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TMI Blog2023 (9) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocates Ms A.A. Agni, Senior Advocate, with Ms Surabhi Kuvelkar, Ms Rajlaxmi Bhatkar, Ms C. Dias, and Ms Afrin Khanm Harihar, Advocates For the Respondents : Mr D. J. Pangam, Advocate General with Mr Shubham Priolkar, Addl. Govt. Advocate. JUDGMENT : (PER M.S. SONAK, J.) 1. Heard the learned Counsel for the parties. 2. The learned Counsel for the parties agree that a common judgment and order can dispose of all these Petitions. However, the learned Counsel for the parties requested that Writ Petition No. 475/2014 be treated as the lead matter. THE CHALLENGE AND THE RIVAL CONTENTIONS 3. In all these Petitions, the main challenge is to the constitutional validity of The Goa Cess on Products and Substances Causing Pollution (Green Cess) Act, 2013 (Green Cess Act or the impugned Act). 4. Mr Khambatta, the Learned Senior Advocate for the Petitioners in WP No. 475/2014, submitted that the impugned Act relates to the field of "environment". In support of this contention, the learned Counsel referred to the Preamble and the provisions contained in Sections 4, 5 and 6 of the impugned Act. The learned Counsel also referred to the Statement of Objects and Reasons of the Impugned Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat even if it is assumed that the impugned Act relates to field of "public health" and "air" or "air pollution", then the impugned Act would relate, inter alia, to Entry 6, of List II and Entry 97 of List I because there is no entry comparable to Entry 17 (concerning water) with respect to "air" or "air pollution". He submitted that it is only the Parliament which has legislative competence to enact hybrid legislation of subjects covered under the State List and the Union List in the Seventh Schedule to the Constitution. Reliance was placed on Sat Pal & Co. V/s. Lt. Governor of Delhi (1979) 4 SCC 232 and State of M.P. V/s. Mahalaxmi Fabric Mills 1995 Supp (1) SCC 642 in this regard. 10. Mr Khambatta submitted that a clear indication of the field of "air pollution" being in the Union List was the imposition of the Clean Energy Cess vide Finance Act, 2010. He relied upon the Finance Minister's Budget Speech dated 26/02/2010 to point out that the purpose of the Clean Energy Cess was to ameliorate the negative environmental consequences and increased pollution levels associated with industrialisation and urbanisation. He pointed out that the Budget Speech makes a specific reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the international conventions /treaties are akin to the directive principles of State Policy, while the legislations like Air Act, the EPA and the NGT Act are means for implementing such principles. Accordingly, the learned Counsel submitted that the expression "implementation" would mean adopting legislative steps towards the goals and objectives of international conventions/treaties. Based upon this argument, he contended that even assuming without accepting that Entry 6 of List II would cover the impugned Act, the same would stand overridden by Article 253 since the Parliament has already legislated on the fields of the Stockholm Convention and Rio Deceleration viz. The Air Act, EPA and the NGT Act. 15. Mr Khambatta further pointed out that unlike Article 254, which was restricted to the concurrent list, Article 253 was unqualified. The non-obstante clause in Article 253 denudes the State to legislate on a subject or a field where the State has already enacted a law pursuant to the international convention or a treaty. Based on this argument, he contended that the impugned Act was ultra vires the legislative powers of the State because the Parliament to implement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Jalkal Vibhag Nagar Nigam (supra), amongst others, in support of his contentions. 19. Mr Lotlikar, the learned senior Advocate for the Petitioners in WP No. 939/2019, adopted the submissions of Mr Khambatta. He submitted that the Petitioners contributed nothing to the increase in the carbon footprint. He submitted that the impugned Act was beyond the legislative competence of the State. In any case, the levy was a tax without the authority of the law. 20. Mr S.S. Kantak, learned Senior Advocate for the Petitioners in Writ Petition No. 393/2016, adopted Mr Khambatta's submissions. In addition, he relied upon the observations from the minority judgment of Hon'ble Shri Justice S.B. Sinha in State of West Bengal V/s. Kesoram Industries 2004 (10) SCC 201 that the State's powers were denuded once the Parliament enacts legislation on subject matter under Entry 13, List I of Seventh Schedule. Mr Kantak contended that though the observations were in the minority judgement, they were binding on this Court given the decision of the Division Bench in Mahinder Bahawanji Takar V/s. S.P. Pande AIR 1964 Bom 170. 21. Mr Kantak also pointed out that the demand notice dated 22/3/2016 issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Ors. V/s. Shrey Mercantile (P) Ltd. and Ors. (2005) 4 SCC 245 and B.S.E Brokers' Forum, Bombay and Ors. V/s. Securities and Exchange Board of Indian and Ors. (2001) 3 SCC 482 mainly, in the context of the distinction between "tax" and "fee". 