V.P. Gopalan Nambiyar, J.
1. The petitioners in these writ petitions, assail the validity of Section 3(2) of the Produce Cess Act 1966,(Central Act 15 of 1966). The section reads:
'3(1). x x x x x 3(2). There shall be levied and collected as a cess, for the purposes of this Act, on every produce specified in column 2 of the Second Schedule, a duty of excise at such rate, not exceeding the rate specified in the corresponding entry in column 3 thereof, as the Central Government may, by notification in the Official Gazette, specify: Provided that until such rate is specified by the Central Government, the duty of excise shall be levied and collected at the rate specified in the corresponding entry in column 4 of the said Schedule.'
The Act is entitled:
'An Act to provide for the imposition of a cess on certain produce for the improvement and development of the methods of cultivation and marketing of produce and for matters connected therewith.'
Column 2 of the Second Schedule lists cotton, copra and oils. Clause (1) of the section states that an amount equivalent to the proceeds of the cess shall, after due appropriation by Parliament by law be utilised by the Central Government, to meet the expenditure incurred in connection with measures, which, in the opinion of the Government, are necessary or expedient to promote the improvement, development and marketing of produce. Sub-Clause (2) of Section 5 provides that without prejudice to the generality of the provisions of Sub-section (1) the proceeds of the duty levied and collected may be utilised by the Central Government for all or any of the purposes, listed in Clauses (a) to (n) of the said Sub-clause.
2. I shall assume with the petitioner's counsel that Clauses (a) to (n) of the Sub-clause are concerned with the improvement and development of methods of cultivation and marketing of produce set out in the preamble to the Act and that the items of produce specified in Schedule 2 are all agricultural. On these provisions, the petitioner's counsel built the argument that the cess levied by the Act is not a tax or an excise duty but only a fee, to be utilised for the specific purposes in Clauses (a) to (n) of Section 5(2) of the Act; and if a fee. Parliament had no legislative power to levy the same. Alternatively, viewed as tax, the ear-marking of the impost for specific purposes was claimed to be unjustified and inconsistent with the character of a tax which ought to go to the Consolidated Fund of India and be merged with the general revenues instead of being dealt with for specifically enumerated purposes. As an excise duty, it was argued that, there was no provision for theStates to get their share of the duty under Article 272 of the Constitution. Besides negatively disclaiming the impost as beyond the legislative powers of Parliament whether as a fee or as a tax, a positive claim was made that the subject-matter of the legislation fell squarely within Entry 14 of List II of Schedule VII of the Constitution.
3. None of these arguments carry conviction to me. It is well settled that the nature of the impost is to be judged on a conspectus of the whole provisions of the enactment concerned, and not by reference to the words or the language used for describing the levy. In Hingir-Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459, on the provisions of the statute, the cess imposed by the Orissa Mining Areas Development Fund Act (27 of 1952) was held to be neither a tax nor a duty of excise but a fee. On the other hand, in Ahmedabad ., Ahmedabad v. State of Gujarat, AIR 1967 SC 1916 the cess imposed by the Gujarat Education Cess Act, was held to be a tax and not a fee. In Shinde Brothers etc. v. Deputy Commissioner, Raichur, AIR 1967 SC 1512, it was admitted before the High Court that the cess imposed by the Mysore Health Cess Act was a tax, though called a cess. The nomenclature as 'cess' is certainly not decisive of the character of the levy. Section 3(2) is clear that a 'duty of excise' is to be levied and collected as cess for the purpose of the Act. Going by the language of the section and the description of the levy, the indication is that the levy is a tax by way of excise duty.
4. According to the petitioner's counsel, it cannot be regarded as an excise duty, because, were it so, the injunction by Article 272 of the Constitution for distribution of their share to the States would be contravened. The said Article enacts:
'272. Union duties of excise other than such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied and collected by the Government of India, but, if Parliament by law so provides, there shall be paid out of the Consolidated Fund of India to the States to which the law imposing the duty extends same equivalent to the whole or any part of the net proceeds of that duty, and those sums shall be distributed among those States in accordance with such principles of distribution as may be formulated by such law.'
Under the Article the obligation is only if Parliament by law so provides. The mere fact that the States are unable to obtain their share of this cess or that there is no provision to pay any portionof the cess collected to the States is no ground to hold that the impost is not an excise duty.
5. In Shanmugha Oil Mill, Erode v. Coimbatore Market Committee, AIR 1960 Mad 160, it was observed:
'The word 'cess' has a definite legal connotation, indicating tax allocated to a particular thing, not forming part of the general fund. Instances may be found among Central Acts, Cotton Cess Act 14 of 1923, the Indian Lac Cess Act 24 of 1930. Agricultural Produce Cess Act 27 of 1940, the Coffee Market Expansion Act, 7 of 1942. Coconut Committee Act, 10 of 1944, Salt Cess Act 49 of 1953, the Central Tea Board Act 13 of 1949 (a) and Tea Cess Act 9 of 1903 (b). All these enactments authorise levy of a cess. Amongst local Acts mention may be made of the Madras Sugar Factories Control Act (Act 20 of 1949) which authorises the State Government to levy cess. Article 277 of the Constitution refers to 'cess' as a special category of the taxes. According to its import the word 'cess' is only tax and not a mere fee. It is, therefore, not necessary for the purpose of levy of cess there should be quid pro quo between the service actually render-ed and the amount of tax levied, as it is not a fee but a tax.'
