1. In these writ petitions, the petitioners who are Companies running Industrial Units in Ernakulam and Kottayam Districts, challenge order GO (Rt.) No. 805/09/WRD of the Government of Kerala, Water Resources (MI) Department, dated 25.07.2009. By the said Government Order, the State of Kerala enhanced the fee for extraction of water from rivers.2. In WP(C) No.4755/2013, the petitioner-Company states that the Company has permission granted by the Chief Engineer, Irrigation Department, to draw water 1000 TPD (Tons Per Day) from Chalakudy River. However, the Company is drawing only 300 M3 per day. The Executive Engineer required the petitioner to make a fresh application for extraction of water from the river in terms of the G.O. dated 25.07.2009.3. The said G.O. marked as Ext.P5 in the writ petition reads as follows:-GOVERNMENT OF KERALAAbstractWater Resources Department - Extraction of water from rivers/water bodies in Kerala for the purpose other than Drinking Domestic and irrigation - Levy of Water Cess/charges - Orders issued.----------------------------------------------------------------------WATER RESOURCES (MI) DEPARTMENTG.O.(Tt)No.805/09/WRD Dated Thiruvananthapuram 25.07.2009.----------------------------------------------------------------------Read:- 1. No.I AU/W/III/2-1/68/2003-04/218 dated 1.8.2008 from the Accountant General (A), Kerala.2. Lr.No.W3/General/25906/2008 dated 2.5.2009 from the Chief Engineer (I&A), Thiruvananthapuram.ORDERThe Accountant General (Audit) Kerala while conducting the local audit of the office of the Executive Engineer, Irrigation Division Ernakulam for the period from 1.1.2002 to 31.7.2003 laid observed that there is revenue loss of Rs.77,000/- per day due to the non collection of water cess. The Chief Engineer (I&A) has reported that about 30 industrial concerns are unauthorisedly extracting water without permission and without remitting water charges. The Chief Environment Engineer, KSPCB Regional Office Ernakulam has also reported that 19 industrial concerns drawing from Periyar. As per the Kerala Irrigation Water Conservation Act, 2003 and Rules framed in 2005 the water cess has been specified for extracting of water for irrigation only. Hence the same rate as applicable to water extracted for irrigation is made applicable for other purpose also. But the collection of cess and action against unauthorized extraction of water for uses other than irrigation is handicapped by the absence of proper and specific provisions regarding the same in the Act & Rules. Hence a proposal for amendment of the said Act, 2003 for including the above provisions is under the active consideration of Government.In this connection a meeting was held by the Additional Chief Secretary (Water Resources) on 3rd April 2009 with Chief Engineers, representatives of State Pollution Control Board and the Additional Secretary of Industries Department, in his chamber in Secretariat. In the meeting it is pointed out that the proposed amendment of the Irrigation and Water Conservation Act, 2003 would make specific provision to cover this lacuna. It is also decided not to wait till the amendment is made and to issue an executive order to address this loophole by making obligatory for industrial establishments to take permission for drawing water from rivers/water bodies of the Irrigation Department.In the above circumstances as reported by the Chief Engineer (I&A) in her letter read above and as observed by the Accountant General (A) Kerala Government hereby insists the following terms and conditions for the extraction of water from courses.a) No person or agency shall extract water from a water course by installation of any mechanical or electrical device the capacity of which in the aggregate, is more than five horsepower or any hose, pipe or other similar device or by any other means except with the previous permission of the officer authorized by the Government in this behalf within whose jurisdiction such device for extraction of water is installed, provided that the Kerala Water Authority or any local authority shall not be liable to obtain a permit.b) The application for extraction of water for irrigation purpose shall be submitted to the officer authorized accompanied by a fee of rupees fifty to be paid by means of treasury chellan.c) The application for extrication of water for any other purpose like generation of power, industrial use etc., or any other purpose incidential to this but excluding drinking, domestic and irrigation purpose shall be submitted to the officer authorised accompanied by a fee of rupees five thousand to be paid by means of treasury chellan.d) 1) The maximum quality that shall be drawn for the purpose of irrigation shall be fixed by the authorized officer depending on the crop pattern, crop period, area to be irrigated and nature of soil.2) The maximum quantity that shall be drawn for the purpose other than drinking, domestic and irrigation shall be fixed by the authorized other depending on the nature of drawl in consultation with the concerned departments, if required. The quantity fixed shall be in conformity with the availability in that river