Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 10
PETITIONER:
M\S. R.S. REKHCHAND MOHOTASPINNING & ORS WEAVING MILLS LTD.
Vs.
RESPONDENT:
STATE OF MAHARASHTRA
DATE OF JUDGMENT: 07/05/1997
BENCH:
K. RAMASWAMY, S. SAGHIR AHMAD, G.B. PATTANAIK
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
This appeal by special leave arises from the judgment
of the Division Bench of Bombay High Court passed in Writ
Petition No. 1509 of 1981 on November 8, 1989. The primary
question is: whether the state legislature has power to levy
rates of cess on use of flowing water from the river "Wana’.
The facts are as under. The appellant had installed a
mill in the year 1898 and has been drawing water for
industrial purpose from the said river by installing water
pumps at its bank with the help of artificial contrivance.
Under section 70 of the maharashtra Land Revenue Code,
1966, (for short, ’the Code’), The Government of Maharashtra
passed the following Resolution on June 5, 1972 thus;
"In exercise of the power conferred
in it by section 70 of the
Maharashtra Land Revenue Code,
1966, the Government is pleased to
sanction the following rates for
the use of water (the right to
which vest in Government and in
respect of which no rate is liable
under any law in force in any part
of the state) for non-agriculture
purpose.
NON- AGRICULTURE PURPOSE Rate Unit
1. Industrial purpose (a Rs.8/- for the Per ten
first two years thousand
cft. of
water
(b) Rs. 10/- for -do-
the third &
fourth year
(c) Rs. 12.50 for -do-
the fifth and
subsequent
year
2. Purpose for the Rs. 5/- -do-
Municipality
3. Purpose for the Rs. 12.50 -do-
Railways
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 10
4. Domestic use
(i.e. for drinking
water) Nil
The Collector or such other officers as may be
authorised in that behalf should fix the water rates in
accordance with rates sanctioned above.
These orders supersede all the prevalent orders or
practice in regard to the quantum or the rates chargeable
under Section 70 of the Maharashtra Land Revenue Code, 1966.
These orders were issued with the concurrence of the
Finance Department vide in official reference No. 7041 dated
29th April, 1972."
The Tehsildar of Hinganghat on the appellant levied
cess in the sum of Rs. 18,348.30 for the period from 1967-68
to 1973-74 on the use of water for industrial purpose. The
appellant, feeling aggrieved, filed an application under
Section 20(2) of the Code before the Sub-Divisional officer,
Hinganghat, challenging the demand of cess, dated December
19, 1974, inter alia, contending that he had easementary
right to draw flowing water from the river, wane,
uninterruptedly and continuously since he had been so
drawing the water for over 70 years; that it had perfected
as his prospective right to draw water from the flowing
river, and the Government is, therefore, devoid of any
power to levy cess on the use of water.
The Sub-Divisional officer dismissed the application
after consideration after considering necessary evidence.
The appeal filed by the appellant against the order of the
Sub-Divisional officer also was dismissed. The
commissioner, Nagpur dismissed the revision. Thereafter,
the appellant after filing unsuccessful revision petition
before Revenue Tribunal, filed a writ petition in the High
court. The High court has found that the Government has
power to levy cess on water; the resolution, therefore,
passed by the Government under Section 70 of the Code is
within the legislative competence under Article 246 of the
Constitution of India. Accordingly, it upheld the action of
the respondent. On leave being granted and a reference
having been made to three-Judge Bench, the matter has come
up before us.
Shri Sanghi, learned counsel for the appellant
contends that the code envisages collection of land revenue
from agriculturists for use of water for cultivation
purpose. admittedly, the use of water by the appellant, is
for industrial purpose. By operation of Section 70 read with
Section 20 of the code, land revenue is relatable to levy
on land of cess on the water used for agricultural purpose.
Even if it is construed that the Resolution is valid, the
legislature lacks competence to enact law since neither
Entry 18 nor entry 45 or Entry 49 of List are available to
sustain the demand under Section 70; therefore, it cannot be
construed that section 70 is law made under any of the
Entries. As a consequence, he is entitled to the relief.
He further contends that in view of the fact that the High
court has recorded a finding that the appellant has a
natural right to draw water from the flowing river, the
appellant cannot be made to make payment which has no
legislative sanction. Alternatively, as the last straw on
the camel’s back, learned counsel for the appellant
contends that the collector has no power to levy cess with
retrospective effect.
