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JUDGMENT S.B. Sinha, J.
1. All these writ applications involving common questions of law and fact, were heard together, and are being disposed of by this common judgment.
2. Initially the petitioner, filed the aforementioned applications for "issuance of an appropriate writ for quashing the orders passed by the Bihar State Water Pollution Control and Prevention Board, Patna (respondent No. 2) and the Member Secretary, Bihar State Water Pollution and Prevention Board, Patna (respondent No. 3) whereby and whereunder the said respondents in purported exercise of their powers conferred upon them under Water (Prevention and Control of Pollution) Cess Act, 1977 (hereinafter referred to as 'the said Act") assessed the amount payable by the petitioner for consumption of water in its industries.
3. According to the petitioner while passing the said orders, the respondents Nos. 2 and 3 failed to allow rebate to the petitioner as contemplated under Section 7 of the said Act.
4. The petitioner thereafter filed an applications for amendment of the writ application whereby and whereunder it sought to insert some paragraphs in the writ applications, namely, paragraphs 20, 21 and 22 thereto. By reason of the said applications for amendment of writ applications the petitioners company inter alia challenged the vires of the said Act.
5. In these cases facts involved are short and practically are not in dispute. The petitioner is a public limited company and has primarily been carrying on business of manufacturing Iron and Steel. The petitioner, however, also renders services of municipal nature to the residents of the town of Jamshedpur where its main works are situated. The petitioner in particular supplies water for domestic and other purposes to the entire township of Jamshedpur and maintains an elaborate underground system of disposal of the sewage.
6. Some of the legislature of the States in India including the State of Bihar adopted resolution in terms of clause 1 of Article 252 of the Constitution of India to the effect that the matters as mentioned in the preamble to the Water (Prevention and Control of Pollution) Act, 1974 (hereinafter called and referred to for the sake of brevity as the "1974 Act") should bq. regulated in these States by the Parliament by law; pursuant whereof the Parliament enacted the aforesaid 1974 Act being Act No. 6 of 1974.
7. The preamble of the herementioned Act reads as follows:-
"An act to provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water for the establishment. With a view to carrying out the purpose aforesaid of Boards for the prevention and control of water pollution, for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected therewith."
8. The Central Government pursuant to the provisions contained in the 1974 Act constituted Central Board in terms of Section 3 thereof for performance of the functions enumerated in Section 16 thereof and similarly the Government of Bihar in exercise of its powers conferred upon it under Section 4 thereof constituted a State Board for performing the function enumerated in Section 17 thereof.
9. The Parliament, with a view to augment the resources of the Central Board and the State Boards and for the prevention of Water Pollution constituted under the aforementioned, 1974 Act enacted the said Act (Act No. 36 of 1977).
10. The said Act came into force with effect from 7th December, 1977, the preamble whereof reads as follows :-
"An act to provide for the levy and collection of a cess on water consumed by persons carrying on certain industries and by local authorities, with a view to augment of resources of the Central Board and the State Boards for the Prevention and Control of Water Pollution constituted under the Water (Prevention and Control of Pollution) Act, 1974."
The said Act was applicable to all the States to which the Act of 1974 was applicable. Section 3 of the said Act provides for the levy and collection of cess from every local authority and every person carrying on any specified industry, on the basis of the water consumed by them at such rates as may be specified by the Central Government in the Official Gazette.
11. Section 3 of the said Act, reads as follows:-
"Levy of Collection of cess:- (1) There shall be levied and collected a cess for the purposes of the Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974) and utilisation thereunder.
(2) The cess under Sub-section (1) shall be payable by-
(2) every person carrying on any specified industry: and
(b) every local authority, and shall be calculated on the basis of the water consumed by such person or local authority, as the case may be, for any of the purposes specified in column (1) of Schedule II, at such rate, not exceeding the rate specified in the corresponding entry in column (2) thereof, as the Central Govt. may by notification in the Official Gazette, from time to time, specify.
(3) Where any local authority supplies water to any person carrying on any specified industry or to any other local authority and such person or other local authority is liable to pay cess under Sub-section (2) in respect of the water so supplied, then, notwithstanding anything contained in that Sub-section, the local authority first mentioned shall not be liable to pay such cess in respect of such water.
Explanation:- For the purposes of this section and Section 4, consumption of water includes supply of water.
12. Clause (h) of Section 2 of the Act of 1977, defines 'local authority' which inter alia means a Municipal Corporation the term specified industry is defined under clause (c) of Section 2, which means any industry, specified in Schedule I of the Act of 1977.
Section 7 which is relevant for the purpose of these applications reads as follows:-
7. Where any person or local authority, liable to pay the cess under this Act, instals any plant for the treatment of sewage or trade effluent, such person or local authority shall, from such date as may be prescribed, be entitled to a rabate of seventy per cent of the cess payable by such person or as the case may be local authority."
12A. The Central Government in exercise of its power conferred upon it under Section 17 of the said Act framed rules known as the Water (Prevention and Control of Pollution) Cess Rules, 1978. The said Rules came into force with effect from 24th July, 1978.
13. Rule 6 of the said Rules which is relevant for the purpose of these cases reads as follows:-
"Where a consumer instals any plant for the treatment of sewage or trade effluent, such consumer shall be entitled to the rebate under Section 7 on and from the expiry of 15 days from the date on which such plant is success fully commissioned and so long as it functions successfully."
