TaxTMI 
TaxTMI 
1979 (3) TMI 202
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....eir intermediate products for captive consumption. 2. Jute Textile Industries is one of the industries specified in the First Schedule of the Industries (Development and Regulation) Act, 1951. But the specifications relating to jute industry in the First Schedule of the said Act have been from time to time amended/substituted. The Act LXXI of 1956 substituted the First Schedule of the Industries (Development and Regulation) Act, 1951 with effect from 1st of March, 1957. The Heading No. 23 of the First Schedule is as follows :- "Textiles (including those dyed, printed or otherwise processed); (1)    *      *      *       * (2) made wholly or in part of jute, including jute twine and rope. (3)    *      *      *       * (4)    *      *      *       * (5)    *      *....
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.... and jute yarn on captive consumption with effect from 1st of March, 1976. 6. The present appellants had filed writ petitions challenging the levy of cess under Section 9(1) of the Industries (Development and Regulation) Act, 1951 read with the Jute Manufactures Cess Rules and Orders made thereunder. Levy of any cess on jute twine and yarn in the process of manufacture of other jute products was challenged as unauthorised and illegal. His Lordship Mr. Justice Amiya Kumar Mookerji analogously heard and disposed of the Rules obtained by these appellants. The learned Single Judge held that the levy of jute cess under the aforesaid provisions of law were valid and authorised. Therefore, the learned Single Judge discharged the Civil Rules. The appellants, being aggrieved thereby, have preferred these appeals under Clause 15 of the Letters Patent. 7. We have heard these appeals analogously. On behalf of the appellants two sets of submissions have been made by Dr. Debiprasad Pal and Mr. R.N. Bajoria. 8. Mr. Bajoria, learned Advocate for the appellants in F.M.A. No. 910 of 1978, submitted that the Central Government is empowered to levy cess under Section 9 of the I....
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....t and Regulation) Act, 1951. The preamble of the said Act stated that said Act was enacted "to provide for the development and regulation of certain industries". The Section 2 of the Act "declared that it is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule". We may at this stage refer to the definitions of the expressions "schedule" and "scheduled industries". The term "schedule" under Section 3(h) means "a Schedule to this Act". The term "Scheduled industries" under Section 3(i) means "any of the industries specified in the First Schedule". Thus the First Schedule specified the industries whose control have been taken up in the public interest by the Union. The heading of the First Schedule of the Act refers to Sections 2 and 3(i) of the said Act and significantly Section 9(1) of Act 65 of 1951 has not been mentioned therein. 10. Thus, the First Schedule to the Industries (Development and Regulation) Act, 1951 mentions the industries which have become subject to control by the Central Government in terms of the said Act. The Section 2 and the First Schedule to the Act of 1951 are to be read togethe....
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....dule `B' Item 30 of the Punjab General Sales Tax Act, 1948 had interpreted the word "textile". We are bound by the decision of the Supreme Court in Harakchand v. Union of India, (supra), regarding the interpretation of the First Schedule to the Act 65 of 1951. Therefore, we respectfully follow the said decision and hold that the word "textiles" in the heading of Item No. 23 does not qualify the sub-heading (2) which reads as follows :- "made wholly or in part of jute, including jute twine and rope". 11. We have already stated that the First Schedule mentions the industries which becomes subject to control by the Central Government according to the different provisions of the Act 65 of 1951. The said Act has described in detail the different ways in which the Central Government may exercise such control over the scheduled industries. Such powers of control by the Central Government include : (i) Regulation of scheduled industries under Chapter III (a) registration of existing industrial undertakings and power to revoke such registration. (b) licencing of new industrial undertakings. (c) licence for producing or manufacturing new articles. ....
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....in this connection has placed before us the observations in paragraph 43 of the judgment delivered by B.K. Mukherjee, J. (as he then was) in the well-known case of The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Tirtha Swamiar, A.I.R. 1954 S.C. 282. The learned Judge inter alai indicated the indicia of a tax. It is unnecessary for us to discuss at length the real nature of the levy under Section 9(1) of the Act 65 of 1951 because Section 9(1) itself contains elaborate provisions relating to both imposition of cess on scheduled industries and also utilization of the proceeds of such cess. Such proceeds may not form part of the general revenue but may be handed over to the Development Council for promotion of research, improvements in design and quality, imparting of training etc. Further, the real question in these appeals is whether or not the imposition of cess under Section 9(1) has been restricted only to articles mentioned in Heading 23, sub-heading (2) of the First Schedule of the Act 65 of 1951. In our view, there is no substance in the submission made on behalf of the appellants that no cess under Section 9(1) may be imposed upon goods manufactured or....
