IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C ) No. 3816 of 2007
Steel Authority of India Ltd. ........................................Petitioner
Versus
The State of Jharkhand & Ors. ......................Respondents.
CORAM : HON'BLE MR.JUSTICE AJIT KUMAR SINHA
For the Petitioner : Mr. G.M. Mishra Advocate
For the Respondents: Mr. V.K. Prasad, J.C to A.G.
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C.A.V. on : 18.03.2009 Pronounced on : 25.03 .2009
ORDER
05/ 25.03.2009
In the instant writ petition the petitioner prays for issuance of an
appropriate writ, order or direction for quashing the order, as contained in Memo
No.2379/M dated 31.10.2006 issued by the District Mining Officer, Chaibasa whereby
and whereunder it has been held that the whole case of M/s Steel Authority of India
Ltd. is based upon the demand note Memo No.572 dated 21.04.1992 which clearly
mentions the period till 04.04.1991 only; as such no refund of cess amount
aggregating to Rs.60,00,000/- is admissible in the light of the Cess and Other Taxes
on Minerals (Validation) Act, 1992 (16 of 1992) and Hon’ble High Court order dated
27.02.2006 as this amount does not pertain to the period of 5th April, 1991 onwards
and also as per Hon’ble High Court Division Bench order dated 23.12.2003 in CWJC
No.2943 of 1996(R )/ 2945 of 1996 (R ) /4714 of 1996 (R ).
The petitioner further prays for a writ, order or direction commanding upon the
respondents to show cause as to why and under what authority the sum of Rs.1.20
crore paid by the petitioner towards Cess and royalty after 04.04.1991 has not yet
been refunded.
The petitioner further prays for a writ, order or direction from this Hon’ble
Court commanding upon the concerned respondents to immediately and forthwith pay
to the petitioner the aforesaid sum of Rs.1.20 crore along with 18% interest thereon.
2. The facts, in brief, are stated as under:-
The State of Bihar (as it then was) was charging cess and royalty in purported
exercise of authority under Bengal Cess Act, 1880 which was extended and made
applicable to the State of Bihar. Several ordinances and notifications were issued
from time to time enhancing the rate of cess. There were similar provisions
applicable in the State of Tamil Nadu for realizing the cess. The Constitutional validity
of the same was challenged and the matter finally was heard before the Hon’ble
Supreme Court and a Constitution Bench in India Cement Limited and Others
Vrs. State of Tamil Nadu & Others” reported in (1990) 1 SCC page 12 held that
royalty is a tax and as such a cess on royalty being a tax on royalty was beyond the
legislative competence of the state legislature to levy the same because Section 9 of
the Mines and Mineral (Regulation & Development) Act is a central Act which covered
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the field. The judgment of the Hon’ble Supreme Court in India Cement
Case(supra) was rendered on 25th October, 1989. Thereafter another judgment by
three Hon’ble Judges was passed in Orissa Cement case reported in (1991)
(Suppl.) 1 SCC page 430 and the judgment was delivered on 4.4.1991.
3. Following the aforesaid decisions of the Hon’ble Supreme Court several writ
petitions and representations were filed for refund before several High Courts and
finally an ordinance was promulgated by the President of India on 5th February, 1992
known as Cess and other Taxes on Minerals (Validation) Ordinance, 1992. By the said
ordinance of 1992 cess collected up to 1991 was validated by enforcing the provision
of validation up to 4th April, 1991. In pursuance of the said ordinance demands were
made from different parties including TISCO and others.
4. TISCO preferred a writ petition challenging the demand and also raised the
issue of legislative competence in promulgating the Cess and other Taxes of Minerals
(Validation) Act, 1992. A Division Bench of Patna High Court, as it then was, in 1996
(1) PLJR 404 while upholding the validation Act, 1992 held that the taxes collected
before 4th April, 1991 are not required to be refunded. The aforesaid decision along
with other decisions including a Division Bench of the Hon’ble Supreme Court passed
in (1996) 5 SCC page 670 (P. Kannadasan Vrs. State of Tamil Nadu) case
came up for consideration before a Bench of three Hon’ble Judges in District Mining
Officer Vrs. Tata Iron Steel Company reported in (2001) 7 SCC 358 wherein
the Hon’ble Supreme Court held that the said Act validated the collection of levies
already made up to 4th April, 1991 but did not authorise raising of levy and collection
of cess or taxes beyond that period. The judgment of the Patna High Court was
upheld.
5. A writ petition was also preferred by the petitioner herein being C.W.J.C. No.68
of 1993 (R ) before the Ranchi Bench of the Patna High Court for similar relief. In the
said case, an interim order was passed that no coercive step shall be taken against
the petitioner for non-payment of cess on royalty. It appears from the letter dated
19th September, 1998 that in spite of interim order, on special request of the District
Mining Officer, West Singhbhum, Chaibasa, the petitioner paid a sum of Rs.1.2 crores
without prejudice to its right and under protest. The writ petition was taken up on 5th
February, 1996 and by judgment passed on the said date, the Division Bench of the
High Court disposed of the said writ petition in terms with the decision in the case of
Tata Iron & Steel Company (supra) and set aside the demand notice, whereby the
petitioner was asked to pay the cess. Giving reference to the aforesaid order, the
petitioner by his letter dated 19th September, 1998 requested to refund the amount of
Rs.1.2 crores with 18% interest but no action was taken.
