The Supreme Court's decision in India Cement Ltd. vs. State of Madras, which declared the relevant provisions of the Tamil Nadu Panchayat Act ultra vires, was intended to prevent an order of refund and not to exempt assessees from paying cess that they had not already paid.

S.B. SINHA, J.

1. In this case, the petitioner has prayed for issuance of an appropriate writ for quashing a certificate proceeding being Certificate Case No. 59 of 1990-91 pending in the court of respondent no. 3 which was filed for realisation of a sum of Rs. 1,16,121.32 as purported to be due from the petitioner by way of interest for delayed payment of cess for the year 1988-89 payable under the Bengal Cess Act, 1880.

2. The contention raised in support of this application in short is that the Supreme Court of India in India Cement Ltd. vs. State of Madras reported in AIR 1990 S.C. 85-1990 (1) SCC 12 and a Division Bench of this Court in Central Coalfields Ltd. vs. State of Bihar reported in AIR 1991 Patna 27: 1992 (1) PLJR 573 having held that no cess was payable by a mining lessee in terms of the provisions of Bengal Cess Act, 1880 (hereinafter to be called and referred to for the sake of brevity as the Cess Act) the question of payment of any interest as provided for under section 45 of the Cess Act does not arise.

3. On the other hand, the learned Government Advocate contended that in view of the decision of the Supreme Court of India in India Cement's case (supra) which has been followed by this Court in Central Coalfields case (supra) the Cess Act having been declared invalid with prospective effect, the petitioner cannot escape its liability for non-payment of interest for the financial year 1988-89, that is from 1.4.1982 to 31.3.1989 in terms of section 45 thereof.

4. The question, therefore, which arises for consideration is as to whether in view of the decision of the Supreme Court in India Cement case (supra) as also of this Court in Central Coalfields Ltd.'s case (supra), the petitioner is liable to pay interest for delayed payment of cess for the period 1988-89.

5. In India Cement's case, the Supreme Court was considering the validity of Tamil Nadu Panchayat Act, 1958. In that case, it was held that section 115 of the said Act be declared ultra vires the power of the State Legislature prospectively only. Following the said decision, this Court in Central Coalfields Ltd.'s case (supra) held that the petitioner thereof was entitled to refund of the cess paid to the State of Bihar from the date of judgment in India Cement's case (supra) that is from 25.10.1989.

6. Mr. K.D. Chatterjee, learned counsel appearing for the petitioner, submitted that the judgment of the Supreme Court in India Cement's Ltd. case (supra) has to be construed reasonably and in a manner which would uphold the law as declared by the Supreme Court itself. According to Mr. Chatterjee, if the levy of case by the State of Bihar under provisions of the said Act was itself held without jurisdiction, the petitioner cannot be said to be a defaulter for non-payment of the amount of cess levied upon it and consequently no interest is payable in terms of section 45 of the said Act. In order to appreciate the submission of Mr. Chatterjee, paragraphs 34 and 35 of the judgment in India Cement's case may be reproduced:–

"34. In the aforesaid view of the matter, we are of the opinion that royalty is a tax and as such a cess on royalty being a tax on royalty, is beyond the competence of the State Legislature because S. 9 of the Central Act covers the field and the State Legislature is denuded of its competence under entry 23 of List II. In any event, we are of the opinion that cess on royalty cannot be sustained under entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user of land.

Mr. Krishnamurthy Iyer, however, submitted that in any event, the decision in H.R.S. Murthy's case (AIR 1965 SC 177) (supra) was the decision of the Constitution Bench of this Court. Cess has been realised on that basis for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension Service Scheme to which our attention was drawn. Mr. Krishnamurth