M/S. Ultratech Cemco Ltd vs State Of Maharashtra & Anr

The appellant (the term `appellant' refers to M/s Larsen & Toubro Ltd. till date of its demerger in 2004 and thereafter to M/s. Ultra Tech Cement Ltd.) obtained a mining lease for limestone from the Government of Maharashtra, as per lease deed dated 12.2.1980. Under the terms of the said lease, the appellant as lessee was required to pay dead rent as per clause V(1) and (2), royalty in terms of clause V(3) and surface rent, water rate and cesses in terms of clauses V(4) of the lease deed. In response to a notice served by the Collector on the appellant demanding payment of surface rent (equal to non-agricultural assessment) and the Zilla Parishad Cess (for short 2 `ZP Cess') and Gram Panchayat Cess (for short `GP Cess'), the appellant informed the Collector by letter dated 3.1.1991, that it was not liable to pay the ZP cess and GP cess and that those cesses may be deleted from the demand. However by notice of demand dated (nil) July 1991, revised by notice dated 28.1.1994, the Collector, Chandrapur, reiterated the demand for surface rent as also the ZP and GP cesses for the years 1987 to 1992, on the following ground:

2. The appellant was aggrieved by the demand in so far as it relates to ZP cess and GP cess. According to appellant section 151(1) of Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961 (`Zilla Parishad Act' for short) exempted the lessees from the state government from payment of the ZP cess. The appellant also contended that it was not liable to pay the GP cess, as section 127 (1) of Bombay Gram Panchayats Act, 1958 (`Panchayats Act' for short) provides for levy of GP cess at the rate of one hundred paise 3 on every rupee payable to the state government as ordinary land revenues in the area within the jurisdiction of the Panchayat, and as the appellant was exempted from paying land revenue under section 64 of the Maharashtra Land Revenue Code, 1966 (`Revenue Code' for short) read with clause VII(1) of the lease deed, it was not liable to pay the GP cess also. The appellant admitted the liability to pay surface rent equal to non-agricultural assessment.

Re: Question No.(ii)

(emphasis supplied)

Conclusion

14. The object of clause V(4) of the lease deed is clear. Normally, all leases will contain a provision as to who will be liable to pay the rates, taxes, cesses on the property leased. If the lease deed is silent, then the lessor would be liable to bear and pay the rates, taxes and cesses. Therefore, where the understanding is that the lessee should be liable to pay the rates, taxes and cesses in addition to the rent or premium, the lease deed will provide specifically that the lessee shall bear and pay all rates, taxes and cesses. But this is always on the assumption that there is a liability under the respective enactments to pay any rates, taxes, cesses in respect of the property. All that clause V(4) of the lease deed provides is that the lessee should bear and pay the ZP cess and GP cess, if it is leviable under the respective enactments.

15. In view of the above, we accept the contention of the appellant that it is not liable to pay ZP cess or CP cess to the State Government under the lease deed. It is however made clear that if the said cesses (ZP cess and CP cess) become payable by the appellant by virtue of any amendment to the provisions of the respective enactments under which such cesses are leviable, then the appellant may have to pay the same. Be that as it may.

16. The appeal is therefore allowed. The judgment of the High Court is set aside. The writ petition filed before the High Court stands allowed and the demand notices dated (nil) July 1991 as amended on 28.10.1994 in regard to the period 1987 to 1992 is quashed in so far as the demand for payment of ZP cess and CP cess.