6. The main contention raised by the respondents is that the claim of refund of
Rs.1.2 crores relates to the period prior to 4th April, 1991. Thus it was certainly prior
to the cut off date and accordingly cess on royalty was demanded by the District
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Mining Officer for the period up to 4th April, 1991. In the initial round a writ petition
(civil) No.4158 of 2005 was filed by the petitioner herein for the same set of relief
which after recording the aforesaid fact disposed it of with a direction to the authority
to decide the claim by a reasoned order. An L.P.A. No.166 of 2006 was preferred by
the petitioner herein which was dismissed as withdrawn on 8.3.2007 on the ground
that a new cause of action has arisen by virtue of order passed by the Mining Officer
on 31.10.2006. On reading the order dated 31.10.2006 it will be clear that the
District Mining Officer, Chaibasa held as under”-
“The whole case of M/s Steel Authority of India Ltd. is
based upon the demand note memo no.572 dt. 21.04.1992 which
clearly mentions the period till 04.04.1991 only. As such no
refund of cess amount aggregating to Rs.60,00000/- is admissible
in the light of The Cess and Other Taxes on Minerals (Validation)
Act, 1992 (16 of 1992) and Hon’ble High Court order dated
27.02.2006 as this amount does not pertain to the period 5th
April, 1991 onwards, and also as per Hon’ble High Court Division
Bench order dated 23.12.2003 in CWJC No.2943 of 1996(R
)/2945 of 1996 (R )/ 4174 of 1996 (R ).”
The learned counsel for the respondents further raised a contention that the
present writ petition is barred under the principles of constructive resjudicata since
there is no new cause of action nor any liberty was granted by the Division Bench in
L.P.A. No.166 of 2006 which was dismissed as withdrawn and the present writ petition
has been filed for the same set of relief.
7. I have considered the pleadings and the rival submissions and the judgments
in issue. It will be relevant to refer the ratio of the judgment of the District Mining
Officer with regard to the issue in question. The Hon’ble Supreme Court held at
paragraph 24 that they were in agreement to the conclusion arrived at by the Patna
High Court and by upholding the Validation Act to be valid further held that such
validation acts do not authorize any fresh levy or collection in respect of the liabilities
accrued prior to 4.4.1991, though it prohibits refund of the collection already made
prior to that date.
8. Be that as it may, the same issue again came up for consideration before the
Hon’ble Supreme Court in (2008) 3 SCC 451 in Assistant Director of Mines &
Geology Vrs. Deccan Cement Ltd. & Anr. The Hon’ble Supreme Court while
considering the issue in question and also the ratio of the judgment in District Mining
Officer at paragraph 5, 6 & 8 held as under:-
“5.It appears that in District Mining Officer case this Court
was of the view that they levy may have been validated and that
did not authorize collection. It is to be noted that there are
different stages in the matter of imposition of tax or cess. First is
4the source of power for levying tax or cess as the case maybe.
The second is the actual levy by an adjudication or assessment
order. Sometimes, the quantification of the amount payable is
done in the adjudication/assessment order. Finally, comes the
question of collection. That being so, collection is a natural
corollary of the levy. It is inconceivable that the levy is valid but
collection can be held to be impermissible. This is an
irreconcilable situation.
6. We, therefore, find it difficult to agree with the view
expressed in District Mining Officer case regarding impermissibility
of collection in the portion quoted above.
8. We, therefore, refer the matter to a larger Bench to test
the correctness of the conclusion that the levy was permissible by
the Validation Act, but amounts which have not already been
collected, cannot be collected. The records maybe placed before
the Hon’ble the Chief Justice of India for appropriate directions.”
9. The admitted fact remains that the cut off date as fixed under the Validation
Act, 1992 was 4.4.1991 and the demand memo No.572 dated 21.4.1992 which is
sought to be challenged even though subsequent is for the period prior to the cut off
date i.e. 4.4.1991. Hon’ble Supreme Court clearly held that pursuant to the
enactment of the Validation Act, 1992 the collection of levies already made up to 4th
April, 1991 were not required to be refunded but it did not authorize collection of cess
or taxes which accrued subsequent to the cut off date. In the instant case the
petitioner admitted that the demand was for a period prior to 4.4.1991 and not
thereafter. Collection is a natural corollary of the levy for which the impugned
demand Memo No.572 dated 21.4.1992 was raised. However, the issue with regard
to impermissibility of collection after the cut off date has been referred to a Larger
Bench and thus it should await the outcome of the same.
10. Considering the aforesaid facts and circumstances of the case, this writ petition
is disposed of with no order as to costs.
(Ajit Kumar Sinha,J.)
Jharkhand High Court, Ranchi
Dated : 25.03.2009
NKC // N.A.F.R.