A.R. Bakshi, J.
1. These are two petitions challenging the vires of Sections 56C to 56F and Section 57(4) of the Bombay Irrigation Act, 1879, (hereinafter referred to as the Act) and for restraining the respondents from recovering the irrigation cess under the relevant provisions of the Act. The petitioner in Special Civil Application No. 420 of 1964 is a cultivator holding lands in village Sankari and village Timbarva of Bardoli Taluka in Surat District. The petitioner also owns certain lands jointly with his wife and is the holder of lands in the same village. The petitioner has been served with a notice dated 4th May 1964 whereby he has been asked to pay Rs. 358-09 ps. by way of dues on account of irrigation cess. That notice was issued by respondent No. 3. The petitioners in Special Civil Application No. 833 of 1968 hold lands in certain villages in Taluka Olpad of Surat District. On or about 14th February 1963 the Talatis of the villages in which the lands of the petitioners are situate demanded irrigation cess from the occupants by making proclamations. The petitioners in both the petitions are thus subjected to the levy of irrigation cess the rates whereof have been fixed by certain notifications annexed with the petitions. The petitioners, therefore, challenge the said notifications and Sections 56C to 56F and Section 57(4) of the Act which relate to the levy and recovery of the irrigation cess.
2. In Special Civil Application No. 420 of 1964 the notifications which relate to the fixation of the rates at which irrigation cess is to be levied are produced as Annexures 'B', 'C', 'D', 'E' and 'F' and the same notifications have been produced in Special Civil Application No. 833 of 1968 as Annexures 'C', 'D' 'E', 'F' and 'G' to the petition. The first notification is dated 29th January 1959 and fixes the rates for the period from 15th February 1959 to 14th February 1960. In that notification the rates are fixed at Rs. 22-50 per acre per annum for lands under sugarcane or equivalent perennial crops receiving water for only one or two seasons and not during full year; at Rs. 4-00 per acre per season for lands under other perennial crops receiving water for only one or two seasons and not during full year; at Rs. 2-50 per acre for lands under eight-month blocks and lastly at Rs. 2-50 per acre per annum for all other lands. The second notification is dated 4th February 1960 and fixes similar rates as in the first notification for the period from 15th February 1960 to 14th February 1961. The third notification is dated 8th February 1961 and fixes similar rates for the period from 15th February 1961 to 14th February 1962. The fourth notification is dated 9th February 1962 and fixes similar rates for the period from 15th February 1962 to 14th June 1962 and so also the fifth notification dated 1st June 1962 fixes similar rates for the period from 15th June 1962 to 14th February 1963. Then there is notification Annexure 'G' in Special Civil Application No. 420 of 1964 which is the same as Annexure 'H' in Special Civil Application No. 833 of 1968 which is dated 28th February 1962 which fixes rates, for the period from 15th February 1963 to 14th February 1966 at the rate of Rs. 6-18 ps. per hectare per annum or Rs. 2-50 per acre per annum. A notification dated 10th February 1966 has been produced as Annexure '1' in Special Civil Application No. 833 of 1968 which is for the period from 15th February 1966 to 14th June 1966 fixing the same rates as the notification Annexure 'H' referred to above. The last notification is produced at Annexure 'J' in Special Civil Application No. 833 of 1968 and is dated 19th January 1967 which fixes rates for the period from 15th February 1967 to 14th February 1968 at the rates as were fixed by Annexure 'H'.
3. Both these petitions which involve the same points relating to the validity of Sections 56C to 56F and Section 57(4) of the Act were heard together and as similar points arise for determination in both the petitions, we shall deal with them together by this common judgment. The grounds of challenge which were referred to by the learned advocates of the petitioners may now be summarized as follows:
(1) that the irrigation cess as levied by the Act is outside the legislative competence of the State Legislature;
(2) that the relevant provisions of the Act relating to the levy of irriga tion cess suffers from the vice of excessive delegation;
(3) that the relevant provisions of the Act and the notifications are violative of Article 14 of the Constitution of India; and
(4) that those provisions and the notifications are violative of Article 19(1)(f) of the Constitution.
4. It was urged on behalf of the petitioners that Article 246 of the Constitution of India provides that the State Legislature shall have power to make laws with respect to any of the matters enumerated in List II of Schedule VII and that Entry No. 17 of List II of that Schedule empowers the State Legislature to make laws relating to water, which would include water supplies, irrigation and canals, etc. subject to the provisions of Entry 56 of List I. It was contended that there was no entry empowering the State Legislature to levy tax on the supply of water and that the irrigation cess being a tax with regard to water, water supplies, irrigation and canals, etc. was outside the scope of List II of Schedule VII. It was urged that the 'lands under irrigable command of a canal' were defined in the Act as such lands as are irrigated or capable of being irrigated from the canal, being under its command and include also lands as are or shall be deemed to be irrigated within the meaning of Section 48 of the Act. This definition, it was contended, had really a reference to the capacity of a canal and what was charged by way of cess was on the basis of the capacity of the canal to irrigate the land and the charge was, therefore, a charge upon the supply of water and water storage which, it was urged, was not within the competence of the State Legislature. It was urged that the power to tax must be express and must be contained within those entries which relate to taxes in the State List and a general entry relating to land revenue would not help in order to validly impose a cess or a tax. It was urged that the irrigation cess was not a tax on land and even if it was a tax on land, it could not fall within the scope of Entry 49 of Schedule II as that entry relates to taxes on lands and buildings. It was further contended that the word 'and' occurring in Entry 49 cannot mean 'or' but must be given a conjunctive effect and as there was no question of tax on land as well as buildings in the case of the irrigation cess, it could not fall within the scope of Entry 49. It was also urged that to be a tax on land, it was necessary that the basis on which the tax was levied must necessarily be the value of the land such as the market value or the annual letting value and as a cess on irrigation was not levied on such a basis it could not be considered as a tax on land. A tax in relation to lands which are irrigated or capable of being irrigated, it was urged, involve a tax not on lands but on irrigation as normally understood and it was further urged that no entry in the Schedule should be stretched beyond its normal meaning and, therefore, applying that test, the irrigation cess was in substance a tax on water. In the preamble to the Act there was no reference to the subject of land or land revenue and, therefore, it was contended that Entry 49 of List II of Schedule VII would have no application.
5. While dealing with the question of legislative competence in respect of a statute, and while ascertaining under which entry of the Lists to Schedule VI the impugned enactment falls, what is to be seen is the true character and substance of the enactment and the class of subjects of legislation to which it in substance belongs. What is to be looked at is not the mere form but the substance of the levy and the tax in a taxing statute. In such cases, if the substance of an enactment falls within the competence and legislative power of the legislative body, the enactment cannot be considered to be invalid because incidentally or remotely it affects a matter outside the purview of legislative sphere. It will be useful here to quote some of the observations made in H.R.S. Murthy v. Collector of Chittoor : 6SCR666 :
It was next urged that the land cess was really a tax on mineral rights falling within Entry 50 of the State List reading:
Taxes on mineral rights subject to any limitation imposed by Parliament by law relating to mineral development.
and that the Central Acts under which also taxes and fees might be levied brought into play the last portion of this Entry and that as a result the power to impose this tax was not available after the Central Acts of 1948 and 1957 came into force. In this connection Mr. Ramareddi pointed out that as the impugned land cess was payable only in the event of the mining lessee winning the mineral and so paying the royalty and not when no minerals were extracted, it was in effect a tax on the minerals won and therefore on mineral rights. We are unable to accept this argument. When a question arises as to the precise head of legislative power under which a taxing statute has been passed, the subject for enquiry is what in truth and substance is the nature of the tax, No doubt, in a sense, but in a very remote sense it has relationship to mining as also to the mineral won from the mine under a contract by which royalty is payable on the quantity of mineral extracted. But that, does not stamp it as a tax on either the extraction of the mineral or on the mineral right. It is unnecessary for the purpose of this case to examine the question as to what exactly is a tax on mineral rights seeing that such a tax is not leviable by Parliament but only by the State and the sole limitation on the State's power to levy the tax is that it must not interfere with a law made by Parliament as regards mineral development. Our attention was not invited to the provision of any such law enacted by Parliament. In the context of Sections 78 and 79 and the scheme of' those provisions it is clear that the land cess is in truth a 'tax on lands' within Entry 49 of the State List.
If on the view of the statute, as a whole, it is found that the substance of the legislation can be included within the express powers, it is not invalid because incidentally some of its provisions are likely to affect matters which are outside the authorized field. In other words, the true test is whether the legislation is substantially relatable to the subject matter without reference to its indirect effects upon the subject matter. Therefore, in order to ascertain whether a tax is imposed under a valid power of legislation, what should be examined is the real nature of the tax and the substance of the levy. The charging section would in such cases supply one of the important criteria to ascertain the real character of the tax.
