MADA Market Fee Includible in Coal’s Assessable Value: CESTAT Kolkata

Bharat Coking Coal Ltd. Vs Commr. CGST & CX (CESTAT Kolkata)

The appeal arose from an Order-in-Original dated 08.02.2017 concerning Central Excise duty on coal cleared by M/s. Bharat Coking Coal Ltd. The Revenue alleged that, during March 2011 to October 2015, the appellant collected MADA Market Fee, described on invoices as “Bazaar Fee/Tax”, but did not include it in the assessable/transaction value of coal. The resulting alleged short-payment of Central Excise duty and cess was quantified at Rs.2,49,46,326/-. The Market Fee was collected at 1% and the appellant had disclosed it on its invoices, though it was not included in the ER-1 returns.

The Tribunal considered the character of the levy under Section 90A of the Bihar Mineral Area Development Authority Act, as adopted in Jharkhand, and distinguished it from the levy under Section 89. The Tribunal noted that Section 90A separately provides for a Market Area and a Market Fee on sale or transaction of commodities, with the rate capped at one per cent of sale value, while Section 89 dealt with tax on use of land. The nine-Judge Supreme Court decision in Mineral Area Development Authority v. Steel Authority of India was held to have settled the State Legislature’s competence to tax mineral-bearing land, but the Tribunal found that the Supreme Court decision did not decide whether the distinct Section 90A Market Fee was a tax or a fee.

On the nature of the levy, the Tribunal held that nomenclature is not conclusive. The character of a levy must be determined from the statutory provisions, taxing event, unit or class on which it is imposed, purpose and the existence of a reasonable quid pro quo. The Market Fee was collected under a statutory framework providing for declaration of market areas, licensing, assessment, collection, deposit of the amounts into the State fund and their allocation for civic amenities, infrastructure and marketing facilities. The Tribunal found the statutory scheme, including the specified developmental purposes, sufficient to characterize the impost as a fee rather than a tax. The existence of administrative machinery for assessment, recovery, refund, penalty and appeal did not convert the fee into a tax.

Applying Section 4 of the Central Excise Act, the Tribunal held that the Market Fee was an expenditure/amount connected with the sale and, because it was not an excise duty, sales tax or other tax actually paid or payable on the goods, it did not qualify for exclusion from transaction value. The 1% Market Fee collected from customers was therefore required to be included in the assessable/transaction value of coal.

The Tribunal nevertheless rejected the extended-period demand. It noted the prolonged and unsettled litigation over the State’s competence, including the earlier Patna High Court decision and the subsequent nine-Judge Supreme Court decision, and accepted that the appellant could bona fide have believed the levy to be a tax excluded from assessable value. The invoice itself clearly disclosed MADA Market Fee at 1%, making suppression difficult to allege. Accordingly, the extended-period demand was set aside, while differential Central Excise duty for the normal limitation period remained payable with interest. The penalty imposed by the lower authority was also set aside, and the appeal was disposed of on those terms.

Cases Discussed

• Central Coalfields Limited & Others v. The State of Bihar & Others [1999 SCC OnLine Pat 198]
• State of Bihar v. Indian Aluminium Company [(1997) 8 SCC 360]
• The India Cement Ltd. v. State of Tamil Nadu (AIR 1990 SC 85)
• Eastern Coalfields Ltd. v. Commissioner of Central Excise, Bolpur (Final Order No. 75656-75666 of 2025)
• Koperteck Metals Pvt. Ltd. v. Commissioner of CGST & Central Excise, New Delhi (Final Order No. 59511-59720 of 2024)
• H.M. Sudhundra Tirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowment, Mysore (1963 AIR 1966)

FULL TEXT OF THE CESTAT KOLKATA ORDER

Aggrieved by the Order-in-Original No.07/CEX/COMMR/DNB/2017 dated 08.02.2017 passed by Commissioner of Central Excise & Service Tax, Dhanbad, the appellant has filed the impugned appeal, assailing the correctness and legality of the said order.

2. The appellant M/s. Bharat Coking Coal Ltd., a Govt. of India Undertaking is a 100% subsidiary of M/s. Coal India Ltd. and is engaged in mining and selling of coal in the state of Jharkhand. Central Excise Duty on Coal @ 5% ad valorem was levied w.e.f. 01.03.2011. For purpose of levying Central Excise duty on coal, the basic price as fixed by M/s. Coal India Ltd. was considered as the assessable value while with reference to auction sales of coal, the agreed sale price along with other charges like surface transportation charge etc. was considered as the assessable value. This however excluded taxes and levies charged to the customers as indicated in the excise/sales invoice.

3. A show cause notice dated 01/03.02.2016 was issued to the appellant by the jurisdictional authority, alleging suppression of the actual transaction value by not including the value of Market Area Development Authority Market Fee, loosely nomenclatured as “Bazaar Tax/Fee” collected by the appellant, from their customers, during the period March 2011 to October 2015. It is therefore the case of the Revenue that the appellant failed to pay appropriate Central Excise Duty (along with cess), as leviable on the said goods. The appellant have therefore been issued a show cause notice for allegedly evading Central Excise Duty (including cess) amounting to Rs.2,49,46,326/- (BED Rs.2,43,28,850/-, Education Cess Rs.4,11,651/- and Secondary and Higher Education Cess Rs.2,05,825/-), on the value of goods cleared during the aforestated period.

4. It was in the course of the audit of the appellant, undertaken in October 2013 for the period February-September 2013, that the department noticed that the appellant was effecting clearance of coal on payment of Central Excise duty, however, was not including in the transaction/assessable value certain cost elements for the purpose of levy of Central Excise duty, levied by way of MADA Market Fe and collected by the appellant from their customers, resulting in aforestated short payment of duty. During the course of the scrutiny of the sales invoices, the department noticed that this Market Fee was being charged and collected @ 1% of the invoice value. Accordingly, the Range Officer vide letter dated 24.09.2015, followed by communications dated 03.11.2015, 18.11.2015 and 06.01.2016, called from the appellant the details of “Bazaar Fee/Tax” collected from their customers, during the period aforestated. Monthwise details of such sums collected, were communicated by the appellant to the authorities vide their letter No.BCCL/KA/FIN/2015-16/16/353 dated 22.01.2016, whereby the Revenue determined that the appellant had collected an amount of Rs.41,78,32,279/- from their customers, during the said period (March 2011 to October 2015) towards the said “Bazaar Fee/Tax”. The Revenue‟s case therefore concerns about non-inclusion of this sum (which was collected from the buyers) in the transaction value, for purpose of levy of Central Excise duty. It is the Revenue‟s case that this MADA Market Fee, referred to as “Bazaar Fee/Tax” ought to be an ingredient for determination of transaction value for purpose of assessment of goods and to determine the quantum of the levy chargeable and payable amount of Central Excise Duty.

5. In the meanwhile the very powers and competence of the State Government for levy of such tax by the State Government was subject to question and challenged by the various coal companies including the appellant before the hon‟ble Patna High Court. Vide its order dated 24.03.1999 the hon‟ble High Court in the case of Central Coalfields Limited & Others v. The State of Bihar & Others [1999 SCC OnLine Pat 198] held that the State Legislature was not empowered to tax coal mining land as it fell within the powers vested in the Central Government. The levy of said tax/fee by the State Government was therefore held as ultra vires. The material finding rendered by hon‟ble Patna High Court in this regard is as follows :

”25.It is clear that the Act covers and deals with the same matter which is covered and dealt with by M.M.R.D. Act. Section 89 is the part of the overall scheme of the Act and it has been enacted in order to generate funds to meet the expenditure incurred by the Authority in the performance of functions under the Act. That apart as mentioned above, it is not open to State Legislature to tax coal mining land. The Act has, thus, trespassed into forbidden territory and, therefore, it must suffer.

26. SECOND POINT/SUBMISSION

27. Section 89 as substituted by the Amendment Act is as follows:-

”89. Levy of Tax on use of land for other than Agricultural and Residential Purposes – (1) The Authority shall subject to the provisions of this Act and Rules framed thereunder levy tax, by notification published in the Official Gazette, on land being used by any person, group of persons, company, the Central Government or the State Government, local or Corporate Body for mining, Commercial or Industrial purposes with the prior approval of the State Government;

Provided that the tax so levied shall not exceed Rupees 1.50 per square meter annually for any such land but such tax shall not be levied on land which is subject to Holding Tax.

(2) The State Government shall, out of the tax so levied and collected, determine the amount to be deposited into the Consolidated Fund of the State Government from time to time.”

28. The submission of the learned counsel for the petitioners is that the section 89 imposes tax on ―use of land‖ and not on land. The learned Advocate General and the learned counsel for the Mineral Development Area Authority, on the other hand, submitted that it is a case of tax on land which is covered by Entry 49 of List II of 7th Schedule of the Constitution.

29. What constitutes ―tax on land‖ has been settled by the Apex Court in series of its decisions. It is sufficient to refer to the latest decisions in State of Bihar v. Indian Aluminium Company [(1997) 8 SCC 360] which contains the summary of law on the subject laid down by the Apex Court in various cases. In the said case, the Apex Court held that ―Entry 49 of List II has been interpreted to mean the levy of tax directly on land as a unit. The land has been regarded as meaning the land on surface and also below the surface‖. In that case, the Apex Court declared that the Bihar Forest Restoration And Improvement Of Degraded Forest Land tax, is ultra vires on the ground that it is a tax ―on use of various land and not on the forest land as such‖. 30. The caption of section 89 states that levy of tax is ―on use of land for other than agricultural and residential purposes‖. Sub-section (1) of the said section says that the Authority shall levy tax ―on land being used‖ for mining, commercial and industrial purposes. It means that tax can be imposed only when land is used for any of the above three purposes. The tax is, thus, dependent on use of the land. If there is no use of the land, there is no tax. In The India Cement Ltd. v. State of Tamil Nadu (AIR 1990 SC 85), levy of cess on royalty or mineral rights was declared bad on the ground that it is not a tax on land. In this connection, the Apex Court observed as follows:-

”23. …..In the Western India Threatres Ltd. v. The Cantonment Board, Poona Cantonment (1959) 2 Suppl. SCR 63 at p. 69 : (AIR 1959 SC 582 AT P. 585), it was held that an entertainment tax is dependent upon whether there would or would not be a show in a cinema house. If there is no show, there is no tax.It cannot be a tax on profession or calling. Profession tax does not depend on the exercise of one‘s profession but only concerns itself with the right to practice. It appears that in the instant case also no tax can be levied or is leviable under the impugned Act if no mining activities are carried on. Hence, it is manifest that it is not related to land as a unit which is the only method of valuation of land under entry 49 of list II, but is relatable to minerals extracted…….”

31. It is, therefore, clear that the tax is not on land as a unit and it is not covered by Entry 49 of List II of 7th. Schedule of the Constitution. The State Legislature has no power to enact such a provision.

32. That apart, the Authority under section 89 of the Act can levy tax ―subject to the provisions of this Act and rules framed thereunder‖. The State Government has framed rules in 1994 which have provided for filing of returns by assessee, assessment of his tax and payment of the same by him. The ―assessee” has been defined in Rule 2(h) as under:—

”2(h) ―Assessee”—means any person, group of persons company, the Central or the State Government, Local or corporate Body or Undertaking using land for other than agricultural or residential purposes.‖

33. The assessee is, thus, a person who uses land for other than agricultural and residential purposes. The assessee, therefore, may or may not be the owner of the land. When tax imposed is not on owner but on the person who uses the land, it cannot be said to be a ―tax onland‖. In this regard, the Apex Court in State of Bihar v. Indian Aluminium Company (supra) has laid down as under:—

”18. One of the facets of tax being levied on land is that the primary responsibility of the payment of tax is on the owner of the land. In the instant case the levy is not on the general ownership of the land but is on the person who uses it and who may or may not be the owner. The primary liability is on the use by the occupier and if the occupier and the owner are two different persons the liability would be that of the occupier alone and not of the owner.‖

34. The learned Advocate General and the learned counsel for the Mineral Development Area Authority have submitted that the State Legislature by enacting section 89 has not subjected use of land to tax but it has imposed tax on such land which is being used for mining, commercial and industrial purposes. They say that the expression ―being used‖ has been employed as a mechanism to select the land for taxation. According to the learned counsel, expression ―land being used‖ is an indicator showing the subject of taxation. Their further submission is that as the rate of tax has been fixed by the proviso at the flat rate of Rs. 1.50 per square meter and the tax has been treated at par with the ‗holding tax‘ under the Bihar & Orissa Municipal Act, it is directly connected with the land and is squarely covered by the Entry 49 of List II of the 7th. Schedule of the Constitution. It has also been submitted that the caption of section 89, which states that levy of tax is on use of land, is due to ill drafting and is, therefore, liable to be ignored. It is not possible to accede to the said submissions.

