ivil Appeal No 4552 of 1989
From the Judgment and Order dated 2312
1988 of the Rajasthan High Court in CWP No 13 of 1987
GL Sanghi and YP Rao for the Appellant
CS Vaidyanathan SR Setia and KV Mohan for the Respondents
The Judgment of the Court was delivered by K JAGANNATHA SHETTY J
Special leave granted
Having heard counsel on both sides and having perused the material on record we are of opinion that the matter requires reconsideration by the Provident Fund Commissioner
The Food Corporation of India has depots located at various places in Rajasthan for handling storing and trans porting food grains and other articles
It has appointed contractors for execution of such works and the contractors in turn engaged some workers
In respect of such workers the Provident Fund Commissioner called upon the Corporation to deposit contribution payable under the Employees Provi dent Fund Act and the scheme framed thereunder
When there was non compliance the Commissioner made an order under section 7A of the said Act determining amount payable by the Corporation
Being aggrieved by that determination the Corporation moved the 757 High Court for relief under article 226 of the Constitution
The High Court has dismissed the petition
Hence the Corpo ration has appealed to this Court
The grievance complained of by the Corporation is that it was denied of reasonable opportunity to produce material in proof of identification of the workers in respect of whom the contribution was payable
It is urged that the contrac tors are in possession of the relevant lists and the Commis sioner has not even given notice to contractors nor made them parties to the proceedings in spite of repeated re quests made by the Corporation
Counsel for the Union of Workmen however contended that under the provisions of the the Corporation being the principal employer has to maintain list of workers that it has failed to produce such list and therefore it cannot throw the burden on the contrac tors to prove the case
We have carefully perused the Commissioner s order and also the order of the High Court
The total amount ordered to be payable comes to about Rs2248000 in respect of the employees of depots namely Udaipur Jaipur Ajmer Badmer and Sawai Madhopur
The Commissioner has also directed the Divisional Officer Jaipur to deposit the Provident Fund Contribution ie Rs 1872194 to the Fund being maintained by the trustees of the establishment
It is indeed a large amount for the determination of which the Commissioner has only depended upon the lists furnished by the workers Union
It is no doubt true that the employer and contractors are both liable to maintain registers in respect of the workers employed
But the Corporation seems to have some problems in collating the lists of all workers engaged in depots scattered at different places
It has requested the Commissioner to summon the contractors to produce the re spective lists of workers engaged by them
The Commissioner did not summon the Contractors nor the lists maintained by them
He has stated that the Corporation has failed to produce the evidence
The question in our opinion is not whether one has failed to produce evidence
The question is whether the Commissioner who is the statutory authority has exercised powers vested in him to collect the relevant evidence before determining the amount payable under the said Act
It is of importance to remember that the Commissioner while conducting an inquiry under section 7A has the same powers as are 758 vested in a Court under the Code of Civil Procedure for trying a suit
The section reads as follows section 7A Determination of Moneys due from Employer 1 The Central Provident Fund Commissioner any Deputy Provident Commissioner or any Regional Provident Fund Commissioner may by order determine the amount due from any em ployer under any provision of this Act the scheme or the Family Pension Scheme or the Insurance Scheme as the case may be and for this purpose may conduct such inquiry as he may deem necessary
2 The Officer conducting the inquiry under sub section 1 shall for the purposes of such inquiry have the same powers as are vested in a Court under the Code of Civil Procedure 1908 for trying a suit in respect of the following matters namely a enforcing the attendance of any person or examining him on oath b requiring the discovery and production of documents c receiving evidence on affidavit d issuing commissions for the examination of witnesses
and any such inquiry shall be deemed to be a judicial pro ceeding within the meaning of Sections 193 and 228 and for the purpose of Section 196 of the Indian Penal Code
 It will be seen from the above provisions that the Commissioner is authorised to enforce attendance in person and also to examine any person on oath
He has the power requiring the discovery and production of documents
This power was given to the Commissioner to decide not abstract questions of law but only to determine actual concrete differences in payment of contribution and other dues by identifying the workmen
The Commissioner should exercise all his powers to collect all evidence and collate all material before coming to proper conclusion
That is the legal duty of the Commissioner
It would be failure to exercise the jurisdiction particularly when a party to the proceedings requests for summoning evidence from a particu lar person