basic or water body and shall be computed after giving full preference for requirements under drinking domestic and irrigation purpose.3) The extraction arrangements should be open for inspection at any time by the department authorities4) The fee for extraction of water shall be - i) One rupee for every kilo liters and part thereof for irrigation purpose. ii) Two rupee for every kilo and part thereof for all purpose other than drinking, domestic and irrigation.5) The permission once granted shall remain validi) For a period of three years for irrigation purpose.ii) For a period from two years for all purpose other than drinking domestic and irrigation unless it is cancelled before the expiry of that period for valid reason. This order shall be in force till the Kerala Irrigation & Water Conservation Act, 2003 is amended.Accordingly, the petitioner submitted an application on 03.02.2011.4. The Confederation of Indian Industry requested the Government to reconsider the enhancement of cess/fee made as per the said G.O. The petitioner also addressed the Minister for Irrigation & Water Resources to hold a meeting and resolve the issue. However, the petitioner was served with a demand notice dated 13.12.2012 of the 3rd respondent-Executive Engineer demanding Rs.78,42,000/- from the petitioner towards water charges for the period from 14.12.1994 to 31.12.2012.5. The petitioner-Company in WP(C) No.21134/2013 has been using water from Meenanthara rivulet openly and peaceably without interruption from 1969. By letter dated 08.06.2013 of the Executive Engineer, Irrigation Division, the petitioner was required to pay Rs.55,34,745/- towards Cess for abstracted water, for the period from 1992 to 2012. The objections filed against the demand were rejected by the Executive Engineer by a letter dated 13.08.2013.6. The petitioner in WP(C) No.5019/2015 is a Central Public Sector Undertaking having its industrial unit at Udyogamandal. On 17.10.2014, the Executive Engineer, Irrigation Department required the petitioner to furnish details of its monthly water consumption from Periyar River, for remittance of water Cess. The petitioner submitted a reply to the Executive Engineer pointing out that the Company has been paying Water Cess as per law, to the Kerala State Pollution Control Board. However, by a letter dated 15.10.2012, the Assistant Executive Engineer, Irrigation Sub Division required the petitioner to obtain permission for abstraction of water and execute an agreement in terms of G.O. dated 25.07.2009. The petitioner challenges the said G.O. dated 25.07.2009.7. The learned counsel for the petitioner in WP(C) No.4755/2013, Sri. R. Lakshmi Narayan argued that in view of Article 265 of the Constitution of India, no tax shall be levied or collected except by the authority of law. The demand made by the respondents for water cess/fees amounts to levy of tax/Cess which has no authority of law. The learned counsel for the petitioner further argued that assuming without conceding that the respondents are competent to demand tax/cess, the demand cannot be retrospective in effect. The respondents cannot demand any arrears of tax or Cess for any period beyond three years. The provisions of the Limitation Act will apply for such demand. The learned counsel further argued that even though, under compulsion, the petitioners had paid amount towards the alleged cess/tax, acquiescence on the part of the petitioners cannot justify the demand by the respondents, if the same is illegal.8. Sri. Saji Varghese, counsel for the petitioner in WP(C) No.21134/2013 argued that the petitioner’s factory was established in the year 1969 and has been drawing water from the Meenanthara river since then. There are more than 300 employees engaged by the petitioner. The water is drawn for their personal requirements also. The demand for water tax is without the authority of law. The levy of tax with retrospective effect for the period from 1992 to 2009 cannot under any circumstances stand the scrutiny of law.9. The counsel for the petitioner in WP(C)No. 5019/2015 argued that the object of the Kerala Irrigation and Water Conservation Act, 2003 is to regulate irrigation in the state. The Act, 2003 cannot apply to use of water for industrial purpose. The learned counsel further argued that the petitioner-Company has been using water from Meenanthara Rivulet for the last 44 years and Section 7 of the Easement Act will apply. The illustration to Section 7 of the Easement Act would squarely apply to the case of the petitioner.10. The learned counsel argued that Section 3 of the Kerala Irrigation and Water Conservation Act is subject to Section 218 of the Panchayat Raj Act. The Government has no right over the Meenanthara river, in view of Section 218 of the Panchayat Raj Act. The levy imposed now is not supported by any legislative sanction, contended the learned counsel for the petitioner.11. The learned Government Pleader resisted the writ petitions and contended that what is paid by the petitioners to the Pollution Control Board is Cess payable to the Pollution Control Board. The said payment has nothing to do with water charges. The