35. As mentioned before, the Act deals with the development of coal mining area only. The question of selection of land for taxation, therefore, does not arise. Even the coal mining area is not liable to be taxed unless it is used for one of the three purposes mentioned in section 89. The taxing event is the use of land. Merely because the proviso has laid down measure of tax at flat rate and has excluded the land which has been subjected to holding tax from purview of section 89, the nature of tax which is clear from the caption as well as subsection (1) of the said section, cannot be changed. It is also not a case where caption of the section is inconsistent with the main provisions. According to the caption, levy of tax is ―on use of land for other than agricultural and residential purposes‖. After excluding the said two purposes, what is left is the mining, commercial and industrial purposes, which have been mentioned in sub-section (1).

36. That apart as observed while dealing with the first point, it is not open to the State Legislature to enact any law subjecting coal-mining land and mineral-bearing land to tax, royalty etc. Even if it is presumed that section 89 imposes tax on land, which, in the instant case, is the coal mining land with which the Act is concerned, the same cannot be sustained because the State Legislature has no power to impose tax on such land. For this reason also, section 89 has to go.

37. Goodricke Group Ltd. v. State of W.B. (1995 Supp. (1) SCC 707) and Ajoy Kumar Mukherjee v. Local Board of Barpeta (AIR 1965 SC 1561), on which heavy reliance has been placed by the learned counsel for the respondents cannot be of any help. Goodricke Group Ltd. case has already been explained and distinguished by the Apex Court in State of Orissa v. Mahanadi Coal fields Ltd. (supra) with the observation that there ―the Act was held to be a law relating to tax on land and that makes all the difference‖. Ajoy Kumar Mukherjee case was also distinguished for the similar reason in Orissa Cement Ltd. v. State of Orissa (supra).

38. Although in the writ petitions challenge is made to the Bihar Coal Mining Area Development Authority (Amendment) Act, 1992, but the learned counsel for the petitioners during the course of their arguments have stated that the petitioners are really aggrieved by section 89 and the rules framed thereunder only and they are, therefore, confining their challenge to the said provisions only. It is, therefore, not necessary to declare whole of the Amendment Act as ultra vires. Moreover, there is no challenge to the main Act.

39. For the reasons given above, these writ petitions are allowed. Section 89 of the Bihar Coal Mining Area Development Authority Act,1986, as amended by the Bihar Coal Mining Area Development Authority (Amendment) Act 1992 and the rules framed there under namely the Bihar Mineral Area Development Authority (Land Use Tax)Rules, 1994, are declared ultra vires. The assessment orders, demand notices and other notices issued under or pursuant to section

89 and the rules are quashed. The respondents are directed not to realize any tax under and in pursuance of the section 89 and the rules. No costs.”

6. The aforesaid decision of Patna High Court was challenged before the hon‟ble apex court by the State Government in the case of Mining Area Development Authority & Ors v. SAIL & Ors. [2011 (4) SCC 450] and the subject matter subsequently came to be referred to a Bench of nine judges of the apex court noting that there was a contrary view in the case of State of West Bengal v. Kesoram Industries Ltd.[2004 (10) SCC 201]. The nine Judges Bench vide its judgement dated 25.07.2024 in the case of Mineral Area Development Authority v. Steel Authority of India Ltd. [2024 (21) CENTAX 378 (SC)] held that the State Legislature had the power to tax mineral right and it enjoyed the legislative competence under Article 246A read with Entry 49 of List II to tax land which comprises of mines and quarries. Mineral bearing land falls within description of “Land” – [Entry 49 of List II]. The relevant portion of the judgement of the nine judges Bench is reproduced hereinbelow:

”275. In view of the above discussion, we can summarize the following principles for a tax under Entry 49 of List II:

(i) The expression ―lands‖ means all kinds of lands irrespective of the use to which the land is put;

………………….

(vii) A tax levied on the activity or service rendered on or in connection with lands and buildings does not fall within the description of taxes on lands and buildings under Entry 49 of List II;

(viii) The use to which the land is put does not affect the competence of the State legislature to tax it; and

(ix) The legislature may take into account the use of land for determining the measure of taxation under Entry 49 of List II.”

7. It is not disputed that the appellant noticee is charging 1% of value of sale of coal towards MADA Fee, commonly held by noticee as a “Bazaar Fee/Tax” levied under section 90A(i) of the Bihar Mineral Area Development Authority Act, 19861, as amended and adopted in the state of Jharkhand vide notification dated 15.02.2001 as Jharkhand Mineral Area Development Authority Act, 2001. The fee in question is leviable under Section 90A of the act ibid and not in terms of Section 89 of the Act. The two sections read very differently, use different terminologies and were introduced to the main statute by virtue of separate sections viz. Section 8 and Section 10 of the Amendment Act, 1992 (24 of 1992) respectively. The two sections read as :

89. [Levy of tax on use of land for other than agricultural and residential purposes. [New Section 89 Substituted for old Section 89 vide Section 8 of the (Amendment) Act, 1992. [24 of 1992]]

(1) The Authority shall subject to the provisions of this Act, and Rules framed thereunder levy tax, by notification published in the Official Gazette, on land-being used by any person, group of persons, company, the Central Government or the State Government, local or Corporate Body for mining, Commercial or Industrial purposes with the prior approval of the State Government: Provided that the tax so levied shall not exceed Rupees 1.50 per square meter annually for any such land but such tax shall not be levied on land which is subject to Holding Tax. (2) The State Government shall, out of the tax so levied and collected, determine the amount to be deposited into the consolidated Fund of the State Government from time to time.] …………………

………………..

90A. [New Section 90A added by Section 10 of the (Amendment) Act, 1992. [24 of 1992].]

Declaration and purpose of Market Area-The State Government may, by notification in the Official Gazette, declare any area as a Market Area where sale or transaction of commodities takes place with the purpose to provide civic amenities, infrastructure and marketing facilities subject to the following conditions:-

(i) Market-fee shall be chargeable on sale or transaction of any commodity at a rate which may, by the State Government in the Official Gazette, be determined from time to time:

Provided that the rate so fixed shall not be more than One percentum of the sale value of the commodity.

(ii) The Authority may, with the approval of the State Government, make a list of such chargeable commodities and may add, amend or cancel any of the items of commodity specified in the said list, by notification in the Official Gazette:

Provided that no such commodity shall be included in the list of chargeable commodities under this Act on which Market-Fee is chargeable under the Bihar State Agriculture Produce Market‘s Act, 1960.

(iii) A person or Commercial concern engaged in the sale, transaction or trade of commodities specified in the list as mentioned in clause (ii) shall be required to obtain a licence from the Authority concerned, on payment of fee to be prescribed:

Provided that the rate of the licence fee so fixed shall not be more than Rupees Two Hundred annually.]

8. Coal is a notified commodity under the Mining Area Development Authority Act and the market fee collected is required to be deposited with the treasury. The said amount collected is shared between the State Government and the Mineral Area Development Authority (MADA) for provisioning of civic amenities. It is the Revenue‟s case that the said Fee is imposed and collected for a given and specified purpose of developmental related work in the areas of health and sanitation, environmental protection in the districts of Dhanbad and Bokaro, for setting up/maintenance of crematorium and burial ground, providing of maternity facilities, prevention from epidemic, water supply (through stand post) and are provided free of cost in the coal-belt(mineral area) to the inhabitants.

9. The show cause notice alleged that the said Market Fee or “Bazaar Fee/Tax” as collected by the appellants from their buyers, was actually different from a levy of tax as the former was a sort of a “user charge”, in lieu of services provisioned by the institutions- thereby strongly and clearly displaying an element of quid pro quo and was therefore in the nature of a fee. It is for this reason that the notice proposed the inclusion of the said fee in the computation of assessable value and determination of transaction value. It is the revenue‟s case that this “fee” like royalty, transit fee, entry tax etc. was required to be included while arriving at the assessable value. Pointing out that the statutory provisions being unambiguous only taxes leviable on the goods cleared, could be considered for exclusion from the costing structure and determination of assessable value. It further added that since the present levy was not on goods i.e. cleared coal but on coal bearing land and it ultimately being a cost component of coal produced from the said land, would be required to be taken into account for purpose of transaction value determination. It therefore referred to the definition of “transaction value”, in Section 4 of the Central Excise Act to emphasise its inclusion in the assessable value. Relevant provision of Section 4 is extracted below: –

SECTION [4. Valuation of excisable goods for purposes of charging of duty of excise. — (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall –

(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value;

(b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed.

[Explanation. — For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum- duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods.]

(2) The provisions of this section shall not apply in respect of any excisable goods for which a tariff value has been fixed under sub-section (2) of section 3.

(3) For the purpose of this section,-

(a) ―assessee” means the person who is liable to pay the duty of excise under this Act and includes his agent;

(b) persons shall be deemed to be ―related” if –

(i) they are inter-connected undertakings;

(ii) they are relatives;

(iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub-distributor of such distributor; or

(iv) they are so associated that they have interest, directly or indirectly, in the business of each other.

Explanation ……………….

(c) ―place of removal”means –

(i) a factory or any other place or premises of production or manufacture of the excisable goods;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited without [payment of duty;]

[(iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;] from where such goods are removed;

(d) ”transaction value” means the price actually paid or payable for the goods, when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to, any amount charged for, or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does not include the amount of duty of excise, sales tax and other taxes, if any, actually paid or actually payable on such goods.]

Submissions

10. Shri Rajeev Agarwal, Ld.Counsel for the appellant has argued before us that in view of the hon‟ble apex court upholding the competence of the State Legislature in levying the said „Bazaar Tax‟, – it therefore is a “Tax” (imposed by the State Government) and being so, would not be includible for the determination of transaction value for purpose of ascertaining the assessable value for payment of Central Excise Duty. The Ld.Counsel sought to draw an analogy from this Tribunal‟s decision in the case of Eastern Coalfields Ltd. v. Commissioner of Central Excise, Bolpur [Final Order NO.75656- 75666/2025 dated 11.03.2025], wherein the co-ordinate bench of this Tribunal held that the levy of Rural Employment and Rural Production Cess, Primary Education Cess, PWD Road Cess, Asansol Mines Board of Health Cess payable by the coal companies to the State Government were not includible in the assessable value for payment of Central Excise Duty on coal.

11. As for the extended period of limitation invoked in the show cause notice, the Ld.Advocate submitted that there certainly was no intent to evade payment of duty. He fairly conceded that the said sums were however collected from the buyers and were not considered for computation of assessable value, hence not shown in the ER-1 returns. He however points out that the said amount was indicated on the invoices raised, thereby making clear their intents of not concealing anything. Being a Public Sector Organization there was no room for any willful intent to evade duty payment. For the said reason he submitted that no penalty was imposable on the appellant.

12. On the other hand, the Ld.AR Sri S.K.Jha, for the Revenue contends that the said Market Fee or “Bazaar Tax” is neither a tax nor a duty component as would entitle its exclusion from the ambit of transaction value. He submits that instead the said sum is an expenditure/expense, collected from the customers, and is therefore includible in the transaction value for payment of Central Excise Duty/cess as leviable. He strongly asserts that it is a fee as leviable in terms of Section 90A of the Act and not tax as leviable under Section 89 of the Act. He further states that the element of quid pro quo is very much evident, as it itself is made out in the statutory provisions and this was the determinative test to convincingly hold the true nature of Market Fee as a Fee and not tax.

13. Post-conclusion of the hearing held on June 19, 2019, before this Tribunal, both sides were directed to file their Written Submissions for which sufficient time upto to 05.07.2025 was granted. Written Submissions of the two sides have now been received in the matter and taken on record. As observed earlier, the essential question before us in the matter remains the determination, as to whether the subject impost is in the nature of a tax or a fee, which determination would accordingly hold good for inclusion or not of the said Market Fee in the determination of assessable value under Section 4 of the Central Excise Act. The arguments rendered by both the sides in the matter will fall for such a determination in the matter.

