilla Parishads Act, 1959 have been conferred on Standing Committee No. V. Section 18 (1) inter alia empowers the Panchayat "to exercise and perform such of the powers and functions of the District Board including the powers to levy any tax or fees as may be transferred to it under this Act". This again takes us to the question whether there was any such transfer of the power to levy tax as contemplated by Section 18 (1). It was represented on behalf of the learned Advocate General that the respondents could not place their hands on any such notification or on adaptation order. However, it is not necessary for us to rest our decision on the absence of such notification or order because there is another fatal infirmity in the impugned levy.
25. As. already noticed, the charge under Section 34 could be brought into effect only on the basis of a previous sanction of the State Government or on a direction by the State Government.
26. After the cases were partly heard, we adjourned the cases at the request of the learned Advocate General to enable him to furnish the orders of the Government directing or sanctioning the levy of education tax at the specified rate. Thereafter, certain orders issued by the then Madras Government have been placed before us. The first one is G.O. Ms. No. 2286, Law and Education, dated 3rd November 1934. By that CO., the Government directed that education tax shall be levied under Section 34(2) of the Madras Elementary Education Act, 1920 in the district mentioned in the Annexure to the order at the rates set out therein. Vizagapatnam and Guntur are two of the Districts mentioned therein. As far as Vizagapatam is concerned, the rate of education tax to be levied is specified at 11 4/9% of land cess or 2 pies in the rupee of land revenue. For Guntur it was mentioned as 13 8/9% and 2 1/2 pies, respectively. In G.O. Ms. No. 1340 dated 2nd July 1935 the Government directed that education tax shall be levied in the area of the new district of Vizagapatam at 13 8/9% of land cess or 2 1/2 pies in a rupee of land revenue. Again by G.O. No. 1419 dated 5-7-1947, the Government directed that the rate of education tax levied in the area of District Board, Vizagapatam be raised from 15 to 18 pies in a rupee of land revenue (from 61 1/2 to 75 per cent of land cess; with effect from Fasli 1357. The District Board. Vizagapatnam on 13-8-1947 passed a resolution enhancing the rate of education tax from 15 pies to 18 paise in the rate of land revenue. Then followed Govt. Memo No. 264636C/ 51-2 dated 9-8-1951, Education Department, Government of Madras, whereunder the Government sanctioned the proposal of the District Board, Vizagapatam to raise the rate of education tax levied in the area of the District Board from 18 pies to 36 pies in the rupee in the land revenue with effect from 1361 Fasli. It is stated that education cess now being levied is 19 paise which is within the ceiling limit of the third proviso to Section 35 and which is equivalent to 36 paise (old pies). Certain orders issued by the Government and the then Board of Revenue have also been referred to show that the education cess continued to be levied even after the Panchayat Samithis and Zilla Parishads came into existence. It is mentioned in G.O. Ms. No. 805 Planning & Local Administration Department dated 14th June 1962 that in the "Andhra Area in addition to this land cess, education cess at the rate of 19 Np. per rupee of land revenue is also being collected". In Board's reference TT4. 2744/62 dated 5-2-1963, the Commissioner for land Revenue informed the Collector, Anantapur, that after the enactment of the Andhra Pradesh Land Revenue (Additional Assessment) Act, 1962, 'the education cess of 19 NP in addition to land cess of 18 NP per rupee in Andhra Area has to be collected as the education cess has not been amended under the new Act.'
27. Assuming that by virtue of the orders of the then Government of Madras referred to supra the education-tax leviable by the former District Boards are still leviable by the Zilla Parishads/Panchayat Samithis after the District Boards were abolished, it is obvious that the levy could only be at a per cent age of the land cess or land revenue. The levy being an addition to land cess, working out a per cent age of land-cess is in fact the proper method of determination of education-tax. That is why care has been taken by the then Government of Madras to specify a per cent age of land-cess and indicating its equivalent in terms of land revenue. The demand of education cess or tax at 19 paise in a rupee of non-agricultural land assessment is nowhere authorised or contemplated by any of the notifications or orders produced before us. As noticed earlier, the assessment under NALA Act is levied in respect of nonagricultural lands in lieu of land revenue. The NALA Act itself shows that the non-agricultural land assessment levied is distinct and separate from the land revenue collected on lands other then non-agricultural land it is not the same thing as land revenue. We are therefore of the view that the demand of education cess worked out at 19 paise per puree of non-agricultural land assessment, in purported exercise of power under the Andhra Pradesh (Andhra Area) Elementary Education Act, 1920 has no sanction of law and is therefore violative of Article 165 of the Constitution.
