LexTHE HINGIR-RAMPUR COAL CO., LTD. AND OTHERS versus THE STATE OF ORISSA AND OTHERS
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2 S.C.R. SUPREME COURT REPORTS 537 THE HINGIR"RAMPUR COAL CO., LTD. AND OTHERS v. THE STATE OF ORISSA AND OTHERS (P. B. GAJENDRAGADKAR, A. K. SARKAR, K. SUBBA RAO, K. N. WANCHOO and J. R. MuDHOLKAR, JJ.) Mining Areas, Development of--Enactment by State Legisla- ture authorising constitution of mining areas and development fund-Imposition of cess-Constitutional validity-Competency of State Legislature-Orissa Mining Areas Development Fund Act, z952 (Orissa XXV II of I952), s. 4-Constitution of India, Art. 372, Seventh Schedule, List II, Entry 23, 66, List I, Entries 52, 54, 84- Adaptation of Laws Order, z950, els. z6, 2I. The petitioners challenged the constitutional validity of the Orissa Mining Areas Development Fund Act, 1952, which by s. 3 empowered the State Government to constitute mining areas for the purpose of providing them with certain amenities after hearing objections from the lessees, by s. 4 to impose and collect a cess not exceeding 5 % of the valuation of the minerals at the pit's mouth and by s. 5 created a fund to which the cess was to be credited. The petitioners' case, inter alia, was that the impugned Act and the rules made thereunder were ultra_vires the powers of the State Legislature, the cess levied thereunder was not a fee but a duty of excise on coal within Entry 84 of List I of the Seventh Schedule to the Constitution and repugnant to Coal Mines Labour Welfare Fund Act, 1947 (Act XXXll of 1947), and, alternatively, even supposing it was a fee relatable to En- tries 23 and 66 of List II, it was hit by Entry 54 of List I read with the Mines and Minerals (Regulation and Development) Act 1948 (Act Lill of 1948), or. by Entry 52 of List I read with the Industries (Development and Regulation) Act •. 1951 (Act LXV of 1951). It was urged on behalf of the State, inter alia, that the cess was a fee and not a duty of excise and the competence of the State Legislature to levy it was not affected by the Central Acts. Held (per Gajendragadkar, Sarkar, Subba Rao and Mudhol- kar, JJ.), that the cess imposed by the Act was a fee relatable to Entries 23 and 66 of List II of the Seventh Schedule to the Constitution and the Constitutional validity of the impugned Act was beyond question. Although there. can be no generic difference between a tax and a fee since both are compulsory exactions of money by public 11u~horities, there is this distinction between them that whereas a tax is imposed for public purposes and requires no considera- tion to support it, a fee is levied essentially for services rendered and there must be an element of quid pro quo between the person November 111. 538 SUPREME COURT REPORTS [1961] z960 who pays it and the public authority that imposes it. While a tax invariably goes into the consolidated fund, a fee is earmark- Th• Hingir- ed for the specified services in a fund created for the purpose. Rampur Coal Co .. Whether a cess is one or the other would naturally depend on Lid. &- Others the facts of each case. If in the guise of a fee, the Legislature v. imposes a tax, it is for the Court on a scrutiny of the scheme of The Slat• of the levy, to determine its real character. The distinction is Orissa ..S- Olhers recognised by the Constitution which while empowering the appropriate Legislatures to levy taxes under the Entries in the three lists refers to their power to levy fees in respect of any such matters, except the fees taken in court, and tests have been laid down by this Court for determining the character of an im- pugned levy. Matthews v. Chicory Marketing Board, 60 C.L.R. 263, The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, [1954] S.C.R. 1005, Mahant Sri ]agannath Ramanuj Das & Anr. v. The State of· Orissa, [1954) S.C.R. 1046, and Ratilal Panachand Gandhi v. The State of Bombay, [r954] S.C.R. 1055, referred to. P. P. Kutti Keva & Ors. v. The State of Madras, A.LR. 1954 Mad. 621, Attorney-General for British Columbia v. Esquimalt and Nanaimo Railway Co., (1950) A.C. 87 and Parton & Anr. v. Mils Board (Victoria). (1949) 80 C.L.R. 229, considered and held in- applicable. In determining whether a levy is a fee the true test must be whether its primary and essential purpose is to render specific services to a specified area or class, it being of no consequence that the State may ultimately and indirectly be benefited by it. So judged, the scheme o
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