The main legal point established in the judgment is that the contribution payable under Clause 9a of the Cement Control Order amounted to a compulsory exaction of money and constituted a levy of tax without the necessary legal sanction.

Judgment

Y. K. SABHARWAL, J.

( 1 ) THE appellants are cement manufacturers. They challenge the legality and validity of clause 9a of the Cement Control Order, 1967 (for short, the Control Order ). Clause 9a and some other clauses were incorporated by amendments made in the control order in the year 1982. Clause 9a requires every producer to pay to the Cement regulation Account (for short, cra) an amount at the rate of Rs. 9/- per metric tonne of production of non-levy cement. This payment to be made by the producer on production of non-levy cement was withdrawn on 15th December, 1986. One of the manufacturers (Andhra Cements) filed the writ petition in the High Court challenging the validity of the clause in September 1986; two of them (Mysore Cement and raymond Woollen) filed writ petitions in 1987 and Digvijay Cement in the year 1992. Their principal contention before the High court was that the amount payable under clause 9a was in the nature of tax and there was no authority of law to impose that tax. Undoubtedly, no tax can be levied or collected except by authority of law. The contention of the writ petitioners did not find favour with the High Court and, therefore, these appeals were filed on grant of leave.

( 2 ) CEMENT is a schedule industry under the provisions of the Industries (Development and Regulation) Act, 1951 (for short, the act ). Section 18g of the Act, inter alia, empowers the central government to provide for regulating the supply and distribution of any article relatable to any schedule industry. The acute shortage of cement in the country resulted in the making of the control order in exercise of powers conferred by sections 18g and 25 of the Act. The cement manufacturing units in India were located in different places. Some of the units manufacturing cement were located at a long distance from consumption centres. A huge amount on freight had to be incurred in transporting the cement from various factories to the market. The manufacturing cost varied depending upon the age of the unit, manufacturing process and technology utilized etc. The transportation cost varied considerably depending upon the location of the unit. In the control order a mechanism was devised for equalizing the freight cost on the cement. An equalization account was provided for in the control order. Different ex-factory retention prices were provided in respect of various cement manufacturing units keeping their varying cost of production. It provided for the manufacturer to get a retention price to cover his cost and yield a reasonable return to the manufacturer. A uniform for (free-on-rail) destination price for cement was fixed in respect of the whole of India irrespective of the distance over which the cement had to be transported. The excess of FOR destination price realized by a cement manufacturer over his retention price, subject to certain adjustments, had to be paid by the cement manufacturers into the cement regulation account (CRA ). In cases where freight actually incurred was in excess of the specified amount, the differential amount was paid to the manufacturer out of the CRA.

( 3 ) THE operation of the control order brought out certain serious problems affecting the cement industry. The control resulted in the fall of the fresh investments in the cement industry. Further, there were consistent demands for revision of the retention prices on the basis that the cost of manufacture had increased considerably. The burden of cra increased rapidly because of the rapid increase in fuel and transport cost. The CRA went into deficit. It was unable to meet its commitments.

( 4 ) CONSIDERING the problems, the government on 23rd March, 1981 constituted a high level committee to review the developments of the cement industry and recommend measures to accelerate its progress including incentives and fair prices. The terms of reference of that committee were :" (I) To review the present system of pricing in the cement industry (con