Case: Dantuluri Ram Raju And Ors Vs. State Of Andhra Pradesh And Anr

1. The vires of Andhra Pradesh (Krishna and Godavari Delta Area) Drainage Cess Act, 1968 (Act No.11 of 1968), hereinafter referred to as the Act, has been challenged in civil appeal No.223 of 1970 as well as in writ petition No.251 of 1971. Civil appeal No.223 has been filed on a certificate granted by the Andhra Pradesh High Court against the judgment of that Court whereby petition under Article 226 of the Constitution of India presented on behalf of the eight appellants to assail the vires of the Act was dismissed at the stage of admission. Writ petition No.251 of 1971 has been filed by 434 petitioners. The respondents in the appeal are the State of Andhra Pradesh and the Collector of West Godavari District while those in the writ petition are the State of Andhra Pradesh and the Collector of Krishna District2. The appellants in the civil appeal belong to different Taluks of the West Godavari District and own extensive areas of land in that district. As such, they are liable to pay land revenue. Petitioners Nos. 1 to 38 in the writ petition are residents of Tenneru within the area of Vijayawada Taluk. They own about 500 acres of land in and around that village. The rest of the petitioners are residents of different villages in Krishna district and own an area of about 4,000 acres in that district3. As the petition under Article 226 of the Constitution of India which is the subject of civil appeal was dismissed at the stage of admission, no affidavit on behalf of the respondents was filed in the High Court. The respondents were consequently permitted to file an affidavit in this Court. Affidavit of Shri D. Venkatdri, Assistant Secretary, Government of Andhra Pradesh was thereafter filed on behalf of the respondents. A more detailed supplementary affidavit of Shri Venkatdri has also been filed on behalf of the respondents and the same officer has filed his affidavit in opposition to the petition under Article 32 of the Constitution4. Before dealing with the different provisions of the Act and the contentions advanced, it would be apposite to reproduce the Statement of Objects and Reasons of the Bill for the purpose of understanding the historical background and the antecedent state of affairs leading up to the impugned legislation. The Statement of Objects and Reasons reads as under:"The coastal districts of East Godavari, West Godavari, Krishna and Guntur are being subjected to floods every year which cause immense damage to crops as well as private properties besides disrupting rail and road communications for considerable periods in the year. The intensity of the floods which occurred in 1953, 1962 and 1964 have highlighted the need for immediate action for solving this recurring problem and to suggest remedial measures for mitigating or avoiding in future the damage to crops and property in the area on account of similar floods. The Committee after having an extensive tour in the area, made some recommendations for improving all the drains in the delta area of the Krishna and Godavari rivers and also formation of flood moderating reservoirs across Budameru, Yerrakalva, Tammileru etc. The total cost of all the drain improvement schemes as well as the flood moderating reservoirs as recommended by the Expert Committee is estimated roughly to be Rupees 27 crores. It is considered that it might be necessary to undertake in the delta area not only the schemes and work suggested by the Expert Committee but also some other schemes and works for the purpose in view. The actual cost of all the schemes and works required to be undertaken in the delta area is likely to exceed the cost, as estimated above. In view of the present ways and means position, it is not possible to provide the necessary funds required for the purpose either under the flood control sector or under the irrigation sector of the State. It is, therefore, considered necessary to levy a drainage cess on all the lands comprised within each of the divisions in the delta of the Krishna and Godavari rivers, for a period of six years, at a rate not exceeding rupees ten per acre per annum in respect of lands in the Godavari eastern deltaic division and Godavari Central deltaic division, rupees twenty-five per acre per annum in respect of lands in the division comprising the Godavari western deltaic division and the Krishna eastern and Krishna Central deltaic division and at rupees fifteen per acre per annum in respect of lands in the Krishna western deltaic divisionIt is also proposed to constitute the proceeds of the drainage cess into a separate fund and to establish a Board to administer the said Fund and to apply the proceeds of the draninage cess derived in a division towards meeting the cost of drainage schemes undertaken