JANAPADA SABHA, CHHINDWARA ETC. versus THE CENTRAL PROVINCES SYNDICATE LTD. AND ANR. ETC.

JANAPADA SABHA, CHHINDWARA ETC.

THE CENTRAL PROVINCES SYNDICATE LTD. AND ANR. ETC.

February 23, 1970

[J. C. SHAH, K. S. HEGDE, A. N. GROVER, A. N. RAY AND I. D. DUA, JJ.J

Retrospectil'ity-Madhya Pradesh Kaya/a Upkar (Manyatakaran) Adhi-nayam (18 of 1964), ss. 2(fl)(b) and 3(1)-Act purporting to validate levy of cess notwithstanding the judgment of coiut to the contrary, but. nature and text of aniendment not specified-Effect of Validating A.ct.

In 1935, the Independent Mining Local Board, Chhindwara, constituted under C.P. Local Self Government Act, 1920, resolved to levy cess on coal e<tracted within the area at 3 pies per ton. The sanction of the Local Government, as required bys. 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 sanc-tion of the Local Government and such sanction not having been obtained, the levy at 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 dOfines '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', ands. 2(b) defines 'ccss' to mean 'a cess imposed by the Independent Mining Local Board, Chhindwara or its successor'. Section 3 ( !) provides that 'notwithstanding judgment of any court, cesses imposed, assessed or co1lected by the Board in pursuance of the notificatjbns notices specified in the Schedule shall, for all purposes, be de~ed to be, and to have always been validly imposed, aSllessed or collected as if the enactment under which they were issued stood amended nt material times so as to empoWer· _the Board to issue the said notifications. , In the Schedule were specified the three notifications enhancing the rate df cess.

On the question whether the enhanced levy was validated by the 1964 Acr.

HELD : The Act did not give legal effect to the imposition of cess at the enhanced rates.

By diction 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 Min-ing Local Board, Chhindwara, and its successor body and only in respect -H of the three notifications specified in the Schedule. An Act so limited in its app1ication to one·Local Board and to specified notifications cann.ot re~ peal the sub-section which applies to all Boards. Nor is t~ere anythmg to 1ndicate that notifications issued by the appellant-Board without the sanc-L\OSup Cl (NP)/70-3

tion of the St~te Government must be deemed to have been issued validly. ~uch an intendment cannot be implied, without express language, in tax-ing statute, It was open to the Legislature within certain lin1its to amend the provisions o'f an Act retrospectively and to declare what the law shall be deemed to have been. But the Legislature, in the present cast\ attempted to_ overrule or set aside decision of the court. It is not open to the Legis-lature to -say that judgment of court porperly constituted and rendered in cxercis~ ot its powers in matter brought before it shall be deemed to be ineffective either as precedent or between the panics. l750 E-F: 751 A-OJ Commissioner of Income-tax v. Ajax Products Lui., 55 1:r.R. 741 (S.C.) and Commissioner of Income-tax v. B. M. Khanvar, [1967] 2 S.C.R. 650, followed. CIVIL APPELLATE JURISDICTION : Civil Appeal; Nos. 125 to 134 of 1967. ·

App.eals 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 fin C.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 0. C. Mathur, for respondents Nos. 1 and 2(in C.A. No. 134 of 1967)

· The Judgment of the Court was delivered by

Shah, J. These appeals are filed !>Y the Janapada Sabha, Chhindwara-h.ereinafter 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 Indepen-dent Mining Local Board 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, Board constituted under the Central Provinces Local Self-Gov-ernment Act 4 of 1920, resolved on Marc!! 12, 1935 to levy 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

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 com-mencement 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 Coalfields Ltd. & Others on diverse grounds in petitions filed in this Conrt under Art. 32 of the Constitution. This Court rejected the· petitions holding that Act 4 of 1920 had received ihe assent of the Governor-Gnereal and its validity was not liable to be challenged and that "on proper interpretation of s. 51 of the Act th© 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·: Amai-gamated Coal-fields Ltd. v. Janapada Sabha, Chhindwara(').

