GOODRICKE GROUP LTD. ETC. v. STATE OF WEST BENGAL AND ORS.

Chapter-III containing Sections 12 to 16 provides for control over the extension of tea cultivation. Section 12 says that no one shall plant tea on any land not planted with tea on the date of commencement of the Act unless permission therefor has been granted by the Tea Board in writing. c The restriction applies to replanting as well. Section 13 sets out the limitations su~ject to which permission under Section 12 can be granted. Section 14 prescribes the manner in which applications for grant of permission under Section 12 have to be filed. Section 15 provides for grant of permission to plant tea in certain special circumstances. Section 16, however, permits the owner of a tea estate to establish nurseries on land not previously planted with tea for growing of plants intended for in filling or supplying vacancies etc. Thus no fresh area can be brought under tea plantation except with the permission of the Tea Board.

Chapter-IIIA provides for management or control of tea undertakings or tea units by the Central Government in certain circumstances. The chapter contains Section 16A to Section 16N. We have referred at an earlier stage to the provisions of Sections l 6B, l 6C and l 6D which empower the Central Government to take steps for ensuring that the production of tea in a tea estate does not fall below a particular level. The powers includes the power to order investigation, to issue directions as well as to assume management or control of the tea undertakings or tea units, as the case may ... be. ["Tea undertaking" is defined by clause (e) in Section 16A (1) to means "an undertaking engaged in the production or manufacture (}r both of tea through one or more different units" whereas the expression "tea unit" is defined in clause (t) to mean, "a tea estate or garden, including a sub- division thereof, which has a distinct entity for which accounts are kept and has a factory of its own for the production and manufacture of tea."] Section l 6E empowers the Central Government to take over a tea undertaking or a tea unit without ordering a prior investigation, in certain specified circumstances. Section l 6F specifies the powers of the Central Government where it takes over the management of a tea undertaking/tea unit under Section l 6D or Section l 6E, as the case may be. So does Section

GOODRICKE GROUP LTD. v. STATE [B.P. JEEVAN REDDY, J.] 159

16G. The other provisions in this chapter are ancillary and supplemental to the power to ensure the production of tea at a parti;::ular level.

Chapter-IV containing Sections 17 to 24 provide for control of the Tea Board/Central Government over the export of tea and tea seed.

Chapter-V contains Sections 25 to 29 and they provide for finance, accounts and audit. Since Section 25 is strongly relied upon by the learned counsel for the petitioners, it is necessary to set out the section in full:

"25.(1) There shall be levied and collected as a cess for the purposes of this Act' a duty of excise on all tea produced in India at such rate not exceeding fifty paise per kilogram as the Central Government may, by notification in the Official Gazette, fix:

Provided that different rates may be fixed for different varieties or grades of tea having regard to the location of, and the climatic conditions prevailing in the tea estates or gardens producing such varieties or grades of tea and any other circumstances applicable to such production.

(2) The duty of excise levied under sub-section (I) shall be in addition to the duty of excise leviable on tea under the Central Excises and Salt Act, 1944, or any other law for the time being in force.

(3) The provisions of the Central Excises and Salt Act, 1944, and the rules made thereunder, including those relating to refund and exemption from duty, shall, so far as may be, apply in relation to the levy and, collection of the duty of excise under this section as they apply in relation to the levy and collection of the duty of excise on tea under the said Act."

A perusal of sub-section ( 1) makes it dear that it empowers the Central Government to levy and collect "as a cess for the purpose of this Act a duty on excise on all tea produced in India." The proviso to sub-section (1) empowers the Central Government to prescribe different rates of cess for different varieties or grades of tea having regard to the circumstances mentioned therein. Sub-section (2) says that the duty of excise levied under sub-section (1) shall be in addition to the duty of excise leviable on tea under the Central Excise and Salt Act, 1944. Sub-section (3) makes certain H

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A machinery provisions of the Central Excise Act applicable in the matter of levy and collection of the duty of excise levied under sub-section (1). Section 26 says that out of the duty of excise collected under Section 25 appropriate amounts shall be made over to the Tea Board by the Central Government from time to time. Section 26A empowers the Central Government to make grants or loans to the Tea Board. Section 27 provides B for the constitution of Tea Fund to which all the monies including the duty of excise levied under Section 25 is to be credited.

Chapter-VI containing Sections 30 to 32 empowers the Central Government to control the price and distribution of tea or tea waste while Chapter-VII contains certain miscellaneous provisions to which it .is not c necessary to refer.

The learned counsel for the petitioners have also placed before us a copy of the notification issued under Section 25 (I) of the Tea Act being the Ministry of Commerce Notification No. S.O. 488 (E) dated 13.8.1986 [as amended by S.O. 799 (E) dated 30.10.1986]. The notification reads as follows:.

