2001 (7) TMI 1185 - SC - Companies Law

Whether, there can be a valid levy under the provisions of the Water (Prevention and Control of Pollution) Cess Act, 1977 on the hydro power generating industry? Held that - Appeal dismissed. It is not necessary for us to consider what is the effect of not moving the resolution within the time frame of 15 days as prescribed by sub-section (2) as the present case is not where there has been a delay in moving the resolution. There has been in fact a non-compliance with the said requirement. With resolution not having been moved at all, it cannot be held that there was a valid amendment of Schedule I. The High Court, in our opinion, was, therefore, right in coming to the conclusion that this levy and the purported realisation of the cess was not in accordance with law.

Summary

Issues:
Validity of levy under the Water (Prevention and Control of Pollution) Cess Act, 1977 on the hydro power generating industry.

Detailed Analysis:

Issue 1: Validity of Cess on Hydro Power Generating Industry
The main issue in this case was whether a valid levy could be imposed under the Water (Prevention and Control of Pollution) Cess Act, 1977 on the hydro power generating industry. The Act aimed to collect cess from industries causing pollution, with funds used for remedial measures. Initially, hydel power generating industry was not included in Schedule I of the Act. However, a notification was issued to amend Schedule I, allowing for the imposition of cess on this industry. The respondents challenged this imposition, arguing that there was no valid amendment of Schedule I, thus rendering the levy invalid.

Issue 2: Compliance with Section 16 of the Act
Section 16 of the Act outlines the procedure for amending Schedule I to include new industries for cess imposition. The Central Government has the power to add industries to Schedule I, subject to approval by Parliament. In this case, the High Court found that there was non-compliance with the provisions of section 16, as no resolution relating to the notification dated 16-4-1993 had been moved in Parliament. Despite the notification being laid before Parliament, the necessary approval through a resolution was not sought, leading to a failure in the amendment process.

Issue 3: Lack of Parliamentary Approval
During the proceedings, an affidavit confirmed that no resolution related to the notification had been moved in Parliament, indicating a lack of parliamentary approval for the amendment. The Supreme Court emphasized that without the necessary resolution approving the notification within the specified timeframe, the amendment of Schedule I cannot be considered valid. The court concluded that the levy and collection of cess from the hydro power generating industry were not in accordance with the law due to the absence of parliamentary approval.

Conclusion:
The Supreme Court dismissed the appeals, upholding the decision that the levy on the hydro power generating industry was not valid due to non-compliance with the procedural requirements of Section 16 of the Water (Prevention and Control of Pollution) Cess Act, 1977. The lack of parliamentary approval for the amendment of Schedule I rendered the imposition of cess on the industry unlawful.