in that divisionThis Bill is intended to give effect to the above objects"5. The Act came into force on 20th December, 1968. It applies to all the lands comprised within the delta areas of Krishna and Godavari rivers in the State of Andhra Pradesh. According to the preamble of the Act, it is "an Act to provide for the levy and collection of drainage cess on all lands comprised within the delta area of the Krishna and Godavari Rivers in the State of Andhra Pradesh for the purpose of raising funds to meet the expenses incurred on drainage schemes undertaken in the said delta area and for matters connected therewith". Section 2 of the Act contains various definitions. "Board" has been defined in Clause (a) to mean the Krishna and Godavari Delta Drainage Board established under Section 7 of the Act. "Delta area" according to Clause (c) means the area comprising the lands in the deltas of Krishna and Godavari rivers, irrigated whether by flow or lift, under the net work of canals taking off from the barrage near Vijayawada on the Krishna river and the anicut near Dowlaishwaram on the Godavari river. "Division" has been defined in Clause (d) to mean any of the following divisions in the delta area, namely:-(i) the Godavari eastern delta;(ii) the Godavari central delta;(iii) the area comprising the Godawari western delta, the Krishna eastern delta and the Krishna Central delta;(iv) the Krishna western delta;According to Clause (e), "drainage cess" means the tax leviable and collectable under Section 3. Clause (f) defines "drainage scheme" as under:"(f) "drainage scheme" means any scheme for the improvement of drains in the delta area and for the formation of flood moderating reservoirs in the upland areas across the rivers and streams flowing into the delta area and includes any scheme relating to the following works in the delta area which are owned or controlled by the Government or constructed or maintained by them and not handed over to any person:-(i) channels, whether natural or artificial, for the discharge of waste or surplus water, and escape channels from an irrigation work, together with dams, embankments, weirs, sluices, grovnes, pumping sets and other works connected with or auxiliary to all such channels;(ii) all works for the protection of lands from floods or from erosion;Explanation: - For the purpose of this clause, any part or stage of a scheme shall be deemed to be a scheme""Government" according to Clause (g) means the State Government while "land" has been defined in Clause (h) to mean wet or dry land. Clause (j) defines "owner" in relation to any land as meaning the person liable to pay the land revenue due on the land and includes a ryot having a permanent right of occupancy within the meaning of the Andhra Pradesh (Andhra Area) Estates Land Act, 1908. According to the explanation to that clause, the expression "person liable to pay the public revenue" in relation to any land in respect of which no public revenue is payable means the person who would have been liable to pay public revenue had it been payable on such land6. Section 3 of the Act deals with the levy and collection of drainage cess. According to sub-sec. (1) of the section there shall be levied and collected by the Government, for a period of six years from the date of the commencement of the Act, as a drainage cess on every land in the delta area comprised within a division specified in Column (2) of the Schedule, for the purpose of this Act in that division a tax at such rate per acre per annum not exceeding the rate specified in the corresponding entry in column (3) thereof, as the Government may, by notification specify in respect of that division. According to sub-section (3) of that Section, the drainage cess leviable under the section on any land shall be payable by the owner of such land while according to sub-section (1) shall prevent the Government from levying and collecting at any time after the expiration of the period of six years the drainage cess or any arrears pertaining thereto, which is leviable or collectable during the said period of six years. The Schedule referred to in the section fixes the maximum rate at which drainage cess may be collected and according to it the maximum rate shall be Rupees 10 per acre per annum for the Godavari eastern delta, and the Godavari central delta, Rupees 20 per acre per annum for the area comprising the Godavari western delta, Krishna eastern delta and the Krishna central delta and Rupees 15 per acre per annum for the Krishna western delta7. Section 4 of the Act gives the procedure to be followed before levying drainage cess. According to this section, the collector before levying the cess in respect of any land, shall cause a notice to be served on the owner of the land, requiring him to make payment of the amount