Research › Search › Judgment

Calcutta High Court · body

2011 DIGILAW 1128 (CAL)

Tata Iron & Steel Co. Ltd. v. UNION OF INDIA

2011-08-18

PINAKI CHANDRA GHOSE, PRABHAT KUMAR DEY

body2011
Judgment :- Pinaki Chandra Ghose, J This appeal is directed against a judgment and/or order dated 12th July, 1989 passed by the Hon’ble Single Judge in the writ petition being matter No. 532 of 1983. In the writ petition the writ petitioner, the appellant herein challenged the assessment orders mentioned in Annexure-A to the writ petition and also a notification dated 29th November, 1978 in respect of the products of the six captive collieries situated at the placed mention in the said writ petition. The facts of the case briefly are as follows:- The appellant owns five collieries i.e. (i) Sijua Colliery, (ii) Digwadih Colliery; (iii) Malkera Colliery; (iv) Jamdoba 6 and 7 pits collieries; (v) West Bokaro Colliery. The coals raised from the said collieries are used by the appellant for captive consumption in its steel plant in Jamshedpur. It is the case of the appellant that the raw coal raised by the appellant from the said collieries has to be first treated in the coal washeries belonging to the appellant for the same could be used in the Steel Plant of the appellant in Jamshedpur. The said treatment of raw coal in the washery is known as beneficiation. It is further the case of the appellant prior to the issuance of the impugned notification dated 29th November, 1978, excise duty was levied and collected by the respondents on the final product coming out of the washeries of the appellant namely the raw coal raised by the appellant form its collieries after notification thereof in the washeries of the appellant. The aforesaid levy and collection was made in accordance with the provisions of Rule 8 of 1975 Rule said at the rates specified in the notification dated 1st April, 1975 being the earlier notification issued by the respondent (in exercise of the powers conferred under Section 6 of the 1974 Act) which was in force prior to the issuance of the impugned notification dated 29th November, 1978. The rates of excise duty livable on different grades of coals as stipulated in the 1975 notification are as under: It is further the case of the appellant that prior to the issuance of the impugned notification and the appellant was paying excise duty on middling at the rate of Rs. 1.65 per tone. The rates of excise duty livable on different grades of coals as stipulated in the 1975 notification are as under: It is further the case of the appellant that prior to the issuance of the impugned notification and the appellant was paying excise duty on middling at the rate of Rs. 1.65 per tone. The appellant was also paying excise duty at the same rate on “rejects” having high ash content which could not be classified as coal on which excise duty could be levied. It is also the case of the appellant that on 29th November, 1978 the respondents issued the impugned notification and purported to have illegally changed the basis of the said levy in supersession on and/or contravention of the earlier notification dated 29th March, 1975. Being aggrieved by the said impugned notification as also the said levy and collection of excise duty purportedly on the basis of the said notification, the appellant filed the writ petition challenging the said notification and the levy and collection of excise duty in pursuance thereof. The said notification was challenged by the appellant on the ground that the said notification issued by the respondent on the intention to issue such notice is to amend the Rule 8 of the 1975 Rules. It is further stated that the respondent is not empowered to amend the said Rule by way of administrative instruction. It is also stated that to issue the said notification and thereby changing point of levy of excise duty from the finished product i.e. after beneficiation of raw coal at the washery to the raw coal at the pit head, cannot be done by the respondent in such a manner and on that ground alone the said notification should be quashed and/or set aside. It is further stated that without amending Rule 8 which was made in exercise of the rule making power conferred upon the respondents under Section 18 of the 1974 is bad in law and cannot be sustainable in the eye of law. It is also stated that for the purpose of amending the rule certain procedures was necessary to be followed by the respondent. It is further submitted that the said notification is ultra virus Section 6 of the said Act as also ultra virus Rule 8 framed under the said Act. It is also stated that for the purpose of amending the rule certain procedures was necessary to be followed by the respondent. It is further submitted that the said notification is ultra virus Section 6 of the said Act as also ultra virus Rule 8 framed under the said Act. Hence it is submitted that the said