IMPORTANT POINT
The State had no authority to impose cess in terms of the impugned Act of 2010, and the court required the State to refund 20 percent of the amount realized from the individual petitioners and invest 30 percent of the total amount of cess realized under the bogus legislation for the purpose of procuring equipment for the cancer wing of the Government General Hospital in Shillong.

JUDGMENT

1. The challenge in these two writ petitions is to the validity of a State enactment that already stands repealed upon the goods and service tax regime having taken over.

2. According to the petitioners, the cess imposed by the State of Meghalaya by the Meghalaya Cement Cess Act, 2010 (Act No.5 of 2011) was completely illegal, without any authority and grossly prejudicial to the petitioners and others connected with the cement industry. The petitioners submit that when a tax is imposed by a State or the Union in accordance with law, a further levy may be added thereto by way of a cess, where the quantum realised by way of the cess is earmarked for a special public beneficial purpose. The petitioners refer to the education cess which is imposed on income-tax and cess charged in various other fields by way of an additional levy but which is earmarked for a special purpose and may not be subsumed as a part of the general revenue of the Union or the State.

3. Section 3 of the impugned Act of 2010 is the charging section:

"3. On and from the coming into force of this Act, there shall be levied and collected a cess on produced Cement from any person or factory who produce cement within the State."

4. Section 4 of the Act indicates the rate of cess. Section 6 of the Act, on which much emphasis has been placed by the State, provides for the manner of collection and payment of cess. Section 6 of the Act is set out:

"6. (1) The cess under this Act shall be leviable and payable in the manner as may be prescribed.

(2) Unless the cess due under this Act has been paid no person shall remove or transport or attempt to remove or transport any produced cement from any factory, stackyard, warehouse and godown for sale or transfer."

5. According to the petitioners, for any State to impose a tax or collect a cess thereon, the relevant field has to be discovered in List-II of the Seventh Schedule to the Constitution. The petitioners submit that since the charging section makes it incumbent on the person manufacturing or producing cement within the State to be liable to pay cess, it amounts to a kind of additional excise duty which is sought to be imposed though in the guise of cess.

6. In such connection, the petitioners place Entry 84 from the Union List as it stood prior to the 101st Amendment to the Constitution which was effected in 2016. Entry 84 of the Union List, at the time that the impugned Act was enacted, read thus:

"84. Duties of excise on the following goods manufactured or produced in India, namely:-

a) Petrol crude;

b)High speed diesel;

c) Motor spirit ( commonly known as petrol);d) Natural gas;

e) Aviation turbine fuel; and

f) Tobacco and tobacco products."

7. It is evident that since cement was not included as one of the excepted products in Entry 84 of List I, no impost could have been levied by any State on the manufacture of cement notwithstanding such process of manufacture being within the geographical limits of the State. And, for the same reason that the State had no authority to impose any tax or the like on the manufacture of cement in the State, it did not possess any authority to levy cess on such manufacture. There appears to be little room for the State to try and justify its authority in enacting the said Act of 2010 or the levy imposed thereby. Though the State has relied on Entry 54 of the State List, it does not appear that such entry authorises the State to impose a kind of excise duty with a different name. Entry 54 of the State List, as it stood prior to the 101st Amendment to the Constitution, permitted tax on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of the Union List. It is not necessary to even refer to Entry 92A of the Union List to ascertain the exact authority available to a State under Entry 54 of the State List as it stood at the time that the impugned Act was brought into force. At the relevant point of time, the field covered by the entry authorised the levy