Discussion & Analysis

14. The appellant not canvassing against and not disputing the competence of the State Legislature to levy Tax on coal bearing land, having been upheld by the hon‟ble apex court, the only question that now remains for our consideration is the ascertainment of the nature of this levy as falls from the statutory provisions, its objectives and purpose, as to whether the same is in the nature of “Tax” or a “Fee”.

15. At the outset it can be noted from records that in effect the adjudication carried out in the matter by the lower authority has been rendered ex parte. The Ld.Commissioner has stated in Para 6 that no defence reply was tendered by the appellant even though the show cause notice was issued on 01/03.02.2016. The Adjudicating authority has categorically noted in the matter that –

“the Noticee have not submitted their defence reply till date even after being granted sufficient time after personal hearing commenced on 14.12.2016 where the Authorized Representative of the Noticee had promised to submit the same by 10.01.2016.”

Assuming thus, as considerable time had elapsed, that the noticee indended to prolong the adjudication and that they had nothing to say in person, the Ld.Adjudicating authority proceeded to decide the matter on the basis of available documents and evidence as available with the Department.

16. The Ld.Adjudicating authority has noted that Noticee were ―charging and collecting Bazaar Fee/Tax (MADA Fee) from their customers on the value of coal, inclusive of basic value and other cost element such as surface transportation charges, breaking charges etc., they however did not include this MADA Fee in the assessable value for discharging Central Excise Duty on clearance of Coal.‖ The ld. adjudicating authority further noted that “Bazaar Fee” was charged on “Coke-Semi coke of coal” under the Bihar Coal Mining Area Development Authority Act, 1986 and Jharkhand Mineral Area Development Act (Amendment and Adoption) Act, 2001 for any sale of coal and other notified non-agricultural commodities in the area notified under MADA. Proceeds for which were required to be deposited in the Government Treasury.

17. It is in terms of powers vested in the Authority by virtue of Section 128 of the Act, that the state of Jharkhand has prescribed Mineral Development Authority Market Fee Rules, 2010, that regulate and carry out the purpose and object of the enactment. These rules provide for detailed procedures relating to all aspects and sphere of activity to carry out the purpose of the said act like issuance and cancellation of licence, declaration of market area, levy and collection of Licence Fee and/or Market Fee, its deposit with the State Government (inclusive of the procedures for temporary deposit in a separate authority fund), filing of returns, their assessment, appeal, processes, issuance of demand notice, recovery provisions, appeals and other areas of working concerned like interest, refund, penal and other miscellaneous provisions etc. Various formats for carrying out the purpose and objectives of the Act have thus been prescribed.

18. We note that this Market Fee (Bazaar Fee) so collected by the appellant is required to be statutorily deposited in the State Fund Section 90B(2) of the Act, from where the authority prescribed shall make yearly appropriate allocations for the provisioning of civic amenities, infractructure and marketing facilities within the concerned area. In terms of Rule 19 of Jharkhand Mineral Area Development Authority Market Fee Rules, 2010, the said Market Fee collected is required to be temporarily deposited in a separate authority fund, and thereafter required to be deposited into the State fund on 15th day of each month. In terms of Section 4 of the Central Excise Act, 1944, Sub- section 1(a) thereof, a duty of Excise is chargeable on excisable goods with reference to the value as at the time of removal of such goods for delivery at the time and place of removal, where the assessee and the buyer of the goods are not related and the price is the sole consideration for the same. The said transaction value would include in addition to the amounts charged as price any amount that the buyer is liable to pay in connection with the sale, including any amount charged for provision of advertising, publicity, marketing/selling, organization expenses, storage, outward handling etc. However, in terms of the statutory provisions the transaction value excludes the amount of Duty of Excise, Sales Tax and other Taxes, if any actually paid or payable. In the aforesaid backdrop the Ld.Commissioner has recorded a finding that the “Bazaar Fee” was collected on basic value of coal for specified purpose of development work in the mineral area (coal belt). Relevant para of his order is extracted below:

”12. In the instant case, I find that the noticee charged & collected Bazar Fee @1% on the basic price of coal from their customers on sale of Coal, but did not include the same in the assessable value for discharging Central Excise duty on clearance of coal to the Government exchequer. In the instant case, the Bazar Fee was collected on basic value of coal for specified purpose of development work in the mineral area (coal belt) viz. health and sanitation schemes, protection of environment from the pollution in Dhanbad and Bokaro Districts, crematorium and burial ground, maternity facilities prevention from epidemic, water supply (through stand post) free of cost in the given areas etc.”

19. Notification dated 12.05.2010, issued by the Urban Development Department of the State Government of Jharkhand laying down the Mineral Area Development Authority Market Fee Rules, 2010 provides for the manner of declaration of Market Area, grant/cancellation of Licence, filing of Returns , assessment and deposit of Market Fee, recovery of Short Levy if any along with interest etc. amongst other provisions as required for regulation and operation of the Act. The said rules in themselves are a complete code as they cater to the mechanics of refunds, demand, penalty, appeal, interest amongst others. A feeble argument to suggest that in view of existence of such an elaborate scheme to deal with and administer the Market Fee collected, was indicative of the fact that the same was merely a tax, was also raised. We are not amused by the said logic for essentially two reasons viz. (i) that it is nowhere a prohibition in law to lay down well established procedures and practices regulating the mechanics of the Market Fee levied and collected. It, but is for sake of ease of, for both the administrators and the administered. Such well defined procedures bring about greater clarity in management of the Funds, provide consistency and transparency to the working of the statutory provisions and are an aid to smooth governance (ii) We also draw a parallel to emphasize that such structured and notified provisions are not an exclusive prerogative of administration of a “tax” levy. Thus for instance The Andhra Pradesh Agricultural Produce and Livestock Market Act, 1966, that levies “Market Fee” on notified agricultural produce, live stock etc. similarly provides for a well laid out extensive mechanism for its administration and working. So is the position with regard to several other statutes. This argument thus cuts no ice in the matter.

20. Section 90(A) of the Bihar Mineral Area Development Authority Act, 1986, provides for the declaration of “Market Area” where sale and transaction of commodities takes place besides the levy of “Market Fee”. The objective of such a levy is to provide for civic amenities, infrastructure and marketing facilities in the said area as indicated in the section itself (refer para 7 above for the legal provision). The “Market Fee” at the rate 1% was fixed on the value of coal cleared, as a non-agricultural product. Section 90B of the Act provides for collection of Market Fee and allocation of Fund for Developmental purposes. Given this backdrop the Ld.Commissioner too had arrived at the following findings to distinguish “Market Fee” (also colloquily referred to as Bazar Fee/Bazar Tax) from a “Tax” holding it to be a user charge in lieu of certain specific services provided in the realm of developmental sphere of the notified area; that is to say as by way of a symbiotic relationship as a trade-off between collection of the levy and execution of developmental programmes.

21. In this regard, for sake of records we would like to place on record the following findings of the ld.Commissioner, thus :

”15. I observe that the Bazaar Tax charges are nothing but a ‗fee‘ which is charged from the noticee for the purpose of developmental activities of the concerned mining and operational area. In other words such amount is nothing but a cost incurred by the noticee for the purposes of mining out minerals/coal and hence such element of cost necessarily enriches the value of product produced i.e. coal. Therefore, such charges are to be included in the assessable value of the coal produced by the noticee in terms of Section 4 of the Act.

15.1 Moreover, I find that such Bazar fee is charged for a specific purpose by the local authority and its nature and character cannot, at all be equated with that of tax. The subject Mada charges (Bazar fee) is nothing but a ‗fee‘ which is taken for a specific purpose of developmental work of the concerned region and therefore is a cost incurred by the noticee, hence must form a part of assessable value.

15.3 Even otherwise also I find that the noticee on their own are including (i) Royalty Charges (ii) Stowing Excise duty in the assessable value of coal produced by them. I also place reliance of above facts and accordingly I hold that the Bazar Fee (MADA Fee) should also be included in the assessable value for clearance of coal.

15.4 From the forgoing discussion, I hold that ―Bazar fee‖ are not taxes or duties which require exclusion from the ambit of ”transaction value‘ as per Section 4(3)(d) of the Act, instead these are expenditures/expenses collected from the customers and therefore includible in the transaction value for payment of Central Excise duty and Ed.Cess and S&H Ed. Cess and thus the amount so collected under the head ―Bazar Fee‖ in course of sale of coal are part and parcel of the transaction value on which Central Excise duty is required to be paid. The noticee did not pay Central Excise duty on such amount by not declaring and including such element in the transaction value and therefore, the same recoverable under Section 11A(4) of the Act from them alongwith interest in terms of Section 11AA of the Act.‖

22. In their written submissions filed post-hearing the appellant, has submitted that vide Notification dated 12.05.2010 issued by the State Government “Market Fee/Bazaar Tax” was levied (statutorily known as “Market Fee”), and that the appellant was making such payments to the State Government which are in the nature of “Tax” and not “Fee”, therefore such expenses were allowable as a deduction from the computation of assessable value, by virtue of the provisions of the Central Excise Act. The Ld.Counsel has further pointed out that merely because the term “Market Fee” has been used in the Act, the fact of such payment cannot be assumed to be in the nature of “fee”. He therefore emphasizes that the nomenclature could not be a determinate criteria to ascertain whether the impugned levy is “Tax” or a “Fee”. We find no qualms in the nomenclatural proposition of the Ld.Counsel for the appellant. The nomenclature made use of in the statute though a very important indicator however cannot ipso facto be a conclusive determinate to arrive at the nature of the levy. Whether a particular levy is a tax or a fee can only be decided by reference to the terms of the Section and other provisions of the statute. Certainly to ascertain whether the levy is a tax or a fee would however call for scrutiny and analysis in the backdrop of judicial pronouncements and analogies. The variation in phraseology is of no practical importance in determining the true and essential character of the levy as a fee or a tax. The label will certainly not clarify or determine the nature of the levy. The character of the levy will have to be deduced and determined from its nature, specifics of the taxing event, the unit-class upon which the levy is imposed and for whose benefit the same is intended.

23. The determination of a levy whether “Tax” or “Fee” would be dependent on the nature of its scope and the purpose meant to be subserved, the existence of a quid pro quo between the levy and the purpose it is put to sub-serve.

24. The distribution of power to levy a tax is not identical with that of power to levy a fee. Taxes are specifically distributed between the Union and State Legislature by way of various entries in List I and List II and Residuary Power (to levy a tax not enumerated under Entry 97 to List I, – exclusively for the Parliament). On the other hand entry relating to fee has been specifically mentioned at the end of the List I, II and III in the 7th Schedule vide entry No.96, 66 and 47 respectively. Every Legislature has power to levy fee along with power to legislate with respect to substantive matters. The Legislature may, while making a law relating to a special matter within its competence levy a fee with reference to services that would be rendered by the State under such law. While taxes are specifically divided between List I and List II entries, it is not so for the fees which is included as a general entry empowering the legislature to levy a fee in respect of any matter over which it has legislative competence.

25. Chapter II of the Urban Development Department‟s Notification of the State of Jharkhand dated 12.05.2010, prescribing the Mineral Area Development Authority Market Fee Rules, as concerned with the declaration of Market Area, grant of Licence or its cancellation, whereby the State Government was empowered to declare the whole area of the Authority or part thereof as a Market Area where production/sale/transaction of commodities takes place. MADA thereunder is empowered (with the approval of the State Government) to make a list of such commodities as well as collect such Market Fee as levied by the State Government over the commodity, for which purpose such person, company, corporate body engaged in the production/sale or transaction of trade is required to obtain a licence in the prescribed format. Thereunder the designated officers are required to assess the Market Fee as leviable on production, sale, transaction, trade or commerce of the concerned commodity. Rules provide for not permitting such sale/transaction or trade in the market area without acquiring the aforesaid licence. The mechanics of the operation of such amount (Market Fee) as levied and collected from and by the licence holders are provided for in Clause 18, 19 and 20 of the said Rules.