28. The Andhra Pradesh (Andhra Area) Elementary Education Act was replaced by the Andhra Pradesh Education Act, 1982 and it came into force from 24th April, 1987. Let us see the position under the said Act. The charging section as far as the levy of tax is concerned is Section 37, which reads thus :
"37. Levy of taxes :
(1) Any municipal council may, with the previous sanction of the Government and shall, if so directed by them, levy within its jurisdiction, taxes for the purposes of this Act, as such rates as may be considered necessary, as an addition to the taxation levied in the municipality under the Andhra Pradesh Municipalities Act, 1965 under the head of property tax or profession tax or both these heads.
Explanation :--In construing the expression taxation levied occurring in this Subsection (5) of Section 18 of the Andhra Pradesh Municipalities Act, 1965 shall not be taken into account.
(2) Any Gram Panchayat may with the previous sanction of the Government and shall, if so directed by them, levy within the area under its jurisdiction or part thereof, taxes for the purposes of this Act, at such rates as may be considered necessary, as an addition to the taxation levied in such area or part under law for the tune being in force governing gram panchayats under all or any of the following heads, namely cess or local cess, profession tax and house-tax".
Section 38 provides for she rate of levy of tax. The third proviso thereto enjoins that the rates to any such tax levied by Gram Panchayat as an addition to the taxation under the head land cess or local cess shall not exceed 37 paise in a rupee of the annual rental value of the land. Section 39 provides for assessment and realisation of taxes. It reads:
"39. Assessment and realisation of taxes :
(1) Every tax levied in any area under any head of taxation mentioned in Section 37 shall be deemed to be an addition to a tax levied under the same head in such area under the law for the time being in force governing the municipalities or gram panchayats, as the case may be and ail the provisions of such law relating to the incidence, assessment or realisation of such tax or in any manner connected therewith shall be applicable accordingly :
Provided that the Government may direct that the said provisions shall apply subject to such modifications and restrictions, as may be prescribed.
(2) In particular, any such tax levied in any area within the jurisdiction of a gram panchayat under any head of taxation, other than land cess or local cess shall be realised by such authority as may be prescribed as an addition to a tax levied under the same head under the law for the time being in force governing gram panchayat. Out of the proceeds of the tax so realised, such percentage as may be prescribed shall be deducted towards the collection charges and the balance shall be paid by such authority into the Government treasury".
Thus it could be seen that the power to levy tax under the new Education Act is now conferred on the Gram Panchayat in the place of the District Board. It is not the stand of the respondents either in the counter or additional counter nor is it contended before us by the learned Advocate General that the concerned Gram Panchayat has levied education cess or tax in terms of Sub-section (2) of Section 37 read with Section 38 and that the impugned demands towards education cess have been made to enforce such levy. It is not the case of the respondents that the education cess which is sought to be demanded by the revenue officials is an addition to the taxation levied in the Gram Panchayat area under the provisions of the Gram Panchayats Act under the head-cess' or 'local cess'. Hence we can perceive no authority for demanding the education cess or tax by the respondents under Sections 37 to 39 of the A.P. Education Act, 1982.
29. In W.P. No. 14297/86, apart from the legality of land cess and education, an additional contention has been raised that the respondents have no jurisdiction to reopen the past assessments made under the NALA Act and raise additional demands as a consequence thereof. According to the averments in para 4 of the affidavit in the writ petition, the petitioner was informed in the year 1980 that the rates of assessment have been revised with retrospective effect from 1975. Though there is no specific reference in the affidavit to any revised order passed or demand issued, in the material papers we find that there is a notice of demand date 25-9-1982 issued by the Revenue inspector, Mangalagiri under Section 4 of the NALA Act for Faslis 1373 demanding an amount of Rs. 86,256-57 Ps. including cesses. The petitioner also filed a copy of the communication dt. 26-12-1985 from the Mandal Revenue Officer Tadepalli giving details relating to the assessments made under the NALA Act for the past years in reply to a letter addressed by the petitioner. Thus, the starting point of the petitioner's grievance would go back to 1980 or 1982. This writ petition was filed in the year 1986. There is no apparent reason why the revised demand issued on 2S-9-1982 could not be challenged for nearly four years. We are not inclined at this distance of time to set aside the demand merely on the ground that the Revenue Inspector had no jurisdiction to reopen the assessments especially when the liability to pay at higher rate is not in dispute.
30. In view of the foregoing discussion, we declare that the levy and demand of education cess in relation to non-agricultural lands held by the petitioners is illegal and without jurisdiction. Consequently, there will be a direction not to collect from the petitioners the education cess or tax calculated at 19 paise per rupee on the non-agricultural land assessment and to refund or adjust the amount, if any, paid towards education cess. The other reliefs sought for in the writ petitions arc not granted.
31. The writ petitions arc thus partly allowed to the extent indicated above. There will be no order as to costs. Advocate's fee Rs. 200/- in each.