14. According to the petitioners they have installed such a plant. The respondent No. 2, the Assessing Authority according to the petitioner, for the different periods involved in different writ petitions allegedly failed to take into consideration the claim of the petitioner relating to rebate inter alia on the ground that as the petitioner has not installed any plant for treatment of the entire quantity of trade effluent or sewage, no rebate is admissible to it.
A copy of the said order is contained in Annexure 2 to the writ application.
The petitioner purported to be being aggrieved by and dissatisfied with the said order preferred an appeal before the respondent No. 2 Board, who also by reason of an order as contained in Annexure 3 to the writ application dismissed the same.
15. In these cases one counter-affidavit has been filed on behalf of the respondents Nos. 2 and 3 and another on behalf of the Union of India (respondent No. 4). A supplementary counter-affidavit has also been filed by the respondent No. 4. The respondents Nos. 2 and 3 in their counter-affidavits did not controvert the fact that the petitioner has installed a water treatment plant but contended that unless and until a treatment plaint of such capacity which is capable of treating the entire effluents is installed it will not be entitled to claim any rebate in terms of Section 7 of the said Act or Rule 6 of the said Rules.
16. In its counter-affidavit and the supplementary counter-affidavit the contention of the Union of India in short is that the Parliament has the requisite legislative competence to enact the said Act, in terras of Entry No. 97, List I of the 7th Schedule of the Constitution of India read with Article 248 thereof and the impugned orders passed by the respondents Nos. 2 and 3 are valid and while passing such orders the said respon dents did not commit any illegality in rejecting the petitioners claim for rebate.
17. Mr. K. D. Chatterjee, the learned counsel appearing on behalf of the petitioner firstly submitted that the Parliament had no legislative competence to enact the said Act. Alternatively it was submitted that even if the said Act is valid the petitioner is entitled to rebate in terms of Section 7 of the said Act and the respondents Nos. 2 and 3 had misdirected themselves in law in ignoring the claim of rebate of the petitioner in their orders as contained in Annexures 2 and 3 to the writ petition.
18. Mr. A. B. Ojha, the learned counsel appearing on behalf of respondents Nos. 2 and 3 and Mrs. Renuka Sharma, the learned standing counsel appearing on behalf of Union of India Respondent No, 4) on the other hand, submitted that the Parliament has the requisite legislative competence to enact the said Act and the impugned orders passed by the respondents Nos. 2 and 3 were valid.
19. In view of the rival contentions of the parties, as noticed hereinbefore, the following questions arise for consideration in these writ applications:-
(a) Whether the Parliament had the legislative competence to enact the Water (Prevention and Controf if Pollution) Act, 1977?
(b) Whether the orders passed by the respondents Nos. 2 and 3 rejecting the claim of rebate by the petitioner can be sustained?
Re-question No. (a)
20. Admittedly the Water (Prevention of Pollution and Control) Act, 1974 was enacted by the Parliament in terms of the resolutions adopted by some states under clause 1 of Article 252 of the Constitution. Water is a State subject, as is evident from Entry 17 of List II of the 7th Schedule which reads as follows:-
"Water, that is to say, water supplies, irrigation and canals, drainages and embankments, water storage and water power subject to the provision of Entry 56 of List I."
21. Item 66 of List II of the 7th Schedule confers power upon the State Legislatures to enact an Act relating to fees in respect of any matters in the said list but not including fees taken in any Court. However Entry 97 of List I of the 7th Schedule of the Constitution provides for a residuary power to enact any law relating to any other matter not enumerated in List II or List III including any tax not mentioned in either of those lists.
22. From the aforementioned entries in the respective lists it is clear that whereas a State Legislature is empowered to levy fees in respect of any matter enumerated in the said list, the Parliament alone is empowered to enact an act imposing tax which has not specifically been mentioned in List II or List III of the 7th Schedule.
23. Mr. Chaterjee submitted that cess imposed in terms of the provisions of the said Act is really in the nature of fee and not tax and in that view of the matter the learned counsel submitted that the Parliament had no jurisdiction to enact the said Act. Learned counsel also submitted that although under Section 8 of the said Act the cess levied under the Act is to be deposited in the Consolidated Fund but the same is not decisive as 'fee' also can be appropriated by the Central Government in its consolidated fund.
24. Developing his arguments the learned counsel submitted that as the proceeds of the (sic) cess under the Act upon collection is to be appropriated by a law made by the Parliament in this behalf providing for payment to the Central Board and the State Boards from time to time out of such proceeds and after deducting the expenses of collecting such sums as money as it may think fit for utilisation under Water (Prevention and Control of Pollution) Act, 1974, the cess so levied must be said to be in the nature of fee.
25. Learned counsel in this connection has relied upon the cases of the Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindrs Thirtha Swamiar of Sri Shirur Mutt (1954 SC 282), Ratilal Panachand Gandhi v. State of Bombay, (1954 SC 388). The Indian Micca and Micanite Industries, Ltd. v. The State of Bihar (1971 SC 1182), The Secretary, Government of Madras, Home Department v. Zenith Lapms and Electrical Ltd. (1973 SC 724), The State of Maharashtra v. The Salvation Army, Western India Territory (1975 SC 846) and Kewal Krishna Puri v. State of Punjab (1980 SC 1008).
