Narayana Pai, J.
(1) The petitioners in these writ petitions are operating iron mines within the State of Mysore upon lease granted by the State Government subject to payment of royalty and other conditions stipulated in relevant leases. These writ petitions have been heard together because all of them raise the same question of the validity or constitutionality of the Iron Ore Mines Labour Welfare Cess Act (Central Act58 of 1961) and also because the arguments in support of that contention are same or similar. The common prayer in all these petitions is for declaration of the invalidity of the statute with the consequential relief of quashing certain demands made pursuant to the said Act.
(2) The Act is a short one containing only eight sections. It is described as an Act to provide for the levy and collection of a cess on iron ore for the financing of activities to promote the welfare of labour employed in the iron ore mining industry. The first section sets out the name of the Act, its territorial extent and provides that it shall be brought into force from such date as the Central Government may, by notification in the Official Gazette, appoint; by an amendment effected by Act No. 24 of 1963, the Central Government was authorised to appoint different dates for the coming into force of the Act for different States. So far as the Mysore State is concerned, the Act was brought into force as from 1st October 1963.
(3) Sections 2 and 3 of the Act contain the principal or the most important provisions thereof. As the arguments also are to a considerable extent related to the said provisions and the language of the said sections, the entire sections are copied below:--
'2.With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be levied and collected, as a cess for the purposes of this Act on all iron ore produced in any mine, a duty of excise at such rate not exceeding fifty naye paise per metric tonne of iron ore as the Central Government may, from time to time, fix by notification in the Official Gazette.
3. An amount equivalent to the proceeds of the duty levied under this Act, reduced by the cost of Collection as determined by the Central Government together with any income from investment of the said amount and any other moneys received by the Central Government for the purposes of this Act, shall, after due appropriation made by Parliament by law, be utilized by the Central government to meet the expenditure incurred in connection with measures which, in the opinion of that Government, are necessary or expedient to promote the welfare of labour employed in the iron ore mining industry; and in particular,--
(a) to defray the cost of measures for the benefit of labour employed in the iron ore mining industry directed towards--
(I) the improvement of public health and sanitation, the prevention of disease, and the provision and improvement of medical facilities,
(ii) the provision and improvement of water-supplies and facilities for washing,
(iii) the provision and improvement of educational facilities,
(iv) the improvement of standards of living including housing and nutrition, the amelioration of social conditions and the provision of recreational facilities, and
(v) the provision of transport to and from work;
(b) to make grants to a State Government, a local authority, the owner of an iron ore mine or any other person, of money in aid of any scheme approved by the Central Government for any purpose connected with the welfare of labour employed in the iron ore mining industry;
(c) to pay annually grants-in-aid to such of the owners of iron ore mines as provide to the satisfaction of the Central Government welfare facilities of the prescribed standard for the benefit of labour employed in their mines, so, however, that the amount payable as grant-in-aid to the owner of an iron ore mine shall not exceed--
(i) the amount spent by the owner of the mine in the provision of welfare facilities, as determined by the Central Government or any person specified by it in this behalf, or
(ii) such amount as may be prescribed by rules made under this Act;
whichever is less:
Provided that no grant-in-aid shall be payable in respect of any welfare facilities provided by the owner of an iron ore mine where the amount spent thereon determined as aforesaid is less than the amount prescribed by rules made in this behalf ;
(d) to meet the allowances, if any, of members of the Advisory Committees constituted under Section 4, and the salaries and allowances, if any, of persons appointed under Section 5.'
(4) Sections 4 and 5 empower the Central Government o appoint Advisory Committees and the necessary staff for enforcement of the provisions of the Act. Section 6 empowers the Central Government to exempt from the operation of the Act such States as those in which there is, in the opinion of the Central Government a law making adequate provision for the financing of activities similar to those dealt with by this Act.
