Kamlapat Moti Lal v. State of Uttar Pradesh — 1981 DIGILAW 355 (ALL)

JUDGMENT T.S. Misra, J. - This appeal is directed against the judgement and decree dated 30-9-1969 passed by the Additional Civil Judge, Faizabad, in regular suit No. 29 of 1969, whereby the suit was dismissed with costs. The plaintiff-appellant had filed the suit for a permanent injunction to restrain the defendants, respondents from realising and collecting a sum of Rs. 2,63,684.92 P. towards cane cess from the plaintiff. 2. The plaintiff carries on business of manufacture and sale of sugar under the name and style of Kamlapat Moti Lai (Sugar Mills) at Moti Nagar district Faizabad. It is not in dispute that the U. P. Government had imposed cess not exceeding 4 annas per maund on the entry of sugarcane into the premises of a factory under the provisions of the U. P. Sugarcane Cess Act. 1956, in short, the Cess Act. In the case of Diamond Sugar Mills Ltd. v. State of Uttar Pradesh (AIR 1961 S C 652) the vires of the Cess Act was challenged and the Supreme Court struck down S. 3 of the said Act which empowered the Governor to impose a cess on the entry of sugarcane into the premises of a sugar factory on the ground that it did not fall within Entry 52 of the State List. The Central Government then promulgated an ordinance known as U. P. Sugar Cane Cess Validation Ordinance 1961, dated 31-1-1961. That Ordinance was replaced by U. P. Sugar Cane Cess Validation) Act, 1961. passed by the Parliament. By virtue of S. 3 of the U. P. Sugar Cane Cess Validation Act, 1961, (hereinafter called the Validation Act) the command under which the cess would be deemed to have been imposed or recovered would be the command of the Parliament. The validity of the Validation Act was also challenged but the Supreme Court has held the Validation Act valid. 3. The plaintiff did not submit any returns of cess for the period 1-12-1960 to 2-2-1961. It is stated by the plaintiff in the plaint that the Collector, Faizabad, by his letter dated 1-3-1961, asked the plaintiff to file returns with respect to the said period and the same were submitted by the plaintiff on 11-3-1961. A demand for a sum of Rs. It is stated by the plaintiff in the plaint that the Collector, Faizabad, by his letter dated 1-3-1961, asked the plaintiff to file returns with respect to the said period and the same were submitted by the plaintiff on 11-3-1961. A demand for a sum of Rs. 2,63,684.92 P. on account of cane cess for the period 1-12-1960 to 2-2-1961 was accordingly raised and the plaintiff was called upon to pay the same. The plaintiff then filed the suit which has given rise to this appeal asking for an injunction to restrain the defendants from realising the said amount as cane cess, on the ground inter alia that as the plaintiff had not submitted the returns for the period in question, there could be no assessment for that period by the assessing authority after 3-2-1961 and in the absence of an assessment order no recovery of any amount could be made. In other words, the plaintiff had asserted that no cess could be realised which was not assessed before 3-2-1961. The defendants resisted the suit and disputed the aforesaid assertion made by the plaintiff. The trial court repelling the contentions of the plaintiff dismissed the suit. Aggrieved, the plaintiff has filed the instant appeal. 4. The appellant urged that despite the Validation Act it was essential under the U. P. Sugarcane Cess Act to make an assessment of cess and unless it was done no recovery could be made with respect to any cess from the plaintiff pertaining to the period in question. The other point urged on behalf of the appellant was that under the Validation Act a datum line as 3-2-1961 has been fixed, hence not only the imposition of the cess but also the assessment thereof should have been made before 3-2-1961 and as no action was taken by the respondents to assess the cess with respect to the aforesaid period 1-12-1960 to 2-2-1961, at any time before 3-2-1961 the action taken in the year 1967 was illegal and no cess could be demanded from the plaintiff. The third point urged was that the returns filed by the plaintiff on 11-3-1961 were not the returns in the eye of law because they were filed in compliance of the order of the District Magistrate, Faizahad and also because they were not accompanied by any teasury receipts showing payment of cess with respect to the period in question. The third point urged was that the returns filed by the plaintiff on 11-3-1961 were not the returns in the eye of law because they were filed in compliance of the order of the District Magistrate, Faizahad and also because they were not accompanied by any teasury receipts showing payment of cess with respect to the period in question. The fourth point urged on behalf of the appellant was that the assessment of cess was necessary because both the cess Act and the Validation Act are declaratory and not executory in nature and there could he no automatic assessment or imposition of cess. It was submitted that the rules framed under the Cess Act make a provision for appeal which, according to the argument of the learned counsel for the appellant was a clear pointer to the fact that the Cess and the Validation Act were declaratory and not executory. No other point was urged or pressed on behalf of the appellant. We shall now proceed to consider the points raised before us. 5. The first and the fourth point urged by the learned counsel for the appellant may he taken up together. As pointed out earlier the contention is that under the Cess Act and the rules framed thereunder it is necessary that before-demand is made there should be an assessment order assessing the Cess, and unless an assessment is made no recovery could he effected. In order to appreciate this contention it would be appropriate to refer to the provisions of the Cess Act and the rules framed thereunder. 