26. Mr Gosavi, learned Counsel for the Petitioners in WP No. 436/2016, also adopted Mr Khambatta's submissions. In addition, he submitted that the impugned Act was relatable to Entry 97 List I because it directly and substantially concerns the field of "environment" and "environmental pollution". He referred to the constituent assembly debates to explain the significance of the residuary entry in the Union list. He submitted that the impugned Act imposes a tax without there being any corresponding entry in the State List or any other provision in the Constitution of India. He submitted that the levy imposed by the impugned Act was a tax imposed without any authority of law and consequently hit by Article 265 of the Constitution. 27. The learned Counsel for the Petitioners, based on the above contentions, submitted that these Petitions may be allowed, and the impugned Act struck down as ultra vires, unconstitutional, null and void. 28. Mr D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Constitution makers intended to leave the field of environment and environmental pollution of the State. He, therefore, submitted that it would not be correct to rely on the residuary clause in Entry 97 of List I, Seventh Schedule of the Constitution of India. 33. Learned AG submitted that the impugned Act neither seeks to implement any international treaties or conventions nor does it in any manner conflict with or interfere with the legislations like the Environment (Protection) Act, Air (Prevention and Control of Pollution) Act, 1981 and National Green Tribunal Ac, 2010 for the implementation of international treaties and conventions. He submitted that particularly where no conflict whatsoever was pointed out, the State cannot be denuded from legislating upon fields included in the State list simply because the Centre may have entered into treaties or conventions relating to such fields. Learned AG submitted that the petitioners' contention if accepted, would constitute an affront to the federal structure or the Constitution which is accepted as the basic structure of the Constitution. 34. Learned AG, without prejudice to the above contentions, submitted that the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion. 37. Learned AG submitted that the impugned cess was a fee but urged that even if it were to be a tax, the same was within the legislative competence of the State. He submitted that the fee levied by the impugned Act was relatable to Entry 66, r/w Entries 6, 14, 17, 18, 21 and 25 of List II, Seventh Schedule. 38. Learned AG submitted that the State had the legislative competence to levy a fee as a payment towards services rendered, benefits provided or a privilege conferred. He submitted that the impugned fee was inter alia to augment the State revenue for incurring expenditure and taking measures to reduce the carbon footprint caused by the petitioners. He submitted that the State was entitled to levy fees for services rendered by it, and the petitioners could not insist upon quid pro quo. He submitted that the services rendered by the fee collected need not be confined to the persons or entities from whom the fee is collected. Even the availability of any indirect benefit and a general nexus between the persons paying the fee and services rendered out of the collected fee is sufficient, as held in Kesoram Industries Ltd. (supra). 39. In the context of the distinction bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 43. The learned Advocate General submitted that the Act identifies the persons from whom such Cess has to be collected but that it is not to say that is the tax on any person, that the measure, manner, and the point at which the tax has to be collected is not indicative of the true nature of the levy, and that these are different and distinct from the taxing event, that in this case the taxing event is the use of the land by causing pollution on it and not on the commodity or any person. 44. The learned Advocate General submitted that in Anant Mills Co. Ltd V/s. State of Gujarat (1975) 2 SCC 175 the Hon'ble Supreme Court held that the use of underground pipelines is a use of land and therefore taxable under Entry 49 of List II. He submitted that in Ajoy Kumar Mukherjee V/s. Local Board of Barpeta AIR 1965 SC 1561, it was held that the use to which the land is put can be taken into account for imposing a tax on it within the meaning of Entry 49 of List II. He submitted that the impugned Act has to be read as a whole in its true scope and import, which is, that the levy is a tax on the use of land and not on any commodity or person. 45. The learned Advocate General submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d substance, falls within the residuary Entry in List I, and, therefore, the same is ultra vires the legislative competence of the State. 