IMPORTANT POINT
Circular dated 06.10.2008 is not unreasonable and arbitrary.
Deduction of royalty at rates specified, in absence of production of bills is not a levy.

JUDGMENT :

R. Banumathi, J.

Leave granted.

2. These appeals assail the order of Division Bench of the High Court of Rajasthan at Jodhpur allowing Special Appeal No.369 of 2009 dated 17.01.2011 filed by the respondent thereby quashing the circular dated 06.10.2008 which provided for deduction of royalty payable to the mining department from the bills of the contractors who have been given the work contract by the government department. Relying upon the order in Special Appeal No.369 of 2009, the High Court dismissed the Special Appeal No.753 of 2012 filed by the State.

3. Necessary facts which led to filing of the appeal arising out of SLP (C) Nos.33894 of 2011 are as follows:-Respondent-Deep Jyoti Company, a partnership firm registered as ‘A’ class contractor with various departments of Government of Rajasthan was awarded contract for construction of link road. On 06.10.2008, the Mines(Group-2) Department, Government of Rajasthan issued a Circular being No.P13(6)Khan/Group-2/80-Part dated 06.10.2008, concerning collection of royalty from the contractors involved in construction work using mineral masonry stone, grit, boulder, river sand, kankar, murrum, ordinary sand (excluding brick earth) in government department, autonomous bodies, government undertaking. As per circular dated 06.10.2008, before starting the work, the respondents had to obtain a short term permit (STP) from the concerned Mining Engineer by paying a requisite short term permit fees and the cost of rawanna book for the minerals which were being used as raw material for the work. Clause (5) of the circular deals with the deduction of royalty at the rates provided in the circular from the bills of the contractors. Clause (7) of the said circular provided that if the contractor had purchased the royalty paid mineral from a leaseholder then he can get refund of the same by submitting due receipts/rawanna issued by the lessee within a period of thirty days. Clauses (2), (3), (5) and (7) of the said circular dated 06.10.2008, which are relevant read as under:-

“2. Before commencing the work the contractor shall get a permit from the concerned Mining Engineer/Assistant Mining Engineer office by applying in Scheduled Proforma and enclosing an affidavit duly notary certified with requisite short term permit fees and the cost of rawanna book according to the quantity of mineral specified in G-Schedule.

3. Contractor shall produce the certified copy of the above permit to the concerned department alongwith the first bill, otherwise construction department should not make payment of the bill and if by any construction department the payment for the first bill or any other bill is made without getting certified copy of short time permit, the said department shall be liable to deposit the cost of the mineral.

4. …….

5. The concerned construction department shall deduct the royalty depending on the type of construction in the following manner from the bills of the contractor and shall pay through cheque to the concerned Mining Engineer/Assistant Mining Engineer or get adjusted through auditor general and the details shall be informed within 15 days.

1. Road Construction 1.75%

2. Building Construction 1.00%

3. Road Renewal 0.75%

4. Other works in which 0. 5% mineral is used

6. …..

7. If any contractor purchases royalty paid mineral from a lease holder and he wants the refund of royalty, then he has to submit an application to the concerned Mining Engineer/Assistant Mining Engineer office alongwith rawanas issued by the lease holder, receipts of RCC/ERCC contractors and copy of bill within 30 days of the completion of the construction work. The refund of those rawannas which is desired shall be issued on the name of the concerned construction department contractor. No assessment shall be required if refund application is not make.”

4. Respondent-Deep Jyoti Company filed Writ Petition No.1309 of 2009 before the High Court, challenging the legality of the said circular dated 06.10.2008 and pr