26. For a holistic appreciation of the facts, the legal postulates and the issue involved, it would be necessary to place on record the legal provisions of Bihar Coal Mining Development Authority Act of 1986 (Act 9 of 1986) (published on 20th June 1970). This Act provides for growth and development of coal mining areas in the state of Bihar and for matters ancillary thereto. Vide Notification No.5 dated 15.02.2001 issued by the Government of Jharkhand, the Bihar Mineral Area Development Authority Act came to be known as Jharkhand Khaniz Ksehtra Vikas Adhiniyam (Jharkhand State Mineral Area Development Authority) Act, 2010 (the word Bihar in the original enactment came to be read as Jharkhand). The following legal provisions as have a play in the matter are thus indicated below:

URBAN DEVELOPMENT DEPARTMENT
NOTIFICATION
The 12th May, 2010

CHAPTER-I

1. Short Title, extent and commencement

(i) These Rules may be called Mineral Area Development Authority Market Fee Rules, 2010.

(ii) …………..

(iii) ……………

2. DEFINITIONS :

(i) ………………….

(ii) ………………….

……………………. ……………………….

CHAPTER-II

Declaration of Market Area, Grant of Licence and Cancellation

3. The State Government may by notification in the Official Gazette declare the whole area of the authority or part thereof as market area where production, sale or transaction of commodities takes place.

4. The Authority may with approval of the State Government make a list of commodities, the production, sale or transaction of which takes place in the market area and may add, delete or amend any of the items or rate of fee of the commodity specified in the list notified in the Official Gazette. The power to include or exclude any of the items of commodity vests with the State Government.

5. A person, company or corporate body engaged in the production, sale or transaction or trade of commodities specified in the list under the Act & the Rules shall be required to obtain a licence in Form ‘A’ from the Revenue Officer on payment of fee to the authority through bank challan as prescribed in Form-‘F’ of the authority.

6. The Revenue Officer shall assess the fee on production, sale, transaction, trade of commercial concern, company and person.

7. ………….. .

8. …………. .

17. This authority shall have power to levy and collect licence fee from traders, company, firm, corporate body, enterprises and person operating in the market area as per rates to be assessed by the authority.

18. The market fee shall be chargeable on the transaction on any commodity at a rate which may be determined by the State Government in the Official Gazette from time to time which shall not be more than 1% (one per cent) of the sale value of the commodities.

19. Market fee levied and collected by the authority shall be deposited temporarily in the separate authority fund and the authority shall deposit essentially the amount so levied and collected as a market fee to the State fund on 15th day of each month.

20. (a) The State Government shall release quarterly at least 50% (fifty percent) of the deposited amount to the authority.

(b) The authority shall make available a quarterly statement of the amount so collected and deposited in the State fund in Form ‘G’. Thereafter, the State Government shall make a request to the Accountant General, Jharkhand in prescribed Form ‘H’ to release the amount as specified in ‘a’ in the name of Managing Director, Mineral Area Development Authority (MADA) and on the basis of authority letter received from AG, the amount shall be withdrawn from the treasury concern.

(c) The authority shall deposit the said amount in the P.L. Account of the authority and the Managing Director of the authority shall be drawing and disbursing authority.

(d) The authority shall suitably spend the amount so received from the State Government in the prescribed sectors as specified in the Section 90(b)(2) of the Act.

(e) The authority shall essentially make available utilization certificate annually to the State Government in the prescribed form. Indeed the said Rules as stated earlier, provide for the entire gamut of work including levy, collection, assessment, licensing, appeal, penalty, interest, recovery of arrears, refund etc. and are self-contained governing the entire working and management of the operation of the amount so collected, referred to as a “Market Fee”.

27. As per Section 2 of the Bihar (Coal Mining) Area Development Authority Act renamed as Jharkhand MADA (Amendment Adoption Act, 2001),”Fee” is defined as “means the amount chargeable under section 90A of this Act”. Chapter IV of the said enactment which concerns Development Plan, vide Section 16(3) thereof has provisioned for the Development Plan to necessarily indicate defines and provide for certain specified activities. Amongst others these include the following:

16. Development Plan

(1) ……………

(2) ……………

(3) The Development Plan shall, as far as may be necessary, indicate define and provide for –

(i) Areas reserved for agriculture, public and semi-public open spaces, parks, playground, gardens and other recreational uses, green belt and natural reserve;

(ii) ……………

(iii) Complete road and street pattern and traffic circulation pattern for present and future requirements;

(iv) Major roads and street improvements;

(v) ………………………..

(vi) ………………………..

(vii) Water-supply, drainage, sewage, sewage disposal and other public utilities, amenities and services including electricity and gas;

(viii) Proposals for flood control and prevention of water and air pollution control;

(ix) Filling up or reclamation of low lying, swampy or unhealthy areas and leveling up of lands;

(x) …………………

(xi) Prevention, conservation and development of areas of natural scenery and landscape;

(xii) Preservation of features, structures or places of historical, industrial, architectural and scientific interest and education value;

(xiii) …………………..

(xiv) Detailed development of specific areas for housing of coal miners, establishing industries, civil amenities, educational and cultural facilities;

(xv) Preservation of erosion, provision for afforestation or reformation, improvement and re-development, waterfront areas, rivers and lakes;

(xvi) Proposals for irrigation and hydro-electric works and other sources of water-supply;

(xvii) ………………..

(xviii) …………………

(xix) Infrastructure for health, education, rural housing etc.;

(xx) ……………….

(xxi) ………………

(xxii) Such other matters as incidental to or emerging from the above.

28. The Ld.Counsel has also drawn our attention to the hon‟ble apex court‟s decision in the case of Jalkal Vibhag Nagar Nigam And Others vs. Pradeshiya Industrial And Investment Corporation And Another [2021) 20 Supreme Court Cases 657 : 2021 SCC OnLine SC 960] to draw a simile of understanding and to point out that the levy of water tax of Jalkal Vibhag Nagar Nigam was essentially a Fee and not Tax. As held by us earlier, we find no contest in the proposition that the nomenclature alone would not be the determining characteristic to classify the particular levy as a Tax or a Fee. It was further pointed out that the Market Fee levied by virtue of the Notification dated 12.05.2010 is deposited to the credit of Consolidated Fund of the State Government. This argument to our understanding would also be of no consequence to the contention of the appellants, as governmental sums are ordinarily deposited into the said fund. He has further reiterated and drawn our attention to the Supreme Court nine judges Bench decision referred in earlier paras to state that State Legislature was fully competent to initiate and enforce such levies. It is however clear that in as much as the usage to which the said amount is put to does not affect the competence of the State Legislature to tax it [Para 275(viii) of the apex court‟s order – 2024 (21) Centax 378 – refer para 6 above]. It was therefore the appellant‟s argument that the very levy of Market Fee/Bazaar Tax has been considered by the hon‟ble court as Tax and the State Government was fully empowered to tax the mining land and therefore the appellant was rightly eligible for deduction of the said amount for purpose of arriving at the assessable value. While we have no qualms with that part of the proposition as regards the competence of the State to levy tax, we are afraid we do not find anything in the hon‟ble apex court‟s order to hold that Market Fee indeed was considered by the court to hold it as a tax and not a fee. The subject of consideration before the hon‟ble Patna High Court which fell ultimately in appeal before the hon‟ble apex court and later culminated as a judgement of the 9 Member Bench was in effect for the state‟s competency to levy tax over land bearing mineral as envisaged in section 89 of The Bihar (Coal Mining) Area Development Authority Act and not section 90 of the Act ibid. Actually the question pertinent to the matter in the said case was with regard to Royalty payments arising as a consequence of mining rights. It was under such circumstances that the hon‟ble court had held royalty as a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights.

The apex court under the circumstances further holding royalty as not a tax, outright dismissed the argument that as the Statute provided for its recovery even by way of arrears, it got to be tax.

29. Before proceeding any further it would be pertinent to state here that both Section 89 and Section 90A of the Act operate in separate fields, are distinctly worded, independent in their scope and objectives and meant to play out in their isolated domains. Even the taxing structure under the two Sections is at complete variance, thus while Section 89 provides for levy of tax at specific rates, Section 90A warrants the levy of a fee, the charging basis of which is an ad valorem structure. Not only this the two sections in the Act have been incorporated independently in the principal statute – The Act, by way of different Sections of the amending act (24 of 1992). Moreover, the authority for levy under the two sections viz. Section 89 and Section 90A is also derived from different provisions of the Constitution. Thus while section 89 was in valid exercise of power vested in the State in terms of Entry 50 of List II of the Seventh Sehedule of Constitution, the States are empowered to levy fee, as in section 90A, in terms of sr. 66 of List II of the Seventh Schedule of the Constitution. In view of the remarkability of variances noted above in the two provisions, setting them distinctly apart to construe levy of Market Fees under Section 90A as to be by way of tax (for which levy a separate provision by way of Section 89 under the statute has been carved out) belies sound logic and fails to appeal to reason. Moreover, the tax levied under section 89 of the Act is on mineral bearing land with an upper cap of it, not to exceed Rs.1.50 per square meter whereas the Market Fee leviable under Section 90A of the Act is levied on the sale or transaction of the specified commodity (coal) in the notified Market Area, at a rate not exceeding one per cent of the sale value. The two levies i.e. a Tax and Fee are thus mutually exclusive, independent of one another and in no way equitable, so as to be understood as one for the other.

30. Another over-arching argument to distinguish the impugned Market Fee impost as at to be at variance with a “Tax”, can also be drawn from the fact that the law does not believe in redundancies, there is nothing superfluous in law and each and every word is required to be understood in its natural sense and every word in law is required to be meaningfully read into so as not to render other provisions a nullity. Also the broad purpose of the enactment and the intent of the legislature has to be kept in focus. Moreover, a provision within the statute cannot be so construed and read so as to make the other provision nugatory or diminish in its purport. Thus when a clear provision exists by way of Section 89 to levy taxes, a Market Fee levied under a different Section (Section 90A) (also nomenclatured as Market fee) cannot be inferred and concluded as a Tax.

31. It is thus clear from the above that in terms of section 90A of Jharkhand Coal Mining Area Development Authority Act, a Market Fee is chargeable on sale or transaction of another commodity at the rate fixed by the Government while Section 90B ibid provides for collection of said Market Fee and allocation of Fund for developmental purposes.

By virtue of sub-section 2 thereof it is incumbent upon the State Government to allocate out of the Market Fee, to the Authority such Funds on an yearly basis, to provide for civic amenities, infrastructure and marketing facilities within its area. Further, by virtue of Rule 20(d) of the MADA Market Fee Rules, the Authority is duty bound to spend the amount so received from the State Government in the prescribed sectors, as contained in Section 90B of the Act1.

32. However, Market Fee/Bazaar Tax indeed appears to be different in its true purport, than “tax” because it is a kind of user charge in lieu of services provided by institution. Market Fee, therefore cannot be considered as a tax. It being in the nature of a Fee and like some other charges viz. royalty, transit fee, entry tax, etc. would be required to be included in the assessable value of the goods for purpose of levy of Central Excise Duty. The levy-“Market Fee” is chargeable on sale of coal and being an expense incurred in the production/supply of goods produced, is certainly an element of cost, and has been so invoiced by the appellant. As it forms part of the element of cost for extraction/production of coal, it therefore enriches the value/cost of the coal produced. Thus it would ordinarily be required to be included in the determination of transaction value. If this levy does not qualify as a tax, same would not be deductible from the assessable value in terms of the statutory exclusion contained in Section 4 of Central Excise Act, 1944.

