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1991 DIGILAW 274 (PAT)

Central Coalfields Ltd. v. State of Bihar

1991-07-26

S.B.SINHA, S.HODA

body1991
JUDGMENT S.B. SINHA, J. 1. In this case, the petitioner has prayed for issuance of an appropriate writ for quashing a certificate proceeding being Certificate Case No. 59 of 1990-91 pending in the court of respondent no. 3 which was filed for realisation of a sum of Rs. 1,16,121.32 as purported to be due from the petitioner by way of interest for delayed payment of cess for the year 1988-89 payable under the Bengal Cess Act, 1880. 2. The contention raised in support of this application in short is that the Supreme Court of India in India Cement Ltd. vs. State of Madras reported in AIR 1990 S.C. 85 - 1990 (1) SCC 12 and a Division Bench of this Court in Central Coalfields Ltd. vs. State of Bihar reported in AIR 1991 Patna 27: 1992 (1) PLJR 573 having held that no cess was payable by a mining lessee in terms of the provisions of Bengal Cess Act, 1880 (hereinafter to be called and referred to for the sake of brevity as the Cess Act) the question of payment of any interest as provided for under section 45 of the Cess Act does not arise. 3. On the other hand, the learned Government Advocate contended that in view of the decision of the Supreme Court of India in India Cement's case (supra) which has been followed by this Court in Central Coalfields case (supra) the Cess Act having been declared invalid with prospective effect, the petitioner cannot escape its liability for non-payment of interest for the financial year 1988-89, that is from 1.4.1982 to 31.3.1989 in terms of section 45 thereof. 4. The question, therefore, which arises for consideration is as to whether in view of the decision of the Supreme Court in India Cement case (supra) as also of this Court in Central Coalfields Ltd.'s case (supra), the petitioner is liable to pay interest for delayed payment of cess for the period 1988-89. 5. In India Cement's case, the Supreme Court was considering the validity of Tamil Nadu Panchayat Act, 1958. In that case, it was held that section 115 of the said Act be declared ultra vires the power of the State Legislature prospectively only. 5. In India Cement's case, the Supreme Court was considering the validity of Tamil Nadu Panchayat Act, 1958. In that case, it was held that section 115 of the said Act be declared ultra vires the power of the State Legislature prospectively only. Following the said decision, this Court in Central Coalfields Ltd.'s case (supra) held that the petitioner thereof was entitled to refund of the cess paid to the State of Bihar from the date of judgment in India Cement's case (supra) that is from 25.10.1989. 6. Mr. K.D. Chatterjee, learned counsel appearing for the petitioner, submitted that the judgment of the Supreme Court in India Cement's Ltd. case (supra) has to be construed reasonably and in a manner which would uphold the law as declared by the Supreme Court itself. According to Mr. Chatterjee, if the levy of case by the State of Bihar under provisions of the said Act was itself held without jurisdiction, the petitioner cannot be said to be a defaulter for non-payment of the amount of cess levied upon it and consequently no interest is payable in terms of section 45 of the said Act. In order to appreciate the submission of Mr. Chatterjee, paragraphs 34 and 35 of the judgment in India Cement's case may be reproduced:– "34. In the aforesaid view of the matter, we are of the opinion that royalty is a tax and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because S. 9 of the Central Act covers the field and the State Legislature is denuded of its competence under entry 23 of List II. In any event, we are of the opinion that cess on royalty cannot be sustained under entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user of land. Mr. Krishnamurthy Iyer, however, submitted that in any event, the decision in H.R.S. Murthy's case ( AIR 1965 SC 177 ) (supra) was the decision of the Constitution Bench of this Court. Cess has been realised on that basis for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension Service Scheme to which our attention was drawn. Mr. Cess has been realised on that basis for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension Service Scheme to which our attention was drawn. Mr. Krishnamurthy Iyer further submitted that the Directive Principle of State Policy embodied in the Constitution enjoined that the State should take steps to organise village panchayats and endow them with power and authority as may be necessary to enable them to function as units of self-Government and as the amounts have been realised on that basis, if at all, we should declare the said cess on royalty to be ultra vires prospectively. In other words, the amounts that have been collected by virtue of the said provisions should not be declared to be illegal retrospectively and the State made liable to refund the same. We see good deal of substance in this submission. After all, there was a decision of this Court in H.R.S. Murthy's case (supra) and amounts have been collected on the basis that the said decision was the correct position. We are, therefore, of the opinion that we will be justified in declaring the levy of the said cess to be ultra vires the power of the State Legislature prospectively only." 7. This Court in Central Coalfields Ltd.'s case following the aforementioned decision held:– "In fine it is held that as the-State Legislature has exceeded its competence in measuring the cess in respect of the mineral hearing lands on the basis of royalty or on the basis of pit head value of the mineral the Cess Act must be struck down. All the writ petitions are allowed. In India Cement, AIR 1990 SC 85 (supra) the Supreme Court declared S. 115 of the Tamil Nadu Pachayat Act as ultra vires with prospective effect. In terms of the decision of the Supreme Court it is held that the petitioners are entitled to refund of the royalty paid to the State of Bihar only from the date of judgment in India Cement (supra) that is from 25.10.1989." 