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JUDGMENT with W.P.(c) 1215 and 1221 of 1989 with Nos. 177, 179, 256 and 402 of 1990, 450-53, 500, 690-91, 707, 872 and 908 of 1993 and T.C. (C) No. 93 of 1984 1995 Supp(6) SCR 120 JUDGMENT B.P. Jeevan Reddy, J.

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 the estates in West Bengal.

Legislative Background:

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, 1953 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 (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, 1980. Section 4(2), as originally enacted, prescribed different rates in respect of lands, coal mines and other mines on an annual basis.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 therefore. Sub-section (2) of Section 4, as amended in 1981, read as follows:

31. Now coming to Orissa Cement, it was again a case where the cess was imposed on royalty. As amended by Act 15 of 1988, Section 5(2) of the Orissa ; Cess Act, 1962 read as follows;

(2) The rate at which such cuss shall be levied shall be -

a) in case of lands held for carrying on mining operations in relation to any mineral, on such percentum of the annual value of the said lands as specified against that mineral in Schedule II; and

b) in case of other lands fifty percentum of the annual value.

The effect of the declaration in Section 2 of the Tea Act, 1953 and the Tea Act on the legislative competence of the State Legislature to levy the impugned tax.

50. The learned Counsel for the petitioners submitted that the Parliament has by making a declaration, in Section 2 of the Tea Act, to the effect that "it is expedient in the public interest that the Union should take under its control the tea industry" deprived the State Legislature to impose the disputed cess. It is submitted that the Tea Act has taken over not only the control over the tea industry but also the cultivation of tea by the said enactment. It is pointed out that under Section 25 of the Tea Act, the Parliament has levied a cess on all tea produced in India. It is pointed out that the expression 'tea' is defined in Section 3(n) to mean "the plant Cemellia Sinensia (L) O. Kuntze as well as all varieties of the product known commercially as tea made from the leaves of the plant Camellia Sinensia (L) O. Kuitze including green tea", that according to this definition, tea leaves also fall within the expression 'tea' and since the Parliament has already levied on a cess on the said produce, viz., tea leaves, an identical levy cannot be imposed by the State Legislature. Certain provisions of the Tea Act relating to control over cultivation and production of tea are brought to our notice for buttressing the said argument. For a proper appreciation of these submissions, it is necessary to refer briefly to the provisions of the Tea Act, 1953.

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62. It is true that the 'tea' as defined in Section 3(n) means the tea plant and in that sense, it may also include tea leaves. For that reason it may probably be open to the Parliament to levy a duty of excise, by way of cess, on tea leaves. But a perusal of the aforesaid notification makes it appear that the levy of duty of excise/cuss is really on tea, as commercially known. We need not, however, express any opinion on the scope of Section 25 or of the Notification. We shall assume for the sake of argument that such a duty can be and is impeded on the tea leaves produced in tea estates. The question is whether such levy has the effect of denuding the State legislature of its power to levy the impugned cess which, we have held, is a cuss/ tax on land measured by the quantum of the tea leaves produced in a tea estate. We think not. We have also held that the levy is not upon the produce of land but upon the land and that 'tea estate' can be validly classified as a unit for the purpose of levying the cess. It is. thus clear that the levy contemplated by Section 25 and the levy provided by the impugned enactment arc altogether different and distinct in character. The fact that the Tea Act empowers the Central Government to levy a duty or cess upon tea or tea leaves for the purpose of that Act can in no manner deprive the Legislature of its power to tax the land comprised in a tea estate. This is the purport of the several decisions discussed hereinbefore. Similarly, the fact that the Tea Act controls the cultivation of lea is again not a factor affecting the competence of the State Legislature inasmuch as the State Legislature is not seeking to control the cultivation of tea but only to levy the lax on land comprised in a tea estate. The declaration in Section 2 of Tea Act, it is evident, has again no relevance on the State Legislature's competence inasmuch as the impugned cess is not a cess on the tea industry but a cess on the land comprised in a tea estate. The fact that ultimately the tax may have to be borne by the tea industry is no ground for holding that the said levy is upon the tea industry. For that matter, even the imposition of a land revenue or non-agricultural cess upon the land comprised in a tea estate will ultimately affect the tea industry but that is no ground for invalidating. those taxes. This proposition is too well-established and it would be enough to refer to the decisions in Ganga Sugar Co. v. State of Uttar Pradesh : [1980]1SCR769 and Federation, of Hotel and Restaurant (at page 655 para 37).