Full Judgment Text
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PETITIONER:
JANAPADA SABHA, CHHINDWARA ETC.
Vs.
RESPONDENT:
THE CENTRAL PROVINCES SYNDICATE LTD. AND ANR.ETC.
DATE OF JUDGMENT:
23/02/1970
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
HEGDE, K.S.
GROVER, A.N.
RAY, A.N.
DUA, I.D.
CITATION:
1971 AIR 57 1970 SCR (3) 745
1970 SCC (1) 509
CITATOR INFO :
R 1971 SC 231 (7)
D 1975 SC2037 (11)
RF 1975 SC2299 (190,607)
RF 1984 SC1780 (8,9,11)
D 1991 SC 704 (7)
ACT:
Retrospectivity--Madhya Pradesh Koyala Upkar
(Manyatakaran) Adhinayam (18 of 1964), ss. 2(a)(b) and 3(1)-
Act purporting to validate levy of cess notwithstanding the
judgment of a court to the contrary, but nature and text of
amendment not specified-Effect of Validating Act.
HEADNOTE:
In 1935, the Independent Mining Local Board, Chhindwara,
constituted under C.P. Local Self Government Act, 1920,
resolved to levy a cess on coal extracted within the area at
3 pies per ton. The sanction of the Local Government, as
required by s. 51(2) of the Act, was obtained ’for the levy.
In 1943, the levy was enhanced to 4 pies, in 1946 to 7 pies
and in 1947 to 9 pies. The validity of the enhanced levy
was challenged and this Court, in appeal, held that the
increased levy would also require the previous sanction of
the Local Government and such sanction not having been
obtained, the levy at a rate higher than 3 pies was illegal.
The State Legislature thereafter enacted the Madhya Pradesh
Koyala Upkar (Manyatakaran) Adhinayam, 1964. Section 2(a)
of the Act defines ’Board’ to mean the Independent Mining
Local Board, Chhindwara and its successor body the Janapada
Sabha, Chhindwara (appellant) constituted under the C.P. and
Berar Local Government Act, 1948, and s. 2(b) defines ’cess’
to mean ’a cess imposed by the Independent Mining Local
Board, Chhindwara or its successor’. Section 3(1) provides
that ’notwithstanding a judgment of any court, cesses
imposed, assessed or collected by the Board in pursuance of
the notifications notices specified in the Schedule shall,
for all purposes, be deemed to be, and to have always been
validly imposed, assessed or collected as if the enactment
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under which they were issued stood amended .-It material
times so as to empower the Board to issue the said
notifications. In the Schedule were specified the three
notifications enhancing the rate of cess.
On the question whether the enhanced levy was validated
by the 1964 Act.
HELD : The Act did not give legal effect to the
imposition of cess at the enhanced rates.
By a fiction s. 3(1) of the 1964-Act deems the Act of
1920 and the rules framed thereunder to have been amended.
But the text or even the nature of the amendments is not
disclosed. Section 51(2) of the 1920 Act could not be
deemed to have been repealed by the 1964 Act, because, the
latter Act, in terms is limited in its application to the
Independent Mining Local Board, Chhindwara, and its
successor body and only in -respect of the three
notifications specified in the Schedule. An Act so limited
in its application to one Local Board and to specified
notifications cannot repeal the sub-section which applies to
all Boards. Nor is there anything to. indicate that
notifications issued by the appellant-Board without the sanc
L 10 Sup CI (NP)/70-3
746
tion of the State Government must be deemed to have been
issued validly. Such an intendment cannot be implied,
without express language, in a taxing statute, It was open
to the Legislature within certain limits to amend the
provisions of an Act retrospectively and to declare what the
law shall be deemed to have been. But the Legislature, in
the present case, attempted to overrule or set aside a
decision of the court. It is not open to the Legislature to
say that a judgment of a court porperly constituted and
rendered in exercise. of its powers in a matter brought
before it shall be deemed to be ineffective either as a
precedent or between the parties. [750 E-F: 751 A-GI
Commissioner of income-tax v. Ajax Products Ltd., 55
I.T.R. 741 (S.C.) and Commissioner of Income-tax v. B. M.
Kharwar, [1967] 2 S.C.R. 650, followed.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 125 to 134
of 1967.
Appeals from the judgment and order dated May 3, 1966
of the Madhya Pradesh High Court in Misc. Petitions Nos.,
552 of 1964 etc.