8. At this juncture, it may be profitable to mention that recently the Supreme Court of India in M/s. Tata Iron & Steel Co. Ltd. vs. State of Bihar & others in Civil Appeal Nos. At this juncture, it may be profitable to mention that recently the Supreme Court of India in M/s. Tata Iron & Steel Co. Ltd. vs. State of Bihar & others in Civil Appeal Nos. 4353 & 4354 of 1983 and other analogous cases disposed of on 4.4.1991, while considering the question as to whether the court has any jurisdiction to declare a provision to be unconstitutional only prospectively observed:– "We have given our earnest consideration to these contentions and we are of opinion that the ruling in India Cement concludes the issue. There the Court was specifically called upon to consider an argument that, even if the statutory levy should be found invalid, the Court may not give directions to refund amounts already collected and the argument found favour with the bench of seven judges. We are bound by their decision in this regard. It is difficult to accept the plea that in giving these directions, the Court over-looked the provisions of Articles 246 and 265 of the Constitution. The Court was fully aware of the position that the effect of the legislation in question being found beyond the competence of the State legislature was to render it void ab initio and the collections made thereunder without the authority of law. Yet the Court considered that a direction to refund all the cases collected since 1964 would work hardship and injustice. The directions, now impugned, were given in the interests of equity and justice after due consideration and we cannot take a contrary view. In our view, we need not enter into a discussion on the principle of prospective validation enunciated by at least some of the judges in Golaknath (supra) as the direction in India Cement can be supported on another well settled principle applicable in the area of the writ jurisdiction of Courts. We are inclined to accept the view urged on behalf of the State that a finding regarding the invalidity of a levy need not automatically result in a direction for a refund of all collections thereof made earlier. We are inclined to accept the view urged on behalf of the State that a finding regarding the invalidity of a levy need not automatically result in a direction for a refund of all collections thereof made earlier. The declaration regarding the invalidity of a provision and the determination of the relief that should be granted in consequence thereof are two different things and, in the latter sphere, the Court has and must be held to have, a certain amount of discretion it is a well settled proposition that it is open to the Court to grant, would or restrict the relief in a manner most appropriate to the situation before it in such a way as to advance the interests of justice. It will be appreciated that it is not always possible in all situations to give a logical and complete effect to a finding. Many situations of this type arise in actual practice. For instance, there are cases where a court comes to the conclusion that the termination of the services of an employee is invalid, yet it refrains from giving him the benefit of reinstatement (i.e. the continuity in service) of back wages. In such cases, the direction of the Court does result in a person being denied the benefits that should flow to him as a logical consequence of a declaration in his favour. It may be said that, in such a case, the Court's direction does not violate any fundamental right as happens in a case like this where an illegal exaction is sought to be retained by the State. But even in the latter type of cases relief has not been considered automatic. One of the commonest issues that arose in the context of the situation we are concerned with is where a person affected by an illegal exaction files an application for refund under tile provisions of the relevant statute or files a suit to recover the taxes as paid under a mistake of law. In such a case, the court can grant relief only to the extent permissible under the relevant rules of limitation. In such a case, the court can grant relief only to the extent permissible under the relevant rules of limitation. Even if he files an application for refund or a suit for recovery of the taxes paid for several years, the relief will be limited only to the period in regard to which the application or suit is not barred by limitation, If even this instance is sought to be distinguished as a case where the Court's hands are tied by limitations inherent in the form or forum in which the relief is sought, lot us consider the very case were a petitioner seeks relief against an illegal exaction in a writ petition filed under Article 226. In this situation, the question has often arisen whether a petitioner's prayer for refund of taxes collected over an indefinite period of years should be granted once the levy is found to be illegal. To answer the question in the affirmative would result in discrimination between persons based on their choice of the forum for relief, a classification which, prima facie, is too fragile to be considered a relevant criterion for the resulting discrimination. This is one of the reasons why there has been an understandable hesitation on the part of Courts in answering the above question in the affirmative." 