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PUNJAB & HARYANA HIGH COURT
S.P.Goyal and J.V.Gupta JJ.
Municipal Corporation Of Jullundur City
Versus
Union Of India
Civil Writ Petition No. 5152 of 1978,
Decided On : FEBRUARY 25, 1981
WATER (PREVENTION AND CONTROL OF POLLUTION) CESS ACT, 1977 - CONSTITUTIONALITY - PARLIAMENTARY COMPETENCE - RESIDUARY POWERS - ARTICLE 248 - ENTRY 97 OF LIST I - LEVY OF CESS ON WATER CONSUMPTION - VALIDITY - ARTICLE 14 - ARBITRARINESS - SECTION 16 OF THE ACT - GUIDELINES FOR ADDING INDUSTRY TO SCHEDULE I - PARLIAMENTARY APPROVAL - NO VIOLATION.
Fact of the Case:
The petitioners, a Municipal Corporation and a specified industry, challenged the vires of the Water (Prevention and Control of Pollution) Cess Act, 1977 (Act of 1977), on the grounds that the Parliament lacked the competence to enact a law imposing cess on water consumption, that it encroached upon the sovereignty of the State Legislature, and that the power to specify the industry under the Act was arbitrary and violative of Article 14 of the Constitution.
Finding of the Court:
The court held that the Parliament validly enacted the Act of 1977 under its residuary powers under Article 248 read with Entry 97 of List-I of the Seventh Schedule of the Constitution. The court reasoned that the imposition of tax on water consumption was not mentioned in the State List, and therefore, the Parliament had the exclusive power to make any law with respect to it. The court also held that the levying of cess on a matter included in the State List by the Parliament did not violate any provision of the Constitution, as the Parliament had the exclusive power to make any law with respect to any matter not enumerated in the State List or the Concurrent List. The court further held that the power to specify the industry under Section 2 (c) of the Act of 1977 was not arbitrary or violative of Article 14 of the Constitution, as Section 16 of the Act provided ample guidelines for adding any industry to Schedule I to the Act of 1977, and every notification issued by the Central Government under Section 16 had to be approved by the Parliament.
Issues: 1. Whether the Parliament was competent to enact the Water (Prevention and Control of Pollution) Cess Act, 1977 (Act of 1977), which imposed a cess on water consumption by local authorities and specified industries? 2. Whether the levying of cess on a matter included in the State List by the Parliament violated any provision of the Constitution? 3. Whether the power to specify the industry under Section 2 (c) of the Act of 1977 was arbitrary and violative of Article 14 of the Constitution?
Ratio Decidendi: 1. The Parliament had the exclusive power to make any law with respect to any matter not enumerated in the State List or the Concurrent List, including the power to impose any tax not mentioned in either of those lists (Article 248 of the Constitution). 2. The imposition of tax on water consumption was not mentioned in the State List, and therefore, the Parliament had the exclusive power to make any law with respect to it. 3. The levying of cess on a matter included in the State List by the Parliament did not violate any provision of the Constitution, as the Parliament had the exclusive power to make any law with respect to any matter not enumerated in the State List or the Concurrent List. 4. The power to specify the industry under Section 2 (c) of the Act of 1977 was not arbitrary or violative of Article 14 of the Constitution, as Section 16 of the Act provided ample guidelines for adding any industry to Schedule I to the Act of 1977, and every notification issued by the Central Government under Section 16 had to be approved by the Parliament.
Final Decision: The court dismissed both writ petitions challenging the vires of the Water (Prevention and Control of Pollution) Cess Act, 1977, with costs.
J.V.GUPTA, J.
1. This order will dispose of Civil Writ Petition No. 5152 of 1978 and Civil Writ Petition No. 3358 of 1979, as common questions of law are involved in both of them.
2. Civil Writ Petition No. 5152 of 1978, has been filed by the Municipal Corporation, Jullundur, which is a body corporate under the Punjab Municipal Corporation Act, 1976. Section 44 of the said Act provides certain obligatory functions of the Corporation including the provision for supply of water for public and private purposes. Thus, the Corporation has its own water supply system.
3. In the year 1974 the Parliament, in the exercise of its powers under Article 252 of the Constitution of India, on resolution having been passed by the Legislatures of more than two States, enacted Act No. 6 of 1974, called the Water (Prevention and Control of Pollution) Act, 1974 (hereinafter called the Act of 1974). the preamble of which reads as, follows:
"An Act to provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water, for the establishment with a view to carrying out the purposes aforesaid, of Boards for the prevention and control of water pollution, for conferring on the assigning to such Boards powers and functions relating thereto and for matters connected therewith."
Since the Legislature of the State of Punjab had not passed any resolution under Article 252 of the Constitution, therefore, the Act of 1974, at the time of its enactment, did not apply to the State of Punjab. However, the Punjab Legislature, subsequently, adopted the same by a resolution, which was passed on February 3, 1975. In pursuance of the provisions of the Act, of 1974, the Central Government constituted a Central Board under Section 3 of the Act of 1974, for the performance of the functions enumerated in Section 16 of the Act of 1974, while the State Board was constituted by the State Government under Section 4 of the Act of 1974, for performing the functions enumerated in Section 1 of the Act of 1974.
4. In the year 1977, the Parliament, with a view to augment the financial resources of the Central Board and the State Boards, constituted under the Act of 1974, and to provide for levy and collection of cess on water consumed by the local authorities and the specified industries, enacted the Water (Prevention and Control of Pollution) Cess Act. 1977 (Act No. 36 of 77), (hereinafter called the Act at 1977), the Preamble of which reads:-
"An Act to provide for the levy and collection of a cess on water consumed by persons carrying on certain industries and by local authorities with a view to augment the resources of the Central Board and the State Boards for the prevention and control of water pollution constituted under the Water (Prevention and Control of Pollution) Act, 1974."
The Act of 1977 was applicable to all the States to which the Act of 1974 was applicable. The Act of 1977 came into force with effect from the Ist day of April, 1978, as notified by the Central Government in the official Gazette under sub-section (4) of Section 1 of the Act of 1977. Section 3 of the Act of 1977, provides for the levy and collection of cess from every local authority and every person carrying on any specified industry, on the basis of the water consumed by them at such rates as may be specified by the Central Government in the official Gazette. Section 3 of the Act of 1977, reads as follows:-
"3. Levy and collection of cess- (1) There shall be levied and collected a cess for the purposes of the Water (Prevention and control of Pollution) Act, 1974 (6 of 1974) and utilisation thereunder.
(2) The cess under sub-section (1) shall be payable by:-
(a) every person carrying on any specified industry; and
(b) every local authority and shall be calculated on the basis of the water consumed by such person or local authority as the case may be for any of the purposes specified in column (1) of Schedule II, at such rate, not exceeding the
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