notification is liable to be struck down. It is further submitted that the adjudicating authority at the time of reviewing the orders, all dated June 17, 1982, being Annexure-C to the writ petition passed the said orders without any reason. It is stated that those orders are quasi judicial orders and as such the adjudicating authority had to give reasons and thereafter in the absence of such reasons those orders have to be set aside and quashed. The Hon’ble Single Judge after hearing the parties dismissed the writ petition. His Lordship further held that there is no attempt on the part of the Union of India to make any amendment of Section 6 of the said Act nor does it make an attempt to make a change in the collection of levy of taxes as contemplated in Rule 8 framed under the said Act. His Lordship also held that for the purpose of bringing uniformity for collecting the respondent has now decided to levy tax only on one product, namely, on raw coal raised from the mine irrespective of whether the owner owns both the coal mine as also the washery or a person owns only a coal mine and not the washery. His Lordship further held as follows:- “…I do not think that the said Notification which is impugned by this writ application, makes any amendment either to Rule 8 framed under the said Act or Section 6 of the said Act.” His Lordship also held as follows:- “But under Section 6(1) of the said Act, it is provided that such duty of excise may be fixed from time to time by the Central Government by Notification and different rates of duty may be levied on different grades of coal or coke. It is further provided in section 6 (3) of the said Act that all such Notifications issued under the said Section, should be laid, as soon as may be, before both Houses of Parliament. It is further provided in section 6 (3) of the said Act that all such Notifications issued under the said Section, should be laid, as soon as may be, before both Houses of Parliament. It appears from the gazette copy of the Notification impugned, handed over to this court by the Counsel for the Union of India, that such Notification has been duly published in the Gazette of India. Therefore, it is in compliance with Sub-section (3) of Section 6 of the said Act.” His Lordship further held as follows:- “….The said Notification makes an uniform levy, not contrary to section 6 of the said Act.” His Lordship also held as follows:- “I, therefore, do not accept the contention of the counsel for the petitioner No. 1 that the said impugned notification is ultra virus the said Act or the said Rule.” With regard to the review orders the respondent/the Union of India submitted before the Court that such amount as directed to be refunded, has been adjusted against the further payments and the writ petitioner has accepted such adjustment. His Lordship further held that as such the case made out no reasons have been indicated in the review orders. But after scrutinizing the said orders and the material placed before His Lordship, His Lordship held that the concerned authority has indicated the manner of assessment in the annexure appended to the review orders and further has made order for necessary adjustment which, according to the respondent No.1, the writ petitioner No. 1 has accepted. In this context, His Lordship held that there is no infirmity in such review orders. Being aggrieved this appeal has been filed by the appellant. Mr. Hirak Mitra, learned Senior Advocate appearing on behalf of the appellant submitted that the impugned notification is issued by the respondent under Section 6 of 1974 Act. He further submitted that Section 6 of 1974 Act confers powers on the respondents to levy different rates of duties subject to a maximum rate of Rs.10/- per tone on different grades of coal. The said section does not confer any power on the respondents to change the point of levy of excise duty which was on the finished product i.e. after beneficiation of raw coal at the washery to the raw coal raised by the appellant at the pit head. The said section does not confer any power on the respondents to change the point of levy of excise duty which was on the finished product i.e. after beneficiation of raw coal at the washery to the raw coal raised by the appellant at the pit head. In this connection, he drew our attention to Section 6 of the 1974 Act which is set out hereunder:- “6. Imposition of Excise duties: (1) with effect from the appointed day, there shall be levied and collected on all coal raised and dispatched and on all coke manufactured and dispatched, from the collieries in India such duty of excise, not exceeding rupees ten per tone, as may be fixed from time to time by the Central Government by notification and different rates of duty may be levied on different grades or description of coal or coke; Provided that the Central Government may, by general or special order, exempt any special