6. Another principle which may be borne in mind is that the entries in the lists should be given a wide and liberal construction. Reference may be made to the observations in Banarasi Dass v. Wealth Tax Officer : 56ITR224(SC) :
Logically, the first question to consider is whether the impugned provision can be referred to Entry 86 or not. In construing the word 'individuals' used in the said Entry, it is necessary to remember that the relevant words used in the Entries of the Seventh Schedule must receive the widest interpretation. As Gwyer, C.J., has observed in United Provinces v. Mst. Atiqa Begum 1940 F.C.R. 110 at p. 134 : .
'none of the items in the Lists is to be read in a narrow or restricted sense, and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. I deprecate any attempt to enumerate in advance all the matters which are to be included under any of the more general descriptions; it will be sufficient and much wiser to determine each case as and when it comes before the Court.'
Another rule of construction which is also well established is that it may not be reasonable to import any limitation in interpreting a particular Entry in the List by comparing the said Entry or contrasting it with any other Entry in that very List. While the Court is determining the scope of the area covered by a particular Entry, the Court must interpret the relevant words in the Entry in a natural way and give the said words the widest interpretation. What the Entries purport to do is to describe the area of legislative competence of the different legislative bodies, and so, it would be unreasonable to approach the task of interpretation in a narrow or restrictive manner.
7. Applying these principles let us see the position occupied by the present tax in the Lists to the Schedules. There was some argument about what is a cess but for all purposes, a cess is a tax which is a compulsory exaction by a public authority and which is enforceable by law. A cess, in the general sense, is understood to be a tax for a specific purpose. The validity of the levy of a cess should be determined with reference to the power to tax. In the case before us the charging section is Section 56 of the Act which is as under:
56C. In addition to the water rates or other charges leviable under the provisions of this Act, there shall be levied in respect of land under irrigable command of a canal, a cess called 'the irrigation cess'.
The word 'canal' has been defined in Section 3(1) which runs as under:
3. In this Act, unless there be something repugnant in the subject or context,
(1) 'canal' includes--
(a) all canals, channels, pipes and reservoirs constructed, maintained or controlled by any Government for the supply or storage of water;
(b) all works, embankments, structures and supply and escape-channels connected with such canals, channels, pipes or reservoirs, and all roads constructed for the purpose of facilitating the construction or maintenance of such canals, channels, pipes or reservoirs;
(c) all water-courses, drainage-works and flood embankments as hereinafter respectively defined;
(d) any part or a river, stream, lake, natural collection of water or natural drainage-channel, to which the State Government may apply the provisions of Section 5, or of which the water has been applied or used before the passing of this Act for the purpose of any existing canal;
(e) all land belonging to the Government which is situate on a bank of any canal as hereinbefore defined, and which has been appropriated under the orders of any Government for the purposes of such canal;
The words 'lands under irrigable command of a canal' have been denned by Sub-clause (6A) of Section 3 as under:
(6A) 'Lands under irrigable command of a canal' means such lands as are irrigated or capable of being irrigated from the canal, being under its command and shall include also such lands as are or shall be deemed to be irrigated within the meaning of Section 48;
It would be necessary to refer to Section 48 of the Act which is referred to in the above sub-clause:
48. If it shall appear to a Canal-officer duly empowered to enforce the provisions of this section, that any cultivated land within two hundred yards of any canal receives, by percolation or leakage from such canal, an advantage equivalent to that which would be given by a direct supply of canal water for irrigation,
or that any cultivated land, wherever situate, derives by a surface-flow, or by means of a well sunk within two hundred yards of any canal after the admission of water into such canal, a supply of water which has percolated or leaked from such canal,
he may charge on such land a water-rate not exceeding that which would ordinarily have been charged for a similar direct supply to land similarly cultivated.
For the purposes of this Act, land charged under this section shall be deemed to be land irrigated from a canal.
It will be noticeable that Section 49 of the Act refers to betterment charges leviable on lands referred to in the section. That section provides that when the construction of a new canal or the improvement or extension of an existing canal is undertaken, the State Government shall direct an officer empowered in this behalf to prepare a scheme showing the irrigable command of the canal and the betterment charges leviable on such lands. Section 50 of the Act provides that the publication of scheme and the notice to be given to owners or persons interested in the lands under irrigable command of a canal Section 51 provides for an inquiry and Section 52 refers to the increase in value on account of the completion of a new canal or the improvement or extension of an existing canal. Sections 49, 50, 51 and 52 are as under:
49. When the construction of a new canal or the improvement or extension of an existing canal is undertaken, the State Government shall direct an officer empowered in this behalf to prepare a scheme showing the lands under the irrigable command of the canal and the betterment charges leviable on such lands.
50.(1) The scheme so prepared shall be published in the Official Gazette and in such other manner as may be prescribed by rules.
(2) The officer empowered under Section 49 shall also give notice to the persons known or believed to be the owners of or interested in the lands under irrigable command of the canal requiring them to appear before him either personally or by agent at a time and the place therein mentioned (such time not being earlier than one month from the date of the notice) to state their objections, if any,--
(a) to the inclusion of the lands in the scheme as the lands under irrigable command of the canal, and
(b) to the imposition and recovery of the betterment charges on such lands.
51. On the date fixed under Section 50 or on such other date to which the inquiry may be adjourned the officer concerned shall, after holding a formal inquiry in the manner provided, by the Land Revenue Code and after hearing the objections, if any, stated by the persons as required by notice under Section 50, make an award. The award shall specify--
(a) the lands under irrigable command of the canal,
(b) the increase in value of such lands by the completion of the construction of a new canal or the improvement or extension of an existing canal,
(c) the amount of the betterment charges leviable on each of the said lands,
(d) the date from which such betterment charges shall be leviable:
Provided that no betterment charges shall be leviable in respect of any land which is unarable (kharaba).
52. The increase in value on account of the completion of a new canal or the improvement or extension of an existing canal shall be the amount by which the value of the land on the completion date is likely to exceed the value of the land on the construction date and the betterment charges shall be one-half of such increase in value.
Explanation: For the purposes of this section the State Government shall, by notification in the Official Gazette, specify--
(a) the date of the commencement of construction of any work in connection with the construction or improvement or extension of a canal, as the construction date;
(b) the date of completion of the construction, improvement or extension of a canal as the completion date.
Sections 56C to Section 56F refer to the levy of and liability for and the rate of irrigation cess. Sections 56D, 56E and 56F are as under:
56. D. (1) In the case of unalienated land the occupant, and in the case of alienated land, the superior holder shall be primarily liable to the State Government for the payment of the irrigation cess, inclusive of all arrears of such cess:
Provided that in the case of any land in the possession of a tenant, if such tenant is liable to pay the irrigation cess in respect of such land under the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948, such tenant shall be primarily liable to pay the irrigation cess, in respect of such land.
(2) In the case of default by any person who is primarily liable under this section, the irrigation cess including all arrears as aforesaid, shall be recoverable--
(a) from the occupant or superior holder, as the case may be, where the tenant was primarily liable, and
(b) in any other case, from any other person in possession of the land;
Provided that where the irrigation cess is recovered under this section from a person who is not primarily liable for the same, such person shall be allowed credit for any payments which he may have duly made to the person who is primarily liable, and shall be entitled to credit, or the amount recovered from him, in account with the person who is primarily liable.
56E.(1) The irrigation cess payable in respect of any land under the irrigable command of a canal shall be at such rates and for such period as may be fixed by the State Government by notification in the Official Gazette.
(2) The determination of such rates and period shall be final and shall not be questioned in any Court of law.
Provided that no increase shall be made during such period in the rates so fixed.
(3) All notifications issued under Sub-section (1) shall belaid before the State Legislature as soon as may be after they are issued and shall be subject to such modifications as the State Legislature may make during the session in which they are so laid or the session immediately following.
(4) Any modifications made by the State Legislature shall be notified in the Official Gazette and shall thereupon take effect.
56F. The irrigation cess recoverable in respect of any land shall be leviable on the date on which the land revenue is leviable in respect thereof.
8. On a careful consideration of the sections of the Act referred to above, it appears that the tax is in essence and substance a tax on land. What is taxed is the land and the subject matter of the taxation is also land. Section 56C of the Act clearly states that in addition to the water rates or other charges leviable under the provisions of the Act, there shall be levied in respect of land under irrigable command of a canal, a cess called 'the irrigation cess'. The words 'in respect of land' show that the subject matter of the taxation is land. Section 56C refers to lands under the irrigable command of a canal which when read with Sub-section (6A) of Section 3 would include lands which are actually irrigated as well as lands which are capable of being irrigated. Therefore, lands which though not actually irrigated will be included in the definition of 'lands' under the irrigable command of a canal provided that they are capable of being irrigated. The main stress, therefore, is on the land whether actually irrigated or not. Section 48 provides to include lands in which there is a well within the prescribed range though not fed by water through water course connected with a canal. On account of the existence of a canal in the vicinity what are affected are lands and these lands have on account of the situation been made subject to tax. The real character of the tax is thus a tax on land.
