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1986 (1) TMI 100 - SC - Income TaxWhether the cess levied under the Act is of the nature of a fee levied or leviable on a dealer in market area? Held that:- If in the guise of a fee the legislation imposes a tax, it is for the court on a scrutiny of the scheme of the levy to determine its real character. If, on a true analysis of the provisions levying the amount, the court comes to the conclusion that it is in fact in the nature of a tax and not a fee, its validity can be justified only by bringing it under any one of the entries in List II of the Seventh Schedule to the Constitution under which the State can levy a tax. The State Government has failed in this case to do so. The levy according to us is not a fee as claimed by the State but it is a tax not leviable by it. The levy of the cess under section 3 is, therefore, liable to be quashed. Section 3 being the charging section and the rest of the sections of the Act being just machinery or incidental provisions, the whole Act is liable to be quashed. We, therefore, declare the entire Act, i.e., the Haryana Rural Development Fund Act, 1983, as unconstitutional on the ground that the State Legislature was not competent to enact it. These appeals, therefore, succeed. The judgment of the Division Bench of the High Court is set aside and the Act is declared void.
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