"In exercise of the powers conferred by sub-section (1) of section 25 of the Tea Act, 1953 (29 of 1953), the Central Government hereby notifies, with effect from the 15th day of August, 1986, the rate of cess as specified in column (2) of the Table below on the variety/grade of teas specified in column (1) of the said Table.

TABLE

Variety/grade of tea Rate ofcess

1Copy pinpoint1. All tea except those produced in the areas Paise fifteen specified under column ( 1) of serial number 2. per kilogram.

2Copy pinpoint2. All teas produced in the Sadar Sub-division Paise eight G and Kurseong sub-division excluding the areas per kilogram. in the jurisdiction list Nos. 31, 29, 33, 20, 21, 22, 23 and 24 comprising Subtriguri sub-division of New Chumta tea estate, Smilbarie and Marionbarie; Tea Estates ofKurseong Police Station in Kurseong sub-division of the district of Darjeeling in the H State of West Bengal.

GOODRICK£ GROUP LTD. v. STATE [B.P. JEEVAN REDDY, J.] 161

It is true that the 'tea' as defined in Section 3 (n) means the tea plant A 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/cess 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 B duty can be and is imposed 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 cess/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 are 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 tea 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 tax on land comprised in a tea estate. The declaration in Section E 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 not 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 F 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] l S.C.R. 769 arid Federation of Hotel and Restaurant (at page 655 para 37). G It is contended by Sri Ashok Desai that the impugned imposition is really an imposition of duty of excise on the goods produced in India within the meaning of Entry 84 of List-I and, therefore, outside the competence of the State Legislature. The learned counsel also pointed out that the Central Excise Tariff Act levies a duty upon the tea as well. This contention is again premised upon the assumption that the impugned levy is a levy upon H

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A the produce of the tea estate and not upon the land comprised in a tea estate. Since we have already held that in pith and substance the impugned levy is a levy of tax OIJ- land and that produce of the land is merely brought in for the purpose of quantifying the tax, i.e., as a measure, the said argument becomes out of place and unsustainable.

Sri Ashok Desai submitted that by virtue of the declaration made by Parliament in Section 2 of the Tea Act, as ccintemplated by Entry 52 of List-I, ihe ,State Legislature is denuded of the power to levy any tax on tea. Reliance is ,placed upon the decision of this Court in Baijnath Kadio v. State of Bihar, [1969] 3 S.C.C. 838. This argument again proceeds on the assumption that the impugned cess is a tax upon the tea or tea industry and c not a tax upon the land, which assumption we have rejected hereinbefore. As pointed out repeatedly in the several decisions referred to earlier in this judgment, "measure of tax is not determinative of its essential character" and further that "the same transaction may involve two or more taxable events in its different aspects" and "the fact that there is an overlapping D · does not detract from the distinctiveness of the aspects." The question of .t superior legislature or inferior legislature does not really arise herein. Once the impugned legislation is held to be relatable to Entry 49 of List-II, it will be within the exclusive competence of the State Legislature. In that behalf, the State Legislature is not inferior to Parliament. The reference to the decision of this Court in Synthetics and Chemicals v. State of Uttar E Pradesh, [1990] 1 S.C.C. 109 is equally of no assistance to the petitioners inasmuch as in that case vend fees was levied by the State Government, under the State Excise Act, upon industrial alcohol which industry was taken within the purview of the l.D.R. Act. It is for the said reason that it was held to be incompetent. The decision cannot be read as disentitling the State Legislature to levy a tax upon the land or upon a building merely because such land or building is held or owned by an industry which is within the purview of the l.D.R. Act - or which is governed by the Tea Act, as in the present case.

Lastly, the learned counsel for the petitioners questioned the validity of the retrospective effect given to the impugned enactment. We fail to see any substance in this submission. If the Act is good, it is good both prospectively and retrospectively. Retrospective effect is given for the period covered by the anterior provisions which were struck down in Buxa Dooars. Once it is held that defect pointed out in Buxa Dooars is rectified and remedied 1 in the impugned -enactment, it can certainly be given retrospective effect to cover the period covered by _the earlier enactment

.GOODRICKE GROUP LTD. v. STATE [B.P. JEEVAN REDDY, J.] 163

which is not only a well-known but a frequently adopted measure by all the A Legislatures.

For the above reasons, the writ petitions fail and are accordingly dismissed. The interim orders made in these writ petitions shall also come to an end. The petitioners shall pay the cesses stayed by the orders of this court alongwith interest@ 12% p.a. There shall be no order as to costs. B U.R. Petitions dismissed.