DISTRICT MINING OFFICER AND ORS. v. TATA IRON AND STEEL CO. AND ANR.

A submission of Mr. Dwivedi, appearing for the State of Bihar that on account of the Validation Act, the relevant provisions of the Cess Act of 1880, as applicable in the State of Bihar, conferred an indefeasible right on the State Government to make levy and collect cess or taxes on minerals, which was collectable upto 4th of April, 1991, even after the expiry of the very law B itself. In our considered opinion, the decision of this Court in State of Orissa v. Bhupendra Kumar Bose case, will have no application to the facts of the present case. The next case, Mr. Dwivedi relied upon was the case of R. C. Jal/ v. Union of India, [1962] Supp. 3 SCR 436. In that case, an Ordinance had been promulgated on 26th August, 1944 in exercise of powers vested in the Governor General of India under Section 72 of the Ninth Schedule to the C Government of India Act, 1935 read with India and Burma (Emergency Provisions) Act, 1940, called the Coal Production Fund Ordinance, 1944, for constituting a fund for financing of activities for the improvement of production, marketing and distribution of coal and coke. The said Ordinance was a permanent one and was to be continued to be in force till repealed, as in apparent from the judgment of this Court in Hansraj Moolji's case, [1957] D SCR 634. A second Ordinance was promulgated repealing the earlier one on 26th of April, 1947 and in the repealing Ordinance, an express tenn was there, making the provisions of Section 6 of the General Clauses Act, shall apply in respect of the repeal. The question arose whether after expiry of the life of the repealing Ordinance on November 01, 1947, what would be its effect in respect of the liability continued in respect of the past transactions? This Court held that the repealing Ordinance had continued the life of the original, which was a pennanent one, respect of past transactions and, therefore, the expiry of its life (life of repealing Ordinance) Could not have any effect on that law to the extent saved, and, therefore, it must be held to have continued to have force under Article 3 72 of the Constitution, until it was altered, repealed or amended by competent Legislature, and consequently, it cannot be said that the coal cess was levied or collected without the authority of law. We fail to understand how this decision will be of any assistance to the case in hand, where the original law namely the Cess Act of 1880, as applicable in the State of Bihar, did not have the legislative competence and as such was declared void. By the Validation Act, Parliament fictionally and by a deeming provision, enacted the provisions of the invalid law in relation to cess or taxes on minerals and that also t;ll 4th of April, 1991. Thus, there was no permanent law, authorising the levy which was being validated but on the other hand by a fictional enactment, a law permitting collection made upto 4th of April, 1991 was allowed to be retained. As has been observed earlier in the Validation Act, no provision has been made, corresponding to

DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.J 183 the provision contained in Section 6 of the General Clauses Act, and therefore, after the expiry of the life of the law that is after 4.4.1991, there cannot be any authority of law for making any levy or collection of the cess and taxes · on minerals. This decision also will have no application to the case in hand. The other decision of this Court relied upon by Mr. Dwivedi is the case of .- Mis. Velji Lakshmi and Co. and Ors. v. Mis. Benett Coleman and Co. and B Ors., [1977] 3 SCC 160. In this case the question for consideration was · whether the Municipal Commissioner could order demolition of a building in exercise of power under the provision of City of Bombay (Building Works Restriction) Act, 1944, after the expiry of the said Act, which was a temporary Statute? This Court in the aforesaid case held that question whether the restrictions, rights and obligations flowing from the \ provisions of a temporary statute which came to an automatic end by efflux of time expire with the expiry of the statute or whether they endure and survive after the expiry of the statute depends upon the construction of the statute and the nature and character of the rights, restrictions and obligations and no rigid and inflexible rule can be laid down in this behalf. It is in that context, the Court also further observed that the transactions which are concluded and completed under the temporary statute while the same was in force often endure and continue in being despite the expiry of the statute and so do the rights or obligations acquired or incurred thereunder depending upon the provisions of the statute and nature and character of the rights and liabilities. Applying the aforesaid ratio to the case in hand, it is difficult for us to hold that the State E laws which infused life into it under the Validation Act by a fictional enactment of the laws by Parliament and keeping it alive till 4th April, 1991, can at all be said to have created any right on the State to levy and collect the cess and tax on minerals which can be held to be of enduring nature so as to enable the State to levy and collect even after the expiry of the State laws in question. Consequently, the aforesaid decision is also of no assistance to the State of F Bihar. The only other case relied upon by Mr. Dwivedi is the case of T. Venkata Reddy and Ors. v. State of Andhra Pradesh, (1985] 3 SCC 198. In this case by virtue of promulgation of an Ordinance certain posts were abolished, but the Ordinance could not be made an Act as the State Legislature did not approve of the same. The question for consideration was whether G after the expiry of the life of an Ordinance, the post which stood abolished can be said to have been revived? This Court, on examining the provisions of Section 3 of the Ordinance itself came to hold that the post of part-time village officers stood abolished on 6th January, 1984 and the employees ceased to be employees of the State Government. These matters became accomplished on that date and were completed events and consequently even H