50. The petitioners also contend that the levy under the impugned Act is not a "fee" as contemplated by Entry 66 of List II but instead, the levy is a "tax" beyond the legislative competence of the State. In Writ Petition No. 206/2021, the petitioner has raised an additional issue of the demand notice being issued by an Officer/Authority not competent to issue the same. 51. To determine the above issues, at the outset, a detailed reference is necessary to the preamble and the provisions of the impugned Act. ANALYSIS OF THE IMPUGNED ACT 52. The preamble to the said Act states that the said Act was enacted to provide for levy and collection of cess on the products and substances, including hazardous substances, which upon their handling or consumption or utilization or combustion or movement or transportation causes pollution of the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources of the State of Goa, under the concept of "polluter pays principle", and also to provide for measures to reduce the carbon footprint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The cess shall be assessed, levied and collected in such manner, as may be prescribed. (3) The cess levied under this Act shall be in addition to any other cess, taxes, charges, duties, permission fees, license fees or any other fees payable under any other law for the time being in force." 56. Section 5 of the impugned Act deals with crediting proceeds and utilization of cess. It provides that proceeds of the cess collected under section 4 shall be credited to the Consolidated Fund of the State of Goa and shall be utilized for undertaking the measures to reduce the carbon footprint, by means of such programmes or schemes as may be decided by the Government. 57. Section 6 of the impugned Act is concerned with the constitution of the Environmental and Energy Audit Bureau. It provides that in order to identify sensitive areas of energy and environmental conservation and recommend appropriate measures and solutions for reducing carbon footprint, and suggest measures for deriving benefits under carbon credit trading and related matters in the State of Goa, the Government shall establish an Environmental and Energy Audit Bureau by notification in the Official Gazette. The comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State and the Union Legislatures in List III, fall within List I, including Entry 97 of that List read with Article 248 of the Constitution. The Court held that it would be unthinkable that the Constitution makers while creating the sovereign democratic republic held certain matters or taxes as beyond the legislative competence of the Legislations in this country either legislating singly or jointly. This was never the intention of the constituent assembly. 61. The Court explained that whatever doubt there may be on the interpretation of Entry 97, List I, the same is removed by the wide terms of Article 248 of the Constitution. The Court pointed out that this Article is framed in the widest possible terms. Therefore, on its terms, the only question to be asked is: "is the matter sought to be legislated or included in List II or in List III or is the tax sought to be levied mentioned in List II or in List III. No question has to be asked about List I. If the answer is in the negative, then it follows that the parliament has powers to make up laws or tax". Thus, it was held that residuary power is as much power as the power conferred in Article 246 of the Constitution in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er would not derogate from the validity of the tax. There is a distinction between the object of tax, the incidence of tax and the machinery for the collection of tax. Legislative competence is to be determined with reference to the object of the levy and not with reference to its incidence or machinery. (See Gujarat Ambuja Cements Ltd. V/s. Union of India (2005) 4 SCC 214, Ujagar Prints (11) v. Union of India (1989) 3 SCC 488 Harakchand Ratanchand Banthia v. Union of India (1969) 2 SCC 166; G.K. Krishnan v. State of T.N., (1975) 1 SCC 375) 64. Further, in the context of deciding the question of legislative competence or interpreting the legislative entries, the Courts must bear in mind that the entries in the legislative lists are not sources of the legislative power but are merely topics or fields of legislation and, therefore they must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense. The expression "with respect to" in Article 246 brings in the doctrine of "Pith and Substance" in the understanding of the exertion of the legislative power, and wherever a question of legislative competence is raised, the test is whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lists, it is necessary to examine the impugned legislation in its pith and substance, and only if that pith and substance falls substantially within an Entry or Entries conferring legislative power, is the legislation valid, a slight transgression upon a rival List, notwithstanding. 