26. Learned counsel, in the alternative, submitted that if the cess so imposed is treated not to be in the nature of a fee but a tax, the impost itself would become unconstitutional. According to the learned counsel Entry 97 of List I read with Article 248 of the Constitution must be construed in such a manner so as not to read an exclusive legislative power on taxation which is reserved for the State. According to the learned counsel in view of the fact that the subject water is within the legislative competence on the State Legislature, the tax to be imposed in relation to the matter covered under Entry 17 of List I must also be held to be by necessary implication, within the domain of the State Legislature.
27. Mr. Chaterjee further submitted that by reason of Entry 97 in List I, the constituent assembly did not contemplate putting a whole lot of things which are not specified in the residuary entry.
28. Learned counsel also brought to our notice that in List II there are 19 entries specifying taxes but in respect of the remaining entries i.e. 17 entries there is no power to levy tax but only to a levy fee. According to the learned counsel if tax is to be imposed in respect of any matter contained in any one of the aforementioned 47 Entries, in such an event only Parliament cannot be said to be empowered to make legislation in that behalf. Learned counsel further brought to our notice that similarly the Central lists entries relating to taxes are 13 in number (entries 82 to 92B). It is strange, according to Mr. Chatterjee that no other entry is included in List I although it is said that wide fields of taxation were open to Parliament (in respect of the 47 entries in the State List). It is also strange, Mr. Chatterjee submits that majority of the subjects of taxation are left out (and are covered by the residuary entry) and only 13 entries have been so expressly stated, Mr. Chatterjee contends that this is not the concept of a residue.
It was further submitted that if these taxes were in contemplation of list I there was no difficulty at all in inserting the necessary entries in respect of them for example, taxes on burial grounds (Extry 10) Libraries (entry 12), roads bridges and ferries (entry 13), Cattle pounds (entry 16), fisheries (entry 21) markets and fairs (entry 28), money lending (entry 30) inns (entry 31) betting and gambling (entry 34) and many more.
29. In short the submission of learned counsel appears to be that power to levy tax by the State Legislature even in respect of matters not expressly specified in List II, is not taken away by the Entry, 97 of List I of the Seventh Schedule of the Constitution. In other words, entry 97 of List I, according to the petitioner, contemplates only imposition of tax on such a matter which comes within the purview of the residuary clause entry item No. 97 that is a matter not specified either in List II or List III.
For the aforementioned proposition learned counsel has referred to pages 2004 to 2013 from Vol. (2) 2nd Edn of H. M. Seervai's Constitutional Law of India.
30. Learned counsel for the respondents, on the other hand, submitted that imposition of cess per se is imposition of tax. In this view of the matter, according to the learned counsel, only because some amount of tax is to be spent for the purpose of performing functions under the Water (Prevention and Control of Pollution) Act, 1974 (hereinafter referred to for the sake of brevity as the Act) it cannot be said that cess imposed under the Act is in the nature of a fee.
31. The learned counsel for the respondents, in this connection, has placed strong reliance upon a decision of the Punjab and Hariyana High Court in the case of Municipal Corporation of Jullundur City v. Union of India (AIR 1981 Punjab and Hariyana 287). The learned counsel further submitted that entry No. 97 of List I of the 7th Schedule of the Constitution clearly stipulates that the Parliament will have the jurisdiction to enact any legislation for imposing tax relating to such matter which are not expressly provided for either under List II or List III. Thus, according to the learned counsel, the State Legislature cannot have any legislative competence whatsoever for the purpose of imposition of tax on such matters in respect whereof no specific entry exists in List II of the 7th Schedule of the Constitution of India and, thus according to the learned counsel, enactment of the said Act must be held to be within the competence of the Parliament in terms of entry No. 97 of List I of the 7th Schedule of the Constitution of India.
32. In view of the rival contentions as referred to hereinbefore, the questions which arise for consideration are (i) as to whether the cess imposed under the Act is in the nature of a fee? and (ii) whether in any event such tax can be imposed by the Parliament in terms of entry No. 97 of List I of the 7th Schedule of the Constitution of India.
The distinction between a fee and a tax was pointed out in Matthewa v. Chocory Marketing Board 60 CLR page 263 at 276 by Latham C.J. of the High Court of Australia in the following term 'A tax' according to the learned Chief Justice, is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. The aforementioned definition of tax has been quoted with approval by the Supreme Court in Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1954 SCR 1005 ; AIR 1954 SC 282 wherein their Lordships of the Supreme Court after quoting the aforementioned decision of the High Court of Australia proceeded to hold as follows :-
"The definition brings out in our opinion, the essential characteristics of a tax as distinguished from other forms of imposition which, in a general sense, are included within it. It is said that the essence of taxation is compulsion, that is to say, it is imposed under statutory power without the tax payer's consent and the payment is enforced by law.-
vide Lower Mainland Dairy v. Crystal Diary Ltd. 1933 Appeal Cases 168(N)."
33. In Cooley's Constitutional Limitations, 8th Edition (Vol. 2) at page 986 the learned author has quoted with approval from Blackwell on Tax Title the following definition of tax.
"Taxes are defined to be burdens or charges imposed by the legislative power upon persons or property to raise money for public purposes."