of the drainage cess within 45 days of the service of the notice. Section 5 gives a right of appeal to the person aggrieved by the levy of the drainage cess, while Section 6 makes provision for order in revision by the Government. Section 7 provides for the establishment of the Krishna and Godavari Delta Drainage Board. Provision for the constitution of the proceeds of the drainage cess into a fund and its administration and application is made in Section 8 which reads as under:"8(1) The proceeds of the drainage cess levied and collected under this Act, reduced by the cost of collection as determined by the Government, shall after due appropriation made by the State Legislature by law, be constituted into a fund to be called the "Krishna and Godavari Delta Drainage Cess Fund"(2) In addition to the proceeds referred to in sub-section (1), any moneys received from the State or Central Government or any other source for the purposes of this Act, shall be credited to the Fund(3) The Fund shall vest in, and be administered by, the Board in such manner as may be prescribed(4) The Fund, in so far as it relates to the proceeds of the drainage cess levied and collected in a division, shall be applied towards meeting the cost of the drainage schemes which the Board may, with the concurrence of the Government, undertake in that division. The expenses of the Board and its Committees shall also be met out of the Fund:Provided that it shall not be necessary to obtain the concurrence of the Government as aforesaid in respect of such class of drainage schemes as may be prescribed;Provided further that the expenditure incurred by the Board for any purpose common to all or any of the divisions shall be apportioned among the divisions concerned in such manner as may be prescribed"According to Section 9, the drainage cess payable under the Act by an owner in respect of any land shall be deemed to be public revenue due upon the said land and the provisions of the Andhra Pradesh Revenue Recovery Act, 1864, shall apply. Section 10 gives power to the Government to fix instalments for payment of drainage cess while Section 11 empowers the Government to grant exemption or make reduction in case of undue hardship on account of unseen calamity or any other reasonable cause to an owner or class of owners of land. Section 12 pertains to the bar of jurisdiction of Civil Courts in respect of matters falling within the scope of the authorities acting under the Act. According to Section 13, the provisions of the Andhra pradesh Irrigation (Levy of Betterment Contribution and Advance Betterment Contribution) Act, 1955 in so far as they relate to drainage work, shall not apply to any drainage scheme under the Act. Section 14 gives powers to the Government to give directions to the Board. Rules under the Act are made by the Government under Section 15 of the Act for carrying out all or any of the purposes of the Act8. The Krishna and Godavari Delta Drainage Board Cess Fund Rules made under Section 15 of the Act were issued in April 1969. It is not necessary to refer to the different rules. For our purposes it would suffice to reproduce Clauses (1) to (3) of Rule 21 as under:"(1) The drainage cess shall be collected along with the land revenue and credited to "M.H. IX-Land Revenues". Subject to the provision under sub-sec. (1) of Section 8 at the end of each financial year, an equivalent amount shall be transferred to the Krishna and Godavari drainage cess fund account by debit to "9. Land Revenue"(2) The expenditure on the drainage schemes shall be debited to the appropriate head of account within the Consolidated Fund of the State, either in the revenue or capital head according to the expenditure falling under revenue or capital head and at the end of each financial year, an equivalent amount shall be transferred from the Krishna and Godavari Drainage Cess Fund account to the concerned head by means of a deduct entry(3) The expenditure incurred by the Board for purposes common to all or any of the divisions, like the establishment, tools and plants, shall be apportioned among the divisions concerned as far as possible in the proportion in which the expenditure is incurred on the drainage schemes in these respective divisions"9. Following notification was issued on December 17/20, 1968 under sub-section (1) of Section 3 of the Act;10. The High Court while dismissing the appellants writ petition repelled the contention that the provisions of the Act were violative of Article 14 of the Constitution and that the cess levied by the Act was a fee and not a tax. Likewise, the argument put forth on behalf of the appellants that the State Legislature was not competent to levy drainage cess and there were no effective provisions for appeal and revision did not find favour with the High Court.

