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1988 Supreme(Pat) 279

HIGH COURT OF PATNA
Uday Sinha and K. B. Sinha, JJ.
M/s Monghyr Construction Co. and 8 Ors. - Petitioners
Vs
The State of Bihar and Ors. - Respondents
Civil Writ Jurisdiction Case Nos. 5711 of 1987, 36 of 1988, 92 of 1988, 194 of 1988, 195 of 1988, 197 of 1988, 702 of 1988, 1150 of 1988 and 1107 of 1988.
Decided On : 1.8.1988

Advocates Appeared:
For Petitioners: M/s S. D. San jay; L. K. Bajla & Hari Shankar; Nand Kishore Singh; Shankar Dayal Singh; Nawal Kishore Singh; N K. Singh; A. K. Singh; G. C. Bharuka, Navniti Pd. Singh & Ramesh Kr. Agrawal.
For Respondents: M/s R. S. Sinha, K. N. P. Singh & Nand Bansh Nr. Singh; Kamlapati Singh with Ms. Sangita Das Gupta & with L. S. Sinha & Prem Nath Singh; S. N. Jha; I. P. Singh with D. K. Singh; and with Harendra Nr. Sinha; J. N. Thakur; J. N. P. Shukla; L. S. Sinha, I. P. Singh and A. K. Sinha.

The Government has the power to seek relevant information although it may cause some strain-certainly not unbearable strain -to fulfil that object.

Headnote:

MINERAL RULES - Circular issued by the Government - Validity - Challenge - Petitioners, contractors, challenged the validity of the Government Circular dated 26th March, 1987, sent to all the District Mining Officers of the State of Bihar - Circular was issued to prevent evasion of payment of royalty and cess by the lessees - Petitioners contended that there was no provision in the Bihar Minor Minerals Concession Rules, 1972 (Mineral Rules) or under any other law according to which they were liable to pay royalty and cess on minor minerals used by them in execution of contract work - Petitioners also contended that the Circular was discriminatory and violative of Articles 14 and 19 of the Constitution - Court held that the Circular was not violative of the provisions of Articles 14, 19 (1) (g) and 265 of the Constitution and thus the applications were dismissed.

Fact of the Case:

Petitioners, contractors, challenged the validity of the Government Circular dated 26th March, 1987, sent to all the District Mining Officers of the State of Bihar - Circular was issued to prevent evasion of payment of royalty and cess by the lessees - Petitioners contended that there was no provision in the Bihar Minor Minerals Concession Rules, 1972 (Mineral Rules) or under any other law according to which they were liable to pay royalty and cess on minor minerals used by them in execution of contract work - Petitioners also contended that the Circular was discriminatory and violative of Articles 14 and 19 of the Constitution.

Finding of the Court:

Court held that the Circular was not violative of the provisions of Articles 14, 19 (1) (g) and 265 of the Constitution and thus the applications were dismissed.

Issues: 1. Whether the Circular was violative of the provisions of Articles 14, 19 (1) (g) and 265 of the Constitution? 2. Whether the petitioners were liable to pay royalty and cess on minor minerals used by them in execution of contract work?

Ratio Decidendi: 1. The Court held that the Circular was not violative of the provisions of Articles 14, 19 (1) (g) and 265 of the Constitution because: - It did not create any liability on the petitioners or on other contractors to pay royalty and cess for the minor minerals used by them in execution of the contract work. - It did not levy any tax on the petitioners. - The provision was incorporated in the Circular in the larger interest of the public to prevent evasion and to ensure payment of royalty and cess and so it was regulatory in nature. 2. The Court held that the petitioners were not liable to pay royalty and cess on minor minerals used by them in execution of contract work because: - There was no provision in the Mineral Rules or under any other law according to which they were liable to pay royalty and cess. - The Circular was discriminatory and violative of Articles 14 and 19 of the Constitution.

Final Decision: The Court dismissed the applications.

JUDGMENT

Krishna Ballabh Sinha, J.-In this batch of nine writ applications the petitioners have challenged constitutionality of the Government Circular bearing Memo No. 2939/2192 dated the 26th March, 1987, sent to all the District Mining Officers of the State of Bihar. In all the applications prayer has been made for a writ of mandamus commanding the respondents to forebear and desist from enforcing the provisions of the said Circular of the Government, as contained in Annexure-3 to C.W.J.C. No. 702 of 1988.

2. The case of all the petitioners is almost identical. The questions for determination are the same in all the writ petitions. The counter affidavits filed ill two of the petitions were sought to be used in all the cases and so this judgment will govern all the petitions.

3. Undisputedly, all the petitioners are contractors and they have been doing works of contract allotted by different departments of the Government of Bihar and some of them by the Union of India also. It is the common case of the petitioners that they submitted their bills for the work done by them. The concerned departments, while making payment, deducted some amount from their bills as royalty and cess for the minor minerals used by them in course of execution of their respective work. In their applications, the petitioners have given the details of their bills submitted on different dates as also the amount deducted as royalty and cess from the amount payable to them. The stand of the petitioners is that there is no provision in the Bihar Minor Minerals Concession Rules, 1972 (herein-after referred to as 'the Mineral Rules) or under any other law according to which they are liable to pay royalty and cess on minor minerals used by them in execution of contract work. They approached the respondents and requested them not to make any deduction from their bills on account of royalty and cess but on one plea or the other their request was not heeded to. In course of execution of work of contract, the petitioners stored bricks, stone-chips, stone-meta is and sand etc. after purchasing from the dealers. So they are only consumer of minor minerals and have been purchasing the materials for execution of work of contract from the open market. They are neither lessees of any mine nor holders of quarrying permit and thus they are not liable to pay royalty and cess. In pursuance of Circular, as contained in Annexure-3, respondents have been making deductions of royalty and cess from the amount payable to them on the basis of bills submitted by them

4. Counter affidavits have been filed on behalf of respondent no. In C.W.J.C. No. 92/88 and No. 195/88 stating therein that the aforesaid Circular dated 13.10.87 (Annex.ure-3 in C.W.J.C. No. 195/88) was issued in accordance with law and does not suffer from any legal infirmity. The said Circular was only regulatory in nature and it was issued to prevent evasion of payment of royalty and cess by the lessees. It was found that the lessees in collusion with the con tractors were evading payment of royalty and cess and thereby the State was put to substantial loss of revenue. At times, it was found that the contractors purchased minor minerals from the agencies who did not possess any valid lease or permit under the Minerals Rules. After giving anxious thought to this problem, the said Circular (Annexure-3) was issued making provisions for the 'bonafide contractors to disclose the source of purchase so that the royalty and cess could ultimately be realised from the lessee from whom such contractor purchased the materials used in execution of the work.

5. It is worthwhile to mention at the outset that in CWJC No. 36/88, 194/88, 195/88 and 197/88 the petitioners have challenged the validity of Circular No. C-1055/79-2931 dated 26-5-80 issued by respondent no. 1. It is manifest from Circular dated 13-10-87 (Annexure 3 of C. W. J. C. No. 702/88) that in view of the judgment of this Court, the said Circular was withdrawn and thus,












































































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