WP(C) 378/2004 BEFORE THE HON’BLE MR. JUSTICE AMITAVA ROY JUDGMENT AND ORDER (ORAL) The challenge laid is against the notification No. CTA.30/94/4130 dated 28.03.20 02 of the Commissioner of Taxes, etc., Government of Meghalaya, Shillong determi ning the security deposit payable under section 7 (3A) of the Central Sales Tax Act, 1956 (hereafter referred to as the Act) by a registered coal dealer in the State of Meghalaya at the rate of 1800/- per truck of coal not exceeding 15 MT. 02. We have heard Ms. B Goyal, learned counsel for the petitioners a nd Dr. BP Todi, learned Addl. Advocate General, Meghalaya for the official respo ndents. 03. Whereas the petitioner No. 1, has been introduced to be a Compan y registered under the Company’s Act, 1956 the petitioner No. 2 is described as the Director thereof. They have asserted that the petitioner-company is a regis tered coal dealer under the Act and deals in transportation of coal from Meghala ya to Assam by road. While contending that the demand of security being made by the respondent authorities from its trucks during its inter-State movement, as above, is not in compliance of the mandatory prerequisites therefor, as obligate d by the Act, they have alleged that the rate thereof (security) at Rs. 1200/- p er truck carrying 15 MT of coal as levied by the order No. CTAS-63/90/6201 dated 25.02.2010 by the same authority, was in excess of the amount chargeable under the aforementioned enactment. According to the petitioners, they transport coal of ROM variety only from Meghalaya and that as the highest price of that commod ity of any variety in that State is Rs. 800/- per ton, the tax payable by them a t the rate of 8% thereon would be Rs. 64/- per ton and that therefore, the total amount of levy payable by a dealer is Rs. 960/- for a truck carrying 15 MT of c oal. It is, in this premise that the petitioners have asserted that the realiza tion of security deposit at the rate of Rs.1200/- per truck carrying 15 MT of co als had already been in excess. They, in this perspective therefore, have assai led the impugned notification dated 28.03.2002, whereby, the rate of security ha s been further raised to Rs.1800/- per truck carrying the same load of coal. Th ey contend that neither the enhancement lacks any conceivable basis nor it is in accordance with the letter and spirit of the provisions of the Act, more partic ularly, sections 7 & 8 thereof, and thus is violative of their fundamental right s guaranteed under Article 14 and 19 of the Constitution of India besides contra vening Article 301 thereof. 04. The respondents in their affidavit have sought to justify the re alisation of the security deposit contemplated under section 7 (3A) of the Act i n order to secure proper realisation of the tax payable by a registered dealer o n the Inter-State trade of coal. They have maintained that since the fixation o f the rate of security deposit at Rs. 1200/- per truck based on the estimated sa le value of coal to be Rs. 15000/- per truck, the price of the commodity has ris en enormously and that therefore, the enhanced rate of security deposit has been determined by estimating the sale value of coal at Rs. 22,500/- for one truck l oad of coal of 15 MT. According to them, before enforcing the increased rate of security deposit a notice of the proposed enhancement had been circulated vide notification No.CTA.30/94/3686 dated 13.03.2002 eliciting proposals and objectio ns thereto within 15 days from the publication thereof in the State Gazette of M eghalaya. As no objection from any dealer or person was received to the propose d increase in the rate of security deposit, by the impugned notification dated 2 8.03.2002 it was decided to be imposed w.e.f. 01.04.2002. According to the resp ondents this notification was also challenged by the petitioners in WP(C) No. 41 3(SH) of 2002 before this Court at its Shilling Bench and that an order of initi al restraint was passed therein on 25.09.2003, permitting the petitioner-associa tion to make the security deposit at the rate of Rs. 1200/- per truck. The said writ petition was permitted to be withdrawn on prayer made to that effect on 25 .09.2003. Consequently, the interim order was also vacated. The petitioner the rein was left at liberty to approach the State authorities in the matter of fixa tion of the security deposit of coal. 05. In their additional pleadings, the petitioners while reiterating and reaffirming their averments in the writ petition, have expressed ignorance of any basis of the fixation of the price of coal at the rate of Rs. 22,500/- pe r truck load of 15 MT thereof. While contending that there is no basis therefor , they have clarified not to be the petitioner(s) in WP(C) No.413(SH)/2002 . In order to substantiate their contention that the security deposit collected from them at the rate of 1200/- per truck load of 15 MT of coal had been in excess o f their tax liability qua their turnover, the petitioners have set out the facts and figures in connection therewith as well. They have also referred to sectio n 15(a) and 15(b) of the Act to denounce the realisation of the security deposit at the rate proposed. 