184 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A if the Ordinance is assumed to have ceased to operate from a subsequent date the effect of Section 3 of the Ordinance was irreversible except by express legislation. In our considered opinion, this decision is also of no assistance to support the contention of Mr. Dwivedi, appearing for the State of Bihar, in as much as while infusing life into the void State laws by fictional B Parliamentary enactment under the Validation Act and keeping it alive till 4th April, 1991, the Parliament never conferred any right upon the State Government to make any levy or collect cess which have not been collected though collectable upto 4.4.1991. The parliament merely conferred the life to the void statute by fictional re-enactment and granting legislative competence for limited purpose so that the State would not be called upon to refund the cess already collected under such void law. In the aforesaid premises, we do not find much force in the contention of Mr. Dwivedi about the enduring nature of the law in question and we hold that relevant provisions of the State laws which were validated under the Validation Act and were alive till 4.4.1991 having expired on that date there is no authority of law under which the State would raise any demand or make any collection of cess and tax on minerals under the expired provisions of the State laws. The conclusion of this Court in Kannadas_an's case to the contrary, therefore, must be held to be not correct in law. In Orissa Cement Case, this Court though declared the levy of cess to be unconstitutional, but further directed that there shall be no direction to refund to the assessee of any amounts of cess collected until the date on which the levy in question has been declared unconstitutional. This date so far as Bihar was concerned, was the date of judgment i.e. 4.4.91, in case of Orissa, the State was 22nd December, 1989 and in case of Madhya Pradesh, the date was 28th of March, 1986. It was held that any cess collected after the aforesaid dates by the respective States has to be refunded and the States cannot be permitted to retain the cess collected. It is to obviate the aforesaid difficulty, particularly in case of States of Orissa and Madhya Pradesh, though such difficulty was not there in case of Bihar, the Parliament came forward with the Validation Act. It is true, as Mr. Dwivedi contended that there was no necessity for including the Bihar Act in the Schedule, since the Parliament was enacting the Act only till 4.4.1991, but since several State G laws were being re-enacted and 4.4.91 was the last date of the judgment of this Court in Orissa Cement, it was thought fit to have the legislation effective till 4.4.91 but for the limited purpose, so that the State would not be liable to refund any cess which it might have collected even subsequent to the relevant State laws having been declared unconstitutional. We find sufficient force also in the contention of Mr. K.K. Venugopal that the law never existed H after 4.4.1991 and consequently, there cannot be any right with the State to

DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.J J 85

make any levy or collection of the cess, which was collectable upto 4.4.91. A Mr. Venugopal is right in his submission that under the Validation Act, only past actions have been sought to be validated and that too by a fictional enactment of the State laws by the Parliament, keeping it alive till 4.4.91. There is also some force in the contention of Mr. Venugopal that even if ' there might have been an imposition of levy but not collected the same cannot be collected after 4.4.9 l, as the machinery for collection would not be B available and permitting any such collection beyond that date would contravene Article 265 and such an action may be violative of Article 300A of the Constitution. The expression "law" in the context of Article 300A must mean an Act of Parliament or of a State legislature, a rule or a statutory order having the force of law, as has been held by this Court in Bishambhar Dayal, c [1982] 1 SCC 39. Consequently, in the absence of any such law after 4.4.91 being in force, the State cannot be conferred a right to levy or collection after 4.4.91.

When Parliament enacted the Validation Act and infused life into the 'Void Act for lack of legislative competence, it must be assumed that the D Parliament knew the constitutional position and was fully aware of the position of law and the necessity of providing a saving Clause, in the event, the Parliament intended to confer a right of collection as well as levy subsequent to 4.4.91. The deliberate and conscious ommission of the saving clause by the Parliament, as contended by Dr. A.M. Singhvi, is of considerable E significance and cannot be lightly brushed aside, as contended by Mr. Dwivedi, appearing for the State of Bihar. It is true that the pattern of validation, as indicated by Mr. Parasaran, may not be a clinching factor in construing the provisions of the Act, but at the same time the fact that in Joura Sugar Mills case as well as in some other cases, while validating, laws have been enacted and saving clause has been provided which are in pari materia with Section F 6 of the General Clauses Act and absence of such a provision in the present Validation Act is in consonance with the very object and reasons, as appended to the Act. The said object being to validate the cess and taxes on minerals,

.. already collected under a void law. Dr. Singhvi is also right in his submissit'n that this Court in Kannadasan's case drew wrong analogy from G Gangopadhyay's case and erroneously held that provisions therein were identical to the provisions of the Validation Act of 1992. Section 2(1) of the Validation Act having used the expression "upto 4.4.91 ", it unequivocally indicates that what is validated is the process of levy and collection made upto that date and no further. This being the position and the Validation Act not having provided any provision, permitting levy or collection after 4.4.91, H

186 SUPREME COURT REPORTS [2001] SUPP. I S.C.R.

A we are of the opinion that the Act never conferred right of levy or collection after 4.4.91. The Judgment of Patna High Court, therefore, must be held to be in accordance with law and the judgment of this Court in Kannadasan's case must be held to have been wrongly decided ..

In Kannadasan's case, this Court while interpreting the Validation Act, B held that the Act authorised levy and collection even after 4.4.91, as otherwise it will be held to be discriminatory and violative of Article 14 inasmuch as if two persons would be equally liable to pay, the person who has P<\id the tax would be at the disadvantage, than the person, who did not pay and challenge the demand. This reasoning of the Court in Kannadasan runs C contrary to the observations of this Court in Ma/at/al Industries, (1977] 5 SCC 536, while this Court dealing with the principle of unjust enrichment, categorically stated that a person who has not paid and has successfully challenged the demand in a Court of law stands on a different footing from a person who has chosen to pay and has not challenged the same. We are, therefore, of the considered opinion that this Court erroneously held that D Article 14 would be attracted unless the provision of the Validation At is interpreted to mean that it not only validates the collection made but also entitles fresh collection and levy, even after 4.4.91 of the dues which was collectable upto 4.4.91.

The contention advanced by the State with reference to Section 2(3) of the Validation Act to the effect that it is indicative to confer a substantive power to levy-and collect cess and other taxes on minerals, is in our opinion, wholly misconceived. All that sub-section (3) of Section 2 means, which has been introduced for removal of difficulty is that notwithstanding the fact that the State law remained in force till April, 1991, if an assessee has paid more than what he is legally liable to pay and an application for refund had already been made, then he would have the right .to get refund of the excess tax paid, even though the life of the Act expires on April 04, 1991. This can be held to be a limited saving clause, conferring a right of refund on the assessee, if such assessee has paid in excess of what is due and the said provision cannot be invoked to give a wider interpretation of Section 2(1) or Section 2(2). In this context, we are persuaded to accept the submission of Mr. Ganguli that the removal of difficulty clause, engrafted in Section 2(3) of the Validation Act is of a limited application, dealing with the right of the assessee to get refund of the excess tax paid and by no stretch of imagination could be construed to hold that it conceives of both levy and collection of cess and taxes on minerals by the State even after expiry of 4.4.1991.

