IN THE HIGH COURT OF JUDICATURE AT BOMBAY, APPELLATE SIDE,PANAJI BENCH, GOA, Sere WRIT PETITION No.98 OF 1996, 1. Comunidade of Chicalim, by its. Procurador(Attorney), Shri J.J.S. Rodrigues of Chicalim, Goa; 2. Shri Domingos Savio Mascarenhas, residing at Borges Building, Vasco-da-Gama, Goa +++ PETITIONERS VERSUS. 1. The Administrator of Com- nidades of South Zone, Margao, Goa; 2. State of Goa, through the Chief Secretary, Government of Goa, having its office at the Secretariat, Panaji,Goa ++. RESPONDENTS. Shri J, Dias, Sr. Advocate, with Shri S.M. Lotlikar, Advocate, for the petitioners. Shri C.A. Ferreira, Additional Government Advocate, for the respondent No.2. CORAM : P.S. PATANKAR & R.K. BATTA, JJ. DATED : APRIL 11, 1996. QRAL ORDER (Per PATANKAR, J.) Heard both sides at length, 2. On 12th of December,1995, respondent No.1Administrator issued Notice to the petitioner in view of Article 443 read with Article 125(1) of the Code of Comunidades, 1961 calling upon it to pay outstanding dues towards "Derrama" (towards staff salaries and maintenance of the Office) of Rs.48,80,927-40 for 5 years, This Notice is challenged on the ground that there was no legislative competence with the State Government to enact the Goa Legislative Diploma No.2070 dated 154-1961 (Amendment) Act,1994 and the said Notice and demand \to the petitioner Communidade is illegal and invalid. 3. The main plank of the learned counsel: for the petitioners arguments is that such legislation relating to Comunidades can only be by Parliament under residuary Entry 97 of List I -Union List of 7th Schedule of the Constitution of India, While it is the case of the respondents in the Affidavit vet thecmesnondenbe& sworn by Smt. Maria Angélica , Rodrigues, Under Secretary (Revenue) dated 2nd April, 1996 that the State can enact in view of Entry 18 read with Entry 32 of List II - State List of the 7th Schedule, 4, Why this amendment was required is pointed out in the Statement of Objects and Reasons annexed to (Amendment) Bill,1994, Prior to the Amendment, budgets for Comunidades were prepared under Article 125 of the Code of Comunidades on Taluka basis. But this isamended and it is now directed that it will be on zonal basis, dividing it proportionately smongst the Three Zones were made. Comunidades based on their annual income, /It is, therefore, clear that a prosperous Comunidade has to contribute more or pay higher contribution. The Statement of Objects and Reasons shows that an attempt was made earlier without amending Article 125 of the Code of Comunidades to have the budgets based upon zonal basis. However, that was set aside by the Division Bench of this Court in Writ Petition No.140 of 1991 (Comunidade of Chicalim & anr. v. Administrator of Comunidades of Salcete and South Zone & ors.) on 31st August,1993. This was because Article 125 provided for Taluka-wise budgets. This required amendment. It has been fmrtwer pointed out in the Statement of Objects and Reasons: ",,.Similarly, under Judgement delivered in Writ Petition No.140 of 1991 filed by the Comunidade of Chicalim, directed the Administrator of Comunidades of Salcete and South Zone, Margao, to prepare se- parate budgets under Article 125 of the Code of Comunidades in respect of mormugao, Quepem, Canacona and Sanguem Talukas, As implementation of the judgement would entail financial crisis in admi- nistration of the Comunidades as finan- cial position of some of the Comunidades is not on sound footing and the qualifi- cation of 3rd Cycle of the Lyceum pres- cribed under Article 118 of the Code of Comunidades is found to be out-dated ~ and in order to meet all eventualities, the Governor of Goa had promulgated two Ordinances, namely:- (1) The Goa Legis- lative Diploma No.2070 dated 15-4-1961 (Amendment) Ordinance, 1993 (Ordinance No.4 of 1993) and (2) The Goa Legisla- tive Diploma No.2070 dated 15-4-1961 (Amendment) Ordinance, 1994 (Ordinancesoe No.1 of 1994) on 31-12-1993 and 111-1994 respectively." oe Originally, there were 10 Talukas which had later on become 14 Talukas., Each Taluka consists of many Comunidades. Prior to the Amendment, the peti- tioner was paying its contribution of about Rs.2,900/- per year, Amended Article 116(1)divided all the Comu- nidades in three zones and Article 125(3) thereof reads as follows:- "Art.125- The Administrators of the comunidades has competence tot 3. to order for the preparation, in October of each year, of the budget of the Administration of each Zone, divi- ding it proportionately among the Comunidades based on their