grade or grades or description of coal or coke from the levy of such duty of excise. (2) For the purpose of sub-section (I), coal shall be graded by the Central Government in accordance with such specifications as may be laid down by the Government from time to time. (3) All notification issued under this section shall be laid, as soon as may be, before both Houses of Parliament.” He further drew our attention to Rule 8(1) and (2) of the 1975 Rules which is also set out hereunder:- “Rule 8(1) and (2) of the 1975 Rules “(1) The duties of excise duty levied under Sec 6 shall be shown separately by the owner agent or manager or a coal mine in the bill prepared for the sale of coal and coke. (2) When raw coal is dispatched from the mine for coke making to a coke point or, as the case may be, for beneficiation to a coal washery under the same ownership as the coal mine, the duties of excise shall not be collected on raw coal dispatched from the mine but on the final product of the coke plant or coal washery, that is on hard coke, soft coke, washed coal, middling, rejects or other final product. (3) When raw coal is dispatched from a mine for coke making to a coke plant or, as the case may be, for beneficiation to a coal washery, which is not under the same ownership as the coal mine, the duties of excise shall be collected by the owner, agent or manager of the coal mine on the raw coal dispatched and not on the final product of the coke plant or coal washery..” He further drew our attention to Section 18 of the 1974 Act which is also set out hereunder:- “Section 18 of the 1974 Act. 18 Power to make rules – (1) The Central Government may, by notification, and subject to the condition of previous publication, make rules to carry out the provisions of this Act. (2) Without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely, (a) the measures to be taken for the purpose of conservation of coal and maintenance of safety in coal mines; (b) the measures to be taken for the development of coal mines; (c) the manner in which, and he conditions subject to which, sums at the credit of the Coal Mine Conservation and Development Account may be applied; (d) the form in which the Coal Mine Conservation and Development Account shall be kept; (e) any other matter which is required to be, or may be, prescribed. (3) any rule made under the provisions of this Act may provide that the contravention thereof shall be punishable with imprisonment for a term which may extended to three months or with fine which may extend to two thousand rupees or with both; (4) Every rule made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session for total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified from or be of no effect, as the case may be, so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.” It is necessary for us to set out the Gazette Notification dated 29th November, 1978, which is the subject matter of this appeal, is also set out hereunder:- “MINISTRY OF ENERGY (Department of coal) NOTIFICATION New Delhi, the 29th November, 1978 S.O. 686(E)-In pursuance of the recommendation made by the Coal Conservation and Department Advisory Committee in its meeting held on 17-6-1978 the Central Government in exercise of the powers conferred by sub-section (i) of section 6 of the Coal Mines (Conservation and Development) Act, 1974 (28 of 1974), hereby directs that on and from the date of publication of this notification, excise duty livable under the notification of the Government of Indian in the Ministry of Energy (Department of Coal) No. S.O. 159(E) dated the 29thMarch, 1977 shall be levied only on raw coal, raised and dispatched from the mine or used for coke making or for beneficiation to a coal washery and for soft coke, as the case may be, irrespective of the location or ownership of coal mine, coke plant, and coal washery, and not on final product of the coke plant or coal washery as specified in sub-rule (2) and (3) of rule 8 of the Coal Mines (Conservation and Development) Rules, 1975. [File No. 12014/1/76-CPC/CRC] S.K. Bose, Jt. Secy.” Mr. [File No. 12014/1/76-CPC/CRC] S.K. Bose, Jt. Secy.” Mr. Mitra also submitted that the administrative instructions cannot be given effect to amend Rule 8(2) of the 1975 Rules which are statutory rules. He further submitted that if the impugned notification cannot be sustained in law then as a matter of course the respondents are liable to refund excess duty of Rs.18,71,201.80 collected during period from 1st April, 1975 to 31st December, 1978. Therefore, the collection of the said excess amount on account of excise duty to the tune of Rs.18,71,201.80 by the respondents by giving retrospective effect to the said notification and the provisions thereof is even otherwise wrongful and illegal and the respondents are, therefore, liable to refund the said sum to the appellant. He further submitted that the excess amount