9. The present cess is obviously not a tax on income and the rates that would be fixed are on the basis of the area and the quality of the land. This is also not a tax on water but as stated above is a tax in respect of land and the argument, therefore, that there is no entry enabling levy of tax on water and therefore the present levy of the cess is invalid cannot be accepted. Similarly the argument that there is no reference in the preamble of the Act to the subject of land or land revenue and that, therefore, the tax is not relatable to land is without substance because in such cases what is to be looked at is the real nature of the tax. Annual letting value of the land that is taxed may be one of the modes by which tax could be collected, but machinery or mode or method of assessment is not determinative of the subject matter of an entry. Referring to the case reported in In re S. 3, Finance Act (Northern Ireland) 1936 A.C. 352 and referring to the observations of Lord Thankerton, Fazl Ali J. in Ralla Ram v. Province of East Punjab has observed that: 'Lord Thankerton, who delivered the judgment in that case, pointed out that
It is the essential character of the particular tax charged that is to be regarded, and the nature of the machinery, often complicated, by which the tax is to be assessed is not of assistance except in so far as it may throw light on the general -character of the tax.
The tax was not held to be a tax on income, because it was payable by an occupier, and the distinctive feature of the case was described in these words:.the poor rate, is levied in respect of the occupation of hereditaments, irrespective of a person's income generally, and irrespective of whether the rate payer is in fact deriving profits or gains from such occupation. A dwelling house is a burden, not a source of profit, for the occupier who pays rent for it. He is rated on the value of the burden, while he remains unrated in respect of his whole profits be they from business or from investments. In their Lordships' opinion, this marks the essential difference in character between income-tax and rates, and it is unnecessary to consider other and less important differences between them.
This case demolishes the broad contention that wherever the annual value is the basis of a tax, that tax becomes a tax on income. It shows that there are other factors to be taken into consideration and that it is the essential nature of the tax charged and not the nature of the machinery which is to be looked at.
On a consideration of all the relevant factors, therefore, the present cess is not of the nature of a compulsory water rate or tax, as it was contended. Reference was made to the Report of the sub-committee on the measures to improve the financial position of Major Irrigation Works (1948) in which it has been stated that the irrigation cess is a small annual fee to be paid by every land-owner under the irrigable command of a canal system for the facility of obtaining water supply. But this cannot lead us to the conclusion that the cess is a tax on the supply of water. In the same report it has been stated that the cess was primarily meant to meet the working expenses, that is, cost of repairs and maintenance of the canal system. We have already referred to the provisions of Section 56C of the Act which in terms says that the irrigation cess is a cess 'in respect of' lands and the meaning that can be given to the use of these words is the same as the betterment charges which Section 49 states are leviable 'on such lands'. We cannot, therefore, accept the argument made on behalf of the petitioners to the contrary that the cess that has been levied is not a tax on land and that, therefore, it cannot fall within the scope of Section 49 of the State List. It was urged that such a conclusion would involve stretching of the meaning of an entry beyond its normal meaning and that a tax on irrigation as normally understood would have reference to the levy or tax on water and not on land. But here, as could be seen, the tax does not necessarily depend on the actual supply of water. If the land is within the command area, the tax would be leviable.
10. It was then suggested that if at all, this was a tax on land alone and not on land and buildings. It was contended that the entry 49 of the State List refers to 'tax on lands and buildings' and the tax in order to fall within the scope of this entry must not be a tax on land alone but must be both on lands as well as buildings and as there was no question of the existence of buildings in the present case, the tax leviable merely on lands was unwarranted as it would not fall within the scope of entry 49. This argument has no merit in it. In order to fall within the scope of the entry it is not necessary that land which is taxed must have also buildings thereon. The entry must be given a broad construction and effect and would include either lands or buildings or both.
11. Looking from all the aspects, it appears, that the impugned cess is leviable under entry 49 of the State List and the argument made on behalf of the petitioners that the State Legislature was not competent to levy the irrigation cess cannot be accepted. This disposes of the first contention raised on behalf of the petitioners that the irrigation cess as levied by the Act is outside the legislative competence of the State Legislature.
12. We may now deal with the next contention of the learned advocates of the petitioners that the relevant provisions of the Act relating to the irrigation cess suffered from the vice of excessive delegation. It was contended that by the said provisions and by Section 56E, the State Government was empowered to fix any rate for any period for the irrigation cess to be levied by virtue of Section 56C and that this was an essential legislative function which could not be delegated. No policy or principle, it was urged, which would govern the fixation of rates have been laid down in the Act. The State Legislature has also not fixed any maximum or minimum limit for the guidance of the executive and the fixation of rates, it was contended, was left to the unguided and arbitrary will of the executive. It was argued that such phrases as 'purposes of the Act or need of the concerned body or department cannot afford any adequate guideline and that there was no effective check which had been provided in the Act to control the excessive or arbitrary use of power. It was contended that Sub-clause (3) of Section 56D providing for laying the notifications before the Legislature cannot cover notifications issued before the clause was inserted in 1962 and as regards the notifications issued there after the check was a very weak one as the provision was not mandatory in nature. Lastly, it was contended that the provisions in the Act imposing the tax was in the nature of a money bill and the procedure relating to money bills could not be avoided by delegating the power to the executive and by providing for laying the notifications before the Legislature.
13. It is needless to examine the several decided cases on the subject as ultimately the question has to be decided with reference to the nature of the provisions of each enactment. In the case of Banarasi Das v. State of U.P. : 1SCR427 it was held:
On these observations, the point for determination is whether the impugned notification relates to what may be said to be an essential feature of the law, and whether it involves any change of policy. Now, the authorities are clear that it is not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like.
In the case of Corporation of Calcutta v. Liberty Cinema : 2SCR477 , the case of Banarasi Das was referred to but it was stated therein that there must be some guidance provided for if the power to fix the rate was to be delegated. At page 1117 it was observed that--
First, there is Pandit Banarsi Das Bhanot v. State of Madhya Pradesh : 1SCR427 . That case was concerned with a Sales Tax Act which by Section 6(1) provided that no tax would be payable on any sale of goods specified in a schedule to it. Item 33 of that Schedule read, 'goods sold to or by the State Government'. Section 6(2) of the Act authorised the State Government to amend the schedule by a notification. In exercise of this power the Government duly substituted by a notification for item 33 the following: 'Goods sold by the State Government. 'The amendment of the schedule by the notification was challenged on the ground that Section 6(2) was invalid as it was a delegation of the essential power of legislation to the State Government. Venkatarama Aiyar J. delivering the judgment of the majority of the Court sitting in a Constitution Bench rejected this contention and after having read what we have earlier set out from the judgment of Bose J. in Rajnarain Singh's case : 1SCR290 :
On these observations, the point for determination is whether the impugned notification relates to what may be said to be an essential feature of the law, and whether it involves any change of policy. Now, the authorities are clear that it is not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like.
The Act was a statute imposing taxes for revenue purposes. This case would appear to be express authority for the proposition that fixation of rates of taxes may be legitimately left by a statute to a non-legislative authority, for we see no distinction in principle between delegation of power to fix rates of taxes to be charged on different classes of goods and power to fix rates simpliciter, if power to fix rates in some cases can be delegated then equally the power to fix rates generally can be delegated. No doubt Pandit Banarasi Das s case : 1SCR427 was not concerned with fixation of rates of taxes: it was a case where the question was on what subject matter, and therefore on what persons, the tax could be imposed. Between the two we are unable to distinguish in principle, as to which is of the essence of legislation; if the power to decide who is to pay the tax is not an essential part of legislation, neither would the power to decide the rate of tax be so. Therefore, we think that apart from the express observation made, this case on principle supports the contention that fixing of the rate of a tax is not of the essence of legislative power.
At page 1118 the question of provision for guidance has been discussed:
No doubt when the power to fix rates of taxes is left to another body, the Legislature must provide guidance for such fixation. The question then is, was such guidance provided in the Act? We first wish to observe that the validity of the guidance cannot be tested by a rigid uniform rule; that must depend on the object of the Act giving power to fix the rate. It is said that the delegation of power to fix rates of taxes authorised for meeting the needs of the delegate to be valid, must provide the maximum rate that can be fixed, or lay down rules indicating that maximum. We are unable to see how the specification of the maximum rate supplies any guidance as to how the amount of the tax which no doubt has to be below the maximum, is to be fixed. Provision for such maximum only sets out a limit of the rate to be imposed and a limit is only a limit and not a guidance.
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.