67. In Subramanyam Chettiar V/s. Muthuswamy Goundan (1940) FCR 188, 201, the above principle was expressed in the following words: "It must inevitably happen from time to time that legislation, though purporting to deal with a subject in one list, touches also on a subject in another list, and the different provisions of the enactment may be so closely intertwined that blind adherence to a strictly verbal interpretation would result in a large number of statutes being declared invalid because the legislature enacting them may appear to have legislated in a forbidden sphere. Hence the rule which has been evolved by the Judicial Committee whereby the impugned statute is examined to ascertain its 'pith and substance', or its 'true nature and character', for the purpose of determining whether it is legislation with respect to matters in this list or in that." 68. Bearing in mind the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple", and also to provide for measures to reduce the carbon footprint left due to such activities and for matters connected therewith or incidental thereto. 71. The levy under the impugned Act is on the handling or consumption or utilization or combustion or movement or transportation of products and/or substances, the handling etc. of each causes pollution within the State of Goa. The Act invokes the "polluter pays principle" as a justification for the levy though it is not often that legislation provides for justification for the levy in the text of the legislation itself. 72. Bearing in mind the principles that Entries in the legislative lists are not sources of the legislative power but are merely topics or fields of legislation and that they must receive a liberal construction inspired by a broad and generous spirit and not in a narrow pedantic sense and further bearing in mind the width of the expression "with respect to" employed in Article 246 of the Constitution, we find it different to accept the argument that the impugned Act is not a legislation "with respect to" the entries relating to public health, sanitation, water, land, gas as referred to in entries 6, 17, 18 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature had no legislative competence to tax a market. The Local Board relied on Entry 49 in List II. The Constitution Bench in Ajoy Kumar Mukherjee (supra) held that the tax was on the land though the charges arise only when the land is used for a market. The tax remained a tax on land in spite of the imposition being dependent upon the user of the land as a market. Thus, the tax was held to be a tax on land, though the incidence depended upon the use of the land as a market. 77. In Anant Mills Co. Ltd. (supra) and in Ajoy Kumar Mukherjee (supra), the Court explained that the word "land" included not only the piece of the earth but everything in and over it and has in its legal signification an indefinite extent upward and downward, giving rise to the maxim, Cujus eat solum ejus est usque ad coelom. Since the impugned Act, in this case, encapsulates within it, the lithosphere, atmosphere, biosphere, hydrosphere and other environmental resources, it cannot be said that the impugned Act is not a legislation with respect to the entries like land, water, gas or even public health and sanitation. A legislation need not relate to any one specific Entry in the State List. Even if the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and not rush to conclude that the field or subject finds a place in none of the specified entries in the seventh schedule and, therefore, must relate only to the residuary entry 97 in list 1, seventh schedule. 80. Apart from Entries 6, 14, 17, 18, 21 and 25, being relatable to the field of "environment" and "environmental pollution", there are some entries even in List III (current List), which have a very close nexus with the environment. For example, Entry 17-A and 17-B deal with the topics of "Forests" and "Protection of wild animals and birds". Earlier, these topics were in List II (State List). However, vide Constitution (Forty-second Amendment) Act, 1976 with effect from 03.01.1977, these topics were transferred into List III (current List). Therefore, the broad or omnibus proposition that the subject or topic or field of "environment" or "environmental pollution" is not covered by any of the entries in List II or List III of the Seventh Schedule to the Constitution, cannot be accepted. 81. In the above context, reference can be made to the Statement of Objects and Reasons (SOR) to the Water (Prevention and Control of Pollution) Act, 1974 (Water Act). There is no doubt, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in respect of the aforesaid subject matter, that is, the subject matter of controlling water pollution, was relatable to Entry 17 read with Entry 6 of List II in the Seventh Schedule to the Constitution and therefore, "Parliament has no power to make a law in the States (apart from the provisions of Articles 249 and 250 of the Constitution) unless the Legislatures of two or more States pass a resolution in pursuance of article 252 of the Constitution empowering Parliament to pass the necessary legislation on the subject". The SOR then records that the Legislatures of the States of Gujarat, Jammu and Kashmir, Kerala, Haryana and Mysore have passed such resolutions in the context of Article 252 of the Constitution. Accordingly, the SOR records that the proposed bill was intended to give effect to the resolutions passed by the Legislatures of the aforesaid States. 