J.V. Gupta, J.
1. This order will dispose of Civil Writ Petition No. 5152 of 1978 and Civil writ petition No 3358 of 1979, as common questions of law are involved in both of them.
2. Civil writ petition No. 5152 of 1978, has been filed by the Municipal Corporation, Jullundur, which is a body corporate under the Punjab Municipal Corporation Act, 1976. Section 44 of the Said Act provides certain obligatory functions of the Corporation including the provision for supply of water for public and private purpose s. Thus the Corporation has its own water supply system
3. In the year 1974 the Parliament, in the exercise of its powers under Article 252 of the Constitution of India, on resolution having been passed by the Legislature of more than two states, enacted Act No. 6 of 1974, called the Water (prevention and Control of Pollution) Act, 1974(hereinafter called the Act of 1974). the preamble of which 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 purposes aforesaid, of Boards for the prevention and control of water pollution for conferring on the assigning to such Board powers and function relating thereto and for matters connected therewith.'
Since the Legislature of the State of Punjab had not passed any resolution under Article 252 of the Constitution, therefore. the Act of 1974. at the time of its enactment did not apply to the State of Punjab. However, the Punjab Legislature, subsequently, adopted the same by a resolution, which was passed on February 3, 1975. In pursuance of the provisions of the Act, of 1974, the Central Government constituted a Central Board under Section 3 of the Act of 1974, for the performance of the functions enumerated in Section 16 of the Act of 1974, while the State board was constituted by the State Government under Section 4 of the Act of 1974, for performing the functions enumerated in Section 1 of the Act of 1974.
4. In the year 1977, the Parliament, with a view to augment the financial resources of the Central Board and the State Boards, Constituted under the Act of 1974, and to provide for levy and collection of Cess on water consumed by the local authorities and the specified industries enacted the Water (prevention and Control of Pollution) Cess Act. 1977(Act no 36 of 77), (hereinafter called the Act of 1977), the Preamble of which reads :--
'An Act to provide for the levy and collection of a cess on water consumed by person carrying on certain industries and by local authorities with a view to augment the 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 Act of 1977 was applicable to all the States to which the Act of 1974 was applicable. The Act of 1977 came into force with effect from the 1st day of April, 1978, as notified by the Central Government in the official Gazette under sub-section (4) of Section 1 of the Act of 1977. Section 3 of the Act of 1977, 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 Officer Gazette. Section 3 of the Act of 1977 reads as follows:--
'3. Levy and collection of cess--(1) There shall be levied and collected a cess for the purpose 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:--
(a) 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 Government 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 any thing 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.'
Clause (a) of Section 2 of the Act of 1977, defines 'local authority' which inter alia means a municipal corporation also. 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. The petitioners, in both the writ petitions, are covered under them.
5. In both the writ petitions, the vires of the Act of 1977, have been challenged on the ground that the Parliament was not competent to enact any law imposing cess which is to be calculated on the basis of the water consumed by a specified industry or a local authority. Mr. M. C. Bhandare, the learned counsel for the petitioner in Civil Writ petition no. 5152 of 1978. referred to Arts. 245, 246(3) and 248 of the Constitution of India, and Lists I and II of the Seventh Schedule and contended that the Parliament of its own was not competent to legislate the impugned Act as it touches the matters which are covered by Entries Nos. 5, 6 and 17 of list II. In other words the Parliament under Article 252 of the Constitution could exercise the same powers which a State Legislature has under the Entries in List II, and since the State Legislature itself could not levy tax on the consumption of water under list II, as it could levy only fee under Entry 66m the Parliament could only levy fee on that matter and thus the imposition of tax by the Parliament was beyond its legislative competence. It was further contended that it was the exclusive jurisdiction of the State Collection of the fee on this matter and therefore, no tax could be levied by the Parliament even under Article 248 of the Constitution by invoking its residuary powers of legislation read with Entry 97 of List-I of the Seventh Schedule. According to the learned counsel the residuary powers