The Liberty Cinema case referred to above was distinguished in the case of Messrs. Devi Das v. State of Punjab : 3SCR557 of the report is stated that:
The law on the subject is fairly well settled, though difficulties are met in its application to each case. In Corporation of Calcutta v. Liberty Cinema on which Mr. Ganapati Iyer relied relates to a levy imposed on cinema houses under the Calcutta Municipal Act (33 of 1951). There, the majority held that the levy therein was a tax, that the fixing of a rate of tax was not of the essence of legislative power, that the fixing of rates might be left to a non-legislative body and that when it was so left to such a body, the Legislature must provide guidance for such fixation. The majority held in that case that such a guidance was found in the monetary needs of the Municipality for discharging the functions entrusted to it under the Act. Sarkar J., speaking for the majority, said thus:
It (the Municipal Corporation) has to perform various statutory functions. It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and its needs will vary from time to time, with the prevailing exigencies. Its power to collect tax, however, is necessarily limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified in the statute, to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid.
If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto, it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates and that guidance cannot be judged by stereotyped rules but would depend upon the provisions of a particular Act. To that extent his judgment is binding on us. But we cannot go further and hold, as the learned counsel for the respondents asked us to do, that whenever a statute defines the purpose or purposes for which a statutory authority is constituted and empowers it to levy a tax that statute necessarily contains a guidance to fix the rates: it depends upon the provisions of each statute.
Learned counsel for the State argued that under Article 162 of the Constitution the executive power of the State shall extend to matters with respect to which the Legislature of a State has power to make laws: that is to say, the executive power of a State extends to matters mentioned in List II of the Seventh Schedule to the Constitution: that under Article 266(1) of the Constitution all the taxes collected will go to the Consolidated Funds of the State, that the State has an unlimited power to raise funds by taxation to discharge its vast constitutional duties and that necessarily the amount of tax required would depend upon its needs which can only be known to it. In the said circumstances, the argument proceeds, the doctrine of constitutional and statutory needs would afford reasonable guidelines for the Government to fix the rate and that the principle laid down by this Court in the aforesaid decision would equally apply to this case. If this argument be accepted, it would mean that every statute conferring a naked power on the Government to impose taxes would be good, for in every case the discharge of the constitutional duties by the Government would be deemed to be a sufficient guide for fixing the rate. We cannot accept this argument for three reasons, namely, (1) the decision of this Court in : 2SCR477 should be confined only to the provisions of the Calcutta Municipal Act wherein this Court found a guidance; (2) the provisions of the Sales Tax Act, including the preamble, do not disclose any policy or guidance to the State for fixing the rates; and (3) the general constitutional power to impose taxes has no relevance for discovering a statutory policy under a particular Act.
It appears from what has been stated at page 1901 that the finding was that under Section 5 of Punjab General Sales Tax Act, 1948, as it originally stood, an uncontrolled power was conferred on the provincial Government to levy every year on the taxable turnover of a dealer a tax at such rates as the said Government might direct and no provision was brought to the notice of the Court disclosing or indicating any guidance in the matter of fixation of rates. From the observations from page 1899 of the report already quoted, we have noticed that the question whether the statute' contains a guidance to fix the rates depends on the provisions of each statute.
14. The relevant authorities on this subject have been considered in the case of Delhi Municipality v. B.C.S. and W. Mills : 3SCR251 . In that case the majority view shows that essential legislative function consists of determination of legislative policy which cannot be delegated and that legislative policy and guidance must be sufficiently indicated by the Legislature in the matter of delegation. Wanchoo C.J. speaking on his own behalf and on behalf of Shelat J. in his judgment at page 1244 of the report has summarized the conclusion on this question as under:
A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the Legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The Legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the Courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation. 'Shah J. speaking for himself and also on behalf of Vaidialingam J. has in the judgment at page 1261 of the report summarized the conclusion on this question as under:
A review of these authorities therefore leads to the conclusion that so far as this Court is concerned the principle is well established that essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the Legislature. Nor is these any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The Legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the Courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation.
Shah J. speaking for himself and also on behalf of Vaidialingam J. has in the judgment at page 1261 of the report summarized the principles relating to the question of delegation:
On a review of the cases the following principles appear to be well settled (i) Under the Constitution the Legislature has plenary powers within its allotted field; (ii) Essential legislative function cannot be delegated by the Legislature, that is, there can be no abdication of legislative function or authority by complete efface-ment, or even partially in respect of a particular topic or matter entrusted by the Constitution to the Legislature; (iii) Power to make subsidiary or ancillary legislation may however be entrusted by the Legislature to another body of its choice, provided there is enunciation of policy,' principles, or standards either expressly or by implication for the guidance of the delegate in that behalf. Entrustment of power without guidance amounts to excessive delegation of legislative authority; (iv) Mere authority to legislate on a particular topic does not confer authority to delegate its power to legislate on that topic to another body. The power conferred upon the Legislature on a topic is specifically entrusted to that body, and it is a necessary intendment of the constitutional provision which confers that power that it shall not be delegated without laying down principles, policy, standard or guidance to another body unless the Constitution expressly permits delegation; and (v) the taxing provisions are not exception to these rules.
Sikri J. in his judgment at page 1266 of the report observed:
The question then arises: Is the Delhi Municipal Corporation Act, 1957, a law with respect to any of the items in List II? The answer is no sign of abdication of its functions by Parliament in this Act. On the contrary, Parliament has constituted the Corporation and prescribed its duties and powers in great detail.
But assuming I am bound by authorities of this Court to test the validity of Section 113(2)(d) and Section 150 of the Act by ascertaining whether a guide or policy exists in the Act, I find adequate guide or policy in the expression 'purposes of the Act, in Section 113. The Act has pointed out the objectives or the results to be achieved, and taxation can be levied only for the purpose of achieving the objectives or the results. This, in my view, is sufficient guidance especially to a self-governing body like the Delhi Municipal Corporation. It is not necessary to rely on the safeguards mentioned by the learned Chief Justice to sustain the delegation.
It would thus appear that in matters of delegation the legislature must sufficiently indicate the legislative policy. Regarding the nature of guidance the learned Chief Justice at page 1244 of the report has stated that what form the guidance should take is a matter which cannot be stated in general terms and that it will depend upon the circumstances of each statute under consideration as to whether guidance was provided or not. The learned Chief Justice has observed that:
What form the guidance should take is again a matter which cannot be stated in general terms. It will depend upon the circumstances of each statute under consideration; in some cases guidance in broad general terms may be enough; in other cases more detailed guidance may be necessary. As we are concerned in the present case with the field of taxation, let us look at the nature of guidance necessary in this field. The guidance may take the form of providing maximum rates of tax upto which a local body may be given the discretion to make its choice, or it may take the form of providing for consultation with the people of the local area and then fixing the rates after such consultation. It may also take the form of subjecting the rate to be fixed by the local body to the approval of Government which acts as a watching on the actions of the local body in this matter on behalf of the Legislature. There may be other ways in which guidance may be provided. But the purpose of guidance, whatsoever may be the manner thereof, is to see that the local body fixes a reasonable rate of taxation for the local area concerned. So long as the Legislature has made provision to achieve that reasonable rates of taxation are fixed by local bodies, whatever may be the method employed for this purpose provided it is effective, it may be said that there is guidance for the purpose of fixation of rates of taxation. The reasonableness of rates may be ensured by fixing a maximum beyond which the local bodies may not go. It may be ensured by providing safeguards laying down the procedure for consulting the wishes of the local inhabitants. It may consist in the supervision by Government of the rate of taxation by local bodies. So long as the law has provided a method by which the local body can be controlled and there is provision to see that reasonable rates are fixed, it can be said that there is guidance in the matter of fixing rates for local taxation. As we have already said there is pre-eminently a case for delegating the fixation of rates of tax to the local body and so long as the Legislature has provided a method for seeing that rates fixed are reasonable, be it in one form or another, it may be said there is guidance for fixing rates of taxation and the power assigned to the local body for fixing the rates is not 'uncontrolled and uncanalised.lt is on the basis of these principles that we have to consider the Act with which we are concerned.