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....he two Explanations. But as already stated, First Schedule including the two Explanations do not control or restrict the power of the Central Government under Section 9(1) to impose levy on goods manufactured or produced by the scheduled industry in question. The expression "all" in sub-section (1) of Section 9 of the Act in the present context means "every goods produced or manufactured by a scheduled industry". The Legislature has also deliberately used the words "manufactured or produced" to include both intermediate and the final products of the scheduled industry as may be notified. Therefore, we conclude that the power of the Central Government to levy cess under Section 9(1) is of wide amplitude and such power is not confined or restricted only to articles mentioned in the Heading 23(2) of the First Schedule. We reject the submission of the appellants that the Central Government has no power to impose cess upon intermediate products of jute industry. 15. We may now examine the next submission made on behalf of the appellants that under Section 9 of the Act 65 of 1951 the Central Government is empowered to levy cess only according to the value of the goods produced or....
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.... of cess under Section 9(1) of the Act 65 of 1951 according to weight basis. Mr. Sen has also pointed out that imposition of cess according to weight basis is a common feature of the taxing law and therefore, cess according to weight of any commodity is not per se arbitrary and illegal. The Central Excises and Salt Act also recognizes the power to impose cess under the said Act both according to weight and value of excisable commodities. Section 3(1) of the Central Excises and Salt act which is the charging section, inter alia, provides "there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than sale which are produced or manufactured in and a duty on salt manufactured in, or imported by land into any part of India as, and at the rates, set forth in the First Schedule". In case of some of the excisable goods duty has been imposed according to value and in respect of others according to their weight. For example, the Item 18D of the First Schedule relating to jute twist, yarn, thread, rope and twine etc. etc., excise duty is at a certain rate per metric tonne. Item 22A of the First Schedule of the Central Excises and Sa....
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....pon specified goods produced or manufactured by scheduled industries. We have already pointed out that sub-section (4) of Section 9 of the Act 65 of 1951 makes provision for utilization of proceeds of cess collected under Section 9 of the Act. 18. It would not be correct to urge that in case cess under Section 9(1) is levied on weight basis, the proviso under sub-section (1) of Section 9 would be totally unworkable. If the rate of cess is specified according to their weight, it may be still possible to check whether or not the amount of duty payable according to weight exceeds 12 n.p. per cent of the value of the goods in goods. In this case, the cess imposed under Section 9(1) upon the goods manufactured or produced by the appellants admittedly does not exceed 12 n.p. per cent of their value. Mr. Bajoria and Dr. Pal. learned Advocates for the different appellants, submitted that in case cess under Section 9(1) is imposed according to the weight of the specified goods of a scheduled industry, an element of uncertainty would be introduced and there would always remain a possibility of the said cess exceeding at some point of time 12 n.p. per cent of the value of the goods in....
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....competent to notify changes in the rates of cess in order to make adjustments, if necessary, according to changes in circumstances. A possibility of the Assessing Authority deciding the legality of a Central Government notification under Section 9(1) imposing cess upon specified goods of a scheduled industry is entirely remote and in actuality rates of cess accordingly to the weight of the specified goods is likely to be much lower than 12 n.p. per cent of the price of the goods in question. We have also observed that with changes in their wholesale cash price, the Central Government may alter the rate of the cess of the notified goods according to weight basis so as to keep the same within the limit laid down by the proviso to sub-section (1) of Section 9 of Act 65 of 1951. 20. Mr. Bajoria, learned Advocate appearing on behalf of the appellants, had submitted that the Explanation under Section 9(1) applies both to the main part of sub-section (1) of Section 9 and the proviso thereunder. The Explanation to the main part may apply in case the cess under Section 9(1) is imposed ad valorem. But in case such cess is imposed according to weight of the notified goods, the meaning....
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....n which they are produced for the manufacture of jute manufacturers falling under Item 22A of the said Scheduled from the whole of the duty of excise leviable thereon. The said exemption is subject to the proviso that where such consumption is elsewhere than in the factory of production the exemption contained in this notification shall be allowable only if the procedure laid down in Rule 56A or Rule 96E of the Central Excise Rules, 1944 is followed. Thus, the Central Government by the aforesaid notification has exempted twine, yarn etc. which are used for captive production from the payment of the excise duty under the Central Excises and Salt Act, 1944. The Central Government, however, has refused to extend the said notification and exempt these intermediate jute goods used for captive production from payment under Section 9(1) of Act 65 of 1951. 23. In our view, the said notification exempting jute twine, yarn etc. from payment of excise duty does not apply to the imposition of cess under Section 9(1). In the first place, the paragraph (3) of the Jute Manufactures Cess Rules, 1944 does not provide that even notifications made under the Central Excise Law Rules, law would....