Government Order dated 25.07.2009 speaks itself as to the circumstances in which the levy is made. The question of limitation does not arise, because for any dues to the Government, the period of limitation is 30 years.12. The Government Pleader pointed out that the Order dated 25.07.2009 has been issued considering the fact that collection of Cess and action against unauthorised extraction of water for uses other than irrigation, is handicapped by the absence of proper and specific provisions regarding the same in the Water Supply Act. The Government considered various aspects of the case and decided to issue an executive order making it obligatory for industrial establishments to take permission for drawing water from rivers/water bodies of the Irrigation Department.13. Water is a precious resource available to the citizens. No corporate industry can be permitted to exploit the said resource to the detriment of the interest of the general public. It is in such circumstances that the order impugned by the petitioners has been issued. The Government Order has been issued in public interest and this Court should not interfere in the matter, in the larger public interest, contended the learned Government Pleader.14. I have heard Sri. R. Lakshmi Narayan, Sri. Saji Varghese and Ms. Ramola Nayanpally, the counsel appearing on behalf of the petitioners. I have also heard the learned Government Pleader representing the respondents.15. The question arising in these writ petitions is whether the State is competent to levy Cess/tax/fee from industrial houses for the river water lifted by them for industrial purpose.16. Entry 17, List II, Schedule VII to the Constitution of India reads as follows:-“17. Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of entry 56 of List I.”Entry 56 in List I reads as follows:-“56. Regulation and development of inter-State rivers and river valleys to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.”17. Water supply and irrigation is within the legislative competence of the State Legislature. In the case on hand, the levy is sought to be justified under the Kerala Irrigation and Water Conservation Act, 2003 (hereinafter referred to as “the Act, 2003”) and Article 162 of the Constitution. The Act, 2003 is enacted to consolidate and amend laws relating to construction of irrigation works, conservation and distribution of water for the purpose of irrigation and levy of betterment contribution and irrigation Cess on lands benefited by irrigation works in the State of Kerala and to provide for involvement of farmers in water utilisation system and for connected matters.18. The Act, 2003 is intended to regulate irrigation and water conservation in the State. The question therefore is whether the respondents can regulate consumption of river water for industrial purpose and levy cess thereon under the provisions of the Act. While examining these issues, the following provisions of the Act, 2003 are of significance.19. Section 3 of the Act, 2003 reads as follows:-“3. Water courses and water in water courses to be Government property-Notwithstanding anything to the contrary contained in any other law for the time being in force, or in any custom or usage or in any contract or other instrument but subject to the provisions of section 218 of the Kerala Panchayat Raj Act, 1994 (13 of 1994) and section 208 of the Kerala Municipality Act, 1994 (20 of 1994) all water courses and all water in such water courses in the State shall be the property of the Government and the Government shall be entitled to conserve and regulate the use of such water courses and the water in all those water courses for the purposes of irrigation and the generation of Electricity and for matters connected therewith or for both.”Therefore, notwithstanding the provisions in the Kerala Panchayat Raj Act, 1994 and the Kerala Municipality Act, 1994 all water courses and all water in such water courses in the State shall be property of the Government. The Government is entitled to conserve and regulate the use of such water courses and water for the purpose of irrigation and generation of electricity.20. In view of Section 2(aq) of the Act, 2003, the term ‘water course’ would take in rivers also. The term ‘water user’ is defined under Section 2(ar) to mean and include any individual, body corporate, society, institution or association using water for any purpose from a Government source of irrigation.21. Extent of regulation and abstraction of water from water courses are as provided in Section 4(1), which reads as follows:-“4. Regulation on abstraction of water from water courses-(1) Save as provided in this Act, no person or agency shall abstract Water from a water course by installation of any mechanical or electrical device, the capacity of which, in the aggregate, is more than five horse power, or any hose, pipe or other similar device or by any other means except with the previous permission of the officer authorised by the Government in this behalf within whose jurisdiction such device for abstraction of water is installed and subject to such terms and conditions and on payment of such fees, as may be prescribed:Provided that the Kerala Water Authority or any local authority shall not be liable to obtain a permit under this sub-section.”Section 4 further provides for appeals, confiscation of devices installed for water abstraction and for taking disciplinary action against authorised officers for their supervisory lapses.22. The Act, 2003 contemplated two types of levy, one under Section 25 and the other under Section 45. Section 25 reads as follows:-“25. Levy of irrigation cess by local authority-(1) A local authority may, with the previous sanction of the Government, levy an annual irrigation cess on lands benefited by minor irrigation works executed by it.