One of the guidelines or control on the limit of taxation has been referred to by the learned Chief Justice in his judgment at page 1245 of the report. It has been stated that a guide or control on the limit of taxation could be found in the purposes of the Act. It has also been stated that though the mere fact that specific purpose and functions are set out in an impugned Act may not be conclusive, it is one of the factors which should be taken into account along with other relevant factors. On the question whether purposes of the Act could be considered to afford sufficient guidance, we have already referred to the observations of Sikri J. made by him in his judgment at page 1266 of the report. The learned Judge was of view that adequate guide or policy in the 'purposes of the Act' were provided for. The Act under consideration pointed out the objectives or the results to be achieved and it has been observed in the judgment that taxation can be levied only for the purpose of achieving the objectives or the results and that provided sufficient guidance especially to a self governing body like the Delhi Municipal Corporation. On this question as to whether the expression 'for the purposes of this Act' was sufficient guidance to the Corporation. Shah J. speaking for himself and on behalf of Vaidialingam J. has, it appears, not agreed with the view that by the use of such expression principle, policy, or standard was disclosed in the matter of the rates of tax, liability of persons, objects or transactions to be taxed, and the scheme or system of taxation to be adopted. The observations in this connection are at page 1262 of the report:
It is necessary then to consider whether in the present case the Parliament has disclosed any policy, principles, standards or guidance in conferring authority upon the Corporation to fix the rates of tax selected by the Corporation out of the list contained in Section 113(2), to select persons to be rendered liable to tax, the system of assessment to be adopted and the exemptions, if any, to be granted. The Act leaves it to the Corporation by resolution to define the maximum limits of tax to be levied, the class or classes of persons, or description or descriptions of articles and properties to be taxed, the system of assessment to be adopted and the exemptions, if any, to be grated. The Act discloses by express enactment no standard, no principle and no policy laid down by the Parliament to guide the Corporation in levying and collecting the optional taxes. By providing in Sub-section (2) of Section 150 that the resolution will come into force on or from the date as may be specified in the order of sanction of the Central Government, an overriding authority is conferred upon the Union Executive, but that is not a substitute for guidance. Counsel for the Corporation and some interveners contended that the Act contained some indications of policy and principles governing the exercise of the power to tax. They relied upon the use of the expression 'for the purposes of this Act' in Section 113(2) and contended that this was sufficient guidance to the Corporation. The Corporation is undoubtedly competent to levy tax only for the purposes of the Act, and for no other purpose, and by providing expressly what is implicit in a statute relating to municipal taxation no guidance is furnished to the Corporation in the exercise of the power delegated. Even if the expression 'for the purposes of this Act' were not used in Section 113(2), the Corporation could not levy or collect taxes for purposes other than those for which it is set up by the Act. The Corporation is a statutory body charged with municipal administration. It is a body corporate with power to acquire, hold and dispose of property in its name, and is charged with municipal government, and can exercise its powers only for the purposes of the Act, and for no other purpose. Again by the use of the expression 'for the purposes of this Act' no principle, policy, or standard is disclosed in the matter of the rates of tax, liability of persons, objects or transactions to be taxed, and the scheme or system of taxation to be adopted.
15. The delegation of power to determine the rate of the cess must be subject to some principle or guidance laid down by the Legislature. In the case before us, Section 56C of the Act makes it clear that the irrigationcess was to be levied in respect of land which is under the irrigable command of a canal. These lands must be such lands as are irrigated or capable of being irrigated from a canal or cultivated land which would fall within the purview of Section 84. The cess has, therefore, reference to irrigation, actual or potential and to the existence of a canal. The Act is 'to provide for irrigation' and the preamble says that it was necessary 'to make provision for the construction, maintenance and regulation of canals, for the supply of water therefrom and the levy of rates for water so supplied'. The object and the purpose of the Act, as it appears from the preamble is (1) to provide for irrigation; (2) to make provision for the construction, maintenance and regulation of canals. The implementation of the provisions of the Act as the sections show would require expenses to be met and for seeing whether there is a guideline provided, all the provisions of the Act have to be looked into and an amended section forms part of the whole Act and has to be read in the context of the provisions of the Act. The sections relating to irrigationcess introduced in the Act by the amending Act of 1950 should be read in the context of the preamble and all the sections and doing so the policy of the Legislature as stated above can clearly be spelt out. The learned advocates of the petitioners had referred to the report of the Committee already referred to and in that report it has been clearly stated that the cess was primarily meant to meet the working expenses of maintenance of irrigation canal. This policy is manifest in the preamble read with the other provisions of the Act. It is true that the provisions relating to the levy of betterment charges is more specific in indicating the purpose and the method of the levy, but irrigation cess appears to be in the nature of an additional levy imposed for implementing the policy and the purpose of the Act as stated above.
16. As regards the contention that the provisions imposing the tax were in the nature of a money bill, the contention as regards procedure to be followed in respect of a money bill does not appear to have been specifically raised in the petitions. The Act, however, contains several provisions and the provisions regarding levy of the irrigation cess are not the only provisions of the Act. Here there is no question of avoiding the procedure relating to a finance bill which Mr. Shah does not admit has not been followed in the present case. Here the Act itself gives the power to fix the rates and the question is whether such a power could validly be delegated.
17. We may now refer to Sub-clause (3) of Section 56E which provides that all notifications issued under Sub-section (1) shall be laid before the State Legislature as soon as may be after they are issued and shall be subject to such modifications as the State Legislature may make during the session in which they are so laid or the session immediately following. It is an admitted position that Sub-clause (3) of Section 56E came into force on 10th December 1962 and that notifications dated 29th January 1959, 4th February 1960, 8th February 1961, 9th February 1962 and 1st June 1962 could not have been and were not placed before the Legislature. It is, however, not disputed that notifications dated 28th December 1962, 10th February 1966 and 19th January 1967 have been laid before the Legislature as provided by Sub-section (3). This is the admitted position as regards the various notifications fixing the rate of irrigation cess. Subclause (3) of Section 56E will, therefore, have bearing only as regards the last three notifications. Out of the several methods of Legislative control of delegated legislation, the one that is sometimes employed is the procedure by way of laying on the table of the Legislature. The Legislature, by this procedure, comes to know what has been done by its delegate and this intro duces the possibility of a debate or even disapproval by the Legislature of the delegated action. This laying procedure is likely to work as an effective check particularly when the delegated action is made subject to modifica tion by the procedure when it is laid before the Legislature. In the present case, it may be noted, that the notifications have to be placed before the Legislature as soon as may be and, therefore, not much time is likely to elapse before they are laid before the Legislature. It is however need-less to pursue the matter in view of the conclusions that the Legislative policy is indicated in the Act to guide the action to be taken by the delegated authority.
18. It was suggested that the decided cases which relate to municipal legislation cannot help in the present case which is not a case of taxation by a municipality. But we have decided the matter on general principles governing the question of delegated legislation and have come to the conclusion that the impugned sections and the notifications cannot be struck down because they suffer from the vice of excessixe delegation. This disposes of the second contention of the learned advocates of the petitioners that the relevant provisions of the Act relating to the levy of irrigation cess suffers from the vice of excessive delegation.
19. The third ground of attack was that the impugned sections and the notifications were violative of Article 14 of the Constitution of India. It was contended that the levy of irrigation cess at a uniform rate was discriminatory because it did so without taking note of the nature and quality of land or the type of crops grown on the land. This argument cannot apply to notifications dated 29th January 1959,4th February 1960, 8th February 1961, 9th February 1962 and 1st June 1962 because the rate of cess is not uniformly prescribed. In these notifications the rate is Rs. 22-50 per acre per annum for lands under sugarcane or equivalent perennial crop. Rs. 11.25 per acre per annum for lands under other perennial crop, Rs. 7. 50 per acre per season for lands under sugarcane or equivalent perennial crops receiving water for only one or two seasons and not during full year, Rs. 4.00 per acre per season for lands under other perennial crops receiving water for only one or two seasons and not during full year, Rs. 2. 50 per acre for lands under eight-month blocks and Rs. 2. 50 per acre per annum for all other lands. In the notifications dated 28th December 1962, 10th February 1966 and 19th January 1967 the rates are uniform on the area of the land, that is, Rs. 6. 18 per hectare per annum or Rs. 2. 50 per acre per annum. Now in cases where a cess is levied for a purpose, that is, to meet expenses of maintenance of a canal, it may not necessarily be fixed on the basis of the quality of land as all the lands of whatever grade, would or would be likely to be benefited or take advantage of the canal system. Lands within the irrigable command of a canal may be either irrigated or capable of being irrigated and, therefore, be considered as one category. Where a majority of properties are alike, a flat rate of tax can legitimately be imposed. This principle was indicated in the case of New Manek Chowk Spg. and Wvg. Mills Co. Ltd. v. Ahmedabad Municipality : 2SCR679 . The principle laid down in K.T. Moopil Nair v. State of Kerala : 3SCR77 and the case of State of Andhra Pradesh v. Raja Reddy. : 3SCR28 will not be applicable to the facts of the present case: In Moopil Nair's Case (supra) the relevant observations are at page 558 which show that inequality was manifest and inherent in the provisions of the taxing sections and the case was one of those cases where the lack of classifications created inequality. In the Andhra Pradesh case (supra) reasons why it was held that the impugned Act offended Article 14 of the Constitution have been indicated at page 1469 of the report. It has been stated there:
But in the instant case, as we have pointed out earlier, the whole scheme of ryot-wari settlement was given up so far as the minimum rate was concerned and a flat minimum rate was fixed in the case of dry lands without any reference to the quality or fertility of the soil and in the case of wet lands a minimum wet rate was fixed and it was sought to be justified by correlating it to the ayacut. Further, the whole imposition of assessment was left to the arbitrary discretion of the officers not named in the Act without giving any remedy to the assesses for questioning the correctness of any of the important stages in the matter of assessment, such as ayacut, taram, rate or classification or even in regard to the calculation of the figures. Not only the scheme of classification, as pointed out by us earlier, has no reasonable relation to the objects sought to be achieved, viz., fixation and rationalisation of rates but the arbitrary power of assessment conferred under the Act enables the appropriate officers to make unreasonable discrimination between different persons and lands. The Act, therefore, clearly offends Article 14 of the Constitution.