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....1971 S.C. 2039 (2045) = 1978 E.L.T. (J 399), where also a distinction was made between levy and collection as used in the Central Excises and Salt Act and the Central Excise Rules, in particular Rule 10. In the present case, the Section 9(1) of the Act 65 of 1951 is the charging section and it has delegated power to the Central Government to impose cess upon goods manufactured or produced by a scheduled industry as may be specified by a notification. But the Act did not prescribe in detail how the cess imposed is to be calculated and assessment order shall be made. There is also no provision in the Act relating to machinery for collection of cess. The paragraph (3) of Jute Manufactures Cess Rules has purported to adopt the procedural provisions of the Central Exciss and Salt Act, 1944 and the Rules made thereunder for the purpose of making assessment of jute cess and collection. Therefore, the expression "the levy and collection of the cess" obviously refers to the assessment and realization. As already stated, the imposition of cess is made by a notification under Section 9(1) of Act 65 of 1951. The expression `levy' in paragraph (3) of the Jute Manufactures Cess Rules does not me....
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.... utilised by the Development Council constituted under Section 6(1) for the purposes specified in sub-section (4) of Section 9 of the Act 65 of 1951. The object of the said cess inter alia is to promote research, improvements in design and quality, provisions for training etc. Further, Section 9(1) by delegating the power to the Central Government to impose cess on goods manufactured in any scheduled industry which may be specified has introduced an element of flexibility and adjustability. Therefore, in case the burden of a cess imposed under Section 9(1) causes hardship or it is not commensurate with the value of any particular specified goods, the Central Government is always in a position to make modifications by a fresh notification under Section 9(1). 28. Dr. Pal in support of his submission on the point of discrimination had relied upon the decisions of the Supreme Court in Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Another, A.I.R. 1961 S.C. 552; Khandige Sham Bhat v. Agricultural Income Tax Officer, A.I.R. 1963 S.C. 591 : New Manek Chowk Spg. and Wvg. Mills Co. Ltd. v. Municipal Corporation of the City of Ahmedabad and Others, A.I.R. 1967 S.C. 1801 ....
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.... varying rates of cess for each division. The Supreme Court further held that the Act contains sufficient guidelines for the fixation of the rate of cess and there is also enough material on record to justify a uniform rate of cess for each acre of land in a division of the deltaic area. The imposition of tax on land for raising general revenue is substantially different from the levy of cess for implementation of a drainage scheme for the benefit of lands in an area and the principles applicable in one cess would not necessarily hold good in the others. 30. In our view, the principles laid down in D. Ramaraju's case (supra), should be applied for testing the validity of the jute cess imposed under Section 9(1) of the Act 65 of 1951. The cess under Section 9(1) of the Act 65 of 1951 is to be utilised for the development purposes under Section 9(4) of the Act. The proceeds are to be utilised by the Development Council for any scheduled industry or group of scheduled industries. Therefore, the proceeds of cess are to be used not for promotion of any particular goods but for the scheduled industry or group of scheduled industries. Therefore, the proceeds of cess are to be used....
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....nt. We have given our anxious consideration to the matter. There is some force in the submission of Dr. Pal that the appeals raise substantial question of law of some importance. But for the reasons given by us in our judgment, we are unable to hold that the points involved need be decided by the Supreme Court. In this connection, our attention has been drawn to the observations made in paragraph 2 of the judgment of the Supreme Court in State Bank v. N.S. Money, reported in A.I.R. 1976 S.C. 1111. The Supreme Court had observed inter alia :- "The certificate issued by the High Court under Article 133(1) is bad on its face, according to Counsel for the respondent and the appeal consequently incompetent. We are inclined to agree that the grant of a constitutional passport to the Supreme Court by the High Court is not a matter of easy insouciance but anxious advertence to the dual vital requirements built into Article 133(1) by specific amendment. Failure here stultifies the scheme of the Article and floods this Court with cases of lesser magnitude with illegitimate entry. A substantial question of law of general importance is a sine qua non to certify fitness for hearing by the Ap....