(2) The rate of irrigation cess levied under subsection (1) shall be fixed by the Government from time to time:Provided that the rate of irrigation cess fixed under sub-section (2) shall in the case of minor irrigation works, not more than the rate at which irrigation cess is levied by the Government on lands benefited by medium irrigation works executed by the Government.(3) Where there has been failure of crops in any area, the local authority concerned may by resolution make an exemption or reduction in rate in respect of the irrigation cess leviable under this section on any land within their jurisdiction.Section 45 reads as follows:-“45. Levy of betterment contribution - Where the Government are of opinion that it is necessary to levy a betterment contribution, they may levy betterment contribution in accordance with the provisions of this Chapter from the owner of any land which, in their opinion, is benefited by any major irrigation work constructed or completed after the commencement of this Act and of any land benefited by an irrigation work declared to be a major irrigation work under the provisions of this Act, whether constructed before or after such commencement.Explanation :- A land shall be deemed to be benefited notwithstanding that the benefit is not enjoyed, provided such non-enjoyment is not due to any fault on the part of the Government.”Therefore, the Act, 2003 empowers the respondents to levy only Irrigation Cess and Betterment Contribution.23. Section 25 states that the Government is entitled to levy an annual irrigation Cess on all lands. Section 25 is clear that the levy contemplated is an annual levy and the Cess is on lands which derive the benefit of irrigation measures taken by the Government. It is not a levy dependent on the quantum of consumption of water. Sub-section (4) of Section 25 would make it further clear that it is only those owners of land to whom a certificate has been issued under Section 22 who are liable to pay irrigation Cess.24. The levy of ‘Betterment Contribution’ under Section 45 is on the owners of land which are benefited by any major irrigation work constructed or completed after the commencement of the Act, 2003. When both the levies contemplated under the Act, 2003, under Sections 25 and 45, are on the land and are relatable to land and irrigation, the respondents cannot resort to Section 25 or Section 45 to levy any fee or Cess for consumption of river water for industrial purpose under those provisions.25. The question remaining is whether the respondents can regulate consumption of river water and levy cess or tax on consumption of river water for industrial purposes under any other provision of the Act, 2003. Section 3 provides that the Government is entitled to conserve and regulate the use of such water courses and water in all such water courses. As power is conferred on Government to regulate water courses for the purpose of irrigation and water conservation, the Government will be perfectly within its powers to regulate or curb lifting of water from such water courses for industrial purposes, as unrestricted usage of water for industrial purposes can adversely affect availability of sufficient quantity of water for irrigation purposes.26. When Section 3 of the Act, 2003 makes the Government owner of all water courses and water in such water courses including rivers, and when Section 4 obligates the Government to regulate abstraction of water from such water courses for the purpose of irrigation and water conservation, the petitioners do not have unbridled right to lift water from the rivers in Kerala for industrial purposes.27. The question then will be whether the Government can levy Cess, Tax or Fee on industrial houses for lifting river water for industrial consumption.28. In State of Kerala and others v. P.J. Joseph [AIR 1958 SC 296], the Hon’ble Apex Court held that-“In Mohammad Yasin v. Town Area Committee Jalalabad 1952 SCR 572 : (AIR 1952 SC 115) (A) & again in Bengal Immunity Co. Ltd. v. State of Bihar 1955-2 SCR 603 at p.681: (S) AIR 1955 SC 661 at p.693) (B), an impost not authorised by law cannot possibly be regarded as a reasonable restriction and must, therefore, always infringe the right of the respondent to carry on his business which is guaranteed to him by Art.19(1)(g) of the Constitution. In this view of the matter it is not necessary to express any opinion on the other points dealt with in the judgment of the High Court.”29. In