Under the Constitution of India, Governments cannot levy or collect any cess, fee or tax or spend any money without authority of law. Consequently, both for receipts and expenses, there has to be legal sanction validly enabling and authorising such transactions. In other words, there are strict limitations on the powers to cause impost and to undertake expenses. Both the activities are conditioned by the requirements of a law, valid under the Constitution.
The Government of Odisha has attempted to cause many imposts, has proceeded on the basis of realising such amounts and, finally, courts have struck down several such imposts as unconstitutional. The tax on minerals and minerals-bearing land in the guise of aiding rural development or social sector investments have been struck down during the tenure of the present Government on account of being beyond the powers of State legislature. The purport and limits of the Orissa Irrigation Act have not been understood in the appropriate Constitutional perspective.
The Government has styled the imposts in this regard some times as “cess” and sometimes as “tax”. The legislative power in this regard is conditioned by Entry-17 of list-II of Schedule-VII to the Constitution. This Entry is not a taxing Entry. Consequently, the legislature cannot impose a tax on the items exhaustively prescribed under the Entry-17, which reads, “Water, that is to say, water supplies, irrigation and canals, drainage and embankments, water storage and water power subject to the provisions of Entry 56 of list I.” But for matters relating to the contents of Entry-17, a “fee” could be levied in terms of Entry 66 of list II of Schedule VII to the Constitution.
A fee must relate to any specific service provided to the class of persons on whom it is levied. There has to be quid pro quo. Even as a regulatory fee, the quantum to be realised is to be limited to the cost of “regulation”. With scant regard to the Constitutional provisions, the legislature has abdicated its power to the Executive Government to effectuate illegal and arbitrary imposts under the Irrigation Act. In fact, this Act is squarely vulnerable and liable to be declared unconstitutional so far as it travels beyond Entry 17, read with the legal requirements for imposition of a “fee”. The State Government has recently issued an executive instruction on the pretext of creating a Water Conservation Fund and wants crores of rupees from non-agricultural users of “any water”. Such an executive fiat is grossly unconstitutional, and exactions through such measures are liable to be declared void.
Through such unconstitutional methods, the Government artificially undertakes the realisation of such amounts, which are eventually liable to be declared illegal. This has its inevitable adverse impact on the efficacy of the budgetary process. The amounts collected as cess or fee are appropriated to the general revenue and are not being, as mandated by law, utilised for the specific purpose for which they could be legally levied. We have thus unauthorised use of amounts realised for specific purposes, coupled with non-utilisation of amounts available through the budgetary process under general revenue.
The Central Government is also not free from this disease. Records of the Comptroller General of Accounts and Reports of the Comptroller and Auditor General of India reveal that funds collected by the Government through imposition of various forms of “cess”, e.g., for higher education, road development and welfare of construction workers are lying unutilised to the extent of about `1.5 lakh crore. Notwithstanding this perversion, the Government has continued to impose new forms of cess.
In addition to the items of cess mentioned, the Central Government has levied cess for Swachh Bharat and is planning a 2-per cent cess for regional connectivity and aviation and threatens to increase the cess on sugar production. When the cost of secondary and higher education is skyrocketing, the Centre has an amount of about `64,288 crore collected during 2006 to 2015 under secondary and higher education cess lying unutilised. This cess is levied on all taxpayers. The CAG laments, “Neither a fund was designated to deposit the proceeds of secondary and higher education cess nor were any schemes identified on which the amount of cess was to be spent. Thus, the possibility of diversion of funds for the purposes not mandated under the Finance Act cannot be ruled out.”
As per law, a cess is allowed to be levied for a specific purpose. For example, the education cess can only be utilised for development of “education”. When there is use of such funds for other purposes, it amounts to a misuse and misappropriation. Over Rs 39,000 crore or about 60 per cent of the Universal Service Obligation funds, collected between 2002-03 and 2014-2015 as a levy up to 5 per cent of the revenue of all telecom service providers are still unutilised.
Reports indicate that the amount has not even been transferred to the aforesaid fund. The Union Minister for labour & Employment has stated in Parliament that as in April, 2015, the State Governments have spent an amount of Rs 2,860 crore out of the available fund of about Rs 16,214.5 crore for welfare of construction workers. The amount utilised is around 17.6 per cent of the total amount available in the fund as on December 31, 2014. An amount of Rs 13,300 crore is lying unutilised. Collection of primary education cess from 2004-05 to 2014-15 was in the range of Rs 1,54,818 crore. Out of this, Rs 13,298 crore is lying dormant. But levy and collection have gone on unabated.
That’s not all. When it comes to expenditure, specially from the Corporate institutions, an eminent RTI activist has circulated the information obtained under the RTI Act from the Industrial Infrastructure Development Corporation of Odisha (IDCO). This entity is created by a statute enacted by the legislature with an objective of aiding the infrastructure for facilitating orderly growth of industries. The details of the IDCO expenses reveal that in 2013-14 it spent Rs 13,85,591 for high mast lights at Patia and KIIT Square. In 2015-16 (till 25.08.2015), the IDCO spent Rs 4,98,634 on construction of a reception room for the office of DG of Police at BJB Nagar. During the same period, the IDCO spent Rs 2,19,60,000 on Aahar in Sambalpur. During last two years, it spent around eight lakh rupees on an Information Centre of the Jagannath Temple at the Jayadev Bhawan, Bhubaneswar. It further spent during 2013-14 and 2014-15 `5,75,12,000 and `6,09,59,236 on franchisee in hockey (HIl) Kalinga lancers. During 2012-13, it spent `21,55, 577 for infrastructure facilities towards land acquisition for Posco, an exercise that was eventually abandoned. During last two years, the IDCO has also spent about `4.45 lakh on renovation of the Information Centre at the Gundicha Temple, Puri.
Without any contribution from the industry-beneficiaries, the IDCO extended assistance of `25 lakh to the Silpanchala Vidyalaya during 2012-13 to 2014-15. Over three years, it spent over `1.31 crore on the Badagabapur police station. It spent `11,18,550 on a road to the Bhagabati temple at Konark and short of `2 lakh on special repairs to the Seva Ghar. Worse still, it spent `57.3 lakh on a conference hall of the Khordha Collectorate. In 2013-14, it spent `11,10,328 on a conference hall of RDC office, Cuttack. In 2012-13, it spent `53,41,717 on street lighting from Badambdi to link Road Square in Cuttack and Rs 10,15,966 from Rabi Talkies to Samantarapur Square in Bhubaneswar. `5 lakh was spent towards sponsorship of Kalinga Football Tournament. About Rs 8 lakh was spent for sponsorship of Adivasi Mela. During the last two years, the IDCO spent Rs 4 crore on a road from NH to Barunei Temple.
All these and more items are not authorised under the Odisha Industrial Infrastructure Development Corporation Act, 1980. The IDCO’s resources can only be utilised for the objects specified in the Act which include none of these. It is worth investigating how and by whom were such expenses authorised and the mounts are liable to be recovered from the persons who spent such amounts obviously for unauthorised purposes.
The entire scenario smacks of gross financial and fiscal indiscipline. Such instances could be styled as instances of pickpocketing by the Government and its authorities.
The inevitable conclusion is that there is wanton indiscipline in the Government, both at the State and Central levels. There is a need for the entire society to wake up and cause a rectification of such increasing illegal activities. But this requires concerted efforts by the civil society and, particularly, the youth. And surely this concerns us all!