In AIR 1967 SC 1512, Hidayatullah, J., (as he then was) in his dissenting judgment observed:
'The word 'cess' is used in Ireland and Is still in use in India although the word 'rate' has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expenses which the name (health cess, education cess, road cess, etc.) indicates. The majority Judges stated nothing contra on this aspect. I cannot agree with the petitioner's counsel that what is imposed is a fee and not a tax and that the levy cannot be sustained as an excise duty. Being a tax by way of excise duty the legislation is clearlv within Entry 84 of List I of Schedule VII of the Constitution of India, and therefore with-in the legislative field of Parliament. In this view it is unnecessary to consider the argument that the levy is a fee and therefore beyond the legislative competence of Parliament under Entry 96 of List I.
6. The contention that the subject-matter of the legislation falls squarely within Entry 14 of List II of Schedule VII of the Constitution does not merit serious consideration. The petitioner's counsel himself properly admitted that the levy must be related to any of the specific taxing entries in the Constitution. It cannot be related to Entry 14 of List II of Schedule VII.
7. It was argued that if the impost was a tax the same should go to the Consolidated Fund and be merged with the general revenues and dealt with as provided in Article 266 of the Constitution. Article 266 enacts:
'266 (1) Subject to the provisions of Article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government In repayment of loans shall form one consolidated fund to be entitled 'the Consolidated Fund of India' and all revenues received by the Government of a State, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances and all moneys received by that Government in repayment of loans shall form one consolidated fund to be entitled 'the Consolidated Fund of the State'.
(2) All other public moneys received by or on behalf of the Government of India or the Government of a State shall be credited to the public account of India or the public account of the State, as the case may be.
(3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution.'
Reliance was placed on the observations in paragraph 9 of Hingir Rampur Coal Co.'s case. AIR 1961 SC 459 to the following effect:
'Tax recovered by public authority invariably goes into the Consolidated Fund which ultimately is utilised for all public purposes, whereas, a cess levied by way of fee is not intended to be, and does not become, a part of the Consolidated Fund. It is ear-marked and set apart for the purpose of service for which it Is levied. There is, however, an element of compulsion in the imposition of both tax and fee. When the Legislature decides to render a specific service to any area or to any class of persons, it Is not open to the said area or to the said class of persons to plead that they do not want the service and therefore they should be exempted from the payment of the cess. Though there is an element of quid pro quo between the tax-payer and the public authority there is no option to the tax-payer in the matter of receiving the service determined by public authority.'
The above observation, with respect, only stated the general position. But to argue from this, that in all cases where a levy does not go to the Consolidated Fund, orget merged in the general revenue it cannot be regarded as a tax, seems to me to involve a fallacy. In Jaora Sugar Mills (P) Ltd. v. State of Madhya Pradesh, AIR 1966 SC 416, such an argument was repelled as follows:
'It is doubtful whether a plea can be raised by a citizen in support of his case that the Central Act is invalid because the moneys raised by it are not dealt with in accordance with the provisions of Part XII generally, or particularly, the provisions of Article 266. We will, however, assume that such a plea can be raised by a citizen for the purpose of this appeal. Even so, it is difficult to understand how the Act can be said to be invalid because the cesses recovered under it are not dealt with in the manner provided by the Constitution. The validity of the Act must be judged in the light of the legislative competence of the Legislature which passes the Act and may have to be examined in certain cases by reference to the question as to whether fundamental rights of citizens have been improperly contravened, or other considerations which may be relevant in that behalf. Normally it would be inappropriate and indeed illegitimate to hold an enquiry into the manner in which the funds raised by an Act would be dealt with when the Court is considering the question about the validity of the Act itself. As we have just indicated, if the taxes or cesses recovered under an Act are not dealt with in the manner prescribed by the Constitution, what remedy a citizen may have and how it can be enforced, are questions on which we express no opinion In this appeal.'
8. The fact that the cess in this particular case has been earmarked for certain particular purposes indicated by Clauses (a) to (n) of Sub-clause 2 of Section 5 does not appear to me to be destructive of the levy being a tax. The provisions in these clauses are without prejudice to the generality of the power conferred by Sub-clause (i) of Section 5. Besides there is authority in Jadeja Habhubha v. The State of Bombay, AIR 1959 Bom 43, to the effect that simply because the proceeds of the cess would go to a local fund it could not be contended that a cess is not a tax.
9. None of the grounds on which Section 3(2) of the Act and the levy imposed thereby have been challenged appeal to me. I dismiss these writ petitions with costs. Issue carbon copies to counsel.