The rates fixed by the last three notifications cannot, therefore, be struck down because there is lack of classification which creates inequality nor can it be said that keeping in mind the purpose of the levy, if a rational basis for rates is adopted, the rule of uniform levy should always be rigidly followed. Lands such as those which can get the maximum advantage such as sugar cane or perennial crop lands can be separately categorised provided there is some rational basis or standard which can be determined. Because some basis for fixation of rates is differently adopted for that reason only the fixation of rates cannot be struck down as arbitrary or discriminatory. That there is no method or machinery to -determine what lands are sugarcane crop lands or equivalent perennial crop lands or other perennial crop lands or lands of the other categories mentioned in the first five notifications is another matter, but on these categories the rate fixed is a flat rate.
20. Another argument on which the challenge under Article 14 was based was that the process of recovery of the tax that was provided for in the Act was discriminatory inasmuch as it was left to the unguided discretion of the executive as to which of the remedies of a civil suit or of recovery by revenue process was to be followed. It was urged that in some cases the executive may employ the revenue process and in others may take resort to a civil suit. It was also urged that even the revenue process permitted more than one methods of recovery which was left to the unguided discretion of the executive and, therefore, introduced discrimination. Section 56F provides that irrigation cess recoverable in respect of any land shall be leviable on the date on which the land revenue is leviable in respect thereof. Section 57(2) of the Act provides that:
57. (2) Any such rate of the instalment thereof which is not paid on the date when it becomes due shall be deemed an arrear of land revenue due on account of the land for the use of which canal water was supplied or which was benefited by percolation or leakage from any canal and shall be recoverable as such arrear by any of the methods specified in Section 150 of the Land Revenue Code, including the forfeiture of the said land.
The amount of the betterment charges or any of its instalments together with interest thereon, if not paid on the date specified in Section 56A and the amount of the irrigation cess if not paid on the date specified in Section 56F shall be deemed to be an arrear of land revenue due on account of the land in respect of which it is payable and shall also be recoverable as such arrear by any of the methods specified in Section 150 of the Land Revenue Code, including the forfeiture of the said land.
Sub-section (4) of Section 57 may also be referred to here:
57.(4)(a) Any other sum due to the State Government or to a Canal-officer under the provisions of this Act whether on behalf of the State Government or any other person under Part HI of this Act which is not paid when demanded shall, and
(b) any rent or instalment thereof payable to the owner of a water-course, which is not paid when it becomes due may, on behalf of the owner,
be recoverable as arrears of land revenue in accordance with the provisions of the Land Revenue Code.
The words 'also be recoverable' in Section 57 Sub-section (2) in connection with recovery of irrigation cess do not necessarily mean, as was contended, that a remedy by way of suit was kept in tact for being followed and in addition to that remedy the remedy by revenue process of recovery was also made available. What is meant is that the amount of irrigation cess if not paid shall be considered as revenue dues and shall also be recoverable as 'such' arrear by any of the methods specified in Section 150 of the Land Revenue Code. The word 'also' has to be read in the context of what is previously said, namely, that the arrears shall be deemed to be arrears of land revenue and the use of the words 'shall also be recoverable' further clarifies the position. These provisions indicate that there is an effective remedy for recovering the dues provided for in the Act itself. The right to levy and claim the dues is for the first time created by the Act and the remedy is also effectively provided. The remedy by way of a suit would thus be implicitly excluded leaving the executive to follow only the revenue procedure of recovery under the Land Revenue Code and, therefore, no question of discriminating one person in arrear against another such person would arise.
21. In the case of Northern India Caterers (Private) Ltd. v. State of Punjab : 3SCR399 , which was referred to in the course of arguments, the Court on the particular provisions of the Punjab Public Premises and Land (Eviction and Rent Recovery) Act, 1959, came to the conclusion that Section 5 of that Act conferred an additional remedy over and above the remedy by way of suit leaving it to the unguided discretion of the Collector to resort to any one of the alternatives. The rule governing the decisions of questions of this kind has been stated in Wolverhampton New Water Works Co. v. Hawkesford (1859) 6 C.B. (N.S.) 336 at page 356:
There are three classes of cases in which a liability may be established founded upon statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law; there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy. The second class of cases is, where the statute gives the right to sue merely, but provides no particular form of remedy: there, the party can only proceed by action at common law. But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to.
The liability in the present case for levy and payment of the cess did not exist prior to the present Act and was created for the first time as a new liability and the Act gave a special remedy for enforcing the liability. The present case, therefore, would fall in the third class of cases enumerated by Willies J. and must be considered as providing for an exclusive remedy. The impugned provisions cannot, therefore, be struck down on this ground.
22. It was then urged that Section 150 of the Bombay Land Revenue Code itself provides for five remedies of recovery and thus gives a discriminatory power of resorting to any one of the remedies mentioned therein. The recovery under Section 150 can be made by serving a notice of demand, by forfeiture, distraint and sale of moveable or immovable pro perty and by arrest and imprisonment. Now these are methods by which a particular remedy is to be enforced and these modes are methods of recovery by revenue process, applicable to all persons who are in arrears of land revenue. These are generally known methods of revenue recovery and the use of these methods are to be made within narrow limits. These modes can be grouped under one general mode of recovery by a revenue process and it cannot be considered that they are unreasonable or prejudicial since they are only normal methods of recovery. The provisions of the Act, therefore, cannot be successfully challenged on the ground that they are violative of Article 14 of the Constitution of India. The third ground of attack, therefore, based on the contention that the relevant provisions of the Act and the notifications are violative of Article 14 of the Constitution also fails.
23. The last ground on which the provisions of the notifications were challenged was that they violated Article 19(1)(f) of the Constitution. It was urged that there was no machinery or inquiry provided in the Act for the assessment or levy of tax before fixing the rates and for their application to the lands of the landholders or for determination of the various details which would be necessary before the cess is actually charged. The principle relating to this question has been indicated in K.T. Moopil Nair v. State of Kerala (supra). The principle is stated at page 559 of the report in the following observations:
The provisions of the Act are unconstitutional viewed from the angle of the provisions of Article 19(1)(f) of the Constitution, also. Apart from the provisions of Sections 4 and 7 discussed above, with reference to the test under Article 14 of the Constitution, we find that Section 5(A) is also equally objectionable because it imposes unreasonable restrictions on the rights to hold property, safeguarded by Article 19(1)(f) of the Constitution. Section 5(A) declares that the Government is competent to make a provisional assessment of the basic tax payable by the holder of unsurveyed land. Ordinarily, a taxing statute lays down a regular machinery for making assessment of the tax proposed to be imposed by the statute. It lays down detailed procedure as to notice to the proposed assessee to make a return in respect of property proposed to be taxed, prescribes the authority and the procedure for hearing any objections to the liability for taxation or as to the extent of the tax proposed to be levied, and finally, as to the right to challenge the regularity of assessment made, by recourse to proceedings in a higher Civil Court. The Act merely declares the competence of the Government to make a provisional assessment, and by virtue of Section 3 of the Madras Revenue Recovery Act, 1864, the landholders may be liable to pay the tax. The Act being silent as to the machinery and procedure to be followed in making the assessment leaves it to the Executive to evolve the requisite machinery and procedure. The whole thing, from beginning to end, is treated as of a purely administrative character, completely ignoring the legal position that the assessment of a tax on person or property is at least of a quasi judicial character. Again, the Act does not impose an obligation on the Government to undertake survey proceedings within any prescribed or ascertainable period, with the result that a landholder may be subjected to repeated annual provisional assessments on more or less conjectural basis and liable to pay the tax thus assessed. Though the Act was passed about five years ago, we were informed at the Bar that survey proceedings had not even commenced. The Act thus proposes to impose a liability on landholders to pay a tax which is not to be levied on a judicial basis, because (1) the procedure to be adopted does not require a notice to be given to the proposed assessee; (2) there is no procedure for rectification of mistakes committed by the Assessing Authority; (3) there is no procedure prescribed for obtaining the opinion of superior Civil Court on questions of law, as is generally found in all taxing statutes, and (4) no duty is cast upon the Assessing Authority to act judicially in the matter of assessment proceedings. Nor is there any right of appeal provided to such assesses as may feel aggrieved by the order of assessment.
