Case: District Mining Officer and others Vs. Tata Iron and Steel Co. &amp; Others

3. This batch of caes related to the Cess and other Taxes on Minerals (Validation) Act, 1992 [hereinafter referred to as `the Act]. The question for consideration is, by the aforesaid Act, what in fact has been validated, is it only the taxes on minerals already realised under the invalid law or the right to levy tax and realise the same, whcih became due upto 4th of April, 1991 ? Several cases arising from different STates have been tagged on to the main matter arising out of the judgment of the Patna High Court, were listed together, but we think it appropriate to decide the Bighar matter, so that the law laid down therein would be followed in other case. Incidently, the earlier judgement of this Court arising out of the said Validation Act in relation to the levy of tax on minerals in the State of Tamil Nadu in the case P. Kannadasan and others v. State of Tamil nadu and others, 1996(5) SCC 670, is required to be reconsidered and it is for that purpose, these cases have been referred to a three Judge Bench. In the case arising out of the judgment in Patna High Court in S.L.P. (Civil) No. 13102-13107 of 1996, the State through the District Mining Officer is the petitioner and by the impugned judgment, the High Court though has upheld the validity of the Validation Act, but has held that the said Validation Act does not authorise the recovery of any tax or cess after 4.4.91, even if the liability was incurred under the Validated laws before 4.4.1991 and consequently, the demand raised by the State were quashed and the STate was restrained from taking any steps to realise such demand. Be it be stated that a batch of writ petitions were filed by several assesses, assailing the legality of the demands raised by the Mining Authorities for payment of cess in respect of such dues, which would be leviable till 4th of April, 1991. In the batch of cases relating to State of Madhya Pradesh, after the judgment of this Court in Kannadasans case, the state of Madhya Pradesh issued notice to several assesses, raising the demand and such demand was assailed by filing writ petitions in the High Court. Applications had been filed in this Court for getting those writ petitions transferred, but no order of transfer has been passed by this Court and as such the writ petitions are still pending before the High Court of Madhya Pradesh and we, therefore, do no propose to deal with those matters, since the High Court can well dispose of the same, on the basis of our judgment in the Bihar Case. Civil Appeal No. 9917 of 1996, however, is directed against the judgment of Madhya Pradesh High Court dated 10.5.1995. Before the High Court, the validity of the Ordinance No. 7 of 1992 as well as Cess Validation Act 16 of 1992 had been assailed. The High Court, by the impugned judgment upheld the validity of the aforesaid Validation Act. We are in respectful agreement with the said conclusion and hold the Validation Act to be constitutionally valid. Hence no interference is called for in the Civil Appeal. But the dispute, whether fresh notice could be issued for collection and levy of dues in respect of liability accrued till 4.4.91 is the subject matter in pending writ petitions in the High Court. In the cases arising out of the judgment in Karnataka High Court, the High Court has followed the judgment of this Court in Kannadasan and thus upheld the right of the State to levy demand and collect, which was collectable upto 4.4.1991 and the assesses are challenging the said judgment in this Court. Several Writ petitions were filed under Article 32, challenging the constitutional validity of the Validation Act as well s for quashing the demand notices dated 1.8.98 and 2.9.98, issued by the Department of Mines and Zoology in the State of Karnataka. In the cases arising out of judgment of Andhra Pradesh High Court, the High Court followed the judgment of this Court in Kannadasan and upheld the Constitutional validity of the Validation Act as well as the right of the State to make the demand upto 4.4.1991 and this judgment of the Andhra Pradesh High Court is being assailed by the assesses in different special leave petitions. In Kannadasans case, which arises out of the judgment of Madras High Court, after the judgment of this Court, review petitions were filed by the assesses and this Court had merely directed those review petitions to be tagged on to the special leave petitions filed against the judgment of Patna High Court, but in those petitions, no formal notice had been issued to the State of Tamil nadu and necessarily therefore, those review petitions have to be de-linked and only after disposal of the special leave petitions filed, arising out of the judgment of Patna High Court, the review petitions can be listed for observance of formalities and disposal.4. Though large number of counsel argued for different sets of persons, but basically two contentions were advanced. One by Mr. Rakesh Dwivedi, the learned senior counsel, appearing for the STate of Bihar, contending that the Validation Act authorises the State Governments to levy and realise tax which were due up to the date of validation, namely, 4.4.1991 and there should not be any embargo on the States power to realise the same notwithstanding the fact that the life of the Validation Act was only upto 4.4.1991. This stand of Mr. Dwivedi, learned senior counsel appearing for the State of Bihar was supported by Mr. Chaudhary, appearing for the State of Madhya Pradesh, Mr. Sanjay Hegde, appearing for the State of Karnataka as well as Mr. Mariaraputham, appearing for the State of Tamil Nadu. According to Mr. Dwivedi, the judgment of this Court in Kannadasans case squarely covers the point and has rightly been decided and the same does not require any reconsideration. On behalf of different sets of assesses, arguments were advanced by different counsel, particularly by Mr. Shanti Bhushan, Mr. Parasaran, Mr. K.K. Venugopal, Dr. A.M. Singhvi, Mr. A.K. Ganguli and Mr. Ranjit Kumar, all senior counsel, and the essential