are to be exercised by the Parliament only if they are not in conflict with List-II that is if the matters are not covered thereunder. The learned counsel also argued that the taxation is the incident of a named subject and if the Parliament itself could not legislate on a subject covered by List-II no tax also could be levied by the Parliament of that subject. It was further argued that the sovereignty of the State under Article 246(3) of the Constitution could not be allowed to be violated by the Parliament and therefore the Parliament was not competent to enact the Act of 1977. In support of this Contention the learned counsel placed reliance on Hari Krishna Bhargav v. Union of India, AIR 1966 SC 619 Sudhir Chandra Nawan v. Wealth-tax Officer Calcutta, AIR 1969 SC 59 Second Gift Tax Officer Mangalore v. D. H. Hazareth, AIR 1970 SC 999, Union of India v. Harbhajan Singh Dhillon, AIR 1972 SC 1061 Kesavanananda v. State of Kerala, AIR 1973 SC 1461, M. P. V. Sundararamier & Co. v. State of Andhra Pradesh, AIR 1958 SC 468, R. M. D.C. (Mysore) Private Limited v. State of Mysore, AIR 1962 SC 594 and Kewal Krishan Puri v. State of Punjab, AIR 1980 SC 1008, but none of the decisions, directly deals with the point at issue in the present cases.
6. Mr. Ashok Bhan the learned counsel for the petitioner in Civil Writ Petition No. 3358 of 1979, in addition to the adoption of the aforesaid arguments advanced by Mr. Bhandare, further contended that the power to specify the industry under Section 2(c) of the Act of 1977, was arbitrary and violative of the fundamental right guaranteed under Article 14 of the constitution and therefore, the same was liable to be struck down on this ground also.
7. Mr. Kuldip Singh, the learned counsel for the Union of India, vehemently argued that the Act of 1977 was not violative of any provision of the constitution and that the Parliament was fully competent to enact the law in the exercise of its residuary powers under Article 248, read with Entry 97 of List 1 of the Seventh Schedule of the Constitution. As a matter of fact, according to the leaned counsel, fee could not be levied by the Parliament as it was within the legislative competence of the State Legislature only. Moreover, after the constitution of the Central Board and the State boards under the Act of 1974 it was necessary for the Parliament to provide funds for those boards in order to make them function effectively. Thus, in order to augment the financial resources of the Central Board and the State Boards for the prevention and control of water pollution the Parliament enacted the Act or 1977. He further contended that once it was held that the Parliament was competent to enact the law, then the same could not be struck down on the ground that its working may be difficult or cumbersome to the persons affected thereby. As regards the challenge on the ground of arbitrariness and discrimination under Article 14, it was submitted that Section 16 of the Act of 1977 provides necessary guidelines, and therefore, the power to specify an industry under Section 2(c) of the Act of 1977 was neither arbitrary nor discriminatory. Section 16 of the Act of 1977, reads as follows:--
'16. Power to amend Schedule I (1) The Central Government may, by notification in the official Gazette, add to schedule I any industry having regard to the consumption of water in the carrying on such industry and the consequent discharge thereof resulting in pollution of any stream and there upon Schedule I shall, subject to the provisions of Sub-section (2) be deemed to be amended accordingly.
(2) Every such notification shall be laid before each House of Parliament, if it is sitting as soon as may be after the issue of the notification and it is not sitting, within seven days of its re-assembly and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification if so laid before the House of the people and if the Parliament makes any modification in the notification or directs that the notification should cease to have effect the notification shall thereafter have effect, only in such modified form or be of no effect, as the case may be but without prejudice to the validity of anything previously done thereunder.'
8. Mr. J. L. Gupta, the learned counsel for the State board contended that the tax on the consumption of water does not fall within the ambit of any of the Entries in List II and any matter not covered under List II or List III is covered under Entry 97 of List I of the Seventh Schedule. He further contended that the power to impose tax is separate from the power to impose tax is separate from the power to regulate and there being no prohibition direct, or even by necessary implication under the constitution the Parliament was competent to enact the Act of 1977. In support of this contention the leaned counsel relied upon D. H. Hazareth's case (AIR 1970 SC 999)(Supra) M. P. V. Sundararamier & Co's Case (AIR 1958 SC 468)(Supra) and State of Karnataka v. Union of India, AIR 1978 SC 68.