33. It be noted that the statutory provision is unambiguous as regards the levy of the said impost-Market Fee. In an oft quoted case on literal interpretation of statute- Kanailal Sur Vs. ParamnidhiSadhukhan (1957-SCC Online 8), the hon‟ble apex Court had held:-

”If the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction ………………. ”

Where the language is clear, plain and unambiguous, the courts are duty bound to give effect to the meaning that can be inferred from the statute, irrespective of the consequences. Even inconvenience caused by such a plain/literal interpretation can be no ground to forego the same. In fact, if the statute is plain and unambiguously worded, the consequences of such a construction are no more a consideration for the court to decide upon (Tamilnadu State Electricity Board Vs. Central Electricity Regulatory Commission – 2007(7)SCC 636), even if they appear to be unreasonable, unjust or oppressive or strange or surprising (Mahalaxmi Mills Ltd, Bhavnagar Vs. CIT, Bombay-1963 SCC Online SC 190, Nasiruddin Vs. State Transport Appellate Tribunal-1975(2) SCC 671, Precision Steel and Engineering Works Vs. Premdeva – 1982(3) SCC 270), In fact hon‟ble justice SR Das had once very pertinently observed:

“The spirit of the law may well be an elusive and unsafe guide and the supposed spirit can certainly not be given effect to in opposition to the plain language of the Sections of the Act”

(Rananjaya Singh Vs. Baijanath Singh -1954(2)SCC 314)

34. Lord Atkinsion in the case of Corporation of the City of Victoria Vs. Bishop of Vancouver Island (1921-SCC Online PC 75) had observed:

”In the construction of statutes their words must be interpreted in their ordinary grammatical sense unless there be something in the context or in the object of the statue, in which they occur, or in the circumstances in which they are used to show that they were used in a special sense different from their ordinary grammatical sense.‖

That the words used in the statute are to be understood in their natural, ordinary and popular sense can be underscored no better than in the words of justice Frankfurter:

“After all legislation when not expressed in technical terms is addressed to common run of a man and is therefore to be understood accordingly to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed.” (Wilma E Addison Vs. Holly Hill Fruit Products -322 US 607)

35. It is thus clearly evident that when the words used are plain and unambiguous, courts are duty bound to give them a meaning as commonly understood and flowing from the plain reading of the words. It is imperative those words are carried in their natural and ordinary sense. Thus “Tax” and “Fee” in the impunged matter will have to be construed differently in varied sense of the terms also more so for reasons as discussed, deliberated and detailed in subsequent paras of this order.

36. Thus on the face of it as the appellant has not included the said “Market Fee” in the transaction value during the period from March, 2011 to October, 2015, the demand as made out is payable by the appellant on the merits of the case.

37. While legitimacy of the levy of tax by the State, has been upheld by the nine Judges Bench decision of the hon‟ble apex court and is therefore a given, there is no need now to go into the background and genesis of the matter which has been dwelt upon before us by the Ld.Counsel for appellant at great length. What is important now is to ascertain and determine the question that actually arises in the matter, viz. what is the nature/character of the sums collected by the State under the garb of “Market Fee” and whether the same could be considered as a Tax or but be Fee and thus to validate or invalidate our aforesaid assertion of the impugned levy being in the nature of a fee. The following paras therefore dwell on the said issue.

38. As is well known, a tax is an imposition made for public purpose, but carries no reference thereto with regard to any specificity of services required to be rendered by the State or a specific benefit to be conferred upon the taxpayer. The objective of the tax levied is essentially to raise the general revenue of the exchequer. Contrast this with Fee that is in the nature of a payment levied by the State or the Authorized Body in respect of services performed by it for the benefit of the individuals of the area. The levy of Fee is on a principle at significant variance with that of a tax. Thus while tax is paid for a common benefit conferred by the Government on all taxpayers, a fee is a payment made for special benefit enjoyed by the payer and the payment is a proportion of the said special benefit. The hon‟ble apex court in the case of Municipal Corporation of Delhi & Others vs. Mohd. Yasin etc. [1983 SCR (2) 999] and Sreenivasa General Traders & Others vs. State of Andhra Pradesh & Ors. [1983 AIR 1246 SC (Para 33 & 38)] have held that what is to be seen for a fee is whether there is a fair correspondence between the fee charged and the cost of services rendered to the fee payers as a class; a broad co- relationship is all that is necessary. Such relationship need not be strict and even a casual relation may be enough. Neither the incidence of fee nor the service rendered need be uniform.

39. It has been repeatedly held by courts, that there is no generic difference between a tax and fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of tax payers whereas a fee is a payment for services rendered, benefit provided or privilege conferred.

40. It is also settled law that merely because others are also getting benefitted will not detract the character of the fee. The said view has been reiterated by the hon‟ble apex court in the case of M/s. Kishan Lal Lakhmi Chand & Ors. vs. State of Haryana [1993 (3) SCALE 296] while dwelling on the vires of the Haryana Rural Development Act. It was held therein:

”7. The object of the Act is to improve the agricultural production and the marketing and sale of agricultural produce and the burden is passed on to the second purchaser. The dealer bears no burden under Section 5(3). The primary and essential purpose of the impost and collection of the fee is to effect improvement of communications and other related amenities and facilities to augment agricultural production and to improve storage and marketing of agricultural products. From the scheme of the Act it would be clear that there is broad reasonable and general corelationship between the levy and resultant benefit to the producer of the agricultural produce, dealer and purchasers as a class though no single payer of the fee receives direct or personal benefit from those services. He represents that class. Though the general public may be benefitted from some of the services like laying roads, the primary service is to the producers/dealers and purchasers of agricultural produce ………………..”

[Emphasis supplied]

While upholding the vires of the statutory provision, the hon‟ble court dismissed the appeal filed with costs, clearly holding that the fee levied was not a tax. Para 9 of the judgement is extracted below:

”9. Accordingly we hold that Section 5(i) (ii) are valid. The fee levied therein is not a tax but a fee towards the fund to expand for the purpose enumerated under Section 6(5) of the Act. The fund would be expended accordingly. In this view we hold that the appeals bear no merit. They are accordingly dismissed with costs quantified at Rs.5,000/- in each appeal.‖

41. The present matter is no different in its intent, purpose or objectives but for the fact that the statute concerned operates in a different domain and concerns the welfare amenities of and for the people of the coal-mining region.

42. As for the element of reciprocity or quid pro quo, it is settled law that it would not necessarily be lost merely because the statute prescribes a minimum rate. The fee such as a Market Fee is levied in respect of public properties for example public road, or other common amenities. The benefit to be derived from fee is not simultaneous but is deferred and the amount collected by way of fee is a result for future services. It has been so held by the hon‟ble apex court as well in a series of cases.

43. In the case of Krishi Upaj Mandi Samity v. Orient Paper & Industries Ltd. [1994 (11) TMI-421 (SC)], the hon‟ble apex court while upholding the constitutionality of the MR Krishi Upaj Mandi Adhiniyam, 1973 and after going through a variety of arguments and series of judgements inter alia held as under :

”21. Thus what emerges from the conspectus of the aforesaid decisions is as follows:

(1)Though levying of fee is only a particular form of the exercise of the taxing power of the State, our Constitution has placed fee under a separate category for purposes of legislation. At the end of each one of the three Legislative Lists, it has given power to the particular legislature to legislate on the imposition of fee in respect of every one of the items dealt with in the list itself, except fees taken in Court.

(2)The tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered. There is no quid pro quo between the taxpayer and the public authority.

It is a part of the common burden and the quantum of imposition upon the taxpayer depends generally upon his capacity to pay.

(3)Fee is a charge for a special service rendered to individuals or a class by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service though in some cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are various kinds of fees and it is not possible to formulate a definition that would be applicable to all cases.

(4)The element of compulsion or coerciveness is present in all kinds of impositions though in different degrees and it is not totally absent in fees. Hence it cannot be the sole or even a material criterion for distinguishing a tax from fee. Compulsion lies in the fact that payment is enforceable by law against an individual in spite of his unwillingness or want of consent and this element is present in taxes as well as in fees.

(5)The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of the common burden while a fee is a payment for a special benefit or privilege. Fees confer a special capacity although the special advantage is secondary to the primary motive of regulation in the public interest. Public interest seems to be at the basis of all impositions but in a fee it is some special benefit which is conferred and accruing which is the reason for imposition of the levy. In the case of a tax, the particular advantage if it exists at all, is an incidental result of State action. A fee is a sort of return or consideration for services rendered and hence it is primarily necessary that the levy of fee should on the face of the legislative provision be corelated to the expenses incurred by Government in rendering the services. As indicated in Article 110(2) of the Constitution ordinarily there are two classes of cases where Government imposes fees upon persons. The first is of grant of permission or privilege and the second for services rendered. In the first class of cases, the cost incurred by the Government for granting of permission or privilege may be very small and the amount of imposition levied is based not necessarily upon the costs incurred by the Government but upon the benefit that the individual receives. In such cases, the tax element is predominant.

If the money paid by privilegeholders goes entirely for the expenses of matters of general public utility, the fee cannot but be regarded as a tax. In the other class of cases, the Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered.

(6)There is really no generic difference between tax and fee and the taxing power of the State may manifest itself in three different forms, viz., special assessments, fees and taxes. Whether a cess is tax or fee, would depend upon the facts of each case. If in the guise of fee, the legislature imposes a tax it is for the Court on a scrutiny of the scheme of the levy, to determine its real character. In determining whether the levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specific area or classes. It is of no consequence that the State may ultimately and indirectly be benefited by it. The amount of the levy must depend upon the extent of the services sought to be rendered and if they are proportionate, it would be unreasonable to say that since the impost is high it must be a tax. Nor can the method prescribed by the legislature for recovering the levy by itself alter its character. The method is a matter of convenience and though relevant, has to be tested in the light of other relevant circumstances.

(7)It is not a postulate of a fee that it must have relation to the actual service rendered. However, the rendering of service has to be established. The service, further, cannot be remote. The test of quid pro quo is not to be satisfied with close or proximate relationship in all kinds of fees. A good and substantial portion of the fee must, however, be shown to be expended for the purpose for which the fee is levied. It is not necessary to confer the whole of the benefit on the payers of the fee but some special benefit must be conferred on them which has a direct and reasonable corelation to the fee. While conferring some special benefits on the payers of the fees, it is permissible to render service in the general interest of all concerned. The element of quid pro quo is not possible or even necessary to be established with arithmetical exactitude. But it must be established broadly and reasonably that the amount is being spent for rendering services to those on whom the burden of the fee falls. There is no postulate of a fee that it must have a direct relation to the actual services rendered by the authorities to each individual to obtain the benefit of the service. The element of quid pro quo in the strict sense is not always a sine qua non for a fee. The element of quid pro quo is not necessarily absent in every tax. It is enough if there is a broad, reasonable and general co-relationship between the levy and the resultant benefit to the class of people on which the fee is levied though no single payer of the fee receives direct or personal benefit from those services. It is immaterial that the general public may also be benefited from some of the services if the primary service intended is for the payers of the fees. (8)Absence of uniformity is not a criterion on which alone it can be said that the levy is of the nature of a tax. The legislature has power to enact appropriate retrospective legislation declaring levies as fees by denuding them of the characteristics of tax. (9)It is not necessary that the amount of fees collected by the Government should be kept separately. In view of the provisions of Article 266, all amounts received by the Governments have to be credited to the Consolidated Funds and to the public accounts of the respective Governments.”

[Emphasis supplied]

These postulates as laid down by the apex court are actually a gospel for the determination of the question impugned in the present matter.

44. It is settled law that a Fee is levied for special purposes or services. The fact that besides those paying a Fee, others are also benefited cannot detract the character of the Fee [ITC v. State of Karnataka -1985 Supplement SCC 476, Para 3]. This landmark case, lays down 5 cardinal principles concerning the competency of the legislature to legislate with regard to the Entries of the Seventh Schedule.

Hon‟ble Justice Faizal Ali, while delivering his assenting judgement, therein observed.

”……………..The theory of nexus between the fee levied and the services rendered cannot be reduced to a ritualistic formula so as to close it in a straitjacket nor can be weighed in golden scales. All that is necessary is that there should be a direct nexus between realization of fees and the services rendered. What would be the nature of the services, when and how it should be rendered and in what measure is entirely a matter for the market committees to decide or determine. So long as the money is realized, even though on the higher side, but is spent on the extention and expansion of the markets, market yards, market facilities, godowns, rest houses, buildings, even roads leading up to the markets, that would be fully within the concept of afee and could not be lebelled as a tax on the purchasers at the action of goods or articles in the market. It is, however, difficult to lay down any hard and fast rule for determining the extent and contours of the services that should be rendered by the Government while imposing a fee. All that the law requires is that the amount of fee realized from the purchasers should be spent for the purposes of the market. For instance, if the fee is on the higher side but the excess amount is reserved for the present or future expansion of the market, the provision for making further facilities, the building up of roads upto the point of markets so as to benefit the purchasers and make there task easier to collect all their goods at one place or to build rest houses for their stay while transacting their business in which case any reasonable fee levied by the market committees would be justifiable.”

45. Cases may arise whereunder under the garb of levying a fee, the legislature may attempt imposition of tax. In case of such colourable action, it would be for the court to scrutinize the scheme of levy very carefully and therefore determine whether in the facts and circumstances, there is a co-relation between the service and the levy.