6. Under S. 3 of the Cess Act. 1956, the State Government may by notification in the Official Gazette impose a cess not exceeding four annas per maund on the entry of the cane into the premises of a factory for use, consumption or sale therein. Sub-section (2) of S. 3 provides that the cess imposed under sub-s. (1) shall he payable by the owner of the factory and shall be paid on such date and at such place as may be prescribed. Sub-section (2) of S. 3 provides that the cess imposed under sub-s. (1) shall he payable by the owner of the factory and shall be paid on such date and at such place as may be prescribed. Under sub-section 151 if any person is in default of payment of the cess the officer or authority empowered to collect the cess may direct that in addition to the amount of the arrears and interest a sum not exceeding 10 per cent thereof shall by way of penalty be recovered from the person liable to pay the cess. Section empowers the State Government to make rules for carrying out the provisions of the Act. In exercise of that power the State Government framed rules called U. P. Sugarcane Cess Rules, 1956. Rule 3 requires the owner of a factory to maintain a correct account day to day in Form I or Form l-A as the case may he, of the cane which enters the premises of the Factory. Rule 4 requires that the amount due as cess on the quantity of sugarcane which enters the premises of it factory for use, consumption or sale therein during the first fortnight of each calendar month shall he deposited by the owner of the factory in the Government treasury by the twenty-second day of that month and the amount of cess similarly due for the remainder of that month shall be deposited in the Government treasury before the seventh day of the next following month. Rule 5 requires the owner of a factory to submit to the Assessing Officer before the twenty-fifth day of each calendar month a return in Form II or Form II-A. as the case may he showing the quantity of cane that entered the premises of a factory during the first fortnight of that month and the amount of cess due under the Act and deposited by him under R. 4 in respect of that cane, together with the treasury receipt indicating the deposit. A return is also required to he submitted in respect of the remainder of the calendar month before the tenth day of the next following month. Sub-para (2) of R. 5 requires the owner of a factory to send before the respective dates mentioned in sub-r. (1). A return is also required to he submitted in respect of the remainder of the calendar month before the tenth day of the next following month. Sub-para (2) of R. 5 requires the owner of a factory to send before the respective dates mentioned in sub-r. (1). a copy of the relevant return referred to in that sub-rule to the Cane Commissioner and another copy to such other officer as the Cane Commissioner may specify in writing. Under R. 6 the Assessing Officer, on receipt of the returns submitted under R. 5( 1), is to ascertain that the amount of cess has been correctly stated in the return. If the Assessing Officer finds that the cess has not been correctly stated in the return he shall, after giving the owner of the factory an opportunity to be heard, determine the correct amount of cess and inform the owner of such amount. On receipt of the assessment report from the Assessing Officer the owner is required to deposit within a period of one week the balance amount, if any, in the treasury and inform the Assessing Officer. Sub-rule (4) of 1 Rule 6 provides for an appeal against the order of the Assessing Officer made under sub-r. (2) of R. 6. A revision may also he filed against the order of the Sub-Divisional Magistrate made under sub-r.14). Then before (5th day of the calendar month the Assessing Officer shall send to the Collecting Officer a statement in Form III show in the name of factory, the amount of cane cess due paid and the balance, if any remaining unpaid in respect of the month immediately preceding. Rule n deals with imposition of penalty. Rule 9 provides for giving of notice by the Collecting Officer to the owner of the factory demanding bi Form IV within the specified period. tit arrears of cess with interest thereon and the amount of penalty. if any. Sub-section (2) of S. 3 of the Cess Act makes it obligatory for the owner of the factory to pay the cess and R. 3 aforesaid enjoins the owner of the factory to maintain it correct account in the prescribed form of the cane which enters the premises of the factory. if any. Sub-section (2) of S. 3 of the Cess Act makes it obligatory for the owner of the factory to pay the cess and R. 3 aforesaid enjoins the owner of the factory to