Thus, tax is a compulsory exaction of money imposed under a statutory Act for public purposes. This meaning is attributed to the word 'tax' in contradistinction to the term 'fee'. It will be seen that the cess imposed by reason of the provisions of the said Act is in the nature of a tax and not a fee.
34. It has not been disputed before us by Mr. Chatterjee that in a case where fee is leviable, the element of quid pro quo is essential. The question, therefore, that has to be posed and answered is as to whether the authorities under the said Act have been rendering any service to the industries like that of the petitioner in lieu of imposition of cess.
By reason of various decisions of the Supreme Court it is now clear that prevention of Water Pollution is essential for the general public and if the same is not carried out, the interest of protecting the lives of the people using water from rivers and other sources shall be subversed. A law of prevention of water and air pollution is for the purpose of enforcing directive principles of the Constitution.
35. In M. C. Mehta v. Union of India (AIR 1988 SC 1034) the object of the Act has been emphasised. Reference in this connection may also be made to M. C. Mehta v. Union of India (AIR 1988 SC 1115).
36. From the object and purport of the 1974 Act it will be evident that the same had been enacted for the purpose of preventing water pollution i.e. in the interest of the general public and not for rendering any services to the owner of the industries. The owners of the industries by reason of the provisions of the said Act are not benefited as such but they may be so benefited only as a member of the community at large.
37. In Member Secretary, Andhra Pra-desh State Board for Prevention and Control of Water Pollution v. Andhra Pradesh Rayons Limited, reported in 1989 Vol. 1SCC 44, the Supreme Court stated that the purpose of the Act was to realise money from those whose activities lead to pollution and who must bear the expenses of the maintenance and running of the State Board.
38. From a perusal of the said Act it will further appear that thereby obligations have been imposed not only upon the owners of the industries but also upon the Municipalities and other local authorities. It seems that had 'cess' imposed under the said Act been in the nature of fee, no question of levying it would have arisen nor such a burden would have been imposed upon the local authorities which supply water to the industries unless exempted under Section 3(3) of the said Act.
39. True it is, as contended by Mr. Chat-terjee that it is always not necessary that the payer of 'fee' must be directly benefited.
40. The question as to whether a particular imposition is a tax or a fee depends upon the provisions contained in the Act.
Under the provisions of the said Act even 'cess' is levied not only upon the specified industries which consume water but also upon the local authorities including the Municipal Corporation which supplies water to such industries or to any other local authority.
41. The very fact that in terms of the explanation appended to Section 3 of the said Act, consumption of water has been held to include supply of water also is a pointer to the fact that even the local authority which supplies water would be liable to pay the cess unless specifically exempted in terms of subsection (3) of Section 3 of the said Act. Thus from the provisions of the said Act it is clear that only specified industries and local authorities are to be levied cess for consumption and/or supply of water which may lead to water pollution.
42. For the purpose of obtaining answer to the question as to whether the imposition of cess is in the nature of tax or fee, the first thought that comes to one's mind is as to whether it is meant to be used primarily for public purpose. If the realisation is to be used for public purpose there cannot be any doubt that such imposition would be in the nature of tax.
43. It is clear from the provisions of the said Act that the purposes for imposition of cess is for public purpose upon those who consume or supply water leading to water pollution.
43. Recently the Supreme Court of India in Om Prakash Agrawala v. Giri Raj Kishore, reported in AIR 1986 SC 726 has held as follows:-
"In determining a levy as a fee the true test must be whether its primary and essential purpose is to render specific services to specified area or class it being of no consequence that the State may ultimately and indirectly be benefited by it."
It was further observed in the said case that-
"The purpose on which any amount collected by way of tax is spent by any State and there is nothing which is done specifically to benefit the dealer. When any amount is spent from the fund the interest of the dealers is not at all kept in view even generally. There is no other restriction imposed on the manner in which the Fund can be spent. The cess, therefore, partakes of the character of a part of the common burden which has to be levied and collected only as a tax.
There is practically no difference between the Consolidated Fund which vested in the State and the Fund under the Act which also vests in the State. Amounts credited to the Consolidated Fund and the amounts credited to the Fund can both be spent practically on any public purpose almost throughout the State."
44. Reference in this connection may also be made to the District Council of the Jowai Autonomous Distt. Jowai v. Dwet Singh Rymbai etc. (AIR 1986 SC 1930) wherein the royalty imposed under the United Khasi and Jaintia Hills Autonomous District (Management and Control of Forests) Act was held to be in the nature of a tax being compulsory exaction of money by a public authority for public purposes enforceable by law. Cess imposed under the said Act, in my opinion, having been imposed by way of compulsory exaction of money under statute by the public authority for public purposes cannot be but a tax.
45. The purposes for which the aforementioned Act has been enacted can also be gathered from the functions of the Central Board as well as State Board as contained in Sections 16 and 17 respectively of 1974 Act which are in the following terms :-
"16. Functions of Central Board- (1) Subject to the provisions of this Act, the main function of the Central Board shall be to promote cleanliness of streams and wells in different areas of the States.