46. It is noteworthy that the Constitution provides for the legislative purpose and makes a categorical distinction between a Tax and a Fee. Further, it cannot be conclusively held that power to levy tax and the power to levy fee are identical. As pointed earlier, taxes are specifically distributed as between the State and the Union Legislatures by virtue of Entries in List I and List II and the Residuary List. To levy a Tax, not enumerated in any of the Entries in List II or List III would fall within the exclusive domain of the Parliament, by virtue of Entry 97 of List I. On the other hand Entry relating to Fee have been specifically provided for at the end of List I, II and III of the 7th Schedule. Thus, while the State Legislature would have the power to levy Fee, co-extensive with power to legislate with respect to substantive matters and with reference to making of law within its competence, it may levy a Fee with reference to services that would be rendered by the State under such a law. In this regard reference is invited to the case of Mahant Sri Jagannath Ramanuj Das And Another v. State of Orissa And Another [AIR 1964 SC 400, Para-9], wherein Para 9 of its order, the apex court has prescribed the following criteria to determine the nature of levy as a Tax or as a Fee.

“A tax is undoubtedly in the nature of a compulsory extraction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax. The taxes collected are all merged in the general revenue of the State to be applied in the general revenue public purposes. Thus, tax is a common burden and the only return which the tax -payer gets is the participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded. Thus, in fees there is always an element of ‘quid pro quo’ which is absent in a tax. Two elements are thus essential in order that a payment may be regarded, as fee. In the first place, it must be levied in consideration of certain services, which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make the imposition of a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State to be spent for general public purposes.”

[Emphasis supplied]

47. The aforesaid view was reiterated by the hon‟ble apex court in the case of M/s. Kishan Lal Lakhmi Chand & Ors. v. State of Haryana & Ors. [1993 (3) SCALE 296]. The appellant in the case had taken a plea that the said levy by the State by way of market fee was actually a tax and the State had camouflaged the import levying it @ one percent and thus the State had resorted to colourable exercise of power to circumvent the Constitutional mandate. The appellant further argued that the principle of Quid Pro Quo in the region of at least 2/3 or ¾ as envisaged in the case of Kewal Krishan Puri v. State of Punjab [1979 (5) TMI -136 (SC)] was completely lost, in as much as the traders as a class and the appellants in particular were not deriving any benefit therefrom and thus there apparently was no correlation between the fund collected and the service intended to be rendered to the dealers. After extensive arguments on each side and consideration of several judgements, the hon‟ble apex court, while noting that there was a change in the old concept held as under:

“5. …………the traditional view that there must be actual quid pro quo for a fee has undergone a sea change. The distinction between a tax and fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary purposes of regulation in public interest, if the element of revenue for general purposes of the State predominates, the levy becomes a tax. In regard to fee, there is, and must always be, co-relation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purposes it to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that is must be “by and large” a quid pro quo for the services rendered. However, co- relationship between the levy and the services rendered/expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a “reasonable relationship” between the levy of the fee and the services rendered. There is no genetic difference between a tax and a fee. Both are compulsory extractions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a person in spite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compulsion or coerciveness present in it, not is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual nor that each should obtain the benefit of the service………………….. “

[Emphasis supplied]

”6. In Ramesh Chandra Etc. v. State of U.P. Etc. , Southern Pharmaceuticals & Chemicals Trichur and Ors. etc. v. State of Kerala and Ors. etc. benches of three Judges and Municipal Corpn. of Delhi and Ors. v. Mohd. Yasin a bench of two Judges took the same view. In Ramesh Chandra’s case declaration of the entire U.P. State as market area and sub divisions thereafter as notified markets, levy and collection of 1 per cent ad valorem market fee by each market committee was held to be valid. In Sirsilk Ltd. v. Textiles Committee and Ors. JT 1988 (4) SC 592 : (1989)Suppl. 1 SCC 168 a specific argument that no individual trader was receiving benefit from the services rendered was negated. Considering the scope of the powers of the Committee under Section 3 of the Textiles Committees Act, 1963 read with Rule 21 of the Textiles, Committee Rules; 1965 this Court held that the purpose therein was quality control of all textiles. The interpretation, therefore, should be the benefit to the textiles industry as such though it has no specific relationship to the particular industry which bears the burden. The broad correlationship between the imposition of fee and the nature of the service rendered to the entire textiles industry satisfied the test of quid pro quo, though no specific service was rendered to the Payer of the fee. The administrative expenditure incurred by the Committee from the fund was held to be integral component of the fund. In Ramesh Chandra’s case similar contention was rejected.”

Finding no merit in the appeal filed, while upholding the Constitutionality of the statutory provisions the apex court dismissed the appeals with costs quantified at Rs.5,000/- per appeal.

48. In the cases of (i) Indian Mica Micanite Industries v. State of Bihar [1971 AIR 1182] (ii) Om Prakash and Ors. v. Giri Raj Kishore and Ors. [AIR-1985 P & H 52] (iii) The Municipal Council, Madurai v. R. Narayanan etc. [1075 AIR 2193], as well hon‟ble courts have considered Fee that was charged for services rendered and observed that in such cases where the Fee is charged for a service rendered, an element of quid pro quo is necessary and there has to be a co-relationship of a general character between the cost of rendering of such service and the Fee charged. This principle has been followed regularly in umpteen cases since.

49. In one of the earliest cases concerned with the question whether a particular levy is Fee or a Tax, the five Member Bench of the apex court in the case of Commissioner, Hindu Religious Endowments Vs. Sri Sri Lakshmindra Thirtha Swamiar of Sri Shirir Mutt [1954 AIR 282 SC] held that Constitution, particularly the legislative entries in Schedule VII make a clear distinction between Tax and Fee. It however laid down certain general characteristics of fee and tax in this regard. To quote the following extract from the order would be imperative to place the issue in its proper perspective.

”This Court reproduced the definition of what ―tax” means, given by Latham, C.J. of the High Court of Australia in Matthews vs. Chicory Marketing Board (CLR at p 276) (See at p. l040). ―A tax” according to the learned Chief Justice, ’tis a compulsory extraction of money by public authority for public purposes enforceable by law and is not payment for services rendered”. A fee, on the other hand, is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases, the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay.”

50. Expressly stating the distinction between a tax and a fee, the honourable Court held that primarily a tax is levied as part of a common burden while a fee is a payment for a special benefit or a privilege. It was clearly noted in the said judgment that –

”A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered.

It is not possible to formulate a definition of fee that can apply to all cases as there are various kinds of fees. But a fee may generally be defined as a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by Government in rendering the service, though in many cases such expenses are arbitrarily assessed.

The distinction between a tax and a fee lies primarily in the fact that a taqx is levied as part of a common burden, while a fee is a payment for a special benefit or privilege.”

51. The hon‟ble apex court reproduced therein the definition of a tax given by LATHM C.J. of the High Court of Australia in Matthews v. Chicory marketing Board [(Vict)-1938HCA 38], “tax” according to Ld. Chief Justice – “It is a compulsory extraction of money by public authority for public purposes and forcibly by law and is not payment for services rendered. The “Fee” on the other hand is generally defined to be a charge for special services rendered to individuals by some Governmental agencies. The amount of fee levied is supposed to be based on the expenses incurred by the Government for rendering the service, (though in some cases cost may be arbitrarily assessed).

Ordinarily, the fees are willing and no account is taken of the varying capacity of different recipients to pay. These are undoubtedly some of the general characteristics as far may be of various kinds of fees. It is not possible to formulate a definition that would be applicable to all cases. The court further said.

”The difference between a tax and a fee lies primarily in the fact that a tax is levied as part of the common burden, the fee is a payment for special advantage”

as for example in the case of registration fee for documents or marriage licences is secondary to the primary motive of regulation in public interest.

52. The said order of the apex court further noted that there really was no generic difference between a tax and a fee as noted by the apex court in several other decisions; that the the Constitution however clearly draws a distinction between imposition of a tax (by way of Money Bill) and the impost of fees by way of the Bill being of the ordinary kind. So also in the Seventh Schedule both in the List-I and List-II a distinction has been maintained in relation to the Entry of tax and fee. It therefore referred to the three lists of the Seventh Schedule. Thus in the Union List Entries 82 to 92C relate to taxes and duties and Entry 96 carves out the legislative field for imposition of a Fee in respect of matters contained in the State List except those relating to court fees. Likewise in State List Entries relating to taxes are listed at Sl.No.46-63, while Entry 66 provides for fee in respect of any of the matters contained in List-II but not including fees taken in any court. Entry No.47 in List III specifically provides for charging of Fees. Therefore, the court laid emphasis that the Constitution did recognize and makes a distinction between taxes and fees.

53. In the case of Secundarabad Hyderabad Hotel Owners Association and Others v. Hyderabad Municipal Corporation, Hyderabad [1999 (2) SCC 274] the apex court has once again dwelt upon considerable length the various aspects and characteristics to identify Fee and had elaborately discussed therein various case including the one decided by the apex court in the case of Sri Lakshmindra Thirtha Swaminar of Sri Shirir Mutt [1954 AIR 282]. It was held by the apex court that Fee may be regulatory or compensatory that when a Fee is charged for rendering specific services, there necessarily has to be a certain element of quid pro quo between the service rendered and the Fee charged. Referring to the Licence Fee which is largely regulatory for the purpose, when such licence is given, the apex court clarified that the Fee which is charged for regulation for such activity would be validly classifiable as Fee and not Tax, although no service is rendered and in such cases the element of quid pro quo may not be imperative. It may further be added Supreme Court had categorically held in the Sri Lakshmindra Thirtha Swamiaar of Sri Shirir Mutt case that “distinction between a Tax and the Fee lies primarily in the fact that a Tax is levied as a part of a common burden, while the Fee is payment for special advantage. The court noted in its order that there is really no generic difference between a Tax and a Fee, as was said by Seligman – that the taxing power of the State may manifest itself in three different forms viz. Fees, Taxes and Special Assessments.

54. In the case of Corporation of Calcutta v. Liberty Cinema (1965 AIR 110 7 SC) referring to the constitutional provisions, the apex court once again noted that the Constitution provided for a distinction between a fee and a tax and pointed out that under the Constitution, a fee for services rendered are contemplated as a different kind of levy, as was apparent from a consideration of Article 110(2) and Article 199(2) where both the expressions are made use of, thereby indicating that the two as not to be the same.

55. In the case of ACC Ltd. v. Commissioner of CGST & CE [2019 (31) G.S.T.L. 103 (Tri.-Del.)], dwelling on the subject of Clean Energy Cess levied on coal, this Tribunal clearly held that irrespective of the nomenclated as Excise Duty Clean Energy Cess which provide for specific purpose of funding the Clean Energy initiatives and for other purposes related thereto, besides was not for use of general public and deposited into the Consolidated Fund of India, was not a Duty of Excise or Tax, but in the nature of Fees. In arriving at the said finding, the Tribunal in its order considered the apex court‟s pronouncements and the Constitutional provisions as referred to by it in its order. Relevant paras 6.2 and 6.3 of the said order are enumerated below:-

6.2 Apparent from these clauses is the fact that clean energy cess is nomenclated as duty of Excise and the provisions of Central Excise Act, 1944 are made applicable in relation to levy/exemption, etc.

thereof. But whether the cess is actually in the form of excise duty or tax or it is merely a fee, the question is still to be adjudicated for deciding the above mentioned substantial question of law. For the purpose, we refer to the following case laws :

”17. The Constitution Bench of the Apex Courtin the case of Kewal Krishna Puri & another v. State of Punjab & another reported in (1980) 1 SCC. 416 in which it was held, the quid pro quo must exist between the payer of the fee and the special services rendered. It was observed :

”that a fee is a charge for special services rendered to individuals by the Governmental Agency and therefore for a levy of fee an element of quid pro quo for the service rendered was necessary; service rendered does not mean any personal or domestic service and it meant service in relation to the transaction, property or the institution in respect of which the fee is paid. The element of quid pro quo may not be possible or even necessary to be established with arithmetical exactitude but even broadly and reasonably it must be established, with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of fee realized is spent for the special benefit of its payers. Each case has to be judged from a reasonable and practical point of view for finding an element of quid pro quo.”