of excise duty to the tune of Rs.7,78,012.60 purportedly for the period of 1991-96 paid by the appellant by way of inadvertence and/or by mistake have to be refunded by the respondents. He also submitted that the said amounts had been realized by the respondents without any authority of law and he further drew our attention to Article 265 of the Constitution of India and also relied upon the decision reported in AIR 2008 SC 351 . On the contrary, it is contended on behalf of the respondent that the impugned notification dated 29th November, 1978 has neither changed nor revised the basic principles of levy of stowing excise duty nor it is basically different from the earlier Notification dated 29th March, 1975. It is further submitted that before issuing such notification dated 29th November, 1978, there was a meeting calling all the representatives of the organizations interested in coal mines. The representatives of the appellant/writ petitioner also attended the said meeting. It is further submitted that the copy of the said Minutes of the Meeting held on 17th June, 1978 has been handed over to the Hon’ble Single Judge. It appears from the said Minutes that the Chairman explained that there was some confusion in the matter of levy of conservation excise duty on raw coal vis-à-vis washed products of a washery. It appears from the said Minutes that the Chairman explained that there was some confusion in the matter of levy of conservation excise duty on raw coal vis-à-vis washed products of a washery. At that meeting it was discussed and decided that the disparity and confusion regarding the rate of excise duty on middling’s and rejects of a coking coal washery could be avoided if an uniform system was introduced by way of levy of excise duty on the raw coal feed of every washery irrespective of the fact whether it belonged to the same management as the colliery or not. The said arrangement was accepted by all the representatives attended the said meeting, including the representative of the writ petitioner. After such discussion this Notification was issued and was formally published in the Gazette of India on 29th November, 1978. Therefore, he submitted that there is no anomaly with regard to the issuance of such circular and the same was issued only to resolve the disputes. We have considered the facts, which can be summed up as follows: - The allegation of the writ petitioner/appellant is that issuance of notification dated 29th November, 1978 is nothing but imposition of excise duty twice. But it appears to us that the notification dated 29th November, 1978 was issued in exercise of the powers conferred by Sub-section (1) of Section 6 of the said Act. We have further noticed that the case of the appellant is that prior to the issuance of the notification dated 29th November, 1978, excise duty was levied and collected by the respondents on the final product coming out of the washeries. The question which tried to be raised on behalf of the appellant is that the point of levy of excise duty from the finished product of the appellant emanating from the washery to the raw materials at the pit head as provided in Rule 8(2) of the 1975 Rules could not have been changed without an appropriate amendment of Rule 8 and Sub-rule 2 thereof in particular. We have considered the said question also and after reading Section 6 of the 1974 Act it appears to us that the authority has a right to levy and collect the excise duties on all coal raised and dispatched from the collieries in India. We have considered the said question also and after reading Section 6 of the 1974 Act it appears to us that the authority has a right to levy and collect the excise duties on all coal raised and dispatched from the collieries in India. Further such duty of excise may be fixed from time to time by the Central Government. Different rates of duty may be levied on different grades or description of coal or coke. The said Section has a statutory force and the authority has been given power to the Central Government to issue the notification with regard thereto. We have considered the said aspect of the matter and we come to the conclusion that the Central Government has power to levy and collect taxes in terms of the notification issued from time to time in terms of Section 6(1) of the said Act. After going through the said notification it appears to us that the respondents by the notification dated 29th November, 1978 has specifically stated that the excise duty livable and shall be levied only on raw coal raised and dispatched from the mine. Therefore, the said notification has been issued so that the excise duty can be levied only on raw coal raised and dispatched from the mine or used for mine or used for coke making or for beneficiation to a coal washery irrespective of the location or ownership of coal mine, coke plant, and coal washery. It has also been specifically