Shri Andhyarujina, learned solicitor General, on the
other hand, contends that though the appellant has been
using the water for industrial purpose, he is using the
water by artificial contrivance, drawing water from the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 10
flowing river; the levy of cess stands vested in the state;
and, therefore, the state has power to regulate the payment
of cess. The Resolution came to be passed in exercise of
the power under section 70 of the Code relating to the mode
of payment and the manner in which the land revenue or cess
can be computed. Sub-sections (2) & (3) of section 20, are
the essential provisions providing for the appellate remedy
which the appellant has availed of. List II Entries,
namely, Entries 18, 45 and 49 are to be read with reference
to the use to which land and water are put. Water is nothing
but integral part of land; without land, water does not
exist. Section 70 would come within Entry 45 since it
relates to the use of land or water regulated in the rural
India. Entry 49 relates to use of land or water in the
urban area. since the factory of the appellant is situated
in a rural area, Entry 45 is the appropriate Entry and is
required to be broadly interpreted so as to bring back
within the legislative competence under Article 246 of the
Constitution. He further contends that though the
appellant had been using the water for a period of 70 years,
he does not have a natural right which right is exercised
with the help of artificial contrivance for carrying on
industrial activity. That finding of the High Court is not
correct since the appellant has been using the water for
industrial purpose. The levy as land cess can be used by
operation of section 70 read with section 20 and the
definition of the word ’land’ and ’and revenue’
respectively under the code. He also contends that though
the demand can be made under section 70 read with the
Resolution passed by the Government, since the Legislature
has authorised under section 70 the Collector to levy and
collector having made the impugned demand in the year 1972,
the demand could only be prospective and it cannot be given
retrospective effect.
In view of the respective contentions, the question
that raises for consideration is: whether the appellant has
a natural right to use water form flowing river and whether
the water used by it is exigible to land cess? Entry 17 of
List II of the seventh schedule to the constitution reads
as under:
"Whether, I.e. to say, water
supplies, irrigation and canals,
drainages and embedments, water
storage and water power, subject to
the provisions of Entry 56 List-I"
Entry 56 of List I reads as under:
"Regulation and development of
Entry states rivers and river
valleys to the extent to which such
regulation and development under
the control of the Union is
declared by Parliament by law to be
expedient in the public interest."
Entry 97 of list I which was relied upon by Mr. Sanghi
reads as under :
"Any other matter not enumerated in
List II or List III including any
tax not mentioned in either of
those lists.:
Entry 45 of List II reads as under :
"Land revenue, including the
assessment and collection of
revenue, the maintenance of land
records, survey for revenue
purposes and records of rights, and
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 10
a lienation of revenues."
Section 70 of the code reads as under:
"70. Rates for use of water.
The State Government may authorise
thus collector or the officer in
charge of a survey or such other
officer as it deems fit, to fix
such rates as it may from time to
time deem fit to sanction, for the
use, by holders and other persons,
of water, the right to which
vests in no rate is leviable under
any law relating to irrigation in
force in any part of the state.
Such rates shall be liable to
revision at such periods as the
state Government shall from time to
time determine, and shall be
recoverable as land revenue;
Provided that, the rate for use of
water for agricultural purposes
shall be one rupee only per year
per holder."
Section 20 of the Code reads as under :
"Title of state in all lands ,
public roads, etc. which rate nor
property of others.
(1) All public roads, lanes and
paths, the bridges, ditches, dikes
and fences, on , or beside, the
same, the bed of the sea and of
harbours and creeks below the high
watermark, and of rivers, streams,
nallas, lakes and tanks and all
canals and water-courses, and all
lands wherever situated, which are
not the property of persons,
legally capable of holding
property, and except in so far as
any rights of such persons may be
established, in or over the same,
and except as may be otherwise
provided in any law for the time
being in force, are and are hereby
declared to be, with all rights in
or over the same, or appertaining
thereto, the property of the State
Government and it shall be lawful
for the collector, subject to the
orders of the Commissioner, to
dispose of them in such manner as
may be prescribed by the state
Government in this behalf, subject
always to the rights of way, and
all other rights of the public or
of individuals legally subsisting.
Explanation :- In this section,
"high watermark" means the highest
point reached by ordinary spring
tides at any season of the year.
(2) Where any property or any right
in or over any property is claimed
by or on behalf of the Government
or by any person as against the
Government, it survey officer,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 10
after formal inquiry of which due
notice has been given, to pass an
order deciding the claim.
