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SUPREME COURT OF INDIA
M. FATHIMA BEEVI AND S.C. AGRAWAL, JJ.
M/s. Dehri Rohtas Light Railway Company Limited, Appellant
Versus
District Board, Bhojpur and others, Respondents.
Civil Appeal Nos. 3250 with 3249 of 1983
Decided on 12-3-1992.
WITH
Dehri Rohtas Light Railway Co. Ltd., Appellant
Versus
District Board, Shahabad and others, Respondents.
Bengal Cess Act IX of 1880 – Section 5 – Local cess was to be assessed under Section 6 on the annual value of lands and, until provisions to the contrary is made by the Parliament on the annual net profits from mines and quarries and from tramways, railways and other immovable property – Accordingly, the cess payable by the company in respect of its immovable properties on which its railways are constructed and operated is to be assessed on the net profits arising out of the said immovable properties and not on the net profits of the entire business of running the railways which the company derived from its railway undertaking – Held, held that the demands made for the on the basis of the assessment on a net profits of the undertaking is clearly unsustainable – Cess Authorities have to make the assessment taking into account only the net profits of the immovable properties used for the purposes of the business by the company and the assessments have to be modified accordingly – It was submitted on behalf of the respondent that the District Board has received the cess at the rate per annum and, if on revised assessment, the liability is reduced then the burden will be cast an the District Board to refund the excess and that is one of the reasons why the claim of the company cannot be entertained at this distance of time – It was also submitted that under the terms of the agreement, the excess over to be paid by the District Board and that would be an additional burden – It is fairly conceded on behalf of the appellant that on the basis of the revised assessment the company undertakes not to claim any refund from the District Board and would pay the excess over without burdening the District Board with the liability to pay the same in terms of the agreement – Order accordingly.
Certainly. Based on the provided legal document, here are the key points summarized clearly and concisely:
The case involves a dispute over the assessment and payment of local cess under the Bengal Cess Act IX of 1880, concerning a light railway company operating in Bihar (!) (!) .
The railway company had an agreement to pay a fixed cess amount annually, irrespective of profits, but the authorities later demanded cess based on net profits from the entire railway undertaking, which the company challenged (!) (!) .
The legal question centers on whether cess should be assessed solely on the net profits derived from the company's immovable properties used for the railway or on the net profits of the entire railway business (!) (!) .
The court held that cess payable in respect of immovable properties must be assessed only on the net profits arising from those properties, not on the profits of the entire railway undertaking (!) (!) .
Demands made based on the net profits of the entire business were found to be legally unsustainable, and assessments must be revised to reflect only the profits attributable to the immovable properties used for the railway (!) .
The company had previously challenged demands for earlier years through a civil suit, which was dismissed on procedural grounds, and later challenges for subsequent years through writ petitions, which were also dismissed based on delay and other considerations (!) (!) (!) .
The court emphasized that delays or laches do not automatically bar relief, especially when the illegality of the demands has been established, and the breach of legal rights is clear (!) (!) .
The court directed that the cess for the disputed years should be recalculated based on the correct legal principles, with the company undertaking not to claim refunds for any excess already paid, and the authorities to adjust accordingly (!) (!) .
The parties were ordered to bear their own costs, and the appeals and writ petitions were disposed of accordingly (!) .
Overall, the decision underscores that cess assessments must be confined to the profits attributable to immovable properties and that assessments based on broader profit bases are invalid.
JUDGMENT
FATHIMA BEEVI, J.:—The appellant M/s. Dehri Rohtas Light Railway Company Limited carried on business of running a light railway between Dehri-on-Sone to Tiura Pipradhih in the district of Rohtas, Bihar. The railway line for the said light railway was laid over 67 kilometres. The area covered was 413.55 acres owned and/or used by the company as a lessee. The appellant was liable to pay cess to the District Board under Section 5 of the Bengal Cess Act IX of 1880.
2. An unregistered agreement was entered into between the appellant and the District Board of Shahabad, (now Bhojpur) on 7-8-1953. Thereby it was agreed that the company - will pay a fixed sum of Rs. 10,000/- per annum towards cess in respect of the railway under the Bengal Cess Act IX of 1880 irrespective of the profits or losses made by the company in its railway business. The company paid the cess as per the agreement dated 7-8-1953 for the period from 1953-1954 to 1966-1967.
3. On 27-10-1967, the Collector made a demand of Rs. 9,86,809.33 paise from the appellant intimating therein that State was not bound by the unregistered agreement dated 7-8-1953. The company instituted suit No. 60 of 1968 before the Court of Third Additional Sub-Judge, Sasaram, to enforce the agreement and to restrain the respondents from making any demand in excess of Rs. 10,000/- per annum. The suit was dismissed by the judgment dated 13-9-1971. The First Appeal No. 1242 of 1971 filed before the High Court against that decision was also dismissed by the judgment dated 23-5-1980. Civil Appeal No. 3249 of 1983 is directed against this judgment of the High Court.
4. In the meantime the demand for the cess was raised against the company for the years 1967-1968 to 1971-1972. This demand was challenged by the company before the High Court by filing Writ Petition No. 1372 of 1974. The High Court by judgment dated 30-3-1979 quashed the notice of demand with direction as to how the cess is to be assessed under Section 6 read with Section 5 of the Bengal Cess Act, 1880. Based on this judgment reported in 1979 Bihar Bar Council Journal 428, the appellant filed C.W.J.C. No. 1266 of 1980 under Article 226 of the Constitution before the Patna High Court for quashing the demand notices for the period 1953-1954 to 1966-1967. The High Court by judgment dated 6-1-1981 dismissed the writ petition in limine. Civil Appeal No. 3250 of 1983 is directed against the judgment of the High Court dated 6-1-1981.
5. The Bengal Cess Act was applicable to the State of Bihar and under Section 5 of the said Act all immovable properties were liable to a local cess. The local cess was to be assessed under Section 6 on the annual value of lands and, until provisions to the contrary is made by the Parliament on the annual net profits from mines and quarries and from tramways, railways and other immovable property. Accordingly, the cess payable by the company in respect of its immovable properties on which its railways are constructed and operated is to be assessed on the net profits arising out of the said immovable properties and not on the net profits of the entire business of running the railways which the company derived from its railway undertaking.
6. The Additional Collector made the demand for the sum of Rupees 9,86,809.33 paise as alleged due on account of cess in respect of the land of the company for the years 1953-1954 to 1966-1967 by various notices, although full payment of the rent and cess as agreed upon was made for the relevant period. Demands are not made on the net profits derived from the said lands used by the company for its railways, but are based on the net profits of the entire business of the railway undertaking. The company had filed returns showing the net profits not of the said lands but of its railway business as a whole on the basis of which the aforesaid cess demands had been made.
7. The company filed the suit challenging the demands for the years 1953-1954 to 1966-1967 on the basis of the ag
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