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"Notwithstanding anything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), the Market Committee shall subject to such rules as may be made in this behalf, levy a cess by way of sales tax on any commercial crop bought and sold in the notified area at such rates as the, State Government may, by notification, determine. Explanation....................
Since that part of Bellary district which had bnen included in the Mysore State by virtue of the Central Act 30 of 1953 was no longer a part of the State of Madras the above amendment made in 1955 did not apply there. The amended section, however, was applicable to South Kanara district which then formed part of the State of Madras. By the States Reorganisation Act 1956 the district of South Kanara, with the exception of the Taluk of Kollegal and certain other areas became part of the new State of Mysore. Section 7(a) of that Act contained a provision similar to s. 53 of the Central Act 30 of 1953. :The laws operating in the State of Madras became applicable to areas which were formerly in that State. Thus s. 11 of the Act as amended, in the year 1955 by the legislature, of the State of Madras continued to apply to the South Kanara district of the State of, Mysore. The situation: on that date was that in the district of Bellary which became part of the former State of Mysore s.11 of the Act was in force as it stood before its amendment in 1955 by the Madras legislature. But s. 11, as amended, was in force in the district of South Kanara.
In 1958 a Bill was introduced in the Mysore Legislature to amend the Act as in force in the Madras area. In the statement of objects and reasons it was mentioned that s. 11 of the Act, as amended by the Madras Legislature in 1955 and as in force in South Kanara district, empowered the South Kanara Market Committee to levy a cess by way of sales tax on any commercial crop bought and sold in the notified area at such rates as the Government might determine. No notification as contemplated by the section was issued by the Government of the erstwhile State of Madras and the Market Committee continued to levy a cess at the same rate as it was levying prior to the amendment. In the decision of the Madras High Court it had been held that the levy of cess was invalid' a no notification had been issued by the State Government. The validity of the collection of the fee prior to the amendment Act of 1955 had also been 34-1 S.C. India/71 questioned. It was, therefore, necessary to validate the levy and collection of the cess already made and to amend the Act to enable the Committee to continue to levy the cess. Previously an Ordinance had also been promulgated on account of the urgency of the matter. The Madras Commercial Crops Market (Mysore Amendment and Validation of Levy of Cess) Act 1958 received the assent of the Governor on November 30, 1958. By s. 2 of this amending Act, s. 11 of the Act was amended. Sub-s. (1) as in force in the "Madras area" was substituted and was to be deemed to have been substituted with effect from November 23, 1955. This sub- section was as follows:-

As the impugned proceedings relate to levy in the Bellary district of the State of Mysore for the year prior to the enactment the new Act of 1966 one of the main questions for determination is whether the amendment made in s. 11(1) by the amending Act of 1958 passed by the Mysore legislature was applicable to that area or whether the amending provision was confined only to the "Madras Area" which meant the district of South Kanra with the exception of specified area which came to be incorporated in the State of Mysore in 1956. The High Court was of the opinion that the definition contained in clause 47 of s. 3 of the Mysore General Clauses Act of "Madras Area" which was limited to the South Kanara district with the exception of specified areas had to be disregarded while interpreting the expression "Madras Area"

which meant the district of South Kanara with the exception of specified areas. We now proceed to give our reasons for coming to the above conclusion. (1) In the statement of objects and reasons relating to the Madras Commercial Crops Markets (Mysore Amendment and Validation of Levy of Cess) Bill 1958 when it was introduced in the Mysore legislature there was mention only of the Act as amended by the Madras legislature in 1955 being in force in South Kanara district. The entire reading of the statement shows that whatever changes in law and the validation provisions which were being made were confined only to the levy of a cess by way of sales tax by the South Kanara I Market Committee. (2) The Amending Act of 1958 was made applicable only to what was called the "Madras Area". This area could have reference only to the South Kanara district with the exception of the specified areas which was a, part of the State of Madras immediately before the States Reorganisation Act of 1956. It would be stretching the language too far to include in it the Bellary district which had ceased to be a part of the state of madras much earlier in 1953 The adaptation made in the Mysore General clauses. Act 1899 by virtue of the provisions contained in the states Organisation Act 1956 defined' "Madras Area to mean the territory specified in clause (d) of sub-s (1) of S. 7 of that Act. That would, as stated before comprise only the territory of South Kanara district with the exception of specified areas. The reasoning of the High Court that the definition 'given in the General Clauses Act should not be applied to the expression "Madras Area" in the Amending Act of 1958 can by no means the Sustained. (3) The distinction between what may be called the "Bellary Area" and the "Madras Area" which came to be incorporated in the State of Mysore in 1953 and 1956 respectively is full " substantiated by $. 154 of the Mysore Act 27 of 1966. It is stated there in unambiguous language that the Act as in force in' the Bellary district and is in force in the "Madras Area" was being repealed. If "Madras Area" also included the Bellary district. as is the view of the High Court there 'was no question of S. 154 being worded as it is, making it quite clear, that the Act as applicable in Bellary district, was not the same as in force in the "Madras Area". (4) The bye-laws of the Bellary Market Committee which were, framed in exercise of the powers conferred by S. 19 of the Act read with the Madras Commercial, Crops Market Rules 1948 give an indication that the Amending Act of 1958 was not applicable to the Bellary district. These by-laws were approved in May 1960.Under bye-law 19 the Market committee could levy fee or cess on the notified crops or commodities at the rates specified in the schedule. The schedule included cotton bales, loose cotton, kapas, groundnut seeds, groundnut pods and various other commodities. The Amending Act of 1958 specified the rates of only two commodities Arecanut and Coconut. These are not to be found in the schedule of the bye laws. of the Bellary Market committee In the bye-laws of the South Kanara Market Committee which came into force on July 1, 1955 these two commodities, namely,Arecanut and Coconut are the principal, if not the only. commodities which figure. The suggestion which has been made at the bar and which does not seem to be without substance is that in the South Kanara district these are the only or the principal commodities which constitute commercial crops; whereas in the Bellary district there are other commodities mentioned in the bye-laws which do not include these two that constitute commercial crops. Certain notifications have also been produced which show that rice, paddy etc. were declared to be commercial crops for the pur- pose of the Act even in the "Madras Area". But the bye-laws as also the Amending Act of 1958 seem to show that Arecanut and Coconut are the main or the principal commodities in the "Madras Area" and these commodities, according to the bye- laws, are confined to South Kanara district and are not included as commercial crops in the Bellary district at all. Once it is held that the Mysore Amending Act of 1958 did not apply to the Bellary district only fee could levied under S. 11(1) of the Act as it originally stood. Under bye-law 19 the rate specified for groundnut seeds was 9 paise per kilogram. The notice sent by the Market Committee making the demand from the respondents employed the word "cess" but that cannot stand in the way of it being held that the demand related to a fee which alone could be levied under S. 11(1) of the Act. The finding of the High Court was that the cess demanded was a sales tax since it was levied under S. 11 (1) of the Act as amended by the Amending Act of 1958. It was observed that if it was not a tax the question that remained to be considered was whether the cess demanded was a fee and if so whether the levy of the fee was open to criticism that it was not correlated to the services ren- dered.