(5) Section 7 requires the Central Government, as early as possible after the end of each financial year, to cause to be published in the Official Gazette a report giving an account of its activities under the Act together with a statement of accounts.
(6) Section 8 empowers the Central Government to make rules for carrying into effect the purposes of the Act. One of the topics which can be dealt with by the rules is the assessment and collection of cess levied under the Act. Pursuant to the power conferred by the section, rules called the Iron Ore Mines Labour Welfare Cess Rules, 1963, were promulgated by notification dated 20th September 1963. These Rules were brought into force in Mysore as from 1st October 1963.
(7) On the question of the constitutionality or otherwise of the statute, the case for the petitioners if briefly that the Act is violative of their fundamental rights guaranteed under Articles 14 and 19 of the Constitution, and also that the principal charging Section 2 is vitiated by the vice of excessive delegation of legislative powers beyond the limits constitutionally permissible.
(8) Apart from the general case as summarised above, the affidavits also suggest that what is described as excise duty in Section 2 appears to be more in the nature of a fee from the enumeration of the purposes in Section 3 of the Act. The purpose of the suggestion apparently was to make out that as a fee, the impost under the Act may be open to the attack that there is no direct correlation between the amount levied and the value of service rendered in return. However, this part of the case was not pressed for the obvious reason that it is impossible, in the circumstances, to make out that the cess or the impost under the statute partakes to any extent the nature of a fee, pure and simple. It is levied and collected from the mine-owners, the benefit, which the said impost is expected to pay for, is a benefit which is directed by the statute itself to be conferred upon labourers working in mines and not on the mine-owners.
(9) We may also dispose of, at this state, an argument which, though apparently related to the case of alleged violation of Article 14 of the Constitution, refers in substance to matters which may not be capable of being dealt with or discussed under the said article, to certain extent, to an argument which may be of some value under Article 19 of the Constitution.
(10) It is pointed out that the welfare of laborers in mines and the providing of amities to them or benefits to them is a matter already dealt with under other statues which by certain specific provisions thereof impose or have already imposed some duties involving expenditure or financial burdens on mine-owners. The reference particularly is to Sections 19, 20, 21 of the Mines Act (Central Act 35 of 1952) and to the Mines Maternity benefit Act (Central Act 19 of 1941).
(11&12) The Mines Maternity benefit Act, as its name itself indicates, provides for the conferment of certain benefits on female workers in the shape of compulsory leave for certain specified periods immediately preceding and succeeding delivery, special payments in the case of their employing the services of a qualified midwife. etc.
(13) In one of the writ petitions, reference is made to Minimum Wages Act for the same purpose or in relation to the same argument.
(14) Now, the argument constructed on the basis of the aforesaid provisions of other Acts is that the levy under the impugned Act either becomes purposeless or operates to bring about a situation more or less analogous to double taxation resulting, in certain circumstances, in such burdensome or unreasonably high taxation so as infringe the fundamental rights guaranteed under Article 19 of the Constitution.
(15) It appears to us that the hypothesis underlying this argument is inaccurate, if not actually fallacious.
(16) It should be noticed that the particular provisions of other Acts mentioned above, which impose certain obligations on mine owners, are clearly relatable to such topics as regulation of mines, safety in mines, covered by legislative Entries 54 and 55 of the First List in the Seventh Schedule to the Constitution, or social security, welfare of labour, maternity benefit, etc., covered by Entries 23 and 24 of the Third or the Concurrent List in the Seventh Schedule. They are, in substance and in effect, regulatory provisions made in the exercise of legislative powers conferred by the Entries mentioned above It is well established that although under the said Entries read with Entry No. 96 of the First Schedule it may be open or competent to Parliament to levy or collect fees which may be regarded as regulatory fees, the power of actually imposing a tax is not comprehended within the said Entries, nor can the said power be exercised pursuant to the said Entries. For the purpose of imposing tax, resort should be had to other specific Entries like Entries 82 to 92A of the First List.
