JUGDMENT

R. V. Raveendran J. —

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 ‘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:

“The Government of Maharashtra vide its letter Industries Energy and Labour Department (IND) No.TQCR-2176/45691/1172/IND-9 Bombay dated 13.06.1978 and Director, Geology & Mining, Govt.of Maharashtra, Nagpur vide letter No.STC/295/39/2007 dated 09.06.1989 have issued instructions regarding fixation of surface rent on the lease area used for mining purpose. As per these directives and Rule 27(1)(d) of Mineral Concession Rules, 1960, the lessee is required to pay the surface rent at such rate not exceeding the land revenue and the cesses assessable on the land. Since the mining operation is the use of land other than the Agriculture purpose, the rate of non-agricultural assessment, together with the cesses assessable on the land, are applicable for levying the surface rent.” (emphasis supplied)

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 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.

3. On the other hand, the respondents contend that the demand for ZP cess and GP cess is authorized by Rule 27(1)(d) of the Mining Concession Rule, 1960 (‘MC Rules’ for short) read with clause V(4) of the lease deed and the appellant is liable for the same. The submission of the respondents is that they have not made any demand for cess under the Zilla Parishads Act or Panchayats Act and that the demand for ZP cess and GP cess is as a part of the surface rent. According to the respondents, the reference to ZP cess and GP cess assessable on the land, in the lease deed is only for the purpose of arriving at the figure of surface rent. The respondents’ submission is that though “cesses per se could not have been levied under the Mineral Concession Rules”, cesses assessable on the land has been demanded as a mode of calculating the charges for the surface area used by the lessee; and so long as the amount charged does not exceed the land revenue plus ZP cess and GP cess assessable on the land, the lessees can have no grievance.

4. On the