TMI Blog2022 (3) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... List, it does not appear that such entry authorises the State to impose a kind of excise duty with a different name. It is not necessary to even refer to Entry 92A of the Union List to ascertain the exact authority available to a State under Entry 54 of the State List as it stood at the time that the impugned Act was brought into force. At the relevant point of time, the field covered by the entry authorised the levy of the tax on the sale or purchase of goods. In other words, the levy would be on the sale or purchase and be confined only to such sale or purchase - the State had no authority to impose any tax or cess on the manufacture or production of cement, whether by the said Act or by any other disingenuous device; and, in all fairness, no further attempt is made on behalf of the State to justify the legislative illegality except to suggest that after the GST regime has been put in place, the impugned Act of 2010 has been repealed and the same is no longer relevant. There is no doubt that there is no available mechanism to assess the quantum of the levy that may have been passed on to the customer or may have been absorbed by the manufacturers. It is possible that a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s connected with the cement industry. The petitioners submit that when a tax is imposed by a State or the Union in accordance with law, a further levy may be added thereto by way of a cess, where the quantum realised by way of the cess is earmarked for a special public beneficial purpose. The petitioners refer to the education cess which is imposed on income-tax and cess charged in various other fields by way of an additional levy but which is earmarked for a special purpose and may not be subsumed as a part of the general revenue of the Union or the State. 3. Section 3 of the impugned Act of 2010 is the charging section: 3. On and from the coming into force of this Act, there shall be levied and collected a cess on produced Cement from any person or factory who produce cement within the State. 4. Section 4 of the Act indicates the rate of cess. Section 6 of the Act, on which much emphasis has been placed by the State, provides for the manner of collection and payment of cess. Section 6 of the Act is set out: 6. (1) The cess under this Act shall be leviable and payable in the manner as may be prescribed. (2) Unless the cess due under this Act has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force. At the relevant point of time, the field covered by the entry authorised the levy of the tax on the sale or purchase of goods. In other words, the levy would be on the sale or purchase and be confined only to such sale or purchase. 8. However, from the charging section in the impugned Act, which is Section 3, the levy in this case and the liability which is imposed thereby pertains to any person or factory who produce cement within the State. Though Section 6 of the impugned Act provides for the manner of collection and payment of cess and in sub-section (2) thereof prohibits the removal of cement without cess being paid, the expression sale or transfer in the final part of Section 6(2) of the impugned Act does not imply that the levy would be on the sale or transfer. The expression sale or transfer governs the word remove or, more precisely, the action of removing or transporting or attempting to remove or transport used earlier in the same provision. At any rate, just like a river cannot rise above its source, Section 6 and the manner of collection of levy cannot override the charging section which imposes the tax on the manufacturers and producers of cem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale or manufacture in the usual course. In such sense, the manufacturers and producers of cement in the State may have taken a hit as a direct consequence of the illegal impost, for which they ought to be compensated. 13. Again, it cannot be said with any degree of certainty as to whether the illegal levy amounted to a specific percentage of loss of revenue or any loss at all. However, just like in the case where a contract cannot be performed, a ballpark figure of around 15 percent has been judicially recognised in this country to be the loss of the perceived profit, an the ad hoc figure of 20 percent in the case may reasonably be taken to be the amount of loss that was occasioned to the manufactures and producers of cement in this State as a result of the illegal levy of cess by the State without any authority. It is made clear that this figure of 20 percent is arrived at as a rough and ready measure and so that it acts as a deterrent to discourage the State from acting in such high-handed manner and extorting money without authority. 14. So that the deterrent is effective, it is necessary that 30 percent of the total realisation on account of the cess collected u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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