DISTRICT MININGOHICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.J J87 It will be appropriate to notice one of the contentions raised by Mr. A Ranjit Kumar, appearing for India Cement Limited in S.L.P. (Civil) Nos. 12993-12995 of 1998 to the effect that notwithstanding the promulgation of the Tamil Nadu Act, the assessee challenged the levy and the High Court had granted stay of the levy and collection of cess. Even after the judgment of the High Court, while the appeal was pending in this Court, the stay order was operating and the assessee never passed on the cess component to the consumer or end user, and also could not have passed on the same, as the commodity was a controlled commodity. If after this length of time, the Validation Act is interpreted to mean a right being conferred upon the State to impose the levy and collection of the same from 1964, it would work out gross injustice to the assessee and even would run contrary to the very judgment of the Court inter-parties. Though this contention may not be a clinching· issue in interpreting the provisions of the Validation Act, but it cannot be totally lost sight of, and if any other interpretation is permissible then the same must be adhered to particularly, in relation to a taxing Statute. We do find considerable force in the aforesaid submission, as in our view, the interpretation, we have already given to the Validation Act was the real intention of the Parliament and it never intended to confer a right of collection of cess. In agreement with the conclusion arrived at by Patna High Courf, we hold the Validation Act to be valid but such validated Acts do not authorise any fresh levy of collection in respect of liabilities accrued prior to 4.4.91, though it prohibits refund of the collection already made prior to that date. E

In view of our conclusions, as aforesaid, we do not find any infirmity with the conclusion of the Division Bench of Patna High Court requiring our interference with the same. The said judgment of the Division Bench of Patna High Court is accordingly upheld. C.A. as arising out & S.L.P. (c) Nos. 13102-13107 stand dismissed. The batch of cases from the judgment of F Kamataka High Court are allowed and the judgment of Kamataka High Court following the decision of this Court in Kannadasan 's case is set aside. The batch of cases arising out of the judgment of Andhra Pradesh High Court for the self same reason are allowed and the judgment of Andhra Pradesh High Court is set aside. The Review Petitions filed in this Court for Reviewing G the judgment of Kannadasan's case at the behest of the assessees cannot be disposed of notwithstanding our conclusion that the decision of this Court in Kannadasan's case is not correct in law in as much as no formal notice had been issued to the State of Tamil Nadu. Notice may, therefore, be issued to the State of Tam ii Nadu in those Review Petitions whereafter the Review Petitions could be posted for disposal. So far as the batch of cases which are H

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A pending before Madhya Pradesh High Court, though application under Article 139(a) had been filed for getting Writ Petitions transferred, but no order of transfer had been passed and, as such, the Writ Petitions are still pending before the High Court of Madhya Pradesh. In these circumstances, the Transfer Applications filed stand disposed of with the direction that the High Court B will dispose of the pending Writ Petition in the light of our judgment in Bihar case. But Civil Appeal No. 9917 /96 against the judgment of Madhya Pradesh High Court, directed against the judgment of the said Court dated I0.5.95, stands disposed of. Similarly, Review Petitions Nos. 2363, 2364 and 2365 of 1998, filed in Civil Appeal Nos. 9913 of 1996, 9912 of 1996 and 9905 of 1996 also stand disposed of. c All these appeals and applications stand disposed of accordingly. There will be no order as to cost~.

S.V.K. Matters disposed of.