84. Article 252 of the Constitution deals with the power of Parliament to legislate for two or more States by consent and adoption of such legislation by any other State. This Article provides that if it appears to the Legislatures of two or more States to be desirable that any of the matters with respect to which Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etence to enact the impugned Act. The Constitution Benches have liberally construed the entry relating to 'land' as including not only the surface of the earth but everything under or over it and has in its legal significance an indefinite extent upward and downward. 87. As referred to earlier, in State of Rajasthan V/s. Shri G. Chawla and Dr. Pohumal (supra), the issue involved was about the legislative competence of the State to enact the Ajmer (Sound Amplifiers Control) Act, 1952. The Judicial Commissioner, in fact, struck down this Act as being beyond the legislative competence of the State Legislature by referring to Entry 31 of the Union List and Entry 6 of the State List. The Judicial Commissioner held that the Ajmer (Sound Amplifiers Control) Act, 1952 substantially fell within Entry 31 of the Union List dealing with Post and Telegraphs, Telephones, wireless, broadcasting and other like forms of communication. The Judicial Commissioner also held that the Act, in its pith and substance, was not relatable to Entry 6 of the State List dealing with public health, sanitation, hospitals and dispensaries. 88. The Hon'ble Supreme Court reversed the Judicial Commissioner and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the Court held that the control of the 'use' of such apparatus though legitimately owned and possessed, to the detriment of tranquillity, health and comfort of others is quite another. 91. The Hon'ble Supreme Court held that it cannot be said that public health does not demand control of the use of such apparatus by day or by night, or in the vicinity of hospitals or schools, or offices or habited localities. The power to legislate in relation to public health includes the power to regulate the use of amplifiers as producers of loud noises when the right of such users, by the disregard of the comfort of and obligation to others, emerges as a manifest nuisance to them. Nor is it any valid argument to say that the pith and substance of the Act fall within Entry 31 of the Union List, because other loud noises, the result of some other instruments, etc., are not equally controlled and prohibited. 92. The Hon'ble Supreme Court revealed that the pith and substance of the impugned Act is the control of the use of amplifiers in the interests of health and tranquility, and thus falls substantially (if not wholly) within the powers conferred to preserve, regulate and promote the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollution relate to the fields in the State List. Accordingly, the broad contention that the field of "environment" or "environmental pollution", for want of express reference to these terms in the entries in the State List or current List, necessarily falls in the residuary Entry 97 of List I, cannot be accepted. 97. We may refer to M/s. International Tourist Corporation & ors. v. State of Haryana and Ors (1981)2 SCC 318. which was cited with approval in Jindal Stainless Ltd. In this case, the Hon'ble Supreme Court held that before exclusive legislative competence can be claimed in the Parliament by resort to the residuary power, the legislative incompetence of the State Legislature must be clearly established. Entry 97 itself is specific that a matter can be brought under that entry only if it is not enumerated in List Il or List Ill. The Court held that in a Federal Constitution like ours where there is a division of legislative subjects, but the residuary power is vested in Parliament, such residuary power cannot be so expansively interpreted, as to whittle down the power of the State legislature. The Court held that that might affect and jeopardize the very federal princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry 6, 14, 17, 18, 21 and 25, particularly since these entries have to be construed liberally and broadly and not pedantically. 101. Therefore, the argument about the impugned Act being a hybrid legislation on the field in the State list and the Residuary entry 97 of the Union list cannot be accepted. Once any legislation is found to substantially relate to the entries in the State or Concurrent lists, even some incidental or marginal overlap is of no consequence. In any case, once a field or subject is found to be reasonably related to the entries in the State or Concurrent lists, the Courts must be slow to place such fields or subjects in the residuary entry 97 of the Union list. "Residuary" typically means what is left out. CLEAN ENERGY CESS ARGUMENT 102. The learned Counsel for the petitioners also referred to the Clean Energy Cess imposed through the Finance Act 2010 to contend that this legislation gives a clear indication of the fact that the subject of "air pollution" is within the legislative domain of the centre and not the State. They contended that clean energy cess was similar if not identical to the impugned cess. They contended that since the Parliament had to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of the entry. 