(3) An order passed by the
Collector or survey officer under
sub-section (1) or sub-section (2)
shall be subject to one appeal and
revision in accordance with the
provisions of this code.
(4) Any suit instituted in any
civil court after the expiration
of one year from the date of any
order passed under sub-section (1)
or sub-section (2) or, if appeal
has been made against such order
within the period of limitation,
then from the date of any order
passed by the appellate authority,
shall be dismissed (through
limitation has not been set up as a
defence ) if the suit is brought to
set aside such order or if the
relief claimed is inconsistent with
such order, provided that in the
case of an order under sub-section
(2) the plaintiff has bad due
notice of such order.
(5) Any person shall be deemed to
have had due notice of an inquiry
or order under this section if
notice thereof has been given in
accordance with rules made in this
behalf by the state Government."
A conjoint reading of the provisions of the code and
the respective Entries would indicate that the land revenue
including the assessment and collection of revenue, the
maintenance of land records, survey for revenue purposes and
records of rights, and alienation of revenue lie under the
broad-head ’land revenue’. It is well settled legal
position that the land has been widely interpreted. In
Navinchandra Mafatlal vs. The Commissioner of Income-tax,
Bombay city [(1965) 1 SCR 829 at 836] a Constitution Bench
had observed that the question before this court related to
the correct interpretation of a word appearing in a
Constitution Act which, as has been said , must not be
construed in a narrow and pedantic sense. The interpretation
of the statute would apply to the interpretation of the
Entries subject to reservation that their application is of
necessity conditioned by the subject matter of the enactment
itself. It should be remembered that the problem before us
is to construe a word appearing in Entry 54 which is a head
of legislative power. It cannot 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 to it, It
is, therefore, clear that in construing an Entry in a List
conferring legislative powers, the widest possible
construction , according to their ordinary meaning, must be
put upon the words used therein. Reference to legislative
practice may be admissible for cutting down the meaning of
a word in order to reconcile two conflicting provisions in
two legislative lists. The cardinal rule of
interpretation, however, is that words should be given their
ordinary, natural and grammatical meaning subject to the
rider that in construing words in a constitutional
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 10
enactment, conferring legislative power under Article 246,
the most liberal construction should be put upon the words
in the Entries in the respective Lists in the Seventh
Schedule so that the same may have effect in their widest
amplitude. The same principle was reiterated in Kunnathat
Thatcunni Moopil Nair vs. The state of Kerala & Anr. [(1961)
3 SCR 77 at 106] by Sarkar, J. though in a dissenting tone
but on this principle there is no dissent by majority and it
cannot be dissented. It was said thus:
"It is well known that entries in
the legislative lists have to be
read as to cut down the plain
meaning of the word "land" in entry
49 to give full effect to the word
"forest" in entry 19. In my view,
the two entries, namely, entry 49
and entry 18 deal with entirely
different matters. Therefore,
under entry 49 taxation on land on
which a forest stands is
permissible and legal.
In the case of Synthetics and chemicals & Ors. vs.
State of U.P. & ors. [(1990) 1 SCC 109], a Bench of seven
Judges of this court constitution and legislative Entries
in paragraph 67 which reads as under:
" It is well to remember that the
meaning of the expressions used in
the Constitution must be found from
the language used. We should
interpret the words of the
Constitution on the same principle
of interpretation compel one to
take into account the nature and
scope of the Act which requires
interpretation. A Constitution is
the mechanism under which laws are
to be made and nor merely an Act
which declares what the laws is to
b. It is also well settled that a
constitution must not be construed
in any narrow or pedantic sense and
that construction must not be
construed in any narrow or pedantic
sense and that construction which
is most beneficial to the widest
possible amplitude of its power,
must be adopted. An exclusionary
clause in any of the entries should
be strictly and, therefore,
narrowly construed. No entry
should, however, be so read as nor
to rob it of entire content, A
broad and liberal spirit should,
therefore, inspire those whose duty
it is to interpret the
Constitution, and the courts are
nor free to stretch or to courts
are nor free to stretch or to
pervert the language of an
enactment in the interest of any
legal or constitutional theory.
Constitutional adjudication is not
strengthened by such an attempt but
it must not try to give meaning on
the theory of what the law should
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 10
be but it must so look upon a
organic thing and must adapt itself
to the changing situations and
pattern in which it has to be
interpreted. It has also to be
borne in mind that where division
of powers and jurisdiction in a is
desirable to read the Constitution
in harmonious way. It is also
necessary that in deciding whether
any particular enactment is within
the purview of one legislature or
the other, it is the pith and
substance of the legislation in
question that has to be looked
into. It is well settled that the
various entries in the three lists
of the Indian constitution are not
powers but fields of legislation.