maintain it correct account in the prescribed form of the cane which enters the premises of the factory. The amount due as cess on the quantity of the Sugarcane which enters the premises of a factory is required to be deposited by the owner of the factory under R. 4 of the Rules. That amount should be deposited by him in the Government treasury. Under R. 5 the owner of the factory is to submit a return showing the quantity of cane that entered the premises of the factory and the amount of cess due under the Act and deposited by the owner under R. 4 in respect of that case. The owner of the factory is also required to send the treasury receipt indicating that deposit. The Assessing Officer who is an officer appointed by the State Government under sub-s. (4) of S. 3 of the Cess Act of, it the assessment of cess has then to find out whether the amount of cess mentioned in the return has been correctly stated therein and if he finds that the cess has not been correctly stated he ,hall give notice to the owner of the factory and after hearing him determine the correct amount of cess and inform of that amount of cess which the owner must deposit within the period stipulated. The duty of the Assessing Officer therefore is to scrutinise the return submitted by the owner of the factory and to check whether the amount of cess mentioned in the return is correct or incorrect. He has to check the amount of cess deposited by the owner of the factory. The assessing officer therefore has to see that the full amount of the Less has been credited to the treasury. If he finds that this has not been done it is his duty to give a not ice to the owner of the factory and after nearing him determine the correct amount. The cess Act and the Rules do not therefore require the Assessing Officer to make a formal order of assessment and then to collect the cess. If he finds that this has not been done it is his duty to give a not ice to the owner of the factory and after nearing him determine the correct amount. The cess Act and the Rules do not therefore require the Assessing Officer to make a formal order of assessment and then to collect the cess. Sub-rule 12) of Rule 6 relates to the quantity of the cane which has entered the factory premises and the amount of cess deposited in respect of it. It is for this purpose that the return provides the details to he submitted by the owner of the factor and a duty is cast on the owner of the factor\to deposit the cess leviable on the total quantity of the cane and to send receipt evidencing: the deposit to the Collector. The Cess Act and the Rules do not, therefore, require the Assessing Officer to make a formal order of assessment and then to proceed to collect the Cess. In the view we take we find support from a decision of the Supreme Court in Bhopal Sugar Industries Ltd. v. State of Madhya Pradesh, ( AIR 1979 SC 537 ). The points 1 and 4 referred hereinabove lacking merits are therefore, repelled. 7. The next point urged by the learned Counsel was that the Validating Act validates, III actions taken before 3-2-1901 and therefore any action taken after 3-2-1961 demanding arrears of cess for the period in question was illegal. We see no merit in this contention as well. Section 3 of the Validation Act validates all cess imposed, assessed or purported to have been assessed. collected under any State Act before 3-2-1961. 'The cess in question was imposed prior to 3-2-1961. It was the duty of the plaintiff to deposit the cess with respect to the period l-12-1960 to 2-2-1961 within the time prescribed in the Act and the Rules and also to submit return in the manner provided in the Rules. The failure of the plaintiff to do so would not entitle it to contend that and demand made with respect to the cess for the said period was invalid. The plaintiff was no doubt called upon by the Collector Fairdabad to file the return side letter dated 1-3-1961 and the plaintiff did file a return on 11-3-1961. The failure of the plaintiff to do so would not entitle it to contend that and demand made with respect to the cess for the said period was invalid. The plaintiff was no doubt called upon by the Collector Fairdabad to file the return side letter dated 1-3-1961 and the plaintiff did file a return on 11-3-1961. This in fact he should have done within the period prescribed under the Act and the Rules. The failure to do so would has subjected the owner of the factory to payment of interest and penalty but it is wrong to say that no recovery with respect to the cess for the period 1-12-1960 to 2-2-1961 could he effected after 3-2-1961. Neither the Act nor the rules lay down any such limitation. 8. The next contention of the petitioner was that the return filed on 11-3-1961 would not he said to he return in the eye of law because it was not accompanied by the treasury receipt. This submission has also no force. The plaintiff had to file the return accompanied by the treasury receipt showing payment of the cess with respect to the period in question. The plaintiff had not deposited any amount in the Government treasury as cess for the period 1-12-1960 to 2-2-1061. The question of filing a treasury receipt along with the return could not, therefore, arise. 9. No other point was pressed. 10. In the result the appeal fails and is dismissed.