annual income, and submit it for the appro- val of the Government, The income of the tithes of "dessaides" shall be included in the budget of the Administrator of Comunidades of North Zone.". Thus, now Article 125 of the Code, inter alia, provides that it is incumbent upon the Administrator of Comu- nidades to order preparation of the annual budget of income and exenditure of the administration in October of each year of each Zone. The budget is to be prepared by dividing between the Comunidades proportionately the amount of income of the year, shares of the Comunidade and the budget should be submitted for approval of the Government, Article 125(5) provides that the Administrator shall communicate by December15th of each year the contribution which each Comu- nidade has to pay and the contribution is to be determined in proportion to the amount of income earned by each Comunidade every year. The contri- butions can be received in instalments and the recovery is either voluntary or by coercive action. 6. Before dealing with actual arguments, we would like to point out broadly the scheme and nature of Comunidades, No doubt, this has been considered by this Court in various judgments. In Michael Charles D'Souza v. Ganesh V.V. Gaonkar and others (1991 Mah. L.J. 1432) the Division Bench has said: "5, ‘The Code of Comunidades which was enacted in 1933 had undergone changes as a result of many amendments introduced therein, A new Code of Comunidades was enacted under Legislative Diploma No.2070 dated 7-6-1961 (for short, the Code) which presently governs the rights in any land belonging to the Comunidades, After Goa was liberated and became a part of India with effect from 19-12-1961, the Code of Comunidades dated 5-4-1961 still governed the rights in land belonging to the Comunidades, The said Code is an existing law by virtue of Goa, Danan and Diu Administration Act, 1962, It will be at this stage useful to refer to the scheme of the relevant provisions of the Code whose original is in Portuguese and its translation made available to us in English may not be free from some mistakes. 6. Chapter 1 of the Code provides for general bye-laws. It is provided under Article 1 that the Comunidades or Gauncarias existing in District of Goa shall be governed by the Bye-laws contained in the Code and specially by the private lew of each of them.The general law has to be observed in omitted cases. Article 3 provides that each Comunidade shall be composed of: a) 'Jonoeiros', b) Share-holders, ay 'Jonoeiros' and Share-holders and Sharers. Para 1 of Article 3 shows that the part of the annual income to be claimed by the ' jonoeiros' would be called "Jono! and that of the share-holders would be called "dividend", Article 4 then provides that only ' jonoeiros! and share-holders can participate in the profits and losses of the Comunidade and they only are liable for the rights and duties that are guaranteed and imposed upon the components of the Comunidade by the Code, Article 5 then provides that the Comunidades would be under the administrative tutelage of the State according to Rules contained in the Code and their lands can be given, on long lease and transformed in the form established in the Code, 7. As regards the powers of the Comu- nidades, they are contained in Article 30 of the Code. Para 4(f) of Article 30 confers a power upon the Comunidade to decide over the question of long leases, sale or exchange of lands, Para 4(3) of the said Article 30 confers upon the Comunidade the power to decide over generally all the extraordinary acts which are not foreseen in the budget or in the Code as well as all other matters about whlich it is consulted. As regards the power of the State Government or the Governor General who was there prior to the liberation of Goa and/or the power of the Lt. Governor of Goa who was its administrative head, the relevant Article is Article 153.’ Para 9 of the said Article 153 confers the power upon the Governor General to grant leases (aforamentos), to autho- rise the exchange of land of Comu- nidades and to determine its reversion, Para 10 empowers him to grant long-term leases, " The Division Bench in Writ Petition No.134 of 1992 and others (Mr.Gregorio Fernandes & ors. v. Collector & D.C.A. North Goa & ors. And others ) dated 14th ofJune,1994 observed: " A Comunidade is an institution pe- culiar to the Territory of Goa. There are over 200 Comunidades of various villages and towns and they are broadly divided into two zones: North and South. They are governed by the Code of Comunidades 1961 which was enforced in this Territory by the erstwhile Portu- guese Goyernment by Diploma Legisla~ tivo No.2070, Before this Code of 1961 was brought into force, these institutions were governed by a Code of Comunidade 1933 which had replaced the earlier one of 1910, A Comunidade is an Association of villagers,persons who established a Comunidade of a village and their leneal descendants are styled as "Jonoeiros". "Jonoeiros" are therefore the group of persons who have share in the land as well as the income from properties, By virtue of the birth in the families which had established them, their rights are heritable. There are Comuni- dades which are solely composed of "Jonoeiros", but a large number of them are also composed of share- holders in addition to "Jonoeiros". It is possible for any "Jonoeiro® to acquire shares of a Comnidade, The shareholders are entitled to dividends which are declared from time-to-time based upon the income of a Comunidade. The shares are transferable. 2. With a view to streamline over 200 Comunidades in the Territory of Goa, they are brought under a common’ Code with the result the Comunidades all over are governed by uniform law and the Rules which are embodied in the Code. Article 5 of the Code of Comu- nidades of 1961 says that all Comu- nidades are under administrative tutelage of the State with the power to create perpetual lease or alienate properties as laid in the Code. Large number of powers are bestowed under this Code on the Governor General, for under the Portuguese regime the Governor General was the main executive. For administra-tive convenience three groups are made and each group is placed under an Administrator appointed by the Governor. An administrator of Comunidades has large number of powers both executive cum-administrative, Every Comunidade has a clerk known as "Escrivao" appointed by the Governor. 3. The business of each of the Comunidades is carried on by an admi-~ nistrative board chosen triennially as prescribed in the Code vide Article 39. Article 40 provides that the administrative board shall consist of three members: President and two members out of which one is "Procurador" (Attorney) and the other Treasurer and each of these posts have substitutes." fe The learned counsel for the petitioners first submitted that this legislation cannot fall under Entry 32 as the Comunidade is not an Association, Entry 18 and Entry 32 of the List II - State List of the Seventh Schedule are as follows:- "18, Land, that is to say, rights in or over land, lend tenures including the relation of landlord and tenant, and the collection of rents: transfer and alienation of agricultural land; land improvement and agricultural loens; colonization." "32. Incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific, religious and other societies and associations; co-operative societies, " For the above submission, he relied upon the Dictionary meaning of ‘Association’. Black's Law Dictionary, 6th Edition, defines ‘Association’ as follows:" The act of a number of persons in uniting together for some special purpose or business. It is a term of vague mea- ning used to indicate a collection or organization of persons who have joined together for a certain or common object. .....An unincorporated society; a body of persons united and acting together without a charter, but upon the methods and forms used’ by incorpo- rated bodies for the prosecution of some common enterprise. " Then,reliance is placed upon Concise Oxford Dictionary (9th Edition). Association is defined as:- "1, a group of people organized for a Joint purpose; a society; 2. the act of an instance of associating; 3. fellow- ship; human contact or cooperation." It is submitted that a Comunidade is like a Hindu Coparcenary and it cannot be called as Association. 8. We have already pointed out the nature of the Comunidade and there is absolutely no reason and it is not penetrate con the Dictionary meaning to infer that it is not an Association. In fact, the Dictionary meaning itself shows that a Comunidade is an Association and this is what the Division Bench in Writ Petition No.134 of 1992 and others dated 14th of June,1994 (cited supra) has observed. In addition, we would like to point out various Articles in the Code of Comunidades,1961 which go to show clearly that @.