759 We therefore allow the appeal and reverse the order of the Commissioner and that of the High Court
The matter stands remitted to the Commissioner to dispose it of afresh and in accordance with law and in the light of the observa tion made
The parties shall appear before the Commissioner to receive further orders on December 12 1989
The Commission er shall dispose of the matter within three months thereaf ter
N PV
Appeal allowed


Summary:
The appellant company used to manufacture cement and was granted mining lease for limestone and kankar by the Govern ment of Tamil Nadu in accordance with the Mineral Concession Rules 1960
The royalty was fixed under the Mines and Minerals Regulation  Development Act 1957 which is a Central Act by which the control of mines and minerals had been taken over by the Central Government for the regulation and development of minerals
Sub section 1 of section 115 of the Madras Panchayats Act 1958 enjoins that there shall be levied in every pan chayat development block a local cess at the rate of 45 paise on every rupee of land revenue payable to the Govern ment in respect of any land for every Fasli
An explanation to the said section was added and was deemed always to have been incorporated by the Tamil Nadu Panchayats Amendment and Miscellaneous Provisions Act 1964
In this explanation a fiction was created whereby even the royalty payable had been included within the definition of land revenue
The appellant filed a writ petition in the High Court challenging the competence of the State legislature to levy cess on royalty
A learned Single Judge dismissed the writ petition holding that the cess levied 693 under section 115 of the Madras panchayats Act was a tax on land and as such fell under Entry 49 of the State List of Schedule VII of the Constitution
The Division Bench dis missed the appellant s appeal and held that local cess authorised by section 115 was not land revenue but was a charge on the land itself and section 115 merely quantified the basis of the quantum of land revenue
The learned Single Judge as well as the Division Bench relied on the decision of this Court in HRS Murthy vs Collector of Chittoor  Before this Court it was contended on behalf of the appellant that the levy of cess on royalty in this case was nothing but a tax on royalty and was therefore ultra vires the State legislature
On the other hand it was contended that the cess in the present case was a levy in respect of land and could be justified or sustained either under entry 49 50 or 45 of List II of the 7th Schedule to the Constitu tion
It was further submitted that the cess having been realised on the basis of the decision of this Court in HRS Murthy case if at all the Court shall declare the said cess on royalty to be ultra vires prospectively
Allowing the appeal this Court HELD ES Venkataramiah C J Sabyasachi Mukharji Ranganath Misra BC Ray KN Singh and section Natarajan JJ per Sabyasachi Mukharji J 1 Courts of law are enjoined to gather the meaning of the Constitution from the language used and although one should interpret the words of the Constitution on the same principles of interpretation as one applied to an ordinary law but these very principles of interpretation compel one to take into account the nature and scope of the Act which requires interpretation
It has to be remembered that it is a Constitution that requires interpretation
Constitution is the mechanism under which the laws are to be made and not merely an Act which declares what the law is to be
704B C The Attorney General for the State of New South Wales vs The Brewery Employees Union of New South Wales   referred to
2 A Constitution must not be construed in any narrow or pedantic sense and construction most beneficial to the widest possible amplitude of its powers must be adopted
A broad and liberal spirit should inspire those whose duty it is to interpret the Constitution but 694 they are not free to stretch or pervert the language of the enactment in the interest of any legal or constitutional theory or even for the purposes of supplying omissions or correcting supposed errors
704D E F In re  CP Berar Sales of Motor Spirit  Lubricants Taxation Act 1938 1939 FCR p 1 and James vs Common wealth of Australia  referred to
3 It is well settled now that the various entries in the three lists are not powers but fields of legislation
The power to legislate is given by Article 246 and other articles of the Constitution
704G Calcutta Gas Co vs State of West Bengal 1962 Suppl
3 SCR 1 referred to
4 It is well settled that widest amplitude should be given to the language of these entries but some of these entries in different lists or in the same list may overlap and sometimes may also appear to be in direct conflict with each other
Then it is the duty of the court to find out its true intent and purpose and to examine a particular legislation in its pith and substance to determine whether it fits in one or the other of the lists
Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it
705A B  D HR Banthia  Ors etc
vs Union of India  Ors
   Union of India vs HS Dhillon  and DC Rataria vs Bhuwalka Brothers Ltd   referred to
5 It is clear that over a period of centuries land revenue in India has acquired a cannot active meaning of share in the produce of land to which the King or the Gov ernment is entitled to receive
707B NR Reddy  Ors
vs State of AP 1965 2 Andhra Law Times 297 and State ofAPv