Validity of the enhanced levy was then challenged in petitions filed before the High Court of Madhya Pradesh by the Amalga-mated Coal-fields Ltd. and Others. In appeals against the order of the High Court of Madhya Pradesh, this Court held that since neither the Act nor the Rules prescribed ceiling on the levy, the expression "first imposition" occurring in s. 51 (2) would include every increase of the levy after its initial imposition and the in-creased levy would require the previous sanction of the Local Government and such sanction not being there, the levy at the rate of 9 pies per ton was illegal. The Court accordingly allow-ed the appeals and orjlered that the appropriate directions be issued restraining the Janapada Sabha from recovering the tax at rate higher than 3 pies per ton and also restraining the Sabha from recovering any additional tax in respect of the years for which

tax had already been assessed against the petitioners : The Amal-gamated Coalfields Ltd. v. The Janapada Sabha, Chhindwara(').

To rectify the defect pointed out by this Court in the imposi-tion of the cess, the Legislature of Madhya Pradesh enacted the Madhya Pradesh Koyala Upkar (Manyatakaran) Adhiniyam Act 18 of 1964. Bys. 2(a) "Board" means "the Independent Mining Local Board, Chhindwara, constituted under the Central Pro-vinces 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)". Secti~n 2(b) defines "cess" as mean-ing "'a cess imposed by the lndependem 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 manufac· tured at the mines, so1d for export outside the State, or sold otherwise than for export by rail within the territorial jurisdiction of !he 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:

"(!) Notwithstanding anything contained in any judgment, decree or order of any Court, cesses im-posed, assessed or collected or purported to have been imposed, assessed or collected -by the Board in pursu-ance 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 collect-ed as if the enactment under wh.ich 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 recover-ed (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

or authority whatsoever for the refund of any cess so paid;

( d) no Court shaU e.nforce any decree or order directing the refund of any cess so paid.

(2) For the removal of doubts, it is hereby declar-B ed that nothing in sub-~ction (1) shall be construed as preventing any person-

(a) from questioning in accordance with the provi-sions 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 enact-n1ent."

In the Schedule, notificaitons 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 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 I 8 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 pur-ported 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., ex" pressed· 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 taxing statute whiclj 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 rate exceeding three pies per ton. . If

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 Brand.v Syndi· care v. Commissioners of Inland Revenue('):

"In taxing Act one has to look merely at what is clearly said. There is no room for any intendment: There is no equity about tax. There is no presump-tion as to tax. Nothing is to be read jn, nothing is to be implied. One can only look fairly at the langu-age used."

These observations were approved by the House of Lords in Cana· dian Eagle Oil Co. Ltd. v. King('). This Court has also adopt-ed the same rule in Commissioner of Income-tax v. Ajax Products Ltd.("); and Com111issioner 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 pur-suance 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 time~ so as to empower the Board to issue the. said notifications/noti-ces,.. 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 piece of clumsy drafting. By 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 that the intention of the Legislature was to repeal with retrospective effect sub-s. (2) of s. 51 of Act 4 of 1920. Bys. 51 of Act 4 of 1920 it was provided :

"( 1) <;ubject to the provisions of. a~y law or. enact-ment for the time being in force, D1stnct Council may, by resolution passed by majority of no.t less t~an two-thirds of the members present at special meeting convened for the purpose, impose any tax, toll or rate

(l) 55 I.T.R. 74l (S.C.l

(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 liniited in its application to the Indepen-B dent Mining Local Board, Chhindwara, and its successor body the Jamapada 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 ope-rate to repeal the clause insofar as it applied to other Boards.

The nature of the amendment made in Act 4 of 1920 has not been indicated. Nor is there anything which enacts that the notifications issued without the sanction of the State Govern-ment 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, i~ is plain that the Legislature attempted to ovecrule or set aside the decision of this Court. That, in our judgment, is not open to the Legislature to do under our consti-tutional 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 fo is not open to the Legislature to say that judgment of Court properly constituted and rendered in exercise of its powe.rir in matter brought before i~ shall be deemed to be ineffecive and the inter-pretation of the law shall be otherwise than as declared by the Court.

This Court in The Amalgamated Coalfields Ltd.'s(') 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 <if India. The Legislature could not say that that declaration of law was either erroneous, invalid or ineffective either as precedent or between the parties.

It is unnecessary then to consider whether the repealed Act may be amended without re-enactment.

The appeals fail and are dismi<~ed with costs. One hearing

fee.

Appeals dismissed •.

(I) [1963] Supp. I S.C.R. ·112.