06. In their additional-affidavit, the State respondents have admitt ed that if the coal dealers of the State of Meghalaya sell their coal to registe red coal dealers outside the State and provide ’C’ Form, tax is assessed at the rate of 4% and the excess security deposit realized, would be adjusted or refund ed after the completion of the assessment. 07. Ms. Goyal, has argued that there being no perceptible basis for the enhancement of the price of coal from Rs. 15000/- to Rs. 22,500/- for a truc k load of 15 MT thereof, the sharp increase in the rate of security deposit besi des wholly unwarranted, in the attendant facts and circumstances, is also in gro ss contravention of the essential preconditions as embodied in section 7 (3BB). As the underlying purpose of the insistence for such a deposit, as evident unde r section 7 (3A) of the Act is to ensure proper realisation of tax payable there under or for the proper custody and use of the forms referred to sub section 2A, considering the tax liability of the petitioners vis-a-vis their inter-State tr ade in the commodity involved, the impugned notification is, per se, illegal, ar bitrary and non est in law, she urged. According to Ms. Goyal, the enhancement in the rate of security deposit is disproportionately excessive by all means and is liable to be adjudged as inoperative, null and void. As the realisation of the security deposit at the rate of Rs. 1200/- per truck carrying 15 MT of coal vis-a-vis the petitioner has been already in excess of their tax liability, ther e is no justification whatsoever for further enhancement of the rate thereof. D rawing the attention of the Court to the assessment orders relating to the petit ioner-company for the periods ending 31.03.2001, 31.03.2002, 31.03.2003 and 31.0 3.2004 (Annexure V series to their additional/supplementary affidavit) the learn ed counsel has argued that the excess payment of tax as would be evident therefr om, would unequivocally endorse the plea of unsustainability of the impugned ord er. Ms. Goyal pointed out that the excess have been worked out as the petitione rs have been assessed at the rate of 4% of their turnover as enjoined by section 8 (1) of the Act, they having produced the ’C’ Form contemplated under sub clau se 4 thereof. She has further insisted that in terms of section 15(a) and 15B(b ) as well, the security deposit is not realizable from the petitioners having re gard to the fact that no sale of coal handled by them takes place within the Sta te of Meghalaya. In support of her contentions Ms. Goyal has placed reliance on a decision of this Court in Pradip Kumar Sarawgi & Sons (HUF) Vs. Commissione r of Taxes & Ors., 2003 3 GLR 225. 08. Dr. Todi as against this, has urged that it being evident from t he contemporaneous materials on record that the price of Meghalaya coal had rise n over the years, rendering the rate of security deposit at Rs. 1200/- per truck load of 15 MT thereof wholly unrealistic and minimally low to the undue advanta ge of the dealers thereof, the enhancement was proposed on relevant consideratio ns and thus the impugned decision is unassailable. As the notification proposin g the enhancement had remained unobjected inspite of public notice, the plea aga inst the sustainability thereof in law is wholly untenable, he urged. According to him, the facts and figures furnished by the petitioners demonstrating the ex cess realisation from them by way of security deposit vis-a-vis the tax payable is wholly transaction oriented and ought not to be taken as an unimpeachable tes timony of invalidity of the impugned notification. Abiding by the pleaded stand of the respondents, the learned Addl. Advocate General, however, has, admitted that in case of sale of coal by the registered dealers outside the State of Megh alaya, the tax on their turnover on the production of ’C’ Form is assessed at th e rate of 4% and the security deposit realized is then accordingly adjusted or r efunded. Contending that the security deposit vis-a-vis the petitioners is rele ased under the Act, he has insisted that the plea based on section 15(a) and 5(b ) is wholly misconceived. 