9. The Supreme Court after considering various decisions on the point held:– "So far as the present cases are concerned, it is sufficient to point out that all the decided cases unmistakably show that, even where the levy of taxes is found to be unconstitutional, the Court is not obliged to grant an order of refund. It is entitled to refuse the prayer for good and valid reasons. Laches or undue delay or intervention of third party rights would clearly be one of these reasons. Unjust enrichment of the refunded may or may not be another. But we see no reason why the vital interests of the State, taken note of by the learned judges in India Cement should not be a relevant criterion for deciding that a refund should not be granted. We are, therefore, unable to agree with the learned counsel for the petitioners that any different criterion should be adopted and that the direction in paragraph 35 of the India Cement should not be followed in these cases. We are, therefore, unable to agree with the learned counsel for the petitioners that any different criterion should be adopted and that the direction in paragraph 35 of the India Cement should not be followed in these cases. For the reasons discussed above, we are of opinion that though the levy of the cess was unconstitutional, there shall be no direction to refund to the assessees of any amounts of cess collected until the date on which the levy in question has been declared unconstitutional. This in regard to the Bihar cases will be the date of this judgment." 10. From what has been stated hereinbefore, it is absolutely clear that although the levy has been declared to be illegal, the Court did not exercise its discretion in passing an order of refund of the amount of cess. 11. It is true that in India Cement Ltd. case, the Supreme Court declared the relevant provisions of Tamil Nadu Panchayat Act ultra vires with prospective effect, but reading the judgment as a whole, it has to be construed that the said order was passed keeping in view the hardship which the State will have to face if an order directing it to refund the entire amount of cess collected by is passed. In India Cement also, the Supreme Court declared the Act ultra vires prospectively only upon consideration of the submissions in other words, the amount that have been collected by virtue of the said provisions should not be declared to be illegal retrospectively and the State made liable to refund the same. Thus prospective overruling of the said Act was done in a limited sense so as to a void hardship to the State which it had to face otherwise. 12. It is well known that a judgment of the Supreme Court has to be read in a reasonable manner. In a recent decision the Full Bench of the Allahabad High Court in Ganga Saran vs. Civil Judge, Hapur & others reported in AIR 1991 Allahabad 114, held:– "It goes without saying that even the decision of the Supreme Court must be understood reasonably. It would not be reasonable to say that the Supreme Court would depart or dissent from its earlier decision without even referring to them or without even referring to the relevant provisions of law." 13. It would not be reasonable to say that the Supreme Court would depart or dissent from its earlier decision without even referring to them or without even referring to the relevant provisions of law." 13. There cannot be any doubt that a judgment like another document will have to read in its entirety. Reading the India Cement's case (supra) in its entirety, there cannot be any doubt that the Supreme Court was considering the question as the hardship that will be caused to the exchequer if it is directed to refund the amount realised by it for a long time, on the basis of a judgment of the Constitution Bench of the Supreme Court in H.R. S. Murthy's case. 14. It will, therefore, be reasonable to consider that the Supreme Court meant declared Section 115 of the Tamil Nadu Panchayat Act ultra vires with prospective effect only with a view to prevent order of refund and not for any other purpose. However, that does not mean that if an assessees has not paid amount of cess, he will not be liable to do so. 15. It is also well known that judgment of a court is not to be read as a Statute. In General Electric Co. vs. Renusagar Power Co. reported in (1987) 4 Supreme Court Cases 137, it was held:– "As often enough pointed by us, words and expressions used in a judgment are not to be construed in the same manner as statutes or as word and expressions defined in statutes. We do not have any doubt that when the words, adjudication of the merits of the controversy in the suit were used by this Court in State of U.P. vs. Janki Saran Kailash Chandra, the words were not used to take in every adjudication which brought to an end the proceeding before the court in whatever manner but were meant to cover only such adjudication as touched upon the real dispute between the parties which gave rise to the action. Objections to adjudication of the disputes between the parties, on whatever ground, are in truth not aids to the progress of the suit but hurdles to such progress. Adjudication of such objections cannot be termed as adjudication of the merits of the controversy in the suit. Objections to adjudication of the disputes between the parties, on whatever ground, are in truth not aids to the progress of the suit but hurdles to such progress. Adjudication of such objections cannot be termed as adjudication of the merits of the controversy in the suit. As we said earlier, a broad view has to be taken of the principles involved and narrow and technical interpretation which tends to defeat the object of the legislation must be avoided." 16. It is now well known that a decision is an authority for what it decides and not what logically can be deduced therefrom. It is also well settled that a point not argued does not create a binding precedent with regard thereto. 