State of Kerala and others v. P.J. Joseph [AIR 1958 SC 296], the Hon’ble Apex Court held that-“Where the Govt. made an endorsement on the reference made to it by the Board of Revenue that it accorded sanction for extra quota of foreign liquor being allowed to wholesale licencees in Cochin on payment by them of a commission at 20 per cent of the price of liquor but the endorsement did not in terms or in form purport to be an order made by the State in exercise of the powers conferred on it by S.17 of the Act, and it was also not alleged by the Govt. that the order was published in the Gazette or was communicated to the licencee from whom the Excise Authorities demanded the commission of 20 per cent on excess sales.Held, that the endorsement was not a statutory order passed by the State in exercise of the power conferred on it by S.17. It was more in the nature of an intimation given to the Board of Revenue that the government accorded sanction to extra quotas of foreign liquor being allowed to wholesale licencees in Cochin on payment of the Commission. The document was nothing more than what it purported to be namely a departmental instruction that the excise authorities might allow extra quotas to wholesale licencees on payment of the requisite commission.”30. In the judgment in Bimal Chandra Banerjee v. State of Madhya Pradesh etc. [AIR 1971 SC 517], the Hon’ble Apex Court held that-“18. No tax can be imposed by any bye-law or rule or regulation unless the statute under which the subordinate legislation is made specially authorises the imposition even if it is assumed that the power to tax can be delegated to the executive. The basis of the statutory power conferred by the statute cannot be transgressed by the rule-making authority. A rulemaking authority has no plenary power. It has to act within the limits of the power granted to it.”31. In these writ petitions, though Rule 3(2)(iii) provides that the fee for abstraction of water shall be one rupee for every kilo litre and part thereof, since the Act, 2003 does not empower the Government to levy Fee, Cess or Tax on consumption of water for industrial purposes, the said Rule should be read as one applicable to abstraction of water for irrigation purpose and not for industrial purposes.32. Article 265 of the Constitution of India provides that no tax shall be levied or collected except by the authority of law. Tax, duty, cess or fee constituting a class denotes to various kinds of imposts by State in its sovereign power of t
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axation to raise revenue for the State. Within the expression of each species, each expression denotes different kind of imposts depending on the purpose for which they are levied. This power can be exercised in any of its manifestation only under any law authorising levy and collection of tax as envisaged under Article 265 which uses only the expression that no “tax” shall be levied and collected except authorised by law. Therefore, to support a tax, legislative sanction is essential. It cannot be levied and collected in the absence of any legislative sanction, by exercise of executive power of State under Article 162.33. In these cases, Cess/charges are sought to be imposed by Ext.P5 Government Order, which is an executive order. It is evident that the State itself was doubtful about impost of cess/charges without statutory support. In the G.O. dated 25.07.2009, it has been stated as follows:-“As per the Kerala Irrigation Water Conservation Act, 2003 and Rules framed in 2005 the water cess has been specified for extracting of water for irrigation only. Hence the same rate as applicable to water extracted for irrigation is made applicable for other purpose also. But the collection of cess and action against unauthorized extraction of water for uses other than irrigation is handicapped by the absence of proper and specific provisions regarding the same in the Act & Rules Hence a proposal for amendment of the said Act, 2003 for including the above provisions is under the active consideration of Government.”Having stated so, the respondents proceeded not to wait till the amendment is made and to issue an executive order to address the lacuna in the Act.34. Here, it has to be noted that the Act, 2003 in pith and substance, relates to irrigation and water conservation. The Act, 2003 is not intended to regulate use of river water for industrial purposes. When water conservation is a matter falling under the Act, 2003, the respondents may be justified in regulating usage of river water for industrial purpose. However, impost of tax/cess/fee/rate stands on a different footing. Nothing can be realised by way of tax or anything akin thereto which has not been authorised by the legislature. The Executive cannot levy tax. To levy the same, there should necessarily be a statutory source of power, which is lacking in the present case.For all the afore reasons, these writ petitions are allowed. The impugned Government Order G.O. (Rt) No.805/09/WRD dated 25.07.2009 of the 1st respondent and all other orders/demands impugned in these writ petitions are therefore set aside.