B. Sen S. K. Seth and I. N. Shroff, for the appellant
(in As. Nos. 125 to 133 of 1967).
I. N. Shroff, for the appellant and respondent no. 6
(in C.A.No. 134 of 1967).
N. D. Karkhanis and A. G. Ratnaparkhi, for respondent
no. 1. .(in C.As. Nos. 125 to 133 of 1967).
Sachin Choudhary, R. K. P. Shankardass, A. K. Verma and
O.C. Mathur, for respondents Nos. I and 2(in C.A. No. 134
of 1967)
The Judgment of the Court was delivered by
Shah, J. These appeals are filed by the Janapada Sabha,
Chhindwara-hereinafter called ’the Sabha’-against the
judgment of the High Court of Madhya Pradesh declaring that
the Madhya Pradesh Koyala Upkar (Manyatakaran) , Adhiniyam
[Madhya Pradesh Coal Cess (Validation) Act 18 of 1964 does
not "give legal effect to the imposition of cess at the rate
of 4 pies, 7 pies and 9 pies per ton under the
notifications" issued by the Independent Mining Local Board
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on December 22, 1943, July 29, 1946 and July 19, 1947
respectively, "nor to anything done in pursuance of those
notifications".
The Independent Mining Local Board, Chhindwara, a Board
constituted under the Central Provinces Local Self-Gov-
ernment Act 4 of 1920, resolved on March 12, 1935 to levy a
cess under S. 51 of the Act at the rate of 3 pies per ton on
coal extracted within the area. Sanction of the local
Government -was obtained to that levy. On December 22,
1943, the rate
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was enhanced to 4 pies per ton : it was enhanced on July 29,
1946 to 7 pies per ton and on July 19, 1947 the cess was en-
hanced to 9 pies per ton. The Central Provinces Local Self-
Government Act 4 of 1920 was repealed with effect from June
11, 1948 by the C.P. and Berar Local Government Act 38 of
1948. By S. 192 of Act 38 of 1948 it was enacted, inter
alia that all rules, bye-laws and orders made, notifications
and notices issued, taxes imposed or assessed, cesses, fees,
tolls or rates levied under Act 4 of 1920 and in force
immediately before the commencement of Act 38 of 1948 shall
continue to be in force and shall be deemed to have been
respectively made, issued, granted, imposed or assessed,
levied and taken under Act 38 of 1948, and all rates, taxes
and cesses due to the Independent Local Board shall be
deemed to be due to the Sabha to whose area they pertain.
The levy- of coal cess by the Sabha was challenged by
the Amalgamated Coal fields Ltd. & Others on diverse grounds
in petitions filed in this Court under Art. 32 of the
Constitution. This Court rejected the petitions holding
that Act 4 of 1920 had received the assent of the Governor-
Gnereal and its validity was not liable to be challenged and
that "on a proper interpretation of s. 51 of the Act the
levy of coal cess was not excluded from the purview of the
local authority." It was also held that the’ levy of the
cess was valid even after the coming into force of the
Government of India Act, 1935, and the Constitution of
India, in view of s. 143 of the Government of India Act,
1935 and Art. 277 of the Constitution. But the Court
declined to allow the petitioners to urge that the increase
in the rate of tax by Resolutions in the years 1943, 1946
and 1947 was invalid : Amalgamated Coal-fields Ltd. v.
Janapadd Sabha, Chhindwara(1).
Validity of the enhanced levy was then challenged in
petitions died before the High Court of Madhya Pradesh by
the Amalgamated Coal-fields Ltd. and Others. In appeals
against the order of the High Court of Madhya Pradesh, this
Court held that since ieither the Act nor the Rules
prescribed a ceiling on the levy, the Expression "first
imposition" occurring in S. 51(2) would include ,very
increase of the levy after its initial imposition and the
increased levy would require the previous sanction of the
Local Government and such sanction not being there, the levy
at the ate of 9 pies per ton was illegal. The Court
accordingly allowed the appeals and ordered that the
appropriate directions be ssued restraining the Janapada
Sabha from recovering the tax at the rate higher than 3 pies
per ton and also restraining the Sabha from recovering any
additional tax in respect of the years for which
(1) [1962] 1 S.C.R. 1.