Moopil Nair's case has been referred to in Rai Ramkrishna v. State of Bihar A.I.R. 1963 B.C. 1667 at page 1673 where it has been stated:
In view of the recent decisions of this Court Mr. Sastri also concedes that taxing statutes are not beyond the pale of the constitutional limitations prescribed by Articles 19 and 14, and he also concedes that the test of reasonableness prescribed by Article 304(b) is justiciable. It is, of course, true that the power of taxing the people and their property is an essential attribute of the Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature, and in dealing with the contention raised by a citizen that the taxing statute contravenes Article 19, Courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, Courts would be justified in striking down the impugned statute as unconstitutional. In such cases, the character of the material provisions of the impugned statute is such that the Court would feel justified in taking the view that, in substance, the taxing statute is a cloak adopted by the Legislature for achieving its confiscatory purposes. This is illustrated by the decision of this Court in the case of Kunnathat Thathunni Moopil Nair v. State of Kerala : 3SCR77 where a taxing statute was struck down because it suffered from several fatal infirmities. On the other hand, we may refer to the case of Jagannath Saksh Singh v. State of Uttar Pradesh : 46ITR169(SC) where a challenge to the taxing statute on the ground that its provisions were unreasonable was rejected and it was observed that unless the infirmities in the impugned statute were of such a serious nature as to justify its description as a colourable exercise of legislative power, the Court would uphold a taxing statute.
There are observations also in Andhra Pradesh case referred to above : 3SCR28 referring to the imposition of assessment which was left to the arbitrary discretion of the officers not named in the Act without giving any remedy to the assessee for questioning the correctness of any of the important stages in the matter of assessment, or classification or even in regard to the calculation of the figures. The question as regards the machinery to be provided for the determination of price arose in the case of Premchand v. K.G. Sanghrani (1968) 9 G.L.R. 777 where the relevant observations are at page 797:
How is this determination to be made? Obviously for such determination the machinery of the Court would be wholly inappropriate. It would defeat the object and purpose of compulsory sale which in many cases might be directed to be made to meet the emergent requirement of the consumer. It was, therefore, necessary to provide a suitable machinery for determination of the price and the Central Government accordingly made Clause 14B Sub-clauses (3) and (4) in exercise of its powers under Sections 3(1) and 3(2)(j). These sub-clauses of Clause 14B provide the machinery for determination of the price of cotton directed to be sold under Clause 14A and are procedural provisions. But, as held by the Supreme Court in Dr. N.S. Khare v. State of Delhi (1950) S.C.R. 519, where the restrictions imposed by a legislative enactment upon a fundamental right guaranteed by Article 19(1) are reasonable within the meaning of Article 13(5) and (6) would depend as much upon the procedural portion of the law as the substantive part of it. The view was reaffirmed by the Supreme Court in State of Madras v. V.G. Rao (1952) S.C.R. 597 where it was observed that in considering the reasonableness of the law imposing restriction on the fundamental rights, both the substantive and procedural aspects of the impugned law should be examined from the point of view of reasonableness. The same view has also been taken by the Supreme Court in the recent decision in Messrs. Kantilal Babulal v. H.C. Patel Civil Appeal No. 126 of 1966 decided in September 1967. It, therefore, becomes necessary to examine whether the machinery for determination of the price provided in Clause 14B Sub-clauses (3) and (4) is reasonable. 'The argument of Mr. Shah, learned Assistant Government Pleader that what Article 265 of the Constitution requires is that no tax shall be levied or collected except by authority of law and that as there is an enactment which empowers such a levy, no separate machinery was necessary cannot be accepted. The provision regarding the levy of the tax have not to be inconsistent or violative of Article 19(1)(f). Here there is no inquiry provided for fixing the rates, no provision for inviting objections, no machinery for hearing and deciding objections that may be or are liable to be raised on behalf of the landholders. There is no opportunity or machinery provided for deciding questions such as whether the land sought to be charged is within the irrigable command area or whether the lands are irrigable lands or what is the extent or area of such lands. If the landholder wishes to dispute any of these facts, there is no authority who could be approached and no procedure laid down in the Act as to how and by whom such questions are to be decided. There is no machinery provided whereby the measurement or area of lands or the calculation of the amount of cess could be made and fixed or challenged for the purposes of the levy and recovery of the tax. There is no provision for deciding cases of dispute as who actually would be liable to pay or whether the land is cultivable, irrigable or Kharaba land. Some of the notifications, as we have seen, fix rates on the basis of lands having sugarcane crops or equivalent perennial crops and lands of other categories as stated in those notifications. If there is a dispute on these questions, who is to decide and how? Even under Section 48, there is no right of hearing or taking any objection and Section 67 which provides for an appeal would be only illusory when primarily before the first authority no chance is available to lay the requisite materials for consideration by the deciding authority.
24. Mr. Shah, learned Assistant Government Pleader, however, tried to show that there was adequate provision made for procedure to be followed and the machinery to be adopted for the determination of all questions arising in respect of the levy, fixation of rates and collection of tax. It was urged that Section 56 of the Act says that the irrigation cess is in addition to water rate and other charges and is in respect of lands within the irrigable command area which is defined by Clause (6A) of Section 3 and according to the principles set out therein, the executive would decide all relevant questions. It was stated that a right of hearing was implicit in a proceeding where rights were to be decided, but that principle applies to proceedings of a judicial nature. The observations at page 1271 in the case of State of Orissa v. Binapani Devi : (1967)IILLJ266SC were made in the context of the facts obtaining in that case. That case was a case in which the person in service of Government claimed that the order made by the State amounted to an order of compulsory retirement contrary to the rules governing the service and was violative of the principles of natural justice, that the same was aribtrary and mala fide, that the order of retirement amounted to punishment involving consequences such as loss of pay, status and deprivation of service and since it was not made in consonance with Article 311 of the Constitution, the order was liable to be quashed as invalid. It was observed in relation to those facts that an order by the State to the prejudice of a person in derogation of his vested rights may be made only in accordance with the basic rules of justice and fair play. In the present case none of the sections speak of any hearing or opportunity to be given before any assessment or fixation or calculation is made. Section 48 merely says that when it shall appear to the canal officer that the requirements of that section were satisfied, he may charge water rate on lands and such lands shall be deemed to be lands irrigated from a canal. No obligation is cast on the officer to hear the concerned parties before the lands are to be considered such as to fall within the purview of the section and again cases under Section 48 would not be the only cases chargeable to tax as there would be other cases which would fall under Clause (6A) of Section 3.
25. It was urged by Mr. Shah that lands falling within the irrigable command area of a canal would be shown when procedure for levy of betterment charges was followed. That machinery, it was contended, was sufficient and there was no need to duplicate the same machinery for the purpose of the levy of irrigation cess. It was undisputed that the irrigation cess was leviable irrespective of whether betterment charges were or were not levied. When an irrigation cess is levied calculated, and collected, various questions relevant to that levy, calculation and collection may arise and there is no provision that the same machinery was to be employed in the case of irrigation cess also. It was also pointed out that there were internal indications to show that lands were to be within the irrigable command area and reference was made in this connection to the provisions of Sections 56C and 56E read with Subclause (6A) of Section 3 to show that a test of determination was provided. But there is ample scope for and likelihood of disputed questions arising while formulating and applying the criteria for the determination of which there is no machinery provided.