The power to legislate is given by
Articles of the Constitution. The
three lists of the Seventh Schedule
to the Constitution are
legislation. These demarcate the
area over which the appropriate
legislature can operate. It is
well settled that widest amplitude
should be given to the language of
the entries in three Lists but some
of these entries in different lists
or in the same list may override
and sometimes may appear to be in
direct conflict with each other,
then and then only comes the duty
of the court to find the true
intent and purpose and to examine
the particular legislation in
question. Each genera world should
be held to extend to all axillary
or subsidiary matters which can
fairly and reasonably be
comprehended in it. In
interpreting an entry it would not
be reasonable to import any
limitation by comparing or import
ay limitation by comparing or
contrasting that entry with any
other in the same list. It has to
be interpreted as the
Constitution must be interpreted as
an organic document in the light of
the experience gathered. In the
constitutional scheme of division
of powers under the legislative
lists, there are separate entries
pertaining to taxation and other
laws. The aforesaid principles are
fairly well settled by various
decisions of this court and other
courts. Some of these decisions
have been referred to in the
decision have been referred to in
the decision of this court in
civil Appeal No. 62 (N)/70 India
cement Ltd. v. state of Tamil Nadu
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 10
(1990) 1 SCC 12.
In recent judgment, this court, by a Bench of two
Judges, to which K. Ramaswamy and G.P. Pattanaik,JJ. were
members, in Indian Aluminium co. & Ors. vs. State of Kerala
& Ors. [(1996) 7 SCC 637], considered the same question in
paragraphs 12 and 20 which read as under:
" The primary question, therefore,
is: whether the impugned Act
enacted by the state Legislature is
one under Entry 53 of the state
List, viz., "Taxes on the
consumption or sale of
electricity". Indisputably, the
title of the Act as well as the
charging section 3 Employ the words
"duty on supply of electricity".
Under Article 246(3) of the
Constitution, every state
legislature has explicit power to
make law for that stat with respect
to the matters enumerated in List
II (state List) to the seventh
Schedule to the constitution. The
entries in the three lists of the
Seventh Schedule are not power of
legislation but merely fields of
legislation. The power is derived
under Article 246 and other related
articles of the constitution. The
legislative fields are of enabling
character designed to define and
delimit the respective areas of
legislative competitive areas of
legislative competence of the
respective legislature. There is
neither implied restriction imposed
on the legislature nor is any duty
prescribed to exercise that
legislative power in a particular
manner. But the legislation must
be subject to the limitations
prescribed under the Constitution.
When the vires of an enactment is
challenged, its is very difficult
to ascertain the limits of the
legislative power. Therefore, the
controversy must be resolved as far
a possible, in favour of the
legislative body putting the most
liberal construction upon there
relevant legislative entry so that
it may have the widest amplitude.
The court is required to look at
the substance of the registration.
It is an equally settled law that
in order to determine whether a tax
statute is within the competence
of the legislature, it is necessary
to determine the nature of the tax
and whether the legislature had
power to enact such a law. The
power to enact such a law. The
primary guidance for this purpose
is to be gathered from the charging
section. It is the substance of the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 10
impost and not the form that
determines the nature of tax."
Thus, it is settled principle of interpretation that
legislative Entries are required to be interpreted broadly
and widely of as to give power to the legislature to enact
law with respect to matters enumerated in the legislative
Entries. Substantive power of the legislature to enact law
is under Article 246 of the Constitution and legislative
Entries in the respective Lists 1 to 3 of the Seventh
Scheduled are of enabling character, designed to define
delimit the respective areas of legislative competence of
the respective legislature. the substantive power in
Article 246 and all other related articles.
In Province of Madras vs. Lady of Dolours Convent,
Trichinopoly , represented by Mother Superior & Ors. [Air
1942 Madras 719] , the word ’land’ was interpreted to
include land cess. In Kandukuri Bala Suryaprasada Raw &
Anr. vs. secretary to state for India [AIR 1971 PC 42], the
privy council had also interpreted "charge" on water in the
nature of land cess. It was followed by the Madras High
Court, similarly, water cess is land revenue as was held
in K.S. Ardanareeswarar Gounder vs. Tahsildar, Bhavani &
Anr. [Air 1976 Madras 318 at 320]. With regard to the
incidence of cess on the use of water in the urban area. the
Division Bench of the Andhra Pradesh High court in Nizam
Sugar Factory Ltd. vs. city Municipality Bodhan & Anr.
