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TMI Blog1995 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount in question was not paid to the credit of the Government account during the year. On appeal before the CIT(A), it was reiterated for the assessee that the cess in question was neither a tax nor a duty and hence disallowance was uncalled for. Rejecting this contention, the CIT(A), observing that merely by way of nomenclature, the assessee was not justified in claiming the said amount to be neither a tax nor a duty, though in reality it was so, confirmed the view taken by the Assessing Officer. Aggrieved by the order the CIT(A) on this issue, assessee preferred this further appeal on this point before us. 3. Reiterating the contentions urged before the lower authorities, the learned counsel for the assessee submitted that the cess on oils is neither a duty nor a tax, and as such the disallowance made by the Assessing Officer under section 43B is quite unjustified. He also filed before us a copy each of the Vegetable Oils Cess Act, 1983 and the National Oilseeds and Vegetable Oils Development Board Act, 1983, and placing strong reliance on the decisions of the Supreme Court in Om Parkash Agarwal v. Giri Raj Kishori [1987] 164 ITR 376; and of the A.P. High Court decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy and collection of the said duty of excise on vegetable oils under that Act. (a) For such notification see Gaz. of Ind. 8-12-1983, Pt. III, section 3(i), Ext.P. 1 (No. 466). 4. Crediting proceeds of duty to the Consolidated Fund of India-- The proceeds of the duty of excise levied under sub-section (1) of section 3 shall first be credited to the Consolidated Fund of India and the Central Government may, if Parliament by appropriation made by law in this behalf, so provides pay to the Board, from time to time, from out of such proceeds (after deducting the cost of collection) such sums of money as it may think fit for being utilised for the purposes of the National Oilseeds and Vegetable Oils Development Board Act, 1983." From the above provisions of the Vegetable Oils Cess Act, it is clear that the levy under the said Act, though made 'by way of cess' for the purposes of the National Oilseeds and Vegetable Oils Development Board Act, 1983, it is in the nature of 'a duty of excise on vegetable oils produced in any mill in India'. The said duty was specified to be in addition to the duty of excise leviable on vegetable oils under the Central Excise and Salt Act, 1944, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d will also have power to borrow money, with the approval of the Central Government from the public by the issue or sale of Bonds and debentures and from any bank or any other authorities, organisation or institution." Section 9 of the National Oilseeds and Vegetable Oils Development Board Act, provides for the functions of the Board. 7. In the case of Om Parkash Agarwal, the Hon'ble Supreme Court was concerned with the question whether ad valorem cess levied on dealers of agricultural produce under section 3 of the Haryana Rural Development Fund Act, 1983 was a fee or a tax. Drawing a distinction between a tax and a fee, the Supreme Court noted that such a distinction is recognised by the Constitution, which while empowering Parliament and the State Legislature to levy taxes under the relevant entries in List I and List II respectively, also refers to the power of the appropriate Legislature to levy fees in respect of matters specified in the said Lists and also in the Concurrent List and tests have been laid down by Supreme Court for determining the character of a levy. It noted that in determining a levy as a fee, the true test must be whether its primary and essential purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and not in the municipality or a marketing committee or any other local authority having limited functions specified in the enactment under which it is constituted. The State Government is entitled under sub-section (5) of section 4 of the Act to spend the cess credited to the Fund in the rural areas, in connection with the development of roads, hospitals, means of communication, water supply, sanitation facilities and for the welfare of agricultural labour or for any other scheme approved by the State Government for the development of the rural areas. This sub-section authorises the State Government to spend the money credited to the Fund virtually on any object which the State Government considers to be the development of rural areas. The definition of the expression 'rural area' in section 2(h) of the Act, which is extracted above is as vague as it can be. It means an area the population of which does not exceed 20,000 persons. It need not necessarily be a local area as it is ordinarily understood. Ordinarily, a local area means a municipal corporation, a town municipality, a panchayat, a notified area, a sanitary board, etc...." Ultimately, observing that it is constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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