26. Reference was then made to some of the provisions of the Bombay Land Revenue Code and it was contended that these provisions contained an adequate remedy for deciding all questions relating to area, liability of holders, etc. Sections 95, 96 and 97 of the Bombay Land Revenue Code relate to making of revenue survey with a view to the settlement of land revenue and to the record and preservation of rights connected therewith or for any other similar purpose. These provisions or a similar purpose mentioned in Section 95 cannot include cases arising in respect of irrigation cess. Nor can Section 105, which relates to fixing of assessment, Section 106 which makes it lawful for the State Government to direct a fresh survey and revision of assessment or Section 108 which relates to the preparation of statistical and fiscal records or Section 117(3 which relates to the determination of assessment be of any help because those provisions do not contemplate matters and adjudication of disputes which would or are likely to arise when an irrigation cess is to be levied. The provisions of Chapter VIII of the Bombay Land Revenue Code relate to surveys, assessments and settlements of land revenue and Chapter VIII-A relates to similar assessment and settlement of land revenue of agricultural land. The classification value, the class of lands, the standard rate referred to in Section 117C of the Code, the inquiry, objections and reports to be published mentioned in Sections 117-1, J, K, L and Q relate to the general subject of land revenue survey, assessment and settlement of land revenue. What is necessary, however, in cases like the present is that there must be some machinery or provision to deal with the specific subject matter of the tax, that is, the irrigation cess and the problems that would arise in connection therewith. These surveys and settlements referred to in the above Chapters are prepared at long intervals and it is possible that after a particular settlement is prepared, other canals may be constructed or require to be maintained. Reference was also made to the Bombay Land Revenue Rules 3, 4, 8, 9 and 15 of Chapter. But these also relate to the preparation of surveys and records. Some rules from Chapter III-A of the Land Revenue Rules were also referred to. Rule 19-A relates to enquiry by the Settlement Officer in respect of the subjects mentioned in the rule. That Rule also relates to collection of information relating to the area in respect of the matters such a physical configuration, climate and rainfall and other matters mentioned in the rule. Rule 19A says that the Settlement Officer has to examine fully the past revenue history of the area and assess the general effect of the incident of assessment on the economic condition of the area. Rule 19-B provides that the Settlement officer shall incorporate the information called by him in regard to the matters specified in Rule 19A in his settlement report which shall contain the reasons for his proposals and a statement showing the effect of his proposals as compared to that of the settlement then in force. Rule 19C provides for the report to be published in each village, and a notice has to be published by the Collector under Rule 19D. Rule 19F provides that any person desiring to move the State Government to refer the settlement report to the Bombay Revenue Tribunal shall make an application stating his objections to the report and the grounds therefor and thereafter an inquiry shall be made. Reference was also made to Rule 19-0 in Chapter III-A which relates to assessment of agricultural land under Section 52. That Rule requires the Collector to arrange from groups of village homogeneous as far as possible in respect of physical configuration, climate and rainfall, prices and yield of principal crops, to classify the lands into three classes, namely, dry crops, rice and irrigated, to ascertain the average gross agricultural produce per acre for each class of land for a period of five years and to fix the standard rate of assessment per acre for each class of land in each such group. That rule also provides that the Collector shall fix for each individual holding the assessment payable by the holder thereof on the basis of the survey and classification so done at the standard rate fixed and to classify each class of (1) dry crop, (2) rice, and (3) irrigated land into three sub-classes, namely, (1) good, (2) medium, and (3) inferior. Reference was also made to village Form No. XII from the Manual of Revenue Accounts in which the details of cultivable area including irrigated and non-irrigated lands are to be shown. This procedure that is contained in the above rules is mainly for the purpose of survey settlement, maintenance of record and for settlement, ascertainment and revision of land revenue. The details that have to be gathered under those rules and forms would be the details collected for those purposes. The subject matter of the irrigation cess is a separate and a distinct subject altogether and the person who is to levy, Collect or pay the cess would be required to apply his mind from the point of view of the levy of the irrigation cess which will require several details of a different nature to be considered. There must be an inquiry as regards the subject matter of the tax and there must be a procedure provided for in the Act so that the details required to be ascertained for the levy of the tax and the fixation of rates may be ascertained through the machinery so provided. As already stated, there is no such specific procedure or machinery that could be found from the provisions of the Act which could be utilised for the purpose of ascertainment of such details and for the decision of disputes that may arise while levying and collecting the tax. The details that would be necessary in the case of levy of an irrigation cess would be necessary in respect of each land of its holder whose lands fall within the irrigable command area. It cannot, therefore, be said that such a machinery has been provided for by the Land Revenue Code and by the Land Revenue Rules.
27. Reference was then made to Form No. 8A in which the details as regards the name of Khatedar, survey number or pot number, area under irrigation command, the rate of irrigation cess, irrigation cess to be paid for the year have to be mentioned. This was shown from a Handbook of General Circulars or Resolutions etc. issued by the Depart ment by way of administrative instructions. Even if these were prescribed forms, it could not be said that they provide for a machinery for deciding the matters and disputes arising in respect of the levy of irrigation cess under the Act. Reference was also made to Subsidiary Canal Rules from the same Handbook but they again were for the guidance of the officers of the Irrigation and Revenue Departments. The same remarks will apply to form No. 19A which has been produced along with the affidavit-in-reply and which is contained in the Hand Book referred to above. It was also urged that the Canal Rules were framed with reference to Sections 108 95 and Rules 15 and 16 but no resolution or order was shown to show the source of the rules. As already stated these rules appear to be in the nature of instructions or circulars for guidance of officers of irrigation and Revenue Departments and the procedure and forms shown therein are not statutory and obligatory which would be required to Be followed and in respect of which the subject would have a right of hearing and opportunity to challenge and raise all the points in dispute which would be relevant when the levy of irrigation cess is made.
28. It was then urged on the authority of Jinabhai v. The Collector 28 Bom. L.R. 416 that the words 'land revenue' should be given a broad meaning and must mean all kinds of revenue including the irrigation cess and therefore all the procedure and rules of the Bombay Land Revenue Code would be applicable to the levy and recovery of the cess. That was a case decided with reference to the provisions of the Gujarat Talukdars' Act and what we have to see here is whether a machinery has been provided for and has been made available to the subject for the fixation, adjudication and settlement of all questions and disputes arising under the Act in relation to the cess. We are, therefore, unable to accept the argument of Mr. Shah that a specific machinery has been provided for in the Bombay Land Revenue Code, in the Rules and in the various sections and forms pointed out where by provision has been made for the settlement and adjudication of questions, disputes and matters arising in respect of the levy of irrigation cess. Since no machinery has been provided for as stated above in respect of the levy and recovery of the tax, such a levy and recovery would be violative of Article 19(1)(f) of the Constitution.
29. It was contended by Mr. Shah that in the petitions there is no data to show that the lands of the petitioners were not actually irrigated and that no materials were laid in order to challenge the relevant provisions of the Act and the Rules as violative of Article 19(1)(f). If we look to Special Civil Application No. 833 of 1968 there is an averment made in paragraph 17 of the petition that no notice under the provisions of Section 50(2) has been issued upon any of the occupants holding land in the villages in question, that the irrigable command area including the lands of the occupants has been arbitrarily fixed without following any scientific manner, that the lands bearing survey Nos. 87, 88 and 89 belonging to one Bhagubhai situated in the village Pardi have been included in the irrigable command area even though the level of the said lands was higher than the level of the canal and even though there were ditches and dikes intervening between the canal and the said lands, that there are many instances according to the petitioners in the concerned villages which show that no scientific survey was made before preparing the scheme for the irrigable command area inasmuch as many fields surrounded by ditches, dikes and hillocks or situated on higher level than the canal were included within the irrigable command area. The petitioner has also referred to paragraph 18 of his petition that the petitioner apprehended encroachment upon the fundamental rights of the occupants of the villages to hold and enjoy property guaranteed under Article 19(1)(f) of the Constitution. In paragraphs 14 and 15 of Special Civil Application No. 833 of 1968 reference has also been made to the challenge under Article 19(1)(f) of the Constitution. Such averments relating to Article 19(1)(f) have also been included in Special Civil Application No. 420 of 1964 by the amendment that was sought by the petitioner.
30. The aforesaid discussion leads us to the conclusion 'that fourth contention of the petitioners that Section 56E of the Act and notifications issued fixing the rates of irrigation cess are violative of Article 19(1)(f) must be upheld. It was urged by Mr. Shah that only notifications could if at all be struck down and not Section 56E of the Act; but as we have already stated, there is failure on the part of the State Legislature to provide for a machinery in respect of the levy and recovery of the tax and fixation of the rates and that infirmity attaches to Section 56E itself. Therefore, not only the notifications issued under that section but also the section must be held to be invalid. Section 56C is the charging section and creates a liability that there shall be levied in respect of land under irrigable command of a canal, a cess called 'the irrigation cess' and Section 56D relates to the liability for irrigation cess in respect for certain kinds of holders. Section 56F relates to the fixation of date for payment of irrigation cess. These sections do not offend the provisions of Article 14 or Article 19(1)(f) of the Constitution nor do they suffer from the vice of excessive delegation.
31. These sections, therefore, cannot be struck down. We have also upheld the validity of Section 57(2) of the Act which provides for the manner of rcovery of irrigation cess. That sub-section also, therefore, cannot be declared to be invalid.
32. The result, therefore, is that we declare Section 56E of the Bombay Irrigation Act, 1879, and the notifications annexed with the petitions dated 29th January 1949, 4th February 1960, 8th February 1961, 9th February 1962, 1st June 1962, 28th December 1962, 10th February 1966 and 19th January 1967 as ultra vires and violative of Article 19(1)(f) of the Constitution and, therefore, invalid. We also issue a direction restraining the respondents from recovering the irrigation cess from the petitioners at the rate fixed by the notifications. The petitions are allowed. Rule made absolute with costs in both the pet lions. Mr. P.S. Shah for Mr. B.R. Shah asks for leave to appeal to the Supreme Court in both the petitions. Leave granted under Article 133(1)(c).