9. After hearing the learned counsel for the parties at a great length, I am of the considered opinion that the Parliament validly enacted the Act of 1977, as it was within its legislative competence under Article 248 read with Entry 97 of List-I of the Seventh Schedule of the Constitution. Art. 248 provides,--
'Residuary powers of legislation.-
(1) Parliament has exclusive power to make any law with respect to any matter not 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.'
Entry 97 of List-I of the Seventh Schedule reads,--
'Any other matter not enumerated in List Ii of List III including any tax not mentioned in either of those Lists'
It is the common case of the parties that the State Legislature was not competent to levy any tax on the water consumed by the petitioners as the same was not provided under any Entry in List II of the Seventh Schedule. If it is so, then the provision of Article 248 are immediately attracted and the parliament had the exclusive power to make any law with respect to any matter not mentioned in the State List, Sub-Clause (2) of Article 248, further provides that such power shall include the power of making any law imposing a tax not mentioned either in List II or List III of the Seventh Schedule Reference in this behalf may also be made to Harbhajan Singh Dhillon's case (AIR 1972 Sc 1061)(supra) wherein it has been held that if a Central Act is challenged as being beyond the legislative competence of parliament, it is enough to enquire if it is a law with respect to matters or taxes enumerated in List II. If it is not, no further question arises.
10. The next Question is: whether the levying of cess, on a matter included in the State List, by the Parliament in violative of any provision of the Constitution The contention that it amounts to an encroachment on the sovereignty of the State Legislature as contemplated under Article 246(3) of the Constitution is unwarranted. The Legislature of a State has the exclusive power to make laws with respect to any of the matter enumerated in List II of the Seventh Schedule whereas the Parliament has the Exclusive power to make any law with respect to any matter not enumerated in the State List of the Concurrent List. It has been further provided under Article 248(2) that this power shall include the power of making any law imposing a tax not mentioned in either of those lists. Admittedly, the imposition of the tax on water consumption is not mentioned in the State List. The argument that in section 3 of the Act of 1977, the cess in being levied for the purpose of the Act of 1974 and utilisation thereunder and that being on State subject the parliament could not enact any such law, has not force. The use of the Words 'for the purpose of the Water (prevention and Control of Pollution) Act, 1974(6 of 1974)...' in Section 3 of the Act of 1977 is not of much consequence. The reference to the said Act therein appears to have been made for the sake of convenience only. Even in the absence of the Act of 1974 the Parliament was competent to levy tax on the water consumption unless it could be shown that in fact, it was no for any public purpose.
11. So far as the contention raised by the learned counsel for the petitioner in Civil Writ petition No. 3358 of 1978, that the power to specify the industry under Section 2(c) of the Act of 1977, was arbitrary and violative of the fundamental right guaranteed under Article 14 of the Constitution is concerned, suffice it to say that section 16 of the Act of 1977, reproduced above, provides ample guidelines for adding any industry to Schedule I to the Act of 1977, before an industry I to the Act of 1977. Before an industry is included in Schedule I, regard will have to be had to the consumption of water for the carrying on of such industry and the consequent discharge thereof resulting in pollution of any stream. Moreover, every notification issued by the Central Government under Section 16 of the Act of 1977, has to be approved by the Parliament. Thus in view of the provision of Section 16 of the Act of 1977, it could no be successfully agitated that no guidelines are provided under the Act of 1977 or the same suffers from the vice of arbitrariness so as to attract the provision of Article 14 of the constitution.
12. No other point has been urged.
13. For the reasons recorded above, there is no merit in either of the writ petitions and the same are dismissed with costs.
14. Petition dismissed.