(2) In particular and without prejudice to the generality of the forgoing function, the Central Board may perform all or any of the following functions, namely:-
(a) advise the Central Government on any matter concerning the prevention and control of water pollution,
(b) co-ordinate the activities of the State Boards and resolve disputes among them,
(c) provide technical assistance and guidance to the State Boards, carry out and sponsor investigations and research relating to problems of water pollution and prevention, control or abatement of water pollution,
(d) plan and organise the training of persons engaged or to be engaged in programmes for the prevention control or abatement of water pollution on such terms and conditions as the Central Board may specify,
(e) organise through mass media a comprehensive programme regarding the preven-
tion and control of water pollution,
(f) collect, compile and publish technical and statistical data relating to water pollution and the measures devised for its effective prevention and control and prepare manuals, codes or guides relating to treatment and disposal of sewage and trade effluents and disseminate information connected therewith,
(g) lay down, modify or annul, in consultation with the State Government concerned, the standards for a stream or well, Provided that different standards may be laid down for the same stream or well or for different streams or wells, having regard to the quality of water flow characteritics of the stream or well and the nature of the use of the water in such stream or well or streams or wells,
(h) plan and cause to be executed a nationwide programme for the prevention, control or abatement of water pollution,
(i) perform such other functions as may be prescribed.
(3) The Board may establish or recognise a laboratory or laboratories to enable the Board to perform its functions under this section efficiently, including the analysis of samples of water from any stream or well or of samples of any sewage or trade effluents.
17. Functions of State Board-(1) Subject to the provisions of the Act, the functions of a State Board shall be-
(a) to plan a comprehensive programme for the prevention, control or abatement of pollution of streams and wells in the State and to secure the execution thereof,
(b) to advise the State Government on any matter concerning the prevention, control or abatement of water pollution,
(c) to collect and disseminate information relating to water pollution and the prevention, control or abatement thereof,
(d) to encourage, conduct and participate in investigations and research relating to problems of water pollution and prevention, control or abatement of water pollution,
(e) to colloborate with the Central Board in organising the training of persons engaged or to be engaged in programmes relating to prevention, control or abatement of water pollution and to organise mass education programmes relating thereto,
(i) to inspect sewage or trade effluents, works and plants for the treatment of sewage and trade effluents and to review plans, specifications or other data relating to plants set up for the treatment of water, works for the purification thereof and the system for the disposal of sewage or trade effluents or in connection with the grant of any consent as required by this Act,
(g) to lay down, modify or annul effluent standards for the sewage and trade effluents and for the quality of receiving waters (not being water man inter-State stream) resulting from the discharge of effluents and to classify waters of the State,
(h) to evolve economical and reliable methods of treatment of sewage and trade effluents, having regard to the ' peculiar conditions of soils, climate and water resources of different regions and more especially the prevailing flow characterisics of water in streams and wells which render it impossible to attain even the minimum degree of dilution",
(i) to evolve methods of utilisation of sewage and suitable trade effluents in agriculture,
(j) to evolve efficient methods of disposal of sewage and trade effluents on land, as are necessary on account of the predominant conditions of scant stream flows that do not provide for major part of the year the minimum degree of dilution,
(k) to lay down standards of treatment of sewage and trade effluents to be discharged into any particular stream taking into account the minimum fair weather dilution available in that stream and the tolerance limits of pollution permissible in the water of the stream, after the discharge of such effluents, (1) to make, vary or revoke any order-
(i) for the prevention, control or abatement of discharge of waste into streams or wells,
(ii) requiring any person concerned to construct new system for the disposal of sewage and trade effluents or to modify, alter or extend any such existing system or to adopt such remedial measures as are necessary to prevent, control or abate water pollution.
(m) to lay down effluent standards to be complied with by persons while causing discharge of sewage or sullag or both and to lay down, modify or annul standards for the sewage and trade effluents,
(n) to advise the State Government with respect to the location of any industry the carrying on of which is likely to pollute a stream or well,
(o) to perform such other functions as may be prescribed or as may from time to time, be entrusted to it by the Central Board or the State Government.
(2) The Board may establish or recognise a laboratory or laboratories to enable the Board to perform its functions under this section efficiently, including the analysis of samples of water from any strean or well or of samples of any sewage or trade effluents."
46. The purpose for which the fund is to be spent is not of special benefit to the petitioner or other owners of the industries as such.
47. From the scheme of the Act as also from the contentions of the writ petitioners as referred to hereinbefore, it is clear that industries may obtain rebate to the extent of 70% if they set up water treatment plant. Thus, a cess is to be imposed mainly for the purpose of treating the effluent of the factory and other sewages so that the common public may not have to use contaminated water or polluted water. It need not be stated that by doing so the State has undertaken a job to protect the people from health hazards. Further, besides payment of cess under the said Act, even in terms of the 1974 Act, the owners of the specified industries as also the other local authorities are required to perform various functions, disobedience whereof is penal in nature. Thus, in substance, the said Act has been enacted for the purpose of controlling a part of the functions of the industries and other local authorities who discharge polluted water after use thereof.
48. Preservation of purity of water had been receiving attention of the authority from time immemorial. In common law as also under the Indian Penal Code pouring of pollutted effluent into a public stream or river formed basis of an examable (sic) claim for damages for causing nuisance and penal, in nature.