748
tax had -already been assessed against, he petitioners : The
Amalgamated Coalfields Ltd. v. The Janapada Sabha,
Chhindwara(1).
To rectify the defect pointed out by this Court in the
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imposition of the cess, the Legislature of Madhya Pradesh
enacted the Madhya Pradesh Koyala Upkar (Manyatakaran)
Adhiniyam Act 18 of 1964. By S. 2(a) "Board" means "the
Independent Mining Local Board, Chhindwara, constituted
under the Central Provinces Local Self Government Act, 1920
(IV of 1920), and its successor body, the Janapada Sabha,
Chhindwara, constituted under the Central Provinces and
Berar Local Government Act, 1948 (XXXVIII of 1948) ".
Section 2 (b) defines "cess" as meaning "a cess imposed by
the Independent Mining Local Board, Chhindwara, or its
successor body, on coal, coal dust or coke, from time to
time, as the case may be, produced or manufactured at the
mines, sold for export outside the State, or sold otherwise
than for export by rail within the territorial jurisdiction
of the said Board", and by s. 2(c) "enactment" is defined as
meaning "the Central Provinces Local Self Government Act,
1920 (IV of 1920), or the Central Provinces and Berar Local
Government Act, 1948 (No. XXXVIII of’ 1948), as the case
may be, and rules made thereunder". By S. 3 it is provided
"(1) Notwithstanding anything contained
in any judgment, decree or order of any Court,
cesses imposed, assessed or collected or
purported to have been imposed, assessed or
collected by the Board in pursuance of the
notifications/notices specified in the Sche-
dule shall, for all purposes, be deemed to be,
and to have always been, validly imposed,
assessed or collected as if the enactment
Under which they were so issued stood amended
at all material times so as to empower the
Board to issue the said notifications/notices
and accordingly : -
(a) all acts, proceedings or things
done or taken by the Board or by any officer
of the Board in connection with the
imposition, assessment or collection of such
cess shall, for all purposes, be deemed to be
and to have always been done or taken in
accordance with law;
(b) any cess imposed or assessed in
pursuance of the said notifications/notices
before the 20th day of May, 1964 but not
collected before such date may be recovered
(after assessment of the cess where necessary)
in the manner provided therefor;
(c) no suit or other proceeding shall
be maintained or continued in any Court
against the Board or any person
(1) [1963] Supp. 1 S.C.R. 172.
749
or authority whatsoever for the refund of any cess so paid;
(d) no Court shall enforce any decree or order
directing the refund of any cess so paid.
(2) For the removal of doubts, it is hereby declared
that nothing in sub-section (1) shall be construed as
preventing any person-
(a) from questioning in accordance with the provisions
of the enactment, the assessment of such cess for any
period.
(b) for claiming refund of the cess paid to him in
excess of the amount due from him under the enactment."
In the Schedule, notifications dated December 22, 1943, July
29, 1946 and July 19, 1947, enhancing the rate of cess were
referred to.
The levy of coal cess validated by the provisions of
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Act 18 of 1964 was again challenged by the Central Provinces
Syndicate Ltd. and other producers of coal, by petitions
filed in the High Court of Madhya Pradesh. It was claimed
by the petitioners that Act 18 of 1964 was "ultra vires and
ineffective", and the notices issued pursuant thereto were
liable to be quashed. Dixit, C.J., and Pandey, J., who
heard the petitions differed. In the view of the learned
Chief Justice the Amending Act which purported to amend Act
4 of 1920 by seeking to empower the Mining Board to issue
the notifications specified in the Schedule to the Act
without reviving the Act of 1920 was ineffective, and that
in any event the Act did not validate the levy of coal cess
which had been imposed under the three notifications.
Pandey, J., expressed a contrary view. He held that the
provisions of s. 3 of Act 18 of 1964 were not invalid, "nor
were they ineffective". The petitions were then referred to
Shiv Dayal, J. The learned Judge agreed with Dixit, C.J.,
and held that Act 18 of 1964 did not give legal effect to
the imposition of cess at the rate of 4 pies, 7 pies or 9
pies per ton under the notifications issued by the
Independent Mining Local Board nor to anything done in
pursuance of those notifications.
