1997 Supreme(SC) 837

1997(6) Supreme 29
SUPREME COURT OF INDIA
K. Ramaswamy, S. Saghir Ahmad and G.B. Pattanaik, JJ.
M/s. R.S. Rekhchand Mohota Spinning & Weaving Mills Ltd.           -Appellants
versus
State of Maharashtra -Respondent
Civil Appeal No. 1802 of 1990
Decided on 7-5-1997

IMPORTANT POINT
Under the Maharashtra Land Revenue Code, the State Legislature has power to levy rates of cess on use of flowing water from the flowing river for use in a factory for industrial purpose and it is taxable as incidence on cess on water as land cess.

Headnote:(i) Interpretation of Statutes-Interpretation of Constitution and Legislative Entries-Widest possible construction, according to their ordinary meaning, must be put upon words used therein.

       Held 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 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. (Para 8)

       Thus, it is settled principle of interpretation that legislative Entries are required to be interpreted broadly and widely so 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 legislative competence of the respective legislature. The substantive power in Article 246 and all other related articles. (Para 9)

       (ii) Water Cess-Maharashtra Land Revenue Code, 1966-Section 70-Levy as land cess-Right to use water from flowing river-Appellant drawing water from river for industrial purpose for over 70 years-Whether the State legislature has power to levy rates of cess on use of flowing water?-(Yes)-Appellant is liable to pay water cess at rates prescribed by Government - Manner in which prescription of rates has been based, is sufficient guideline for determining the rates at which demand can be assessed to revenue cess-Demand must be construed to operate from date of Resolution passed by Government. (Constitution of India-Entry 45 of List-II of Seventh Schedule).

       Held 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 legislative Entry under Entry 45 of List II of the Seventh Schedule to the Constitution. Therefore, the demand made is within the legislative competence and the legislature is 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 would accordingly be exigible from levy of tax. 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. (Para 11)

       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. (Para 12)

       Further held that the machinery provision under sub-section (2) of Section 20 was adopted by the Tehsildar and after demand was made, the appellant approached the appellate authority and the revisional 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 computed the rate on that basis and make a fresh demand; in 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. (Para 13)