49. Enviornmental protection has been receiving a great deal of attention from the law courts also. In Rural Litigation and Entitlement Kendra v. State of U.P., reported in AIR 1988 SC 2187, the Supreme Court had issued direction to stop the operation of mine of certain area for facilitating environment protection and in a later decision in Rural Litigation and Entitlement Kendra v. State of U. P., AIR 1989 SC 594, even exception granted to a mine under previous order was withdrawn.
50. Judging the case from this angle, in my opinion, the imposition is in the nature of a tax and not in the nature of a fee, for the views I have taken, it is not necessary to deal in details the decisions cited by Mr. Chaterjee. The said decisions in the facts and circumstances of this case are not at all applicable. These views also find support from the Division Bench decision of the Punjab & Haryana High Court in Municipal Corporation of Jullundur City v. Union of India (AIR 1981 Punjab Haryana 287).
51. It is now a well settled principle of law that a statute has to be interpreted in the context of the intention of the Legislature.
52. Now the question as to whether, even assuming the imposition of cess is in the nature of a tax, such tax can be imosed in terms of entry No. 97 of List I of the 7th Schedule of the Constitution or not may be considered. Entry No. 97 of List I of the 7th Schedule of the Constitution of India, on a plaili reading, is in two parts. Firstly it contains a provision empowering the Parliament to enact any laws in respect of any matter which is not covered by List II or List III of the 7th Schedule of the Constitution. However the words including any tax not mentioned in either of those Lists are important. This entry has to be read with Article 248 of the Constitution which reads as follows :-
"(1) Parliament has exclusive power to make any law with respect to any matter enumerated in the concurrent List or State List.
(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists."
53. It is a well known canon of interpretation; of statute as also the Constitution that where words are unambiguous and plain the same must be construed in their ordinary sense. Dr Ajoy Pradhan v. State of M.P. (AIR 1988 SC 1985) and Mithilesh Kumari v. Prem Behari Khare (1989 BBCJ 54 : AIR 1989 SC 1247). See also The Commissioner of Wealth-tax v. Smt. Hashmatunnisa Begam reported in AIR 1989 SC 1024.
54. It is also well known that in construing a statute no word shall ordinarily be left out of consideration unless the situation so warrants.
55. Thus if entry No. 97 is interpreted in the manner as suggested by Mr. Chaterjee, in my opinion, no meaning can be attributed to the words 'a tax' not mentioned in either of those Lists. If a provision for imposition of tax by the State or the Parliament has been made either in List II or List III of the Constitution, the question of granting any power to the Parliament for enacting a taxing statute by reason of entry No. 97 would not arise. The reason for granting such power appears to be that except the power to impose tax conferred specifically upon the State all power to levy tax are to vest in the Parliament itself.
56. Thus viewed, once it is established that the power to impose tax is not covered by any entry in List II or List III of the Constitution it would be competent for the Parliament to impose tax by making a legislation in this regard in exercise of its power under entry No. 97.
57. Further, now it is well known that entry in the list of the 7th Schedule of the Constitution has to be given a broad meaning (See M/s. Ujagar Prints v. Union of India reported in, AIR 1989 SC 516, wherein the law has been laid down in the following terms:-
"Entries to the Legislative Lists, are not sources of the legislative power but are merely topics or fields of legislation and must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression "with respect to" in Article 246 brings in the doctrine of "Pith and substance" in the understanding of the exertion of the legislative power and wherever the question of legislative competence is raised the test is whether the legislation, looked at as whole, is substantially with respect to the particular topic of legislation. If the legislation has a substantial and not merely a remote connection with the entry, the matter may well be taken to be legislation on the topic."
58. This interpretation of the entry No. 97 has also been made in the case of Union of India v. Harbhajan Singh Dhillon, reported in AIR 1972 SC 1061: (1972 Tax LR 449) and Municipal Corporation of Jullundur City v. Union of India, reported in AIR 1981 Punjab & Haryana 287.
59. Thus there is no doubt in my mind that the said Act is not ultra vires the Constitution.
60. Re-question (b).
Admittedly the petitioner has set up a water treatment plant. True it is that the capacity of the water treatment plant is not such so as to treat its entire industrial effluents and other sewages.
From a plain reading of Section 7 of the said Act, it is evident that an assessee is entitled to a rebate of 70% of the cess payable by him. True it is that Rule 6 speaks of successful commissioning of the plant and the successful functioning thereof. The intention of the Parliament in providing for grant of such rebates appears to be to encourage setting up of water treating plants within the industry itself so as to minimise the pollution of rivers by industrial effluents. Rule 6 has been held to be intra vires by a Division Bench of the Kerala High Court in the Member Secretary; Kerala State Board for Prevention and Control of Water Pollution, Kawadiar Trivendram v. The Gwalior Rayon Silk Manufacturing (Weaving) Company Ltd. Kozhikode (AIR 1986 Kerala 256). By reason of the said judgment the Division Bench of the Kerala High Court has reversed the decision of a learned single Judge of the said Court in M/s. Gwalior Rayon Silk Manufacturing (Weaving) Company Ltd. Mavoor v. The Appellate Committee for Water Cess, Trivendrum (AIR 1983 Kerala 110).
61. However, in this case, it is not necessary for this court to consider the question of vires of Rule 6 of the said Rules inasmuch as, in my view regard being had to the intent and purport of the Act, an assessee is entitled to a rebate to the extent of 70% to the extent of water which can be treated in the water treatment plant which has been commissioned and has been functioning successfully.
