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Issues Involved:
1. Competence of the Mysore Legislature to enact the Mysore Health Cess Act, 1962. 2. Nature of the health cess as a tax or cess. 3. Validity of the health cess on shop rent under the Mysore Health Cess Act, 1962. 4. Refund of health cess collected under the Mysore Health Cess Act, 1962 and 1951. Issue-wise Detailed Analysis: 1. Competence of the Mysore Legislature to Enact the Mysore Health Cess Act, 1962: The appellants challenged the Mysore Health Cess Act, 1962, arguing that the Mysore Legislature lacked the competence to enact the Act. They contended that the health cess was in reality a tax, and the State Legislature had no competence to levy a health tax. Furthermore, they argued that the levy was essentially a tax on tax, which is not permissible under the Constitution. The court held that the Mysore Legislature was competent to enact the law under various entries of List II, enabling it to levy land revenue or duties of excise, or other taxes mentioned in Section 3(iii) of the impugned Act. The word 'on' in Section 3 did not indicate that the subject-matter of taxation was land revenue or State revenue, but that 9% of the land revenue or State revenue was to be levied and collected, with the subject-matter remaining the same as in the law imposing land revenue or any duty or tax. 2. Nature of the Health Cess as a Tax or Cess: The appellants argued that the health cess levied under the impugned Act was a tax and not a mere cess. They claimed that the shop rent was not a duty of excise and did not fall within Entry 51 of List II or Schedule A of the Act. The court noted that the levy of health cess was in the form of a surcharge on existing items of revenue, and the legislature adopted the form of calling it a cess and prescribed the rate of nine naye paise in the rupee on the State revenue or tax. The court concluded that the Mysore Legislature was competent to enact the law under the various entries of List II which enable it to levy land revenue or duties of excise, or other taxes mentioned in Section 3(iii) of the impugned Act. 3. Validity of the Health Cess on Shop Rent under the Mysore Health Cess Act, 1962: The appellants contended that the shop rent was not a duty of excise and did not fall within Entry 51 of List II or Schedule A of the Act. The court examined the relevant provisions of the Mysore Excise Act, 1901, and the impugned Act. It found that the word 'duty' in Section 17 of the Mysore Excise Act did not mean only excise duty, and the duty collected under Section 18(c)(2) was not expressly called an excise duty. The court concluded that the health cess sought to be levied under the impugned Act on shop rent did not fall within Item 1 of Schedule A of the impugned Act or Entry 51, List II of the Constitution. Therefore, the levy of health cess on shop rent was invalid. 4. Refund of Health Cess Collected under the Mysore Health Cess Act, 1962 and 1951: The appellants claimed a refund of the health cess collected from them under the Mysore Health Cess Act, 1962, and the Mysore Health Cess Act, 1951. The court noted that no arguments were addressed on the validity of the Mysore Health Cess Act, 1951, and the entire records of all the tenders-cum-auctions were not before the court. It was not clear whether the surcharge of nine naye paise in the rupee on the shop rent, though called a health cess, could be justified independently of the Health Cess Act, 1962. The court left the question of refund open, allowing the appellants to file suits to recover the amounts alleged to have been paid under the Health Cess Act, 1951. Conclusion: The appeals were allowed, and it was declared that the State of Mysore had no authority to levy and collect health cess under the Mysore Health Cess Act, 1962, on shop rent. An order or direction in the nature of a writ of mandamus was issued, restraining the respondents from enforcing the demand for payment of health cess under the impugned Act and directing the respondents to refund the health cess illegally collected under the Health Cess Act, 1962. There was no order as to costs. The question of refund of health cess collected under the Mysore Health Cess Act, 1951, was left open, and the appellants were allowed to file suits if so advised.
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