Kerala High Court: While deciding a case with respect to the constitutionality of the “Mangalya Nidhi” cess under Section 11 of the Kerala Finance Act, 2013, K. Vinod Chandran, J allowed the writ petition and directed the State to refund the amount already collected in the form of cess only to those persons who reserved the hotel/ auditorium for conducting wedding celebration, or the petitioners who paid the cess on their own, or if both are not traceable to retain the said amount for the  welfare purposes.

The matter came before the Court on the basis of a conflict relating to the constitutionality of the cess imposed on the weddings conducted in three star hotels and above and auditorium having a capacity above 500 including the dining hall. The Counsel for the petitioner, K.P. Pradeep contended that the levy is a “tax” under Chapter V of the Finance Act, 1994 which is payable to the Union Government, and that the State Government does not have the power under Article 246 of the Constitution, nor any entries coming within List II and III of the Seventh Schedule of the Constitution to enact such enactment, and that it would be discriminatory and arbitrary. The learned Special Government Pleader (Taxes) on behalf of the respondents co-related various entries of the Seventh Schedule of the Constitution and contended that the levy is a “fee”.

The Court considered the precedents referred by both the parties and observed that the cess on royalty cannot possibly be said to be a tax on building. The Court made clear that though the intention of levying cess is to enable the marriage–union of the less-privileged; however the same should not be ultravires to the Constitutional framework. The Court further made clear that the levy of cess is definitely not a “fee” and can only be treated as a “tax” for which the source is unavailable under the Scheme of the Constitution.

The Court held that the impugned legislation, in so far as it relates to Section 11 of the Kerala Finance Act, 2013 and the Rules framed thereunder is unconstitutional and ultra vires the powers of the State Legislature as conferred by the Constitution of India. The Court therefore restrained the State from levying and collecting the cess in accordance with such enactment. Thara Jayakumar v. State of Kerala, W.P. (C) No. 4555 of 2014, decided on August 26, 2014.

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