[AIR 1965 AP 91] had held that it is land revenue under
Entry 49. Similarly, Allahabad High court in Raza Buland
Sugar Company Ltd., Rampur vs. Municipal Board, Rampur [AIR
1962 All. 83] rates of cess on water under the municipal
limits was held to be the cess of land revenue in the urban
area. Thus, we hold that the legislative Entry 45 of List
II of the seventh Schedule of the Constitution brings within
the ambit power of the legislature under Article 246 to levy
cess on use of the water even from flowing river.
Therefore, section 70 of the code comes within Entry 45 of
List II of the Seventh Schedule to the Constitution.
Mr. Sanghi, learned counsel for the appellant has
relied upon a judgment of this court in Shankar Narayan
Ranade vs. Union of India [(1964) 1 SCR 885 at 893]
contending that this court made distinction between still
water and flowing water. Water for the purpose of cess and
the impost thereof are not referable of cess and the impost
thereof are nor referable to flowing water of the river and
the river water is nor amenable to land cess; therefore, it
is contended that the flowing water is nor exigible to
regulation of the land cess. We find no force in the
contention. The use of the word "water" in the sand property
was construed to exclude the running water of the river and
it could nor be said that the title to the flowing water.
There existing words of difference between still water in
the land like in the pound and flowing water in a river.
This court negatived the contention and held that the
flowing water vests in the state. In that context, at page
894, the title to the bed of the river was negatived and,
therefore, it was held that there were two difficulties in
accepting the contention. The first difficulty was that
the use of the word "water" in the sand, excluded the
running water of the river. Besides, it is by no means
clear that the title to the flowing water of the river
necessarily goes with the title to the bed of the river.
Shri Sanghi further contends that this court made
distinction between the cess on sale of goods in state of
Madras vs. Cannon Dunkerley & Co. (Madras) Ltd. [(1959) 1
SCR 379] which is popularly known as first Cannon
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 10
Dunkerley’s case. Therein, the question was whether the
material supplied to the company was exigible to sales cess
under the Madras sales Tax Act. This Court held that since
sale of goods is clearly covered in different legislative
Entries, it is nor exigible to sales cess. The ration
therein, therefore, has no application to the facts of the
present case. It is seen that Section 20 of the Code
clearly includes flowing water, as investing title thereof
in the State as integral part of the land. The definition
’land’ includes the right to the water flowing therefrom as
in the definition in the Transfer of Property Act.
Therefore, when the cess has been imposed by virtue of power
vested under Section 70 of the Code by the state Government
by way of legislation, the power of the state is traceable
to the legislation, the power of the state is traceable to
the legislative Entry under Entry 45 of List II of the
Seventh Schedule to the Constitution. Therefore, the demand
made is with in the legislative competence and the
legislature i s competent to enact law in exercise of the
power under Article 246. The Government have power under
Section 70 read with section 20 of the Code to levy water
cess on the use of water by the Resolution which came to be
passed by the state Government determining the rate at which
water cess is cessable on use of water for industrial
purpose. It is true that the appellant has been using the
water for over 70 years but that cannot be construed to
mean that it has a right to draw water by artificial
contrivance from the flowing river for use in its factory
for industrial purpose. Having used the water for
industrial purpose, it is taxable as incidence on cess on
water as land cess and, therefore, it is liable to pay
water cess at the rates prescribed by the Government.
Mr. Sanghi, learned counsel for the appellant, lastly
submits that no guidelined have been fixed for demand of
cess levied on use of water from flowing river. we find
that the manner in which the prescription of the rates has
been based, is sufficient guideline for determining the
rates at which the demand can be assessed to revenue cess.
It is already seen that the machinery provision under
sub-section (2) of Section 20 was adopted by the Tehlsildar
and after demand was made, the appellant approached the
appellate authority and the reversional authority who
complied with the principles of natural justice. In view
of the fair stand taken by learned solicitor General that
the executive cannot make any demand retrospectively, the
demand must be construed to operate from the date of the
Resolution passed by the Government and from that date,
the appellant is liable to pay the land cess for use of the
water at the rates specified therein. The respondents are
directed to compute the rate on that basis and make a fresh
demand; on making such demand, the appellant shall pay the
amount of cess within a period of 30 days from the date of
receipt of the demand.
The appeal is accordingly disposed of. No costs.