(17) While on this point, we might dispose of a suggestion contained in the affidavits filed in support of two of the petitions to the effect that the impugned legislation is in its pith and substance merely regulatory and that under the guise of regulation it was not competent to parliame... to impose the cess or duty of excise referred to in Section 2 of the Act. The argument apparently is one of an attack on this legislation as a piece of colourable legislation. But even the premises, on the basis of which the argument proceeds, make it impossible to formulate it in the manner it has been done. if it is conceded, and it has to be, that the legislative Entries, which empower Parliament to make or enact regulatory measures as well as those which empower Parliament to impose tax, are both contained in the First list of the Seventh Schedule to the Constitution, one fails to see why an actual positive provision for imposition of tax cannot be related to an appropriate legislative Entry empowering Parliament to resort to any colourable piece of legislation because the very argument of colourable legislation proceeds on the footing that Legislature is trying to do something indirectly which it is not open to it to do directly. Where, however, Legislature has the power to do a particular thing directly, the fact that it appears to do so indirectly is not, to any extent an argument against the competence of the law enacted by it.
(18) In any event, it is unnecessary to embark upon such specious argument because the impugned law is openly and clearly a law which directly imposes a tax called duty of excise. The legislative competence of Parliament is directly traceable to Entry 84 of the First List.
(19) Another argument, which was sought to be developed but soon given up, was that although the cess or duty sought to be collected under this Act is expressly for a set of purposes clearly enumerated in the statute itself and the necessary enabling provisions are made to give effect to the purposes by providing for separate appropriation and separate accounting and must therefore be regarded as a fee, it is sought to be disguised as a tax with a view to deprive the person from whom the same is collected of the benefit of the services sought to be rendered with the assistance of the said tax. The answer to the argument is that the mine owner, who pays tax, is not the person for whose benefit the proceeds of the tax are expected to be expended. The distinction between the two is clearly brought out in the decision of the Supreme Court reported in Hingir-Rampur Coal Co., Ltd., v. State of Orissa, : 2SCR537 . It is unnecessary to pursue this argument further.
(20) Coming now to the challenge of alleged violation of Articles 14 and 19(1)(f)and(g) of the Constitution, it should first be pointed out that the arguments addressed in support of this case are necessarily, and in the circumstances of the case naturally, not clearly separable so as to be classified separately under Articles 14 and 19 of the Constitution. Most of them bear upon both the Articles.
(21) The only argument which can be clearly recognised as an argument exclusively related to Article 14 of the Constitution is that whereas the general purposes or objects of the Act are equally applicable to several mines producing different metals, iron ore alone has been selected for hostile discrimination.
(22) The general argument is that the express object of the statute is labour welfare or at any rate, welfare of workers engaged in mining operations. There is not, according to the argument, any or any appreciable difference between the conditions of working in iron mines and those in manganese mines, both categories of which are located in the same locality. If so, the argument continues, there was no special reason why iron ore alone should have been selected.
(23) We do not think that the first step in the argument itself is accurate. The Act does not purport to undertake activities of general labour welfare or welfare generally of workers in mines. The long title of the Act expressly states that the levy of a cess on iron ore proposed under the Act is for the purpose of financing activities to promote the welfare of labour employed in the iron ore mining industry. Even as a step in extending activities to promote the welfare of labour, there is no compulsion either in the Constitution or in any law that such activities should be undertaken either in respect of a whole class, however extensive, which may answer a particular description or embrace all parts of the country. It is open to Government to take up particular localities or particular class of people for phasing its welfare activities.