62. In Crawford's Statutory Construction in Article 332 it has been observed :
"that, according to the prevailing and proper view, exemption statutes should be liberally construed in favour of the debtor."
The law in this connection has further been stated in the following terms -
"The provisions of exemption statutes have been frequently involved in litigation where the language had to be construed in order to ascertain the legislative intention. For instance, 'mechanic' is not limited to skilled persons, butchering has been held to be a trade, a piano has been considered house hold furniture, a portable steam saw will has been held a tool, and the commissions of a travelling salesman selling by sample have been regarded as wages. As may be gathered from the foregoing examples, the courts have been liberal in their construction in favour of the debtor."
63. It is also well known that in construing such statute the intent of the legislature will prevail over the strict letter.
64. In K.P. Verma v, State of Bihar, reported in 1988 PLJR 1036 : (1989 Lab IC 2047) this aspect of the matter has been considered, Reed Dickerson in his Interpretation and Application of Statutes at page 135 observed;-
"........The essence of the language is to reflect, express, and perhaps even affect the conceptual matrix of established ideas and value that identifies the culture to which it belongs. For this reason, language has been called "conceptual map of human experience".
65. In Reserve Bank of India v. Peerless Co., reported in 1987 Vol. 1 SCC 424 AIR 1987 SC 1023, it has held as follows :-
"Interpretation must depend on the text and the context. They are the basis of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual A statute is best interpreted when we know why it was enacted. With this knowleged, the statute must be read, first as a whole and then section by section, clause by clause, pharase by pharase and word by word. If a statute is looked at in the context of its enactment, with the glasses of the statute maker, provided by such context its scheme, the sections, clauses pharases and words may take volour and appear different than when the statute is looked at without the glasses provided by the context with these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to any as to fit in to the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place ........."
66. In Inland Revenue Commissioner V. Saxone, Lilley and Skinner (Holdings) Ltd., (1967) 1 WLR501, the House of Lords, while considering Sections 265 and 266 of the Income-tax Act, 1952 and Section 16 of the Finance Act, 1954, whereby provisions have been made for allowances in respect of industrial buildings, held that, if a building's used for even a part of the trade or undertaking for which the exemption is granted the assessee would be entitled to the same exemption to the extent the building has been used for the purposes of part of that trade or undertaking. Lord Reid J. in the aforementioned decision stated as follows at p. 504 (1967) I WLR :-
"I think that underlying the appellants contention in the idea that is not fair that the trader should get full allowances if the building is used in part for non-statutory purposes. But logically that would lead to the result that substantially the whole use must be for statutory purposes before allowances are due. There would still he injustice, though smaller, if even 40 per cent was non-statutory use. The appellants did not shirk from the alternative contention that substantially the whole use must be for a statutory purpose but that would mean doing still greater violence to the words of the Act".
67. In Alladi Venkateswarlu etc. v. Govt. of Andhra Pradesh (AIR 1979 SC 945): (1978 Tax LR 2049), also, Supreme Court has held that statutes containing an exemption clause should be construed liberally.
68. Section 7 of the Act read with Rule 6 of the said rules do not lead any doubt whatsoever that the Parliament in its wisdom intended to provide some relief to the owner of an Industry who has installed a water treatment plant in their Industries. In sense the said provisions are beneficsent to the owner of an Industry.
It is well known that while construing a beneficent legislation interpretation thereof must be done in such a manner which advances the remedy and removes the evil, Reference in this connection may be made to the case of Authorised Officer. Thanjavur v. Naganath Ayyar etc. reported in AIR 1979 SC 1487 and R. Rama Reddy v. State of Andhra Pradesh reported in 1988 Vol. III SC Cases 433 : (AIR 1988 SC 1626). In Paradise Printers v. Union Territory of Chandigarh -
Paradise reported in 1988 Vol. I SC Cases page 440 : (AIR 1988 SC 354) the law has been laid down as follow :-
"The meaning to be given to a word depends upon the context in which it is used. The word takes the colour depending upon the context we must ask what does the word meaning in its context? We must examine why the rule making authority has chosen that word. After examining the purpose and scope of the rule, it must be given such meaning as to render the rule workable in a fair manner. We must give that meaning which would promote the purpose and object of the rule. When there is a choice of meaning, there is a presumption that one which produces an unjust or inconvenient result was not intended".
In Ramchandra Singh v. State of Bihar reported in 1987 PUR 47 : (AIR 1987 Pat 107), a Full Bench of this Court laid emphasis on looking to basic purpose and the larger scheme of the provisions while construing an enactment.
In K.C. Gangopadhyaya v. Union of India reported in 1975 PLJR 418, the Supreme Court laid down the law as follows at p. 422 (SC) 1975 PLJR -
"We listen largely to the language of the statute but where, as here, clearing up of marginal obscurity may makes interpretation surer if light from dependable sources were to beam in, the Court may seek such aid. What has been described as the sound system of construction, excluding all but the language of text and the dictionary as the key, hardly holds the field especially if the enactment has a fiscal or other mission, its surrounding circumstances speak and its history unfolds the mischief to be remedied. The Court, in its comity with the legislature, strives reasonably to give meaningful life and avoid cadaveric consequence. We have set out the story of the rebirth, as it were, of the law of minor mineral royalty levy to drive home the propriety of this method of approach. No doubt, there is some remissness in the drawing up of what professes to be a validating law and the neglected art of drafting bills is in part the reason for subtle length of submissions where better skill could have made the sense of the statute luscent and its validity above board. In-formed by a realistic idea of short falls in legislative drafting and of the social perspective of the statute but guided primarily by what the Act has said explicitly or by necessary implication we will examine the meaning and its impact on counsel's contentions".