18. The Constitution Bench of the Apex Court in the case of Hingir Rampur Coal Co. Ltd. v. State of Orissa reported in 1961 (2) SCR. 537 explained the different features of tax, a fee and cess in the following passage. ―The neat and terse definition of Tax which has been given by Latham, C.J., in Matthews v. Chicory Marketing Board, (1938) 60 CLR. 263 is often cited as a classic on this subject. ―

A Tax”, said Latham, C.J., ―is a compulsory exaction of money by public authority for public purposes enforceable by law, and is not payment for services rendered”. In bringing out the essential features of a tax this definition also assists in distinguishing a tax from a Fee. It is true that between a tax and a fee there is no generic difference. Both are compulsory exactions of money by public authorities; but whereas a tax is imposed for public purposes and is not, and need not, be supported by any consideration of service rendered in return, a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes, whereas a cess levied by way of Fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied. It was further held that, ―It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefiting the specified class or area the State as a whole may ultimately and indirectly be benefited would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case it is necessary to enquire, what, is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequences. That is the true test in determining the character of the levy.”

19. Again, yet another Constitution Bench of the Apex Court in the case of State of W.B. v. Kesoram Industries Ltd. & Ors. – 2004 (10) SCC. 201 explained the distinction between the terms ‗tax and fee‘ in the following words :

”The term cess is commonly employed to connote a Tax with a purpose or a tax allocated to a particular thing. However, it also means an assessment or levy. Depending on the context and purpose of levy, cess may not be a tax; it may be a fee or fee as well. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of Fee collected. It is equally not necessary that the services rendered by the Fee collected should remain confined to the person from whom the fee has been collected. Availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged.”

20. Again the Apex Court in the case of Sreenivasa General Traders and Ors. v. State of Andhra Pradesh and Ors. reported in 1983 (4) SCC 353 held as under :

”The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest. If the element of revenue for general purpose of State predominates, the levy becomes a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area of class; it may be of no consequence that the State may ultimately and indirectly be benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be ―by and large‖ a quid pro quo for the services rendered. However, correlationship between the levy and the services rendered (sic or) expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a ―reasonable relationship‖ between the levy of the Fee and the services rendered.‖ From the aforesaid judgm 21.ents it is clear that the traditional view is that there must be actual quid pro quo for a fee, has undergone a sea change in the recent years. The tax recovered by a public authority invariably goes into the Consolidated Fund, which ultimately is utilized for all public purposes. Whereas, a cess levied by way of fee is not intended to be, and does not become, a part of the Consolidated

Fund. It is earmarked and set apart for the purpose of services for which it is levied.‖

6.3 In accordance of Articles 266 and 270 of the Constitution of India it becomes clear

”26.Any cess levied and collected in order to constitute a fee after such collection should go into a special fund earmarked for carrying out the purpose of the Act. The said fund so set apart should be appropriated specifically for the performance of the specified purpose and it should not be merged in the public revenues. In other words, the cess levied by way of fee is not intended to be and does not become a part of the Consolidated Fund. It should be earmarked and set apart for the purpose of services for which it is levied. Then only it should be described as a fee and not tax. If the cess levied and collected is credited to the Consolidated Fund of India and it has to be appropriated by the Parliament by law and then only the said amount could be credited to the Fund; it ceases to be a fee and partakes the character of a duty or a tax.‖

56. It was in this backdrop and analysis that the Tribunal arrived at the finding that Clean Energy Cess being levied for the specific purpose of funding a Clean Energy initiative and for any other purpose in relation thereto, was not for the use of general public as such and was required to be utilized by the Union Government for a particular Section and a particular purpose therefor irrespective of the nomenclature the said Cess was not a duty of Excise, but was a fee. The said decision also distinguishes therein the case of Commissioner v. Shree Renuka Sugars Ltd. (2014 (302) E.L.T. 33 (Kar.)], citing which the Appellant had pleaded that the sugar cess was invariably going to the Consolidated Fund was ultimately utilized for all purpose and therefore there was no quid pro quo between the sugar cess levied and collected and services referred for such payment. Onthe contrary  Clean Energy Cess, the proceeds though credited to Consolidated Fund of India were being utilized for a specific purpose as that of driving the Clean Energy Initiative and therefore there was the existence of quid pro quo. Para 7 of the Tribunal‟s order reads as under:

”7. Reading the above settled principles along with Section 83 of Finance Act, 2010 it becomes clear that the cess was collected, irrespective of being nomenclated as excise duty, but for the specific purpose of funding the clean energy initiatives and for any other purpose in relation thereto. Thus, it becomes clear that the cess was not for the use of general public as such irrespective it was deposited into the Consolidated Fund of India. Also, it was not to be distributed to the States but was to be utilized by the Union Government for a particular section and a particular purpose. Thus, it becomes clear that the impugned cess, irrespective of its nomenclature, was not at all the duty of excise or tax but was a fee. The present case is different from the case law of Shree Renuka Sugars Limited (supra) as relied upon by the appellant in the sense that the sugar cess in that case invariably goes to consolidated fund and is ultimately utilized for all purposes. There was no quid pro quo between the cess levied and collected and the services referred for such payment on the contrary for clean energy cess, the proceeds though are credited to Consolidated Fund of India but for being utilized for a specific purpose as that of clean initiative, as a quid pro quo.”

57. To similar ratio is the Tribunal‟s decision in the case of Deccan Cements Ltd. v. CCE, Rangareddy [2020 (371) ELT 795 (Tri.- Hyd.)], while dealing with Clean Energy Cess levied on coal where again the same was not held as cenvatable being not a duty of Excise. The said case is cited to point out that irrespective of the nomenclature there is ample room to suggest that the nature of the levy is determinative, taking note of its purpose and objectives.

58. In the case of Ibadatali s/o Abbas Ali Vs. Municipal Council, Khargone and Ors (AIR-1994-MP58), by virtue of an expressive definition of the term “Tax” to include toll, rate, cess fee or other imposts levied under the MP Municipal Corportion Act, 1956 the Hon‟ble High Court outright rejected the plea to the contrary leasing of the ley of tax, and further noted that:

”It is therefore clear that the terms of ―a sum payable,”―fees ―rate” and ―toll” are used in Section 127 itself in contradistinction with the terms ―Tax ”in order to specifically differentiate them from the term ―Tax” ………..

The Court therein noted the variation in the terminologies used and observed ―instead of using these terms at some places, every where the term ―Tax” could have been used. This law as laid down is cited in the present matter, to draw an analogy to the MADA Act, where the two terms “Tax” and “Fee” are used in contradistinction of one another under separate provisions of the statute. Thus, as held by the hon‟ble High Court the term “Tax” and ―Fee” would be required to be understood, read and interpreted in the sense the legislature intended thereto, being two different financial terms with difference in approach, meaning and understanding both statutorily as well as in common parlance.

59. We have also perused and gone through the Hon‟ble apex courts judgement in the case of State of Punjab Vs. M/s Punjab Spintex Ltd, (CA Nos. 10970-10971 of 2014) decided on July 15, 2024, wherein the respondent though granted exemption from payment of Market Fee, was however called upon to pay Rural Development Fee, payable in terms of Agricultural Produce Markets Act 1961 and Punjab Rural Development Act, 1987 respectively The plea of automatic exemption for Rural Development Fee was outright declined by the Court pointing out the difference in the two enactment and the statutory provisions that levied the two Fees. The hon‟ble apex court denounced the respondents plea of there being a clear convergence of interest between the two enactments even though the 2003 Policy Document exempted the recovery of fees under the two laws, by way of an incentive for development of Agro and Food Processing Industries. This case though completely unrelated to the present matter is to drive home the thought and remind that each statutory provision will hold firm within its area of operation. Thus Section 89 of the Act as well as Section 90A of the Act as impugned in the present matter will stand their ground, independent of each other and will have to be given their due priority importance and allowed free area of operability. Section 90A of the Act cannot be read, as to be a product of Section 89 thereof. The two provisions cannot be equated or assumed to be same or similar in their purpose and objective. This is more so demonstrated and evident, as in earlier paras conspicuous variations between the two provisions have already been dealt with in substantial measure. Though the said matter is purely unconnected to the facts of the present case, its reference herein has been cited to bring to fore the fact of levy of tax and Market Fee under the MADA, are by way of distinct and independent statutory provisions viz. Section 89 and Section 90A of the Act respectively; something akin to levy of Market Fee and/or Rural Development Fee under different statutory provisions.

60. In the case of Kewal Krishan Puri And Anothers v. State of Punjab & Others [1979 (5) TMI 136 – SUPREME COURT], where the hon‟ble apex court was concerned with the question of validity of certain provisions of Punjab Agricultural Produce Markets Act, 1961, whereunder Market Fees is fixed by the Market Committees under the direction of the Punjab State Agricultural Produce Market Board and the Haryana State Agricultural Produce Market Board, the hon‟ble apex court after extensive arguments observed as under:-

”…………………………. The impost of fee and the liability to pay it is on a particular individual or a class of individuals. They are under the obligation to submit accounts, returns or the like to the authorities concerned in cases where quantification of the amount of fees depends upon the same. They have to undergo the botherations and harassments, sometimes justifiable and sometimes even unjustifiably, in the process of discharging their liability to pay the fee. The authorities levying the fee deal with them and realize the fee from them. By operation of the economic laws in certain kinds of impositions of fee the burden may be passed on to different other persons one after the other. A few lines occurring at page 119 in the judgment of the Privy Council in the case of Attorney-General for British Columbia and Esquimalt and Nanaimo Railway Company and others may be quoted with advantage. They are as follows:-

”It is probably true of many forms of tax which are indisputably direct that the assesss will desire, if he can, to pass the burden of the tax on to the shoulders of another but this is only an economic tendency. The assessee‘s efforts may be conscious or unconscious, successful or unsuccessful; they may be defeated in whole or in part by other economic forces. This type of tendency appears to their Lordships to be something fundamentally different from the ―passing on‖ which is regarded as the hall-mark of an indirect tax.” The authorities, more often than not, almost invariably, will not be able to know the individual or individuals on whom partly or wholly the ultimate burden of the fee will fall. They are not concerned to investigate and find out the position of the ultimate burden. It is axiomatic that the special service rendered must be to the payer of the fee. The element of quid pro quo must be established between the payer of the fee and the authority charging it. It may not be the exact equivalent of the fee by a mathematical precision, yet, by and large, or predominantly, the authority collecting the fee must show that the service which they are rendering in lieu of fee is for some special benefit of the payer of the fee. It may be so intimately connected or interwoven with the service rendered to others that it may not be possible to do a complete dichotomy and analysis as to what amount of special service was rendered to the payer of the fee and what proportion went to others. But generally and broadly speaking it must be shown with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the amount of fee realized is spent for the special benefit of its payers. We may now extract some very useful and leading principles from the decision of this Court in Shirur Mutt‘s (1954 S.C.R. 1005, supra) pointing out the difference between tax and fee. At pages 1040-41 says Mukherjea J., as he then was: ―The second characteristic of tax is that it is an imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax. This is expressed by saying that the levy of tax is for the purposes of general revenue, which when collected forms part of the public revenues of the State. As the object of a tax is not to confer any special benefit upon any particular individual, there is, as it is said, no element of quid pro quo between the tax-payer and the public authority”―a ‗fee‘ is generally defined to be a charge for a special service rendered to individuals by some governmental agency. At page 1042 the learned Judge. Enunciates- ―the distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives.‖ After pointing out the ordinarily there are two classes of cases where Government imposes ‗fee‘ upon persons, the first being the type of cases of the licence fees for Motor Vehicles or the like and in the other class of caes…. The Government does some positive work for the benefit of persons and the money is taken as the return for the work done or services rendered‖ (vide page 1043), it is said further-―If the money thus paid is set apart and appropriated specifically for the performance of such work and is not merged in the public revenues for the benefit of the general public, it could be counted as fees and not a tax. There is really no generic difference between the tax and fees and as said by Seligman, the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes. ―Finally at page 1044 the striking down by the High Court of the imposition of fee under section 76. Of the Madras Act was upheld on the ground – ―It may be noticed, however, that the contribution that has been levied under section 76 of the Act has been made to depend upon the capacity of the payer and not upon the quantum of benefit that is supposed to be conferred on any particular religious institution. ―Benefit conferred or any particular religious institution would have been undoubtedly benefit conferred on the payer of the fee. After the decision of this Court in Shirur Mutts case (supra) section 76 of the Madras Act was amended. The effect of the amendment came to be considered by this Court in the case of H.H. Sudhundra Thirtha Swamiar v. Commissioner for Hindu Religious & Charitable Endowments. Mysore.1963 Supl. 2 SCR 302 Point out the various differences between the earlier and the amended one at pages 320-21 the imposition of fee was upheld. In two other cases of this Court following the ratio of Shirur Mutt‘s decision the imposition of fee was upheld, vide, Mahant Sri Jagannath Ramanuj Das and another v. The State of Orissa and another and Ratilal Panachand Gandhi v. The State of Bombay and other [1954] SCR 1055.