distinguished that such excise duty shall be levied only on raw coal and not on final product of the coke plant or coal washery as specified in sub-rule (2) and (3) of the said Act. After taking into consideration the said facts, it appears to us that only to remove the anomalies and disputes at which point the excise is livable has been fixed by the authorities/respondents. We further noticed that under Section 6(1) of the said Act the power has been given to the Central Government from time to time to fix the rates of duty by issuing notification on different rates or description of coal or coke. We have also noticed that coal raised by the appellant from the collieries treated in the coal washeries belonging to the appellant and thereafter used in the steel plant of the appellant, which is known as beneficiation. We have also noticed that coal raised by the appellant from the collieries treated in the coal washeries belonging to the appellant and thereafter used in the steel plant of the appellant, which is known as beneficiation. It further appears that the purport of the issuance of such notification only to resolve the disputes that whether the excise duty can be levied at one point and not on different stages. Therefore, we do not find that the respondent has acted arbitrarily or the said notification has been issued in violation of Section 6(1) of the said Act. The rate of tax and the objects to be taxed are to be determined by the Legislature and, in our considered opinion, unless it is found to be so unreasonable, the court does not interfere with the latitude enjoyed by the Legislature in this behalf (See Meenakshi Vs. State of Karnataka reported in AIR 1983 SC 1283 ). The Supreme Court on this point, in the case of Khandige Sham Bhai Vs. Agri. Income-tax Officer reported in AIR 1963 SC 591 ¸ observed as follows:- “…The courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of “wide range and flexibility” so that it can adjust its system of taxation in all proper and reasonable ways.” The Supreme Court, in the case of Hoechst Pharmaceuticals Ltd. Vs. State of Bihar reported in AIR 1983 SC 1019 (Also see, State of Kerala Vs. Aravind Ramakant Modawadakar reported in (1999) 7 SCC 400 ), also observed as follows:- “When the power to tax exists, the extent of the burden is a matter for discretion of the law-makers. It is not the function of the Court to consider the propriety or justness of the tax, or enter upon the realm of legislative policy. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirements is satisfied.” It appears to us that such notification has been issued to reduce inequalities amongst the users of the said coal. If the evident intent and general operation of the tax legislation is to adjust the burden with a fair and reasonable degree of equality, the constitutional requirements is satisfied.” It appears to us that such notification has been issued to reduce inequalities amongst the users of the said coal. The Court will only struck down when a notification issued by a Taxing Department of a State which lacks a sense of reasonability because it is not able to strike a rational balance of classification between the items of the same category would be ultra virus Article 14. The reasonableness of classification must be examined on the basis, on which the notification has been issued. In the given facts we find that the decisions cited by Mr. Mitra have no application in the facts and circumstances of the present case. It is permissible to levy a higher tax on those who are economically stronger than those who are weaker. The object of tax is not only to raise revenue but also to regulate the economic life of the society. Therefore, in our considered opinion, the said notification has been issued without violating Article 14 of the Constitution of India. We have also examined whether the said notification was issued by the respondents in violation of Article 265 of the Constitution of India. But it appears to us that the respondents had an authority under Section 6(1) of the said Act to issue the said notification. Therefore, we are not in a position to accept the contention of Mr. Mitra that such notification has been issued in violation of Article 265 of the Constitution. Therefore, we hold that the said notification has been issued and the tax has been levied and or collected in terms of the said notification by authority of law. For the reasons stated hereinabove, we are not in a position to accept the contention of Mr. Mitra. Accordingly we hold that the said notification has been issued by the authority of law and it cannot be stated to be unreasonable or violates the Article 14 of the Constitution of India. we hold that the said notification has not been issued arbitrarily or illegally. Therefore, we uphold the said notification. We do not find any merit in this appeal. Hence this appeal is dismissed.