69. It is also well known canon of interpretation of statutes that the Parliament intends to do justice and avoid unjustice. Reference in this connection may be made to Ganesh Pd. Singh v. State of Bihar reported in 1977 BBCJ 307 and Mahadeo Oil Mills v. SectionD.M. Araria reported in, AIR 1978 Patna 86 (at page 90) where the law has been stated as follows:-
"Without doing any violence to the express language of the statute, if it can be shown that the construction sought to be put by learned counsel for the respondents would result not only in palpable injustice, inconvenience and absolute hardship put also in absurdity, such a construction, if possible should be avoided".
70. Considering the provision of Section 7 of said Act and Rule 6 of the rules, in my opinion, the petitioners would be entitled to get rebate to the extent water is treated in its treatment plant so long the same continues to function smoothly.
71. It is also useful to refer to the scheme of the said Act and the Rules framed thereunder relating to imposition of case. Payment of cess as seen hereinbefore, is linked with the supply and/or consumption of water by the local authorities or by the industrialists for the purposes specified in Schedule 2 of the Act, the measurement of the water consumed is taken by the meter installed for the purpose. The standard of such meter and the places of such instalment are prescribed under the rules.
72. The consumer is required to file returns in prescribed form. Rule 4 of the 1978 Rules provide that every consumer shall furnish on or before the 5th day of every calendar months, to the assessing authority, a return in Form 1 showing the quantity of water consumed in the previous month.
73. Form I appended to the said Rules provides for the return regarding water consumed during a particular month. One of the columns of the said Form I provides for figures to be supplied to the authorities under the said Act regarding quantity of water qualifying for rebate according to the assessee. The said Form I further provides a remarks column wherein the assessee for the purpose of claiming rebate under column 7 to indicate therein analytical and other reports annexed to the return in support of this claim.
74. From the requirement of the law aforementioned it is clear that the assessee may claim rebate even if he is not in a position to treat the entire trade effluent or sewage in the water treatment plant installed in the premises of its work.
75. Respondents Nos. 2 and 3, therefore, must be held to have misdirected themselves in not granting rebate to the petitioners and the impugned orders as contained in Annexures 2 and 3 to the writ petition therefore cannot be sustained and the matter must be remitted to the respondent No. 2 for a fresh decision in accordance with law.
76. In the result these writ petitions are allowed in part to the extent mentioned herein before but in the facts and in the circumstances of the cases there will be no order as to costs.
P.S. Mishra, J.
77. Brother S.B. Sinha, J., has stated the facts and the law on the subject. His conclusion that the imposition of cess upon those who consumed or supplied water leading to pollution is a public purpose is irresistible. The law is well settled whether a levy is a fee or tax is decided by finding out the primary and essential purpose. Maintaining or restoring of wholesomeness of water for the establishment with a view to carrying out the purposes aforementioned of Boards for the prevention and control of water pollution for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected thereto with the preamble of the Water (Prevention and Control of Pollution) Act, 1974, has got a direct bearing to the Water (Prevention and Control of Pollution) Cess Act, 1977. The two Acts are inseparable. Brother Sinha, J., has referred to the preamble of the 1974 Act as also the preamble of the 1977 Act. He has also referred to the various provisions of the Act and the Rules framed thereunder. He has gone into the issues of legislative competence and the validity of the various provisions of the impugned Act. His conclusion that the cess in question is in the nature of a tax and not in the nature of a fee and that Parliament was competent to enact the impugned Cess Act are fully backed by the authority of reason.
2. Since the cess which has to be realised from the petitioner is a tax, it is necessary that provisions of exemption are strictly complied with. Section 7 of the impugned Act states:-
"Where any persons or local authority, liable to pay the cess under this Act, instals any plant for the treatment of sewage or trade effluent, such person or local authority shall, from such date as may be prescribed, be entitled to a rebate of seventy per cent of the cess payable by such person or, as the case may be, local authority."
Similarly Rule 6 of the rules framed under Section 11 of the impugned Act states :-
"Where a consumer instals any plant for the treatment of sewage or trade effluent, such consumer shall be entitled to the rebate under Section 7 on and from the expiry of 15 days from the date on which such plant is successfully commissioned and so long as it functions successfully."
79. Brother Sinha, J., has concluded that from the requirement of law it is clear that the assessee may claim rebate even if he is not in a position to treat the entire trade effluent or sewage in the water treatment plant installed in the premises of its work. The said conclusion alone shall make Section 7 of the impugned Act, and Rule 7 aforementioned reasonable. I fully Concur with the conclusions recorded by Brother Sinha, J., and accordingly allow the applications to the extent that the matter be remitted to the respondent No. 2 for a fresh decision in accordance with law without misdirecting himself with respect to grant of rebate to the petitioner. Impugned orders as contained in Annexures 2 and 3 are quashed.