106. The learned Counsel for the petitioners referred to the budget speech of the Finance Minister dated 26.02.2010, particularly, para 65, 66 thereon which referred to the purpose of the clean energy cess being to ameliorate the negative environmental consequences and increased pollution levels associated with industrialization and urbanization. The learned Counsel for the petitioners also pointed out that the clean energy cess was not confined to domestic goods but also covered imported goods as is evidenced by Section 83(3) of the Finance Act, 2010. 107. Based on the budget speech of the Finance Minister, we cannot conclude that the clean energy cess, which is nothing but an excise duty, was imposed by the Parliament because the subject of "environment" or "environmental pollution" relates to the residuary Entry 97 of List I. Instead, it is clear that the levy is an excise duty and in 2010, the Parliament had legislative competence to impose such excise duty or a cess which is nothing but an increment on the excise duty. Since the petitioners point out that such levy cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). 112. The Hon'ble Supreme Court noted that the Bombay High Court gave short shrift to the argument based on double taxation in Cantonment Board Poona V/s. Western India Theatres Ltd. AIR 1954 Bom 261. The Court observed that some undeserving contentions die-hard rather than survive after death. The only epitaph that could be inscribed is: Rest in peace and don't be re-born! If, on the same subject matter, the legislature chooses to levy tax twice over, there is no inherent invalidity in the fiscal adventure save where other prohibitions exist. 113. For all the above reasons, we cannot accept the argument based on overlap or double taxation given the law laid down by the Hon'ble Supreme Court in Mohit Minerals (P) Ltd. (supra), Purvi Communications (P) Ltd. (supra) and Avinder Singh (supra). ARGUMENTS BASED ON ARTICLE 253, EPA, AIR POLLUTION ACT, NGT ACT, AND OCCUPIED FIELD. 114. The learned Counsel for the petitioners, then, referred to the Environment Protection Act, 1986, the National Green Tribunal Act, 2010 and the Air Pollution Act, 1981 to contend that these three leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature's legislative competence because the subject fell under Entry 31 of the Union List and further the field was already occupied by Cable Television Networks (Regulation) Act, 1995 enacted by the Parliament. The Court held that the powers of the State Legislature and the Parliament were separate and distinct. Therefore, even the enactment of more than one statute on different taxable objects and taxable persons under the legislative field exclusively reserved for the State was not prohibited by the Constitution. 118. In Purvi Communication (P) Ltd. And Ors. (supra), the Hon'ble Supreme Court squarely rejected the contention that the State Legislation impinged on the field occupied by the Central Legislation. The Court noted that the Cable Television Networks (Regulation) Act, 1995, was enacted to regulate the operation of cable television networks in the country and matters connected therewith or incidental thereto. In contrast, the State legislation was for a levy of entertainment tax on entertainment within the legislative field exclusively assigned to the State Legislature under Entry 62 of List II of the Seventh Schedule of the Constitution. Thus, the objects sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment. Accordingly, there can be no doubt about legislations enacted by the Parliament were for the purposes of implementing the decisions taken at the Stockholm and Rio de Janeiro conferences held in 1972 and 1992 in which India participated. Clearly, therefore, these legislations can be said to be preferable to Article 253 of the Constitution read with Entry 13 of List I, Seventh Schedule to the Constitution. 122. But the impugned Act and the levy imposed by the impugned Act neither seeks to implement any decisions taken at Stockholm, Rio de Janeiro or any other international conferences or treaties in which India participated or was a party. None of the Counsel for the petitioners pointed out or seriously contended that the provisions of the impugned Act either conflicted with the provisions of the Environment Protection Act, 1986, or Pollution Act, 1981 or the National Green Tribunal's Act, 2010. A perusal of the three enactments and their comparison with the provisions of the impugned Act does not make out any case of conflict or inconsistency between the Central legislation and the impugned Act, a State legislation. 123. In such circumstances, it is difficult to accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of powers under Article 253 read with Entry 13 List I of the Constitution. 