contention was that the Parliament in fact came forward with the Validation Act after different Cess Acts were struck down on the ground of lack of legislative competence solely to ensure that the levies collected are not required to be refunded by the State which would have a serious impact on the State revenues of the concerned State Governments, and therefore, in the absence of any law subsequent to 4.4.1991 the authority to collect has disappeared and consequently the decision of this Court in Kannadasans case holding that not only the taxes already collected need not be refunded, but the taxes and cesses which have not already been collected also be collected is not correct in law. It was also further contended that this Court while examining the provisions of the Validation Act in the light of the purpose that was sought to be achieved by the Parliament has not borne in mind the very Statement of Objects and Reasons as well as the language of Section 2 of the Validation Act, and the absence of a provision in the Validation Act, corresponding to the provisions contained in Section 6 of the General Clauses Act. It is the uniform contention of all the counsel appearing for different sets of assesses that the judgment of this Court in kannadasan conferring right on the STate to levy and collect the taxes on minerals, which could be leviable until 4th April, 1991, would run contrary to ARticle 264 of the Constitution and would traverse beyond the object of the Validation Act, and consequently it would be appropriate for this larger Bench to re-consider the earlier judgment of two Judge Bench in Kannadasan case.

Reasoning:
t us now examine the question, as to whether the Statute is a temporary Stature or not ?When we examine this question in the cse in hand, we are not examining the Validation Act, but we are required to examine the relevant provisions of the different State laws, included in the Schedule to the Validation Act, which laws had been declared ultra vires by this Court in the decision of India cement and Orissa Cement, on the ground of lack of legislative competence and that legislative competence has been purported to have been conferred by virtue of a deeming enactment by Parliament and further enacting that such provisions shall be deem to have been remained in force upto the 4th April, 1991. A Statute can be said to be either perpetual or temporary. It is perpetual when no time is fixed for its duration and such a statute remains in force until its repeal which may be express or implied. But a Statute is temporary when its duration is only for a specified time and such a Statute expires on the expiry of the specified time, unless it is repealed earlier. The relevant provisions of the different State laws relating to cesses or taxes on minerals having been deemed to have been enacted by Parliament and having been deemed to have remained in force upto 4th April, 1991 under the Validation Act, those laws relating to cesses or taxes on minerals must be held to be temporary Statute in the eye of law. Necessarily, therefore, its life expired and it would be difficult to conceive that notwithstanding the expiry of the law itself, the collecting machinery under the law could be operated upon for making the collection of the cess or tax collectible upto 4.4.1991. Admittedly, to a temporary Statute, the provisions of Section 6 of the General Clauses Act, 1897 will have no application. Very often legislature enacts in the temporary Statute a saving provision, similar in effect to Section 6 of the General Clauses Act, as was done in Joura Sugar Mills, 1966(1) S.C.R. 523. But in the absence of sucha a provisions in the Validation Act in question, which has purported to have conferred the legislative competence in respect of the several State Laws mentioned in the Schedule and kept it alive till 4.4.91, and not beyond that date, the life of such State laws stood expired on 4th of April, 1991. Consequently, there would be no residuary provision or authority of law conferring a power on the State to make any levy or collection of cess or taxes on minerals, after the expiry of the relevant laws. A temporary Statute even in the absence of a saving provision like Section 6 of the General Clauses Act may not be construed dead for all purposes and the effect of expiry is essentially one of the construction of the Act. The leading authority on the point is the case of Steavensonv. Oliver, (1841)151 ERThese principles have been applied by this Court in the case of State of Orissa v. Bhupendra Kumar Bose, AIR 1962(SC) Page 945, and it is in this context, the argument of Mr. Dwivedi, regarding law of an enduring nature requires consideration. In State of Orissa v. Bhupendra Kumar Bose, on which Mr. Dwivedi heavily relied upon, what arose for consideration before this Court, is whether the electoral rolls were improperly prepared, and the Court having declared the election invalid and validating the Ordinance, which had been promulaged validating the elections to the municipality as well as validating the electoral rolls prepared in respect of other municipalities. When the validity of the ordinance was assailed before the High Court, the High Court struck down the ordinance as having contravened Article 14 and it was held to have offended Article 254(1) of the Constitution. On appeal, this Court held that the ordinance did not offend Article 14 of th8e Constitution and that it effectively removed the defects in the electoral rools found by the first Judgment of the High Court. When arguments were advanced that the invalidity of the electoral rolls and the elections to the municipalities did not revive on the expiry of the Ordinance, that was repelled by this Court, that the right that had been created by the Statute namely the validating ordnance, is of an ending character and has vested in the person concerned, namely the voters, a right to vote as well as the elected counselors. That right cannot be taken away merely because the ordinance has lapsed, since the object of the ordinance was to remove the invalidity permanently. It