(24) From the point of view of the validity of a taxing statue, it is unnecessary to do anything more than cite the following passage from the decision in Khyerbari Tea Co. Ltd. V. State of Assam, : 5SCR975 :-
'That takes us to the question whether the tax levied by the Act can be said to be discriminatory and as such, unconstitutional because it has selected only tea and jute as objects of taxation. The argument appears to be that the legislature should have taxed other commodities along with tea and jute and in so far as only tea and jute have been selected for the purpose of taxation. Article 14 has been contravened. This argument is entirely fallacious. It is not disputed that tea and jute are the main products of the State of Assam and it is not surprising that the Assam legislature therefore levied tax on the said two articles. Besides, the legislature which is competent to levy a tax must inevitably be given full freedom to determine which articles should be taxed, in what manner and at what rate; vide Raja Jagannath Baksh Singh v. State of UP., : 46ITR169(SC) . it would be idle to contend that a state must tax everything. In tax matters. 'the State is allowed to pick and choose districts,objects,persons,methods and even rates for taxation if it does so reasonably.'
(Para 44 at page 941 of the Report).
(25) The next two arguments which may be regarded as relating to both the Articles mentioned above may be considered as a single argument and formulated as follows:--
(26) It is stated that because the levy under the statute is related to the quality of ore produced, without regard to the unassailability of portions described technically as fines and rejects, and without regard to the actual iron content which alone forms the basis for calculating its value to the purchaser, the levy operates to bring about unconstitutional discrimination between persons similarly situated because it purports to treat as equals persons who are essentially unequal.
(27) The first point relating to fines and rejects appears to be factually inaccurate. Although the levy is described as a levy on ore produced and has to be collected at a certain rate per metric tonne of the ore so produced. Section 8 of the Act permits or requires rules to be framed for assessment and collection of the cess levied under the Act, and Rule 33 among the Rules framed pursuant to section 8 of the Act expressly provides that in calculating the duty of excise payable on the production of iron ore, unmarketable fines and rejects will not be included. If the assessing officer commits the mistake of including these fines and rejects, the assessee has the liberty of getting that mistake corrected by means of a review under Rule 41 of the same Rules.
(28) The question whether the levy in its actual operation may be said to be totally unrelated to the iron content is not capable of a definite answer on the material placed before us. It is no doubt admitted that the more produced in several localities or even in the same mining area may not all contain the same percentage of iron. It is also not disputed that the ultimate price fixed by such bodies like the State Trading Corporation or the Minerals and Metals Trading Corporation, to whom the mine owners are obliged to sell their products, is also dependent considerably on the percentage of iron in the ore sold to them. The counter-affidavit on behalf of the Central Government filed in Writ Petition No. 347 of 1965 makes the general statement:
'The State Trading Corporation to whom, as admitted by the petitioner, supplies are exclusively made, has evolved a price structure which takes into account the payment of cess at 25 paise per metric tonne. The price structure is regardless of the quality of the ore and therefore when the uniform rate of 25 paise per metric tonne has been duly considered and allowance made therefore in the price structure by the State Trading Corporation it is obvious that an iron mine-owner does not have to meet this levy out of his profits.'
It is not possible to accept the accuracy of the statement without further material being placed before the court. Apparently, what is meant is that though the general price structure evolved by the State Trading Corporation has direct apparent relation to territories rather than to percentage of iron content, it may be, as suggested in the course of the arguments, that in fixing price rates for the ore lifted from mines in different areas or in different villages, the purchaser--State Trading Corporation might have had in mind the average iron content in the ore produced in a particular locality. However, that the price structure is related to territories is apparent from the affidavit of the petitioner filed not only in writ petition 347 of 1965 but also in writ petition 1003 of 1965. In the former, it is stated that the f.o.r rates for the iron ore mine by the petitioner are as follows:-
'Hospet..... Rs. 8.75 per tonneKariganur..... Rs. 8.25 per tonnePapinayakanahali..... Rs. 8.75 per tonne'
In the latter, the break-up of the figures stated for the cost in Kariganur is as follows :--
'The cost of excavation..... Rs. 1.50Transport charges from mine to Kariganur..... Rs. 3.50Royalty to be paid to State Government..... Rs. 1.00Explosives (approximately)..... Rs. 0.50Loading Charges..... Rs. 0.75Total..... Rs. 7.25'
which leaves a margin of one rupee profit to the purchaser.