126. The Environment Protect Act 1986, The Air Pollution Act 1981 and The Biodiversity Act 2002 relate mainly to regulation and control. In Kesoram Industries Ltd. (supra), the Constitution Bench has explained that the power of "regulation and control" is different and distinct from the power to impose "taxes" or "fees". Therefore, the impugned Act, which is concerned with the levy of cess, does not conflict with the three Parliamentary legislations referred to and relied on behalf of the Petitioners. Further, the enactment of legislation under the power to regulate and control by the Parliament does not denude the State from exercising powers to impose tax or fee even though the legislation to impose tax or fee may incidentally overlap. 127. By resorting to Article 253, read with Entry 13 of List I, Seven Schedule to the Constitution, the Parliament undoubtedly has the legislative competence to enact laws for the implementation of treaties, international agreements, etc. In order to do so, the Parliament may also legislate on a subject or field included in the State list. However, this cannot be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Entry 13 of List l. 131. In S. Jagannath v. Union of India (supra), the issue that arose for the court's consideration was, what the effect of a conflict between a law made by the State under List Il and a law made by the Union parliament, namely the CRZ Notification issued under Section 3(3) of the Environment Protection Act, 1986 enacted under Entry 13 and Article 253 would be. It was argued that certain provisions of the State legislations including that of the State of Tamil Nadu were not in consonance with the CRZ Notification issued by the Government of India under Section 3(3) of the Act, the court held that the CRZ Notification having been issued under the Act shall have overriding effect and shall prevail over the law made by the legislatures of the States. Therefore, it is in the context of conflicting legislations that the central legislation enacted under Art. 253 would override state legislation. This again, is not an authority on the broad proposition that the State is denuded of all its legislative competence, particularly in any a case where there exists no conflict whatsoever between the impugned Act and the various Central Legislations enacted under Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect of whittling down the powers reserved to the States. The Court held that the federalism in the Indian Constitution is not a matter of administrative convenience, but one of principle - the outcome of our own historical process and a recognition of the ground realities. Accordingly, it was emphasized that Court should be careful not to upset the delicately crafted constitutional scheme by a process of interpretation of the Constitution. 136. Thus, several Constitution Bench of the Hon'ble Supreme Court have held that where more than one interpretation is possible or plausible, the interpretation that favours federalism of power and the supremacy of the State within its own sphere must be preferred, and the one that derogates from the same must be eschewed. For all the above reasons, we find it difficult to agree with the Petitioner's arguments based upon Article 253 and the three Parliamentary legislations. THE TAX VERSUS FEE ARGUMENT 137. The Petitioner's contention about the cess being a "tax" and not a "fee" relatable to Entry 66 of List II, Seventh Schedule, also cannot be accepted. This is because the cess imposed has the attributes of a fee rather than a tax. Besides, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two. A broad co-relationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax. 141. In Sociedade de Fomento Industrial Pvt. Ltd. Vs. State of Goa and Ors. 2019 (5) All MR the issue involved before the Division Bench of this Court was constitutional validity of Goa Rural Improvement and Welfare Cess Act, 2000 and the Rules made thereunder. Broadly, two arguments were raised on behalf of the Petitioner. First that since the Parliament had enacted the MMDR Act by reference to Entry 54, List I, the entire field pertaining to minerals stands occupied. The Goa Cess Act was an enactment taxing mineral as cess based on the tonnage of the ore. Therefore, there was no power with the State Legislature to enact such a law since MMDR, the Parliamentary legislature entirely occupied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality. 144. The Division Bench relief relied upon Kesoram (supra), which noted and explained the difference between the power to regulate and power to tax. Kesoram held that the power to levy fees and impose tax for augmenting revenue shall continue to be exercised by the legislature in whom it vests i.e. the State Legislature even though regulation or control is assumed by the Union. 