P. N. BHAGWATI, N. K. VAKIL, J.

( 1 ) THESE two petitions raise a short question of law relating to the interpretation of sec. 7 of the Gujarat Education Cess Act 1962 The facts giving rise to these two petitions are similar and it will therefore be sufficient if we state the facts of the first petition nemely Special Civil Application No. 850 of 1964 and indicate only the points of difference so far as the second petition namely Special Civil Application No. 1467 of 1968 is concerned. The petitioner in Special Civil Application No. 850 of 1964 is a limited liability company engaged in the manufacture of salt at Jamnagar. By an Indenture of Lease dated 29th April 1960 executed by and between the Governor of Bombay and the petitioner the Government of Bombay leased to the petitioner for a period of twenty five years commencing from 2nd June 1956 a piece of land admeasuring 1454 acres 22 gunthas situate in Bedi Port Taluka Jamnagar District Jamnagar. The Indenture of Lease provided : -. . . IN consideration of the rents and royalties covenants and agreements by and in these presents reserved and contained and on the part of the lessee to be paid observed and performed the lessor doth hereby demise unto the lessee the land measuring 1454 acres 22 gunthas situated at Bedi Bunder of Taluka Jamnagar as described and delineated in the plan hereto annexed and therein surrounded by red boundary line (hereinafter called the said lands to hold for a period of 25 (twenty five) years commencing from 2nd June 1956 and ending on 1st June 1981 for the purposes and subject to the terms and conditions set forth. IN the Indenture of Lease. The land was taken by the petitioner on lease for manufacture storage and sale of salt and its bye-products and for work connected therewith. The Indenture of Lease did not contain any clause providing for payment of assessment to the Government and the only provision was that set out in clause 6 which provided that the petitioner shall pay to the Government of Bombay from 2nd June 1956 during the subsistence of the lease annual rent at the rare of Rs. 2/per acre or part of an acre of the land leased as also royalty at the rate of Re. 1/per ton of the salt manufactured by the petitioner. Clause 20 of the Indenture of Lease declared that subject to the foregoing conditions the petitioner shall continue to enjoy the land undisturbed for the term of twenty five years. Pursuant to the Indenture of Lease the petitioner entered into possession of the land and started manufacturing storing and selling salt on the land and there is no dispute that he regularly paid the annual rent at the rate of Re. 2/per acre and royalty at the rate of Re. 1/per ton as provided in clause 6 of the Indenture of Lease.

( 2 ) ON 9th October 1962 the Legislature of the State of Gujarat enacted an Act called the Gujarat Education Cess Act 1962 (hereinafter referred to as the Education Cess Act) to provide for the creation of a fund for the promotion of education in the State of Gujarat and for the levy of education cess for the purpose. Sec. 3 of this Act provided:-

( 3 ) FOR the purpose of providing for the cost of promoting education in the State of Gujarat there shall be levied and collected in accordance with the provisions of this Act an education cess which shall consist of (A) a surcharge on all lands except lands which are within a village site and not assessed to land revenue; (b) a tax on lands and buildings in urban areas. THE land leased to the petitioner was not situate in an urban area and clause (b) of sec. 3 was therefore clearly not applicable and education cess if at all could be levied on the leased land only under clause (a) of sec. 3. The education cess under clause (a) of sec. 3 consisted of a surcharge on all lands except lands within a village site which are customarily exempt from land revenue and this surcharge was to be levied and collected in accordance with the provisions of the Education Cess Act. Secs. 5 and 6

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