TaxTMI 
TaxTMI 
1970 (11) TMI 101
X X X X Extracts X X X X
X X X X Extracts X X X X
....cise Act, 1901, the Government of the State was authorised to grant exclusive privilege of selling by retail Indian made liquor on such conditions and for such period as the Government deemed fit, and to levy duty on manufacture and sale of alcoholic liquor. In exercise of that power the Government of Mysore framed rules regulating sale of "excise privileges". In the Note to 23 in respect of toddy, "tree-tax", "tree-rent" and "shop-rent" were chargeable at the rate of 9 pies per rupee. Under the Act, the exclusive privilege of retail vending of toddy in different areas was sold by auction. Every licencee had to secure toddy by tapping "toddy-yielding trees either in Government groves assigned to his shops or trees of private ownership. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... N.B. :-1/17th of the tree-tax, the shop rental and tree-rent collected should be credited to Local Funds, in lieu of the one-anna cess formerly levied on these items. (Vide also Art. 41-Mysore Accounts Code Vol 1) After the merger of a part of the Bellary District pursuant to the setting up of the State of Andhra in 1953 the Mysore Excise Act, 1901 was extended to the Bellary Area so merged in 1955. The Mysore Excise Act, 1901, was repealed and replaced by the Mysore Excise Act, 1965. But no substantial alteration was, made in the scheme of levy of excise revenue under the new Act. Under the Mysore Elementary Education Act, 1941 an education cess was levied as a percentage inter alia of excise revenue. The Mysore Elementary Ed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollected by the Government of Mysore. A large number of excise contractors moved petitions under Art. 226 of the Constitution before the High Court of Mysore challenging the, levy of "education cess" on "shop-rent in respect of toddy, arrack and beer and on "tree-tax" and "tree-rent". They claimed a declaration that they were not liable to pay the "education cess" and an injunction restraining the State from levying and collecting the education cess and also for an order refunding the amount already collected. It appears that even after the notification of 1907 merging the "tree-tax " and "tree-rent" with the "shop-rent" was issued, the State was in fact collecting the education cess froth the excise contractors. In the view of the Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpose the charge of education cess on Arrack shop-rent, toddy "shop-rent" and beer "shop-rent" "tree-tax" and "treerent" and that "shop-rent" is not a duty of excise and hence education cess cannot be levied on Arrack "shop rent", toddy "shop,-rent" or beer "shop-rent". The High Court also held that the excise contractors may question the validity of the levy of education cess on "shop-rent"-"tree-tax" and "tree-rent" even if they had agreed to pay education cess on those items. The High Court declared the levy of education cess on toddy, Arrack and beer "shop-rent", "treetops" and "tree-rent" as invalid. The State of Mysore has appealed to this Court with certificate granted by the High Court. Mr. Chagla contended that under List II Ent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in error in holding that "shop-rent" was not excise revenue. But this quest-Ion is concluded by a judgment of this Court. In M/s. Guruswamy & Company v. State of Mysore & Ors. ([1967] S.C.R. 548) this Court held that the Mysore State Legislature was incompetent to levy health cess on the items of the State excise revenue. The Court further held that the levy of health-cess could only be made if it be shown that the duty had been levied on goods which had been produced or manufactured, the taxable event being production or manufacture of goods. The Court observed that the essential characteristics of an excise duty was uniformity of incidence, and that the duty must be closely related to production or manufacture of goods. It did not mat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e-rent are excise revenues, those imposts ceased to be levied separately after the year 1907 : they merged in "shop-rent" and a fixed percentage was regarded as local cess and diverted to the Local Bodies. If under the order of 1955 and before that- date education cess on "tree-tax" and "tree-rent" was not being levied lawfully; liability to pay "tree-tax" and "tree-rent" could not be enforced by the State against the excise contractors'. Mr. Chagla also urged that even if education cess on "shoprent" is not within the competence of the State Legislature under Entry 51 List II, it is still a tax on "luxuries" within the meaning of Entry 62 of List II, and a cess may be levied thereon. The argument is, in our judgment, misconceived. Educa....