09. The rival pleadings and the arguments advanced have been duly an alysed. The staple challenge in the instant proceeding is against the enhanceme nt in the rate of security deposit, which the petitioners contend is without any reasonable or conceivable basis. That depending on the nature of the transacti ons as well as the statutory imperatives, the rate of tax payable under the Act is to be fixed and realized, is not in dispute. Though, the materials on record are inadequate to decisively determine the rate of tax at which same is payable by the petitioners for their transactions, the levy being also contingent on th e observance by them of the stipulations contained in section 8 of the Act, the validity or otherwise of the impugned notification can be adjudged even dehors t his aspect. The petitioners though have alleged non-compliance of section 7 (3B ) for not being afforded an opportunity of hearing before the imposition of the enhanced rate of security deposit, in absence of any controversion of the respon dents’ claim of publication of the notification dated 13.03.2002 as the precurso r of the one impugned in the instant proceeding, the same is neither convincing nor persuasive enough to sustain the challenge based thereon. Not only the noti fication dated 13.03.2002 had been published in the issue of the even date in th e official Gazette of Meghalaya Extraordinary, it was for general information th at a decision on the proposed enhancement would be taken within 15 days therefro m and that any objection or suggestion thereto would be duly considered by the G overnment. That no objection or suggestion was offered in response thereto, as avowed by the State respondents, is a plea undisputed. The assailment of want o f fairness in action or contravention of section 7(3B) having regard to the natu re of the decision that followed, does not commend for acceptance. 10. The official records produced on behalf of the State respondents , principally contains communications dated No. SH/M-98-99/164/443/246 dated 22. 01.2002 from the Superintendent of Tax, Shillong, Meghalaya Circle-V to the Comm issioner of Taxes, Meghalaya, Shillong and No. CTAS/63/90/Pt./3147 dated 30.01.2 002 of the Commissioner of Taxes, etc., Meghalaya, Shillong to the Under Secreta ry, Government of Meghalaya, Excise Registration, Taxation & Stamps Department. Both these letters highlighted the necessity of reviewing the prevailing rate o f security deposit of Rs. 1200/- per truck load of 15 MT. These documents discl ose that construing the minimum value of coal to be Rs. 1500/- per truck, the se curity deposit of Rs. 1200/- therefor, had been fixed considering the rate of ta x to be 8% thereon. However, as the price of the Meghalaya coal, more particula rly, the species mined from the Jaintia Hills being of exceedingly good quality, the minimum value of coal was suggested to be assessed at Rs.22500/- per truck of the same load. It was inter alia pointed out that for the lower rate of real isation, the State revenue was suffering and that the coal trade was thriving ou tside Meghalaya at the cost of public exchequer. This proposal, as the records reveal, was accepted at the highest administrative level and accordingly after n otifying the proposed enhanced rate of security deposit, the impugned notificati on was published. The records, however, do not either contain any material nor disclose any exercise for fixation of the price of the coal in general at Rs. 22 ,500/- of a truck load of 15 MT. Even assuming that the State respondents had b een justified in deciding to review the rate of security deposit, which is conce ptually relatable to the tax liability under the Act, it ought to have indispens ably undertaken a process informed with transparency and objectivity to ascertai n the price thereof. This is, more particularly, as several varieties of coal w ere in business and the value thereof was decisive of the tax payable and hence the security deposit realizable. This obligation must be held to be independent of the public notice vide notification No. 13.03.2002 of the proposed enhanceme nt. Having regard to the constitutional imperatives of fairness, predictability , precision and justness of a State action, the fixation of the flat price of al l varieties coal in the manner so done and the resultant determination of the en hanced rate of security deposit cannot be upheld when tested on this touchstone. 11. On a bare reading of the orders passed in WP(C) No.413(SH)/2002, it is not obvious that the petitioners were parties thereto. It is unknown as to whether the petitioners therein had availed the opportunity for representing before the Government on the issue. Considering the nature of the transactions that inter-State trade of coal, in which the petitioners are involved, their ple a founded on section 15, however, is unconvincing. Be that as it may, in the face of the conclusion recorded vis-a-vis the challeng e to the impugned notification, this petition has to succeed. Ordered according ly. The notification dated 28.03.2003 is hereby interfered with. The State res pondents are left at liberty to initiate a fresh process in this regard in accor dance with law, if so advised. No costs.