> Comunidade is an Association. Article 4 deals with how a Comunidade is composed of, Article 5 says that a Comunidade is under the administrative tutelage of the State and would be governed accordingto Rules contained in the Code, Article 6 speaks about the payment of ground rent by the lessees of the land of the Comunidade. Article 9 says that a Comunidade shall not file any civil suit without the consent of Administrative Tribunal except in certain circumstances. Article 10 says that a Comunidade shall be represented in a Court of law or other Public Office by ordinary attorneys. Article 15 shows that a Comunidade can take loan and has to maintain the various books of accounts. Article 18 says that a Comunidade can start Health Services and Health Centres. Article 20 deals with components of Comunidade in view of Article 3. Article 153(15) shows that a Comunidade can be dissolved by way of punishment Merce caietaes prescribed. All this more than clearly shows that a Comunidade is an Association. oe It is next submitted that even assuming that @ Comunidade is an Association, the demand is in the nature of impost or tax. Our attention is drawn to various entries giving power to the State to impose tax and it is submitted that the demand made in this case does not fall under any one and hence cannot be imposed by the State. Our attention is also drawn to Articles 265 and 366(28). The learned counsel also relied upon e Kerala StateElectricity Board & ors. v. The Indian Alluminium Co. Ltd & ors. (AIR 1976 SC 1031) and Rustom Cavas jee Cooper and others v. Union of India and others (AIR 1970 SC 564). 10. In our opinion, the nature of Comunidade shows that it deals essentially with the rights in or over the lands. It is an Association unincorporated and the legisletion is to regulate its functioning. While regulating it, the demand is made for balancing the budget. The Comunidades are also carrying on certain public functions and some of them are prosperous and some are not. Therefore, it is obvious for a prosperous Comunidade like the petitioner to contribute In fact, even prior to the Amendment of Article 125, the petitioner was making the payment, though less. The said payment was never challenged. Similarly, the amending power has been exercised by the State and this Code of Comunidades has been amended from time to time. A Comunidade is, therefore, in the nature of a private Association and the Code is meant for its internal management. Nothing is coblected By the State. Neither is there any levy mr collection. It is only balancing of the budget and a contribution by one to the other. It is not a tax or impost. Nothing goes in the Coffer of the State or any Local Body, It is a regulatory measure for economic and general development, It is meant for common benefit. Originally, it was on view of the amendment, on zonal basis.Article 265 of the Constitution says that no tex can be levied or collected except by authority of law. Article 366(28) defines*taxAtion and says "taxation" includes the imposition of any tax or impost, whether general or local or special, and "tax" shall be c construed accordingly. In AIR 1970 SC 564 (supra) the Apex Court was considering constitutional challenge to Banking Companies (Acquisition and Transfer of Undertakings) Act (22 of 1969). While considering the said challenge, the Apex Court has observed: = *,.. Entry 43 deals with incorporation, regulation and winding up of trading corporations including banking compa- nies. Law regulating the business of @ corporation is not a law with respect to regulation of a corporation, In List I entries expressly relating to trade and commerce are Entries 41 and 42, Again several entries in List I relate to activities commercial in character. Entry 45 "Banking"; Entry 46 "Bills of exchange, cheques, promissory notes and other like instruments", Entry 47 "Insurence"; Entry 48 "Stock exchanges and future markets™;.... 0 sesse oe seeoee We are unable to accede to the argument that the State Legislatures are competent to legislate in respect of the subject-matter of those entries only when the commercial activities are cafried on by indivi- duals and not when they are carried on by Corporations, * In our opinion, this has no application in the present. case. els Similarly, in our opinion, the reliance placed on ATR 1976 SC 1031 (supra) is also misplaced.In the said case, the validity of the Kerala State Electricity Supplv (Kerala State Electricity Board and Licensees Areas) Surcharge Order 1968 was in question, The said Order was passed in exercise of the powers conferred by Section 3 of the Kerala Essential Articles Control (Temporary Powers) Act,1962. The Legislative competence of the State to enact it was challenged. It was negatived. It was observed: ",,. There can be no doubt about the argument on behalf of the Board that the Surcharge Order is necessary for its survival and existence without which there can be no production or supply of electricity. That is why it is a matter falling under Entries 26 and 27 of List II, It is no valid criticism of this view to say that the powers of the Board under the 1948 Act are overriden by the Surcharge Order and the order is therefore re- pugnant to the 1948 Act. * Therefore, we reject this contention. 