is in that context the Court observed that if the right created by a Statute is of an enduring nature and has vested in the person, that right cannot be taken away, because the Statute by which it created has expired. In applying that principles to the facts of that case, the Court observed :"In our opinion, having regard to the object of the Ordinance adn to the rights created by the validating provisions, it would be difficult to accept the contention that as soon as the Ordinance expired the validity of the elections came to an end and their invalidity was revived. The rights created by this Ordinance are, in our opinion, very similar to the rights with which the Court was dealing in the case of Steavenson and they must be held to endure and last even after the expiry of the Ordinance."Applying the ratio of the aforesaid case to the case in hand and in view of our conclusion earlier as to the true object and import for which the Validation Act had been enacted by the Parliament, giving the life to a State law till 4th of April, 1991, it is not possible for us to hold that any right can be said to have been created in favour of the State of an enduring nature, which could be enforced even after the expiry of the life of the Act itself. The Parliament had stepped in and had fictionally enacted certain provisions of the State laws being confronted with the situation that the liability to refund the taxes, illegally collected woudl have a disastrous effect on the State economy. It was indicated also that a Validation Ordinance had been promulgated by the President to validate collection of such levies by the State Government upto the 4th of April, 1991. In the context, it obviously refers to the collection of levies already made and would never relate to any collection to be made thereafter. In this view of the matter, we are not in a position to accept the submission of Mr. Dwivedi, appearing for the State of Bihar that on account of the Validation Act, the relevant provisions of the Case 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 collectible upto 4th of April, 1991, even after the expiry of the very law 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 caes. The next cae, Mr. Dwivedi relied upon was the case of R.C. Jall v. Union of India, 1962 Supp.(3) S.C.R. 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 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 is apparent from the judgment of this Court in Hansraj Mooljis case 1957 S.C.r. 634. A second Ordinance was promulgated repealing the earlier one on 26th of April, 1947 and in the repealing Ordinance, an express term was there, making the provisions of Section 6 of the General Clause Act, shall apply in respect of the appeal. The question arose whether after expiry of the life of the repealing Ordinance on November 1, 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 permanent one, in 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 372 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 mind, 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 till 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 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 M/s. Velji Lakhamsi and Co. and others v. M/s. Benett Coleman and Co. and others, 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 provisions 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 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 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 Bihar. The only other case relied upon by Mr. Dwivedi is the case of T. Venkata Reddy and others 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 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 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 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 Kannadasans 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 the judgment i.e. 4.4.1991, in case of Orissa, the date 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 laws were being re-enacted and 4.4.1991 was the last date of the judgment of this Court in Orissa Cement, it was thought fit to have the legislation effective till 4.4.1991 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 after 4.4.1991 and consequently, there cannot be any right with the State to make any levy or collection of the cess, which was collectable upto 4.4.1991. 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 4.4.1991. 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 4.4.1991, as the machinery for collection would not be available and permitting any such collection beyond that date would contravene Article 265 and such an action may be violative of Article 300-A of the Constitution. The expression "law" in the context of Article 300-A 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, 1982(1) SCC 39. Consequently, in the absence of any such law after 4.4.1991 being in force, the State cannot be conferred a right to levy or collection after 4.4.1991.21. When Parliament enacted the Validation Act and infused life into the void Act for lack of legislative competence, it must be assumed that the 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 4.4.1991. The deliberate and conscious omission of the saving clause by the Parliament, as contended by Dr. A.M. Singhvi, is of considerable significance and cannot be lightly brushed aside, as contended by Mr. Dwivedi, appearing for the State of Bihar. It is true that 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 Joara 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 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 submission that this Court in Kannadasans case drew wrong analogy from Gangopadhyays cas 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 4.4.1991", 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 4.4.1991, we are of the opinion that the Act never conferred a right of levy or collection after 4.4.1991. The Judgment of Patna High Court, therefore, must be held to be in accordance with law and the judgment of this Court in Kannadasans case must be held to have been wrongly decided.