61. As evident from above the apex court elaborately considered several cases to arrive at a distinction between a fee and a tax. It noted therein that in the case of (i) The Hinger-Rampurr Coal Co.Ltd. & Ors v. The State of Orissa and Others [1961] 2 SCR 537 it was noted as under:

”…… the challenge was to the cess levied by the Orissa Mining Areas Development Fund Act, 1952. The petitioners‘ stand in the first instance was that the cess levied was not a fee but a duty of excise on coal and hence beyond the competence of the State Legislature. Alternatively they contended that even if it was a fee it was beyond the competence of the State Legislature for some if other reason not necessary to be mentioned here. The cess imposed was upheld as a ‗fee‘ relatable to Entry 23 of List II read with Entry 66. In other words it was upheld as a ‗fee‘ in respect of regulation of mines and mineral development. Gajendragadkar J, as he then was, delivered the judgment on behalf of the majority and discussed the point at same length. At page 545 are to be found a few words which go directly against the contention of Mr. Tarkunde. Says the learned Judge:‖ ….. a fee is levied essentially for services rendered and as such there is an element of quid pro quo between the person who pays the fee and the public authority which imposes it.‖

62. The apex court in the aforesaid matter further added :

”It is true that when the Legislature levies a fee for rendering specific services to a specified area or to a specified class of persons or trade or business, in the last analysis such services may indirectly form part of services to the public in general. If the special service rendered is distinctly and primarily meant for the benefit of a specified class or area the fact that in benefitting the specified class or area the State as a whole may ultimately and indirectly be benefitted would not detract from the character of the levy as a fee. Where, however, the specific service is indistinguishable from public service, and in essence is directly a part of it, different considerations may arise. In such a case it is necessary to enquire what is the primary object of the levy and the essential purpose which it is intended to achieve. Its primary object and the essential purpose must be distinguished from its ultimate or incidental results or consequence. That is the true test in determining the character of the levy.”

63. Dwelling on fee, it may be pointed out that, at times a fee charged, may have a regulatory connotation and not be intended for delivering of a service. Dealing with such regulatory fees, the apex court in the case of State of U.P. & Ors. v. Vam Organics Chemicals Ltd. [AIR 2003 SC 4650] noted that the locus classicus, on the distinction between a “fee” and “tax” as was its decision in the case of The Commissioner, Hindu Religious Endowments, Madras v. Shri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1954 SCR 1005), wherein the apex court had laid down the distinctive characteristics of a tax and fee. It is pertinent to quote the following gextract from the said judgement, as was reiterated by the apex court in its order.

”a fee is generally defined to be a charge for a special service rendered to individuals by some governmental agency. The amount of fee levied is supposed to be based on the expenses incurred by the Government in rendering the service, though in many cases the costs are arbitrarily assessed. Ordinarily, the fees are uniform and no account is taken of the varying abilities of different recipients to pay. These are undoubtedly some of the general characteristics, but as there may be various kinds of fees, it is not possible to formulate a definition that would be applicable to all cases”.

However, the Court made it clear that the service need not necessarily be one which is voluntarily taken by the person responsible for paying the fee. There may be an element of compulsion or coerciveness present ―if in the larger interest of the public, a State considers it desirable that some special service should be done for certain people, the people must accept these services, whether willing or not.

” …………….

The word ―service” in the context of a fee could, therefore, include therefore a levy for a compulsory measure undertaken vis-a-viz the payer in the interest of the public. This ‗coercive‘ measure has been subsequently judicially clarified to mean a ‗regulatory measure‘. But in the case of both kinds of services whether compulsorily imposed or voluntarily accepted, there would have to be a correlation between the levy imposed and the ―counter payment or quid pro quo”. However, correlationship between the levy and the services rendered is one of the general character and not of mathematical exactitude. All that is necessary is that there should be a reasonable ‗relationship‘ between levy of the fee and the service rendered.”

64. In essence for a levy to be a fee quid pro quo was necessary, not in mathematical exactitude and such fee charged should not be excessive. Distinction between regulatory and compensatory nature of a fee has also been made by the courts in several cases – for records in the case of State of Tripura & Ors. v. Sudhir Ranjan Nath [AIR 1997 SC 1168] can be referred to.

65. It is thus clear from the above that the courts have held the sums payable as „Fee‟, when charged for services rendered demonstrating an element of quid pro quo, and there being a general co-relationship between the cost of rendering such services and the Fee charged.

66. Justice R.P. Sethi‟s seminal Work “Supreme Court on Words & Pharases-Third Edition” on “fee” and “tax” has the following to state:

It can also be noted from the paras extracted, that it fairly brings out the differences between a “fee” and a “tax” as we have already noted and discussed in paras above.

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67. In the case of H.M. Sudhundra Tirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowment, Mysore (1963 AIR 1966) while dealing with a separate question, relating to authority and power of Mahant, the hon‟ble apex court with regard to identity fee noted that

”a fee does not cease to be of that character merely because there is an element of compulsion in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered. Absence of uniformity is not a criterion on which alone it can be said that the levy is of nature of a tax.‖

Thus what characteristically comes out from the aforesaid discussions for a levy to be held as fee, is

(i) there ought to be provisioning of special services and

(ii) benefit thereof also need to accrue in some measure to/on the person responsible for paying the said levy.

To the aforediscussed multitude of cases, can also be added cases, where the levy was in fact held to be in the nature of tax, as the apex court has laid down principles that help determine and establish the nature of levy as a tax of a fee. We may thus added the following citations as they too bring out the difference between a “fee” and a “tax” –

(i) Commissioner of Central Excise, Lucknow v. M/s. Chhata Sugar Co. Ltd. [ AIR (2004) SC 3005]

(ii) Nagar Mahapalika v. Durga Das Bhattacharya [1968 (3) SCR 374]

(iii) Kandivali Co-Operative Municipal Corporation of Greater Bombay [AIR (2015) SC 1434]

68. Having stated and examined the legal position it is of foremost importance to understand the concept of tax vs. fee. In view of the enunciation as flows from the case law pronouncements and judgements of the apex court, it is evident that distinction between tax and fee lies primarily in the fact that a tax is levied as part of a common burden, while “fee” is for payment of specific benefit or privilege. The aspect of a special advantage could also be secondary to the main objective of regulatory controls in public interest. If the element for generation of revenue for general purposes of the State predominates, the levy would take the colour of the “tax”. In regard to fee, there is a co-relation between the fee collected and the service intended to be rendered. In ascertaining whether the levy is by way of a fee the true test is whether the primary and essential purpose of the levy is to render specific/specified services to a specified area or a class. State reaping dividends/benefit out of the levy, is inconsequential to such a determination, as in any which case indirectly the state too would benefit by bringing around greater development for/of its people and or its area. Only caveat could be that the power of the State to levy fee would be conditioned by the fact that it by and large would and is a quid pro quo for the services rendered. The said correlation would however be of a general nature and character and not one with mathematical exactitudes. All that is required is the existence of a “reasonable relationship” between the levy and the service when characterized as a fee, as has been extensively deliberated, discussed and demonstrated in respect of the present matter, and the impugned appeal.

69. The appellant in support of their stance have referred to this Tribunal‟s decision in the case of the Eastern Coalfields Ltd. Vs. Commissioner of Central Excise, Bolpur, decided vide Final Order No. 75656-75666 of 2025. That was a case concerning non-inclusion in assessable value of certain components like royalty, stowing excise duty and certain cesses like rural employment and production cess, primary education cess, road cess and health cess. In the said case 8 out of 11 appeals were allowed by this Tribunal following the Tribunal‟s ruling in the case of Koperteck Metals Pvt. Ltd., Vs. Commissioner of CGST & Central Excise, New Delhi ( Final Order No. 59511-59720 of 2024 ) on account of delayed adjudication, one appeal was dismissed on grounds of limitation, while in respect of the remaining two the question pertaining to royalty was decided against the appellant in view of the express findings of a nine Member Constitution Bench of the apex court and the binding precedent, holding royalty as not to be a ―tax‖, in the case of Mineral Area Development Authority Vs. SAIL (2024 (21) Centax 378 SC) and as for cess we are of the view that the said decision was rendered sub silentio. Hence we are of the view that the appellant cannot draw any support in its favour, therefrom. Interestingly, it may not be out place to point out that a question pertaining to clean Energy Cess payable on Coal imported, albeit in a different context of availment of CENVAT Credit, did come up for consideration before a co-ordinate bench of this Tribunal in the case of Deccan Cements Ltd., Vs. Commissioner of Central Tax, Rangareddy (2020-371-ELT 795 (Tri.-Hyd.) and has already been dwelt upon in earlier para 57, wherein while holding inadmissibility of the cess so paid to CENVAT Credit, the Tribunal also distinguished the case of Commissioner Vs. Shree Renuka Sugar Ltd., (2014 (302) ELT 33 Kar) that was decided in favour of the appellant. Thus it can certainly be stated that each case of levy of cess would have to stand on its own merit and no precedent support can be drawn from a judgement of the co-ordinate bench, decided over a different kind of levy of cess, as may be put to question. Moreover, as elaborately discussed in foregoing paras we do not find any akinness in the “Market Fee” in question in the impugned matter with Cess (es) as concerned for the cited case of Eastern Coalfield Ltd., besides the fact of their leviability under different statutes with different objective, scope and purpose of the enactment. Moreover, with a different set of scope, objective and purpose, the question of creation of any specific MADA kind of a body also does not arise therein.

CONCLUSION

70. In view of the aforesaid and the detailed conspectus of the matter it cannot be doubted that the impugned levy herein is in the nature of fee and therefore would certainly form part of the assessable value for the purpose of determination of the transaction value in terms of Section 4 of the Central Excise Act and would be required to be included therein. From the facts of the present case, we note that the show cause notice in the present matter was issued on 03.02.2016 for the period March 2011 to October 2015 i.e. invoking the extended period of limitation as envisaged under Section 11A(4) of the Central Excise Act. Given the tortuous history of litigation in the matter and the broad framework of law it is evident that the appellant appeared to have harboured a bonafide belief that the nature of the impugned levy was a “tax” imposed and not a „fee‟, and therefore not includible in the determination of the assessable value, being statutorily excludible. This belief and perception gets buttressed further when a look at the excise invoice raised by the appellant are taken note of. For ready reference one such invoice is scanned below:-

71. It can be seen from the said invoice that MADA Market Fee @ 1% of the basic value has been clearly indicated in the invoice. Under such circumstances it would be well impossible to fasten the charge of suppression on the appellant and we are of the firm view that there is no case for alleging suppression on part of the appellant. The extended period of limitation would thus fail on this ground, there being considerable force in the appellant‟s plea on the time bar aspect. The question pertaining to the authority‟s competence to levy tax being initially decided against the State by the hon‟ble Patna High Court and only in July 2024 it came to be settled by the apex court, thus was clearly an interpretational matter, as well. The demand for normal period alone, would thus survive in the circumstances. Given the fact that the normal period of limitation as then prescribed was for a period of 1 year, we hold that the appellant shall in the present matter be required to pay Central Excise duty after inclusion of the MADA fee collected, for the period as flowing within the normal period of limitation. Under the circumstances the appellant is also not liable for imposition of any penalty.

ORDER

In view of our discussions above, we order as under:

(i) Market fee levied levied under Section 90A of the MADA Act is a “fee” and not “tax”.

(ii) The Market fee, levied @ 1% and collected by the appellant from its customers is required to be included in the determination of the assessable/transaction value under Section 4 of the Central Excise Act, 1944.

(iii) The demand confirmed by the lower authority for extended period does not survive and is thus set aside.

(iv) Differential Excise Duty for normal period is payable along with interest, by the appellant.

(v) Penalty imposed by the lower authority is set aside. The appeal is disposed in the aforesaid terms.

(Order pronounced in the open court on 25.07.2025.)