1997 (5) TMI 441 - SC - Indian Laws

Court upholds State's power to levy water use cess under Maharashtra Land Revenue Code. Fresh demand to be paid within 30 days.

R.S. Rekchand Mohota Spinning & Weaving Mills Ltd. Versus State of Maharashtra

The court upheld the State's legislative competence to levy cess on the use of flowing water for industrial purposes under Section 70 of the Maharashtra ... - Issues Involved:1. Legislative competence of the State legislature to levy cess on the use of flowing water from a river.2. Validity of the retrospective application of the cess.3. Natural right to draw water from a flowing river.4. Guidelines for determining the rates of cess.Detailed Analysis:1. Legislative Competence of the State Legislature:The primary question addressed in the judgment is whether the State legislature has the power to levy rates of cess on the use of flowing water from the river 'Wana'. The appellant contended that the Maharashtra Land Revenue Code, 1966 (the Code) envisages collection of land revenue from agriculturists for the use of water for cultivation purposes and that the use of water for industrial purposes is not covered. The appellant argued that neither Entry 18, Entry 45, nor Entry 49 of List II of the Seventh Schedule to the Constitution could sustain the demand under Section 70 of the Code, rendering the resolution illegal.The court held that legislative Entries are to be interpreted broadly and widely to give power to the legislature to enact laws with respect to matters enumerated in legislative Entries. Entry 45 of List II includes land revenue, which encompasses the assessment and collection of revenue, including water cess. The court cited precedents such as Navinchandra Mafatlal v. The Commissioner of Income-tax and Kunnathat Thatcunni Moopil Nair v. The State of Kerala to emphasize that legislative Entries should be given their widest amplitude. The court concluded that Section 70 of the Code comes within Entry 45 of List II, thus validating the State's power to levy cess on the use of water.2. Validity of the Retrospective Application of the Cess:The appellant challenged the retrospective demand of cess levied by the Tehsildar for the period from 1967-68 to 1973-74. The court observed that while the State Government has the power to levy cess under Section 70 of the Code, the demand must be prospective and not retrospective. The Solicitor General conceded that the executive cannot make any demand retrospectively. Consequently, the court directed that the demand should be construed to operate from the date of the Resolution passed by the Government (June 5, 1972), and the appellant is liable to pay the land cess from that date.3. Natural Right to Draw Water from a Flowing River:The appellant argued that he had an easementary right to draw flowing water from the river uninterruptedly and continuously for over 70 years, thereby perfecting his right to draw water. The court, however, found that the appellant's use of water for industrial purposes with the help of artificial contrivances does not constitute a natural right. The court held that the right to use water from a flowing river vests in the State as an integral part of the land, and the State has the authority to regulate and levy cess on such use.4. Guidelines for Determining the Rates of Cess:The appellant contended that no guidelines were provided for the demand of cess levied on the use of water from the flowing river. The court found that the manner in which the rates were prescribed in the Resolution provided sufficient guidelines for determining the rates at which the demand could be assessed. The machinery provision under sub-section (2) of Section 20 of the Code was followed, and the principles of natural justice were complied with by the appellate and revisional authorities.Conclusion:The court upheld the legislative competence of the State to levy cess on the use of flowing water for industrial purposes under Section 70 of the Maharashtra Land Revenue Code, 1966, as it falls within Entry 45 of List II of the Seventh Schedule to the Constitution. The demand for cess must be prospective from the date of the Resolution passed by the Government, and the appellant is liable to pay the cess at the rates specified therein. The appeal was disposed of with directions to the respondents to compute the rate on a prospective basis and make a fresh demand, which the appellant is required to pay within 30 days from the date of receipt of the demand. No costs were awarded.