In the case of Vijayalakshmi Rice Mill v. Commercial Tax Officers, Palokal, (2006) 6 SCC 763, a distinction was sought to be drawn between ‘Cess’ and ‘Tax’ in the following terms:
“Hence ordinarily a cess is also a tax, but is a special kind of a tax. Generally tax raises revenue which can be used generally for any purpose by the State. For instance, the Income Tax or Excise or Sales Tax which generate revenue can be utilized by the Union or State Governments for any purpose, e.g. for payment of salary to the members of the armed forces or civil servants, police, etc. or for development programs, etc. However, cess is a tax which generates revenue which is utilized for a specific purpose. For instance, health cess raises revenue which is utilized for health purposes, e.g., building hospitals, giving medicines to the poor etc. Similarly education cess raises revenue which is used for building schools or other educational purposes. Gujarat Ambuja Exports Ltd. v. State of Uttarakhand, (2016) 1 UPLBEC 627.