Constitution of India Entry 249, List II, Seventh Schedule-West Bengal Taxation Laws (Section Amendment) Act 1989-Sections 2, 3, amending West Bengal Primary Education Act 1953 and West Bengal Rural Employment Production Act 1976, Section 4 Cess on tea estates levied annually assessed on the basis of plucked and unprocessed green tea leaves-Whether cess is levy on land or tax on production of tea-Held, calculation of cess on the basis of yield is accepted mode of levy of tax on land Cess is upon 'tea estate' quantified on basis of quantum of produce of tea estate-It is not cess on production State legislature, therefore, has power to levy impugned cess-India Cement case, which held cess on royalty to be beyond competence of State legislature, distinguished-Entry 45, List II, Seventh Schedule-Legislature competence-Precedent.

Constitution of India-Entry 249, List II, Seventh Schedule-Pith and substance-Legislative lists-Held, where there are three lists containing large number of entries, overlapping inevitable-Rule of pith and substance to be applied to determine the entry to which given legislation relates- Once determined, any incidental trenching on field reserved to other legislature of no consequence-Power of legislature to make law with reference to entry 249, List II is plenary-Interpretation of statutes- Legislative competence.

Constitution of India-Entry 249, List II, Seventh Schedule-Levy on land-Incidents of-Held, tax need not be uniform or constant over number of years-Held further, tax may be based on current years income- Removing produce of the land from plant or tree before assessing tax doesn't alone sever connection between land and tax-Making person in possession of land or building liable for payment of tax, held, is well-known feature of enactments relatable to entry 249, List 11-Labour and capital investment on land in producing yield or income does not alter character of tax on land-Prescribing uniform method of levy of cess not discriminatory Taxing statutes-Statute law. 

West Bengal Taxation Laws (Second Amendment) Act 1989- Retrospectivity Rectified and remedied enactment given retrospective effect for period covered by anterior provisions which were struck down, held, valid.

Constitution of India-Entry 52, List 1, Seventh Schedule-Tea Act 1953 Sections 2 and 25-West Bengal Taxation Laws (Second Amendment) Act 1989 Section 4-Whether declaration under Tea Act affects competence of legislature to levy cess on land comprised in tea estate-Held, Tea Act concerned with tea industry, whereas impugned cess is on land comprised in tea estate-State legislature's competence upheld Pith and substance.

Statute Law Validity-Held, validity of laws to be judged with reference to ordinary, prudent person.

The West Bengal legislature enacted the West Bengal Primary Education Act, 1953 and the West Bengal Rural Employment and Production Act, 1976 to provide for primary education throughout the State and to provide employment in rural areas, respectively. For raising funds for the said purposes, the State legislature imposed two cesses upon certain lands and buildings in the state. By the West Bengal (Taxation Laws) Amendment Act, 1981, tea estates were carved out as a separate category of immovable properties on which cess was levied. The separate rate prescribed therefore was based upon the despatches from the tea estates on the tea grown therein, and the state government was empowered to make certain exemptions in this regard. This amendment was questioned by a number of tea estates in writ petitions and decided by a two-member Bench of this Court in Buxa Dooars Tea Co. Ltd. v. State of West Bengal, [1989] 3 SCC 211.

This Court found that the levy was essentially upon despatches though purporting to be a levy upon the tea estates. They pointed out further that the quality of tea produced in all tea estates in the state was not uniform, that there was no nexus between the tea estate and the varied treatment accorded in respect of despatches of the different kinds of tea. The amendment was accordingly held to be violative of C Article 301 of the Constitution. Further, referring to the Tea Act, 1953 by which Parliament assumed control over the tea industry including the tea trade, and that, if the levy is in substance on despatches of tea it cannot be held to be tax on lands under Entry 49 List II, this Court found the impugned amendment void for want of legislative competence as it pertained to a covered field. 

Following this decision, the State of West Bengal enacted the West Bengal Taxation Laws (Second Amendment) Act, 1989 ('Amendment Act, 1989') with retrospective effect. By this amendment, the cesses were to be levied annually on a tea estate at the rate of 12 paise for each kilogram of plucked and unprocessed green tea leaves produced in each tea estate. The State Government was empowered to exempt certain categories of tea estates from the cess. The cess collected, and assessments made on proceedings taken under the Amendment Act, 1981 were validated.

The levy of the cess by the Amendment Act, 1989 was challenged in writ petitions before this Court. It was contended that the impugned levy was not upon land within the meaning of Entry 49 List II of the Seventh Schedule and therefore the State legislature lacked legislative competence. In this context, it was argued that the levy in question was really a tax on production of tea and not on land; that a tax on land must be a constant figure whereas the impugned levy would vary from year to year based as it is on the quantity of tea produced in a tea estate in a given year; that in fact there may be no production of tea leaves at all in a given year if, for instance, an owner were to decide to leave the leaves unplucked; that the definition of tea estate which included fallow land and land covered by the factory and other buildings further establishes the absence of nexus between the cess and the land. Strong reliance was placed upon the decisions of a seven judge bench in India Cement Ltd. v. State of Tamil Nadu, [1990] 1 SCC 12 and a three judge bench in Orissa Cement Ltd. v. State of Orissa, [1991] 1 SCC 430. It was also pointed out that the provision for exemption, which Buxa Dooars pointed out was a vitiating factor, continues in the present Act.

For the State it was argued that the impugned cesses were within the purview of "taxes of lands and buildings" in Entry 49 of List II of the Seventh Schedule. Alternatively, it was sought to be justified as "land revenue" within the meaning of Entry 45 of List II of the Seventh Schedule.

Dismissing the petitions, this Court.