NR Reddy  Ors   referred to
6 There is a clear distinction between tax directly on land and tax on income arising from land
708C Raja Jagannath Baksh Singh vs The State of UP  Anr
   referred to
695 7 Explanation to section 1151 itself makes a dis tinction between land revenue as such and royalty which by amendment is deemed to be land revenue
It is therefore recognised by the very force of that explanation and the amendment thereto that the expression royalty  in sections 115  116 of the Act cannot mean land revenue property called or conventionally known which is separate and dis tinct from royalty
707D E 8 In the instant case cess is not on land but on royalty which is included in the definition of land reve nue  None of the three lists of the 7th Schedule of the Constitution permits or authorises a State to impose tax on royalty
9 Royalty which is indirectly connected with land cannot be said to be a tax directly on land as a unit
Royalty is payable on a proportion of the mineral extracted
The Act does not use dead rent as a basis on which land is to be valued
Hence there cannot be any doubt that the impugned legislation in its pith and substance is a tax on royalty and not a tax on land
709E New Manek Chand Spinning  Weaving Mills Co Ltd  Ors
vs Municipal Corporation of the City of Allahabad  Ors
   SC Nawn vs WTO Calcutta  Ors   Asstt
Commissioner of Urban Land Tax  Ors
vs The Buckingham  Carnatic Co Ltd etc   Second Gift Fax Officer Mangalore etc
vs DH Nazareth etc
   Bhagwan Dass Jain vs Union of India  and The Western India Theatres Ltd vs The Cantonment Board Poona Cantonment   referred to
10 Royalty is directly relatable only to the minerals extracted and on the principle that the general provision is excluded by the special one royalty would be relatable to entries 23  50 of List II and not entry 49 of List II
713D 11 Royalty is a tax and as such a cess on royalty being a tax on royalty is beyond the competence of the State Legislature because section 9 of the Central Act covers the field and the State Legislature is denuded of its competence under entry 23 of List II
In any event cess on royalty cannot be sustained under entry 49 of List II as being a tax on land
Royalty on mineral rights is not a tax on land but a payment for the user of land
713F G 696 Waverly Jute Mills Co Ltd vs Raymon  Co 1 Pvt Ltd   Anant Mills Co Ltd vs State of Gujarat  Ors  The Hingir Rampur Coal Co Ltd  Ors
vs The State of Orissa  Ors   State of Orissa vs MA Tulloch  Co   Baijnath Kedia vs State of Bihar  Ors  Ms Laxminarayana Mining Co Bangalore vs Taluk Dev Board AIR  M Lal  Ors
vs The State of Bihar  Ors
 AIR 1965 Patna 491 Bherulal vs State of Rajasthan AIR  Dr SS Sharma  Anr
vs State of Punjab  Ors AIR  Saurashtra Cement  Chemi cals India Ltd vs Union of India  Anr  LN Agarwalla  Ors
vs State of Orissa AIR 1983 Orissa 210 and Ms Hira lal Rameshwar Prasad  Ors
vs The State of Madhya Pradesh  Ors MP High Court Misc
Petition No 41083 referred to
HRS Murthy vs Collector of Chittoor  Anr   overruled
12 The amounts of cess have been collected on the basis of the decision of this Court in HRS Murthy s case
The Court is therefore justified in declaring the levy of the said cess under section 115 to be ultra vires the power of the State legislature prospectively only
The respondents will not be liable for any refund of cess already paid or collected
714C D  E Per GL Oza J 1 Sub clause 1 of Section 115 provides for levy of 45 naya paise for every rupee of land revenue payable to the Government
In the explanation a fiction is created whereby even the royalty payable has been included within the defi nition of land revenue 
718A 2 The language of Entries 23 and 50 in List II clearly subjects the authority or jurisdiction on the State Legisla ture to any enactment made by the Parliament
Entry 23 talks of regulation and Entry 50 talks of taxes on mineral rights
It therefore could not be disputed that if the cess imposed under section 115 of the Madras Panchayats Act is a cess or tax on mineral rights then that jurisdiction could be exer cised by the State Legislature subject to the law enacted by the Parliament
715D E 3 Unit of charge of royalty is not only land but land  labour  capital
It is therefore clear that if royalty is a tax or an imposition or a levy it is not on land alone but it is a levy or a tax on mineral land 697 labour and capital employed in extraction of the mineral
It therefore is clear that royalty if it is imposed by the Parliament it could only be a tax not only on land but on the three things stated above
718H 719A 4 When the Legislature included royalty it went beyond its jurisdiction under Entry 49 of List II and there fore clearly is without the authority of law
719D 5 This may lead to an interesting situation
As this cess on royalty is without the authority the result will be that the cess is levied so far as lands other than the lands in which mines are situated are concerned but lands where mines are situated this levy of cess is not in accordance with the law
This anamoly could have been averted if the Legislature had used words surface rent  in place of royal ty
Even if the lands where mines are situated and which are subject to licence and mining leases even for those lands there is a charge on the basis of the surface of the land which is Sometimes described as surface rent or sometimes also as dead rent 
719E F