Judgment

SHAH, J.: - Under the Mysore Excise Act, 1901, the Government of, the State was authorised to grant exclusive privilege of selling by retail Indian made liquor on such conditions and for such period as the Government deemed fit, and to levy duty on manufacture and sale of alcoholic liquor. In exercise of that power the Government of Mysore framed rules regulating sale of "excise privileges". In the Note to Rule 23 in respect of toddy, "tree-tax", "treatment" and "shop-rent" were chargeable at the rate of 9 pies per rupee.

2. Under the Act the exclusive privilege of retail vending of toddy in different areas was sold by auction. Every licencee had to secure toddy by tapping toddy-yielding trees either in Government groves assigned to his shops or trees of private ownership. The licencee was required to pay to the State "tree-tax" at the prescribed rates for the number of trees tapped by him. When he tapped trees belonging to the Government he had to pay, in addition, "tree-rent" to the State. Consideration paid by the licencee to the State for the exclusive privilege of retail vending of toddy, or Arrack or beer was popularly known as "shop-rent". In the notifications inviting bids or tenders for the exclusive privilege of retail vending of toddy, arrack and beer it was stipulated that education cess shall be paid in accordance with Condition 23 of the General Conditions applicable to all excise licences.

3. Originally the Government used to charge shop-rent", "tree-tax" and "tree-rent" separately. But in 1907 a notification was issued abolishing separate levies of tree-tax" and "tree-rent". The Mysore Revenue Manual (1938 Edn.) Vol. I, at page 334 read as follows :-

"Formerly, the local cess was being levied on the following items :

(i) x x x

(ii) Toddy - both date and bagani.

(iii) x x x

But in the marginal note dated G. O. (F. I. 9243-54 S. R. 145-06-1 dated 16th June, 1907), the following directions have been given: -

(a) The separate levy of local cess on tree-tax is abolished and the cess at present levied merged in the main item, the rates of tree tax on the various kinds of trees being as follows: -

x x x

(b) Levy of a local cess on toddy shop rental is also abolished;

(c) The cess on tree-rent is merged in the main item itself

N. B.: - 1/17th of the tree-tax, the shop rental and tree-rent collected should be credited to Local Funds, lieu of the one-anna cess former levied on these items

(Vice also Article 41 - Mysore Accounts Code Vol. I)."

After the merger of a part of the Bellary District pursuant to the setting up of the State of Andhra in 1953 the Mysore Excise Act, 1901 was extended to the Bellary Area so merged in 1955.

4. The Mysore Excise Act!, 1901, was repealed and replaced by the Mysore Excise Act, 1965. But no substantial alteration was made in the scheme of levy of excise revenue under the new Act.

5. Under the Mysore Elementary Education Act, 1941 an education cess was levied as a percentage inter alia of excise revenue. The Mysore Elementary Education Act, 1941, was not extended to the Bellary Area and the excise contractors in that area were not liable to pay education cess. The Mysore Elementary Education Act, 1941, was replaced by the Mysore Compulsory Education Act, 1961. By Section 25 of that Act Chapters VI and VII of the 1941 Act were repealed and the rest of the 1941 Act continued to remain in force in the old Mysore Area. Accordingly S. 9 of the 1941 Act which occurred in Chapter III under which education cess was levied remained in operation. Section 9 (1) of the Mysore Elementary Education Act, 1941, as amended by the Elementary Education (Amendment) Act, 1944 read as follows: -

"The Government may for carrying out the purpose of this Act, levy throughout or in any part of Mysore, an education cess on any or all of such items of State revenue or of tax levied under any Act, or rule constituting Local Bodies in Mysore and at such rates as are specified in the Schedule to this Act."

After the Mysore