(29) We do not have the benefit of similar breakup of figures in the case of ore produced in Hospet and Pappinayakanahally. However it may not be unreasonable on the material now placed before us to assume that the minimum profit earned by the owners of mines in this area cannot be less than one rupee per metric tonne.
(30) The legal argument that a flat rate of tax is fraught with the inevitable consequence of unequal discrimination is supported by an observation contained in the judgment of this court reported in Bhuvaneshwariah v. State of Mysore, 1964 (2) Mys LJ 470 = (AIR 1965 Mys 170) at page 490 of report (Mys. LJ)=(at p. 183 AIR). It reads :--
'Similar is the view taken by the Supreme Court of America in Cumberland Coal Co. v. Board of revision (1931) 76 Law Ed.146, wherein assessment on all coalfields in a township at the same sum per acre, not withstanding differences in actual or market value due to distances from transport facilities and other factors struck down as violating the equal protection clause of the 14th amendment.'
(31) Reference to similar view taken by the Indian Courts in the extract given above is to the case of K. T. Moopil Nair v. State of Kerela decided by the Supreme Court and reported in : 3SCR77 , from the judgment in which a long extract is given in paragraph 33 of the judgment of this Court. The position in Moopil Nair 's Case, : 3SCR77 was that the impugned levy considered in that case operated in such a way that in several cases it might totally deprive the assessee of the very property in respect of which the tax was sought to be levied. But such a result is not possible in this case on the facts now placed before us. From such figures as we have been able to collect from the affidavits filed in these cases, it appears that the levy of 25 paise actually imposed by notification of the Central Government pursuant to Section 2 of the act is not more that about a fourth of the minimum profit derived by the mine owners in this area.
(32) If such a result is not achieved or is not shown to be inevitable or possible, general position would be as stated by the Supreme Court in : 5SCR975 already cited. The passage which is of direct relevant to the present question occurs at page 940 of the report. It reads :-
'Then we turn into the main point urged by Mr. Pathak that the flat rate introduces an element of unreasonableness in the levy of the tax. It is necessary to bear in mind that having regard to the interests of the trade as a whole, a flat rate may in some cases be reasonable. If different rates are levied by the reference to the distance over which the tea is carried before it reaches the Calcutta Port, It would obviously mean that some producers of tea would have to pay more taxes than others and that would introduce an element of unfair competition between producers of tea considered as a class. We are referring to this aspect of the matter to emphasize the fact that the legislature has to consider several relevant factors before deciding how a particular tax has to be levied. The law of taxation is on the ultimate analysis the result of the balancing of several complex considerations, and so it would be unreasonable to insist upon the application of a general rule that if a tax is levied at a flat rate, it must be treated as unreasonable.'
(33) The position, therefore is that the question whether the imposition of a flat rate in a given case does or dose not result in unconstitutional discrimination depends upon facts and circumstances of that case. That is a matter to be proved by the parties placing necessary material before the Court. There is no such material placed before us in this case as to make it necessary for us to reach the conclusion that the flat rate adopted in this case will necessarily result in unconstitutional discrimination. As already pointed out, such material as is capable of being gathered from the affidavits filed before this Court goes to show that the taxing statute in making the selection of the rate has actually infringed the fundamental right under article 14 of the constitution.
(34) For these reasons, we are of the opinion that the petitioners have not made out the case of violation of the fundamental rights either under Article 14 or under Article 19(1)(f) or (g) of the Constitution.
(35) The argument that section 2 suffers from the vice of excessive delegation of legislative power is based on the facts that the statute, while indicating the maximum levy to be 50 paise per tonne, has left it to the Central Government to fix the rate and vary it from time to time. It is stated that the section, while leaving it to the Central Government to fix the rate and change it from time to time, has failed to give sufficient guidance to the Government in the matter of fixing the rate, nor has it indicated the basis for the fixation or relevant considerations to be taken into account before fixing the rate.