17. In Rajeswar Prasad Mishra vs. The State of West Bengal and another reported in AIR 1965 SC 1887 , it was held:– "Article 141 empowers the Supreme Court to declare the law and enact it. Hence the observation of the Supreme Court should not be read as statutory enactments. It is also well known that ratio of a decision is the reasons assigned therein." Dias on 'Jurisprudence' at page 139 observed:– "Knowing the law:– What is 'law' in a precedent is its ruling or ratio decidendi, which concerns future litigants as well as those involved in the instant dispute. Knowing the law in this context means knowing how to extract the ratio decidendi from cases. Statements not part of the ratio decidendi are distinguished as obiter deeta and are not authoritative. Three shades of meaning can be attached to the expression ratio decidendi. The first which is the translation of it, is the reason for (or of) deciding. Even a finding of fact may this sense be the ratio decidendi. Thus a judge may state a rule and then decide that the facts do not fall within it. Secondly, it may mean the rule of law preferred by the judge as the basis of his decision or thirdly, it may mean the rule of law which others regard as being a binding authority. There is a temptation to suppose that a case has one fixed ruling which is there and discoverable here and now and once and for all. There is a temptation to suppose that a case has one fixed ruling which is there and discoverable here and now and once and for all. This is not so, for the ratio is not only the ruling given by the deciding judge for his decision, but anyone of a series of rulings as elucidated by subsequent interpretations. The pronouncement of the judge who decided the case is a necessary step towards ascertaining the ratio, but the process by no means ends there, subsequent interpretation is at least as significant, sometimes more so. It is not sufficient said Jessel MR. That the case should have been decided on a principle if that principle is not itself a right principle or one not applicable to the case and it is for a subsequent Judge to say whether or not it is a right principle, and, if not, he may himself lay down the true principle." 18. The question of payment of interest stands on a different footing. 19. Section 45 of the said Act reads as follows:– "Penalty for default of payment of installment if any installment of local cess or part thereof payable to the Collector shall not be paid within fifteen days from the date on which the same becomes due, the amount of such installment or part thereof may be recovered at any time within three years after it become due with interest at the rate of twelve per centum per annum calculated from the date on which such installment became due and with all cost of recovering the same." From the heading of the said provision, it is evident that the same provides for penalty for default. The said provision authorises the Collector to make a recovery of the due amount with interest at the rate of 12% calculated from the date such installment becomes due. In a given case, therefore, the Collector can take recourse to the said provision, if the amount due is paid subsequently. However, in this case, the Collector has not taken recourse to Section 45 of the said Act inasmuch as by reason of the certificate proceedings no arrear is sought to recovered together with interest and the cost of the recovery but merely the interest itself is sought to be recovered. However, in this case, the Collector has not taken recourse to Section 45 of the said Act inasmuch as by reason of the certificate proceedings no arrear is sought to recovered together with interest and the cost of the recovery but merely the interest itself is sought to be recovered. Upon construction of the provision of section 45 of the said Act, which being penal in nature has to be construed strictly, it has to be held that a recovery of the interest as such is not permissible unless a proceeding is initiated for recovery of the amount of cess due to the Collector. Only in such an event, the recovery of interest @ 12% per annum can be taken recourse to. 20. From a bare perusal of the aforementioned provision it would further be evident that interest is payable only in a case of delayed payment of cess. Interest is payable on the amount not paid by the assessees which, in turn means non-payment of a lawful due. 21. It appears from the Central Coalfield Ltd.'s case (supra) that it had filed a writ application being CWJC 2085 of 1989 (R) challenging the validity of imposition of cess upon it by the State. The impugned certificate proceeding was, however, initiated on 15.10.1990. It is, therefore, clear that when the certificate proceeding was initiated the petitioner had already questioned the validity of imposition of cess. As indicated hereinbefore in India Cement Ltd. case the judgment was pronounced on 25.10.1989 22. In New Delhi Municipal Committee vs. Kalu Ram & another reported in AIR 1976 Supreme Court 1637, it was held that the word 'payable' means 'legally recoverable'. 23. In Krishna Prasad Sinha vs. State of Bihar and others reported in 1983 PLJR 13 (SC) it was held:– "When this Court used the word 'due' it clearly did not intend that the pension would be paid only if due according to the Bihar Pension Rules. The word 'due' was used with a view to indicate the date from which the pension would be paid and this becomes aptly clear when we notice that the then learned standing counselor the State of Bihar in fact agreed that the State would make payment of the amount of the pension." It is, therefore, clear that in that case also the word due used in the judgment was construed upon reading it as a whole. 24. For the reasons aforementioned, this application is allowed and the impugned certificate proceedings being Certificate Case No. 59 of 1990-91 is quashed. Let a writ of certiorari be issued accordingly. In the facts and circumstances of the case, there will be no order as to costs.