145. Kesoram (supra), evaluated and distinguished India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors. (1990) 1 SCC 12 which, in turn, had relied upon a decision of the Division Bench of Mysore High Court in Laxminarayana Mining Co. Bangalore and anr. vs. Taluk Development Board and anr. AIR 1972 Mysore 299 Kesoram held that the decision of the Mysore High Court could not be read widely so as to lay down an absolute proposition that the power of the Union to regulate and control results in depriving the States of their power to levy a tax or a fee within their legislative competence without trenching upon the fields of regulation and control as power of regulation is different from the power to tax. In Kesoram, the Constitution Bench held that an anomaly by way of an error that had crept up in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it even those who employ them. Those who use the improved road will benefit from the reduced air pollution and ease and economics of better roads. The Court held that even assuming that the services rendered benefit others and the State as a whole or indirectly benefits would not make the levy unconstitutional, and therefore, the Petitioners could not legitimately urge that they do not benefit at all from the services rendered or that there is not even a remote connection between the fees paid and the service received. The Division Bench, relying upon Kesoram, held that it was immaterial whether the impost was fee or tax if both could be justified, and it is not necessary that one of the pleas must be given up. 149. In Madhyabharat Phosphate Pvt. Ltd. v. State of Rajasthan 2011 SCC OnLine Raj 3026, the Division Bench of the Rajasthan High Court was concerned with the constitutional validity of the Rajasthan Finance Act, 2008, providing for levy of cess on mineral rights and Rajasthan Environment and Health Cess Rules, 2008. In the aims and objects concerning the impugned Act or the impugned Rules, there was a reference to the duty of the State to protect and to improve the environ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers of the general public and not the Petitioners upon whom such levy is imposed, cannot be accepted. The responsibility for reducing the carbon footprint or, in any case, combating the deleterious effects of such increase, is primarily on the Petitioners. Therefore, if the State levies a cess or a fee upon the Petitioners for taking measures to reduce the carbon footprint or to deal with the deleterious effects of its increase, the Petitioners cannot say that they receive no benefits. 154. Besides, we cannot appreciate the Petitioners' contention that though their activities contribute to the increase of the carbon footprint, the measures taken by the State to prevent the increase of the carbon footprint or to combat the deleterious effects of such increase in carbon footprint, confers no particular benefit to the Petitioners. In other words, the Petitioners contend that they are content with their activities increasing the carbon footprint or that they are unconcerned with the deleterious effects of the increase in carbon footprint. The Petitioners contend that since they are content or in any case, unconcerned, they derive no benefits from the measures adopted by the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he measures to reduce the carbon footprint by means of such programmes or schemes as may be decided by the Government. Further, Section 6 of the impugned Act provides for the constitution of the Environmental and Energy Audit Bureau. This Bureau is tasked with identifying sensitive areas of energy and environmental conservation and recommending appropriate measures and solutions for reducing carbon footprint, and suggesting measures for deriving benefits under carbon credit trading and related matters in the State of Goa. 158. Therefore, the argument that the cess is a "tax" and not a "fee" cannot be accepted. In the present case, there is sufficient material to hold that the cess is nothing but a fee relatable to Entry 66 List Il, Seventh Schedule. Accordingly, the impugned Act cannot be held to be beyond the legislative competence of the State. 159. The learned Advocate General did contend that the State is entitled to defend the impugned Act on the basis that the levy was a tax relatable to Entry 49 List Il, Seventh Schedule to the Constitution. He cited some decisions in support of this contention. However, now that we have concluded that the levy imposed by the impugned Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) of the Constitution of India. 164. In Writ Petition No. 206/2021, there are no proper pleadings to consider a challenge based on discrimination or breach of Article 304(a) of the Constitution. Besides, the contention is premised on the misconception that the impugned levy imposes a cess on the manufacture of goods. The second misconception is that the impugned cess applies in respect of handling, etc. of products and substances manufactured outside the State of Goa and not within the State of Goa. This is incorrect. Rule 3 of the Rules framed under the impugned act only prescribes the point at which cess becomes payable. It is well settled that the measure of tax, point and manner of its levy are different and distinct from the charging event prescribed under the taxing legislation. In this case, what is relevant is the charging section under the impugned Act and not the Rules, which prescribe the point at which the cess becomes payable or would be imposed or collected. 165. The challenge based on Articles 301 to 304 of the Constitution was quite vague. In any case, the decision of the Constitution Bench in Jindal Stainless Limited (supra) provides a complete answer to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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