Reasoning:
21. The modern trend in all progressive countries is towards establishment of a welfare State, and with this and in view, the State has to prepare plans and devise beneficent schemes for the good of the common people. The implementation of those plans and schemes entails colossal expenditure. The State has consequently to tap various sources for augmenting its income and raising the revenue Taxes are levied for this purpose, and the State is given a wide range of choice for the purpose of taxation. It is axiomatic that different situations call for different fiscal measures. The State is presumed to know the requirements of the siutation and act accordingly. No rigidity being possible, it is difficult to apply any set formula. Much greater latitude and discretion has, therefore, to be allowed to the State for the purpose of taxation in the context of article 14 of the Constitution28. Keeping the above observations in view we find that in the present case the Act contains sufficient guidelines for the fixation of the rate of cess and there is also enough material on record to justify a uniform rate of cess for each acre of land in a division of the deltaic area. The imposition of tax on land for raising general revenue is substantially different from the levy of cess for implementation of a drainage scheme for the benefit of lands in an area and the principles applicable in one case would not necessarily hold good in the otherThe question involved in the above case, in our view, was materially different and, as such, the appellants cannot derive much assistance from it, also31. We are not impressed by the above contention. The floods have a vagary and caprice of their own, and it is difficult to predicate about the behavior of flood waters. The problem which arises in one year cannot afford a proper guidance for the following year because the dimensions of the problem in the subsequent year may be hundredfold compared to those of the previous year. This is evident from the figures in the table relied upon by Dr. Singhvi. It would appear therefrom that in the year 1961 only 1,149 acres of land in the Godavari western delta were damaged by floods, while in the year 1959 the damage caused by the floods in that area covered 89,528 acres of land. The material on record further shows that during 1969 floods, an area of as much as 3,69,395 acres out of a total of 4,90,000 acres, that is, about 75 per cent of the area was damaged by floods in the Godavari western delta. It is, therefore, plain that we cannot stick to the average damage referred to by Dr. Singhvi in considering the scheme of drainage. An effective system of drainage has in the very nature of things to make provision not only for a normal rainfal but also to meet those contingenices as arise when there are unusual rains and heavy floods. It is indeed only then that the efficacy of a drainage system is proved. We also find it difficult to accede to the submission made on behalf of the appellants that we should not take into account the figures of damage done in 1969 floodsThe proposed drainage scheme has to provide for years to come adequate safeguards and protection against contingencies created by unusually heavy rains and floods. The fact that the impugned Act enacted in 1968 covered 4,90,000 acres of land in the Godavari western delta shows, in the light of subsequent 1969 floods, the foresight of the authors of the drainage scheme which is the subject of the impugned legislationWe are, therefore, of the view that the provisions of the impugned Act are not violative of Art.14 of the ConstitutionThere is no substance in the contention advanced on behalf of the appellants that the right of appeal provided by section 5 of the Act is illusory. The legislature has prescribed the maximum limit of the rate of cess and the notification issued under the Act has fixed that rate. The procedure to be adopted before the levy of the cess has been prescribed in section 4 of the Act. Section 5 gives a right of appeal to a person aggrieved by the levy of the drainage cess under section 4. The matters which can be agitated in appeal may relate to the area for which the cess is levied or the ownership of that area. In case a landowners stand is that the area owned by him is less than that of which cess is levied or that he has transferred the said land or part of it, he can agitate the matter in appeal. The fact that no discretion is given to the appellate authority to determine the rate of cess would not introduce an infirmity or make the right of appeal to be illusoryNo authority has been cited before us to show that even though maximum limit of the tax has been prescribed, the absence of a minimum limit vitiates the taxing statute. It is not necessary, however, to dilate upon this aspect of the matter as we find that there are enough guidelines in the Act in respect of the rate of cess because the rate of cess in a division has to be correlated to the amount of expenditure to be incurred on the drainage scheme in that divisionIt may also be mentioned that subsequent to the decision of the writ petition which is the subject of the present appeal, validity of the provisions of the Act was challenged in a batch of writ petitions before the Andhra Pradesh High Court. The matter was then referred to a Full Bench. The learned judges constituting the Full Bench by means of three separate judgments upheld the constitutional validity of the provisions of the Act.