12, The learned counsel for the petitioners next submitted that this amounts to deprivation of the property of the petitioners and it is in violation of Article 300-A of the Constitution, We find thet there is absolutely no deprivation of the property of the petitioner. The demand is in the process of balancing the budget and in any case it is by authority of law. The petitioner was required to pay some higher contribution in view of the amended provision. The provision itself does not say that any particular preparing amount is to be paid, It only lays down the process of/the budget which is meant common for all the Comunidades, If the Comunidade is not a prosperous one, it may not be required to contribute anything. 13. The learned counsel for the petitioners then submitted that the demand is arbitrary and violative of Article 14 of the Constitution, We find absolutely no ground for this submission. There is nothing to suggest that the demand is arbitrary or irrational or treating unequals as equals or imposing disproportionate burden, Therefore, we reject this submission, Then, the learned counsel submitted that we mist consider the pith and substance of this Amendment, ahd if 3epeso, it will be a taxing Provision or a provicion meant top imposing 1eVWsmunidades We /already pointed out what sue Article/is and why the Amendment was introduced. The learned counsel in this respect relied upon Sajjan Singh and others v. State of Rajasthan (AIR 1965 SC 845). The Apex Court was considering the validity of Constitution (17th Amendment) Act (1964), In this context, it was observed: " In dealing with constitutional questions of this character, courts generally adopt a test which is described as the pith and substance test. ® Similarly, the learned counsel for the petitioners has relied upon M/s Hoechst Pharmaceuticals Ltd. andfoes another v. State of Bihar and others (ATR 1983 SC 1019). The Court was considering the validity of imposition of surcharge on sales tax under Section 5(3) of Bihar Finance Act, Tt was held that it does not constitute tax on income nor imposes unreasonable restrictions upon the freedom to act; that it does infringe Article 14 of the Constitution of India. Reliance is placed on para 74 and part of para 76 which is as follows:- "74, It is equally well settled that the various entries in the three lists are not "powers! of legislation, but 'fields' of legislation, The power to legislate is given by Article 246 and other articles of the Consti- tution, Taxation is considered to be a distinct matter for purposes of legislative competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production, supply and distribution of essential commo- dities under Entry 33 of List IIT, although the liability to pa tax may be a matterdncidenta! to the Centre's power of price control. T5. soeee seen wee 76. It would therefore appear that there is a distinction made between general subjects of legislation and taxation. The general subjects of legislation are dealt with in one group of entries and power of taxation in a separate group. ss... ® We already pointed out that this is not a measure meant for imposing tax or to impose any . levy or16 impost. liven applying the pith and substance test, in our opinion, essentially it is a regulatory measure meant for balancing the budgets of various Comunidades, The payment of contribution is incidental in nature. -Snsonasove It is not essentially a financial one and the bare reading of Article 125 makes it clear. The said Article falls under Chapter ITI of the Code of Comunidades. The said Chapter deals with Administration of the Comunidades and Articles 118 to 126 deal with Administrators and how to administer a Comunidade. Therefore, in our opinion, this legislation is valid and the State was competent to enact it in view of Entry 18 read with Entry 32 of List II - State List of Seventh Schedule of the Constitution of India. 4, Therefore, we reject this Petition. ( P.S. PATANKAR ) JUDG! ( RK. BATTA ) JUDGE.