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2001(1) Supreme 507
SUPREME COURT OF INDIA
(From Allahabad High Court)
S. Rajendra Babu & Shivaraj V. Patil, JJ.
U.P. Pollution Control Board & Ors. -Appellants
versus
M/s. Kanoria Industrial Ltd. & Anr. etc. -Respondents
SLP (Civil) No. 4436-4437 of 1998
With
SLP (Civil) Nos. 5241-5242 of 1998
With
SLP (Civil) Nos. 12654 of 1998
Decided on 24-1-2001
Counsel for the Parties :
For the Appearing Parties : Altaf Ahmed, Additional Solicitor General, Dushyant Dave, Sudhir Chandra, Sr. Advocates, Pradeep Misra, Indu Misra, Ms. Indu Malhotra, H.K. Puri, S.K. Puri, Rajesh Srivastava, Ujjwal Banerjee, Ms. Anindita Gupta, Jayant Bhushan, Ms. Rebecca George, Ms. Achintya Dwivedi, Vijay Panjwani, Advocates.
The claims made for refund in the writ petitions were consequent upon declaration of law made by this Court. Hence, High Court committed no error in entertaining the writ petitions. (Para 11)
It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the cases on hand where facts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow. We wish to add that even in cases where collection of cess, levy or tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case. (Para 15)
(ii) Constitution of India-Article 226-Writ petition-Res judicata or estoppel-Water Cess-Payment under protest-Writ petition thereagainst-Dismissal-No appeal thereagainst-Subsequent writ petition by some others-Dismissal following earlier judgment-Appeal-Supreme Court holding levy without authority of law-Subsequent writ petition for refund by parties who had not appealed to Supreme Court-Maintainable-Principles of res judicata not applicable.
Another reason to defeat the claim for refund put forth is that the respondents have filed writ petitions challenging unsuccessfully the validity of levy in question and those orders have become final inasmuch as no appeal against the same has been filed. The contention is put forth either on the basis of res judica or estoppel. It is no doubt true that these principles would be applicable when a decision of a court has become final. But in matters arising under public law when the validity of a particular provision or levy is under challenge, this Court has explained the legal position in M/s. Shenoy and Co. v. Commercial Tax Officer, Circle II, Bangalore & Ors., [1985 (2) SCC 512] that when the Supreme Court declares a law and holds either a particular levy as valid or invalid it is idle to contend that the law laid down by this Court in that judgment would bind only those parties who are before the Court and not others in respect of whom appeal had not been filed. To do so is to ignore the binding nature of a judgment of this Court under article 141 of the Constitution. To contend that the conclusion reached in such a case as to the validity of a levy would apply only to the parties before the court is to destroy the efficacy and integrity of the judgment and to make the mandate of Article 141 illusory. When the main judgment of the High Court has been rendered ineffective, It would be applicable even in other cases, for exercise to bring those decisions in conformity with the decisions of the Supreme Court will be absolutely necessary. Viewed from that angle, we find this contention to be futile and deserves to be rejected. (Para 16)
(iii) Constitution of India-Article 226-Writ petition-Delay and laches-Denial of relief on ground of-Claim for refund of water cess paid under protest-Writ filed within reasonable time after Supreme Court declared law that levy of cess was without authority of law-No right created in third party on account of delay-Relief cannot be denied on ground of delay and laches. (Paras 17 to 22)
(iv) Water (Prevention and Control of Pollution) Cess Act, 1977-Water Cess-Sugar and alcohol/liquor manufacturing industries-Cess paid under protest that industry not covered by Entry No. 15 of Schedule I of the Act-Supreme Court finally declaring that levy without authority of law-Industries entitled to refund of cess. (Para 24)
JUDGMENT
Shivaraj V. Patil, J.-In all these cases the controversy raised relates to the claim of refund of the amount paid by the respondents as water cess under the provisions of the Water (Prevention and Control of Pollution) Cess Act, 1977 (for short the Act ). Briefly stated, the facts leading to the filing of these petitions are: The respondents are the owners of industrial units manufacturing sugar from sugarcane and liquor/alcohol from molasses, a by-product. On demand made by the State Government under the provisions of the Act they were required to pay water cess. They protested against the demand principally contending that sugar industry and distillery were not industries covered by Entry No.15 of Schedule I of the Act and consequently they were neither liable to submit any return nor to make any payment of water cess; when their protests were not accepted and the demand persisted for payment of water cess the respondents paid the amount under protest. Some of them filed writ petitions Nos. 3558 of 1980, 494 of 1980 and 17646 of 1986. The writ petitions came to be dismissed. Thereafter, special leave petitions were filed before this Court, which were disposed by judgment in M/s. Saraswati Sugar Mills v. Haryana State Board and others1, reversing the decision of the High Court and holding that the sugar manufacturing industries did not fall within Entry 15 of Schedule I of the Act.
2. After the said judgment was rendered by this Court representations were made to the Board and the Cess Officer/Assessing Authority of the Board for refund of the amounts illegally and without the authority of law realized by them as water cess. Despite several representations there was no response from the Board and its authorities. Hence the writ petitions were filed consequent upon law declared by this Court in Saraswati Sugar Mills case (supra) seeking a mandamus to the petitioners to refund the amount collected from them as cess with interest @ 18 per annum. In the writ petitions it was contended that the writ petitioners themselves have paid the amount as water cess under protest and they had not passed on the liability to the customers.
3. The petitioners contested the claim made by the respondents before the High Court. They filed the counter affidavit in the High Court, in short taking the stand that the respondents were not entitled to refund of any amount from the Board for the reasons that after collection, the amount has been paid to the State Government, which in turn has paid the amount to the Government of India; referring to the representations of the respondents it was stated that a reference had been made to the State Government in the matter and their reply was awaited; after the judgment in M/s. Saraswati Sugar Mills case (supra) Entry 15 of Schedule I of the Act was amended with effect from 2.1.1992 covering sugar industries and distilleries and making them liable to pay water cess under the amended provisions of Entry 15 of Schedule I of the Act. In these petitions, we are not concerned with the said amended Entry and the levy and collection of cess from 2.1.1992. The High Court, after considering the rival submissions and relying few judgments of this Court, disposed of the writ petitions directing the petitioners to refund the sums realized from the respondents as water cess after verification of the amount stated to have been paid by them within the given time. Hence the petitioners have filed these special leave petitions.
4. Shri Altaf Ahmed, learned Additional Solicitor General appearing for the petitioners in special leave petitions 4436-4437 of 1998, contended (1) that in the absence of any specific direction given by this Court in Saraswati Sugar Mills case for refund of the amount collected under the provisions of law, the respondents were not entitled for refund; (2) the respondents having failed in the earlier writ petitions challenging the very levy of cess before the High Court and h
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