(36) On this point also, any elaborate discussion or discussion on first principles has become unnecessary in view of the clear statement of the law made by their Lordships of the Supreme Court in The Corporation of Calcutta v. Liberty Cinema, : 2SCR477 .
(37) Their Lordships, after pointing out that there was no doubt that when the power to fix rates of taxes is left to another body the legislature must provide guidance for such fixation, summarised the effect of the previous decisions of the Court as follows in para 27 at page 1118 of the Report:
'It seems to us that there are various decisions of this Court which support the proposition that for a statutory provision for raising revenue for the purposes of the delegates, as the section now under consideration is, the needs of the taxing body for carrying out its functions under the statute for which alone the taxing power was conferred on it, may afford sufficient guidance to make the power to fix the rate of tax valid.'
Later, after referring to different decisions their Lordships stated further general propositions in paragraph 31 of the same judgment of page 1119 of the Report. Those propositions are that the guidance furnished to a delegate must be held to be good if it leads to the achievement of the object of the statute which delegated the power, that when the power to collect a tax is itself for particular purposes, the power must be taken to be necessarily limited by the expenses required for the discharge of the functions or purposes, that when rates have to be fixed, they must be such as would bring the amount necessary to meet the needs of the delegate for discharging the statutory functions and that the said circumstance would itself be sufficient guidance to make the delegation of the power to fix the rate constitutionally valid.
(38) All these circumstances exist in the case of the statute now under consideration. The statute itself states the purposes for which the cess is to be collected; it makes specific provision to see that the money collected is spent for the purposes enumerated by it, firstly by requiring accounts and reports to be published in the Official Gazette under section 7 and further by details contained in the rules framed pursuant to section 8 of the Act.
(39) The position therefore is that the Government which is the delegate of the legislature for the purpose of fixing the rates is also its delegate for carrying out the purpose of the statute and that the policy of the statute having been clearly stated and the purposes for which the tax is to be expended having also been clearly enumerated, there can be no doubt that the necessary guidance for the fixation of the rates must be found in the quantum of expenditure needed for carrying out the purposes of the statute.
(40) This disposes of all the points raised, except one, viz., that because the iron ore which is made the subject of excise duty under the statute is under certain regulations required to be exported and may therefore be subjected to customs duty, Parliament was not competent to impose additional excise duty thereon. The sustenance for this argument was sought to be derived from the fact that in the case reported in In Re C. P. Motor Spirit Act , Sir Maurice Gwyer, C. J., observed that the meaning of the term 'duties of excise' has to be ascertained from previous legislative practice in India in the absence of a definition in the Constitution Act and that it may be taken to correspond to the meaning assigned to the term in Encyclopedia Britanica to the following effect:-
'A duty charged on home goods, either in process of their manufacture or before their sale to the home consumers.'
The argument is that excise duty is intended to be levied on goods intended for home consumption and that customs duty is to be levied on goods intended for export out of the country. But from what is found discussed in the judgment of Sir Maurice Gwyer, C.J., in the said case, it is not possible to formulate the proposition of law that goods to be made subject to excise duty should, in addition to being goods produced in a country, also be goods actually consumed in the country. Indeed, in a subsequent decision of the Federal Court reported in Madras Province v, Boddu Paidanna and Sons, AIR 1942 FC 33, the same learned Chief Justice has indicated that there is in theory nothing to prevent the Central Legislature from imposing a duty of excise on a commodity as soon as it comes into existence, no matter what happens to it afterwards, whether it is sold, consumed, destroyed or given away.
(41) The result is that all the arguments advanced in support of the case of alleged unconstitutionality of the Act fail.
(42) All the Writ Petitions are therefore dismissed.
(43) There will be no order as to costs.
(45) Petitions dismissed.