The preamble of the Act states that it is "An Act to
validate the imposition and collection of cess on coal by
certain local authorities". Act 18 of 1964 is a taxing
statute which purports to rectify the defects pointed out by
this Court. This Court declared invalid the levy of cess by
the Independent Mining Local Board, Chhindwara, at a rate
exceeding three pies per ton. If
750
the Act does not by the plain language used therein carry
out the object, the Court will not be justified in supplying
deficiencies in the Act. As observed by Rowlatt, J., in
Cape Branty Syndicate v. Commissioners of Inland Revenue(’)
"In a taxing Act one has to look merely at
what is clearly said. There is no room for
any intendment. There is no equity about a
tax. There is no presumption as to a tax.
Nothing is to be read in, nothing is to be
implied. One can only look fairly at the
language used"
These observations were approved by the House of Lords in
Canadian Eagle Oil Co. Ltd. v. King (2) . This Court has
also adopted the same rule in Commissioner of Income-tax v.
Ajax Products Ltd.(’); and Commissioner of Income-tax v. B.
M. Kharwar (4)
The relevant words which purport to validate the
imposition, assessment and collection of cess on coal may be
recalled : they are "cesses imposed, assessed or collected
by the Board in pursuance of the notifications/notices
specified in the Schedule shall, for all purposes, be deemed
to be, and to have always been validly imposed, assessed or
collected as if the enactment under which they were so
issued stood amended at all material times so as-to empower
the Board to issue the said notifications notices". Thereby
the enactments, i.e., Act 4 of 1920 and the Rules framed
under the, Act, pursuant to which the notifications and
notices were issued, must be deemed to have been amended by
the Act. But the Act does not set out the amendments
intended to be made in the enactments. Act 18 of 1964 is a
piece of clumsy drafting. By a fiction it deems the Act of
1920 and the, rules framed thereunder to have been amended
without disclosing the text or even the nature of the
amendments.
Mr. B. Sen appearing on behalf of the Sabha contended
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that the intention of the Legislature was to repeal with
retrospective effect sub-s. (2) of s. 51 of Act 4 of 1920.
By s. 51 of Act 4 of 1920 it was provided:
....................................
"(1) Subject to the provisions of any law
or enactment for the time being in force, a
District Council may, by a resolution passed
by a majority of not less than two-thirds of
the members present at a special meeting
convened for the purpose, impose any tax, toll
or rate
(1) 12 T.C. 358. (2) 27 T.C. 205 (H.L.)
(3) 55 I.T.R. 741 (S.C.) (4) [1967] 2 S.C.R. 650.
751
(2) The first imposition of any tax, toll or
rate under sub-section (1) shall be subject to
the previous sanction of the Provincial
Government.
But the Act in terms is limited in its application to the
Independent Mining Local Board, Chhindwara, and its
successor body the Janapada Sabha, Chhindwara constituted
under Act 38 of 1948, and only in respect of the three
notifications specified in the Schedule. Obviously the Act
limited to one local Board in its application and to certain
specific notifications cannot operate to repeal the clause
insofar as it applied to other Boards.
The nature of the, amendment made in Act 4 of 1920 has.
hot been indicated. Nor is there anything which enacts that
the notifications issued without the sanction of the State
Government must be deemed to have been issued validly under
S. 51(2), without the sanction of the-Local Government., On
the words used in the Act, it is plain that the Legislature
attempted to overrule or set aside the decision of this
Court. That, in our judgment, is not open to the
Legislature to do under our constitutional scheme. It is
open to the Legislature within certain limits to amend the
provisions of an Act retrospectively and to. declare what
the law shall be deemed to have been, but it is not open to
the Legislature to say that, a judgment of a Court properly
constituted and rendered in exercise of its powers in a
matter brought before it shall be deemed to be ineffecive
and the interpretation of the law shall be otherwise than as
declared by the Court.
This Court in The Amalgamated Coalfields Ltd.’s(1)
case held that the cess was not validly imposed and levied
because the sanction of the State Government was not
obtained at the time of enhancing the rate of levy of tax.
That judgment was binding between the parties and also by
virtue of Art. 141 binding on all Courts in the territory of
India. The Legislature could not say that that declaration
of law was either erroneous, invalid or ineffective either
as a precedent or between the parties.
It is unnecessary then to consider whether the
repealed Act may be amended without reenactment.
The appeals fail and are dismissed with costs. One
hearing. fee.
V.P.S. Appeals dismissed.,
(1) [1963] Supp. 1 S.C.R. 172.
752