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HIGH COURT OF CALCUTTA
P. B. CHAKRAVARTTI, S. C. LAHIRI
ALUMINIUM CORPORATION OF INDIA LTD. - Appellant
Versus
COAL BOARD - Respondent
A. F. O. O. 25 Of 1957
Decided On : SEPTEMBER 11, 1958
COAL MINES (CONSERVATION AND SAFETY) ACT, 1952 - S. 8(1)(A) - DUTY OF EXCISE ON COAL RAISED AND DESPATCHED FROM COLLIERIES - LEVY ON COAL CONSUMED BY OWNER OF COLLIERY - VALIDITY - CONSTRUCTION OF S. 8(1)(A) - MEANING OF "DESPATCHED" - COLLECTION OF DUTY BY COAL BOARD - VALIDITY.
Fact of the Case:
The appellant, Aluminium Corporation of India Ltd., has a colliery within the boundaries of its factory. The bulk of the coal raised from the colliery is consumed in the power house for generation of electricity used in the factory for the production of aluminium. A small remainder is sold to third parties. The appellant challenged the validity of the provision made by the Coal Mines (Conservation and Safety) Act, 1952 for feeding the fund by imposing a duty of excise on all coal raised and despatched from collieries in India.
Finding of the Court:
1. Section 8(1)(a) of the Coal Mines (Conservation and Safety) Act, 1952, which imposes a duty of excise on all coal raised and despatched from collieries in India, is a valid piece of legislation and is authorized by entry No. 84 of List I of the Seventh Schedule to the Constitution. 2. The duty imposed by Section 8(1)(a) of the Act is a duty of excise and not a sales tax. 3. The requirement of despatch in Section 8(1)(a) of the Act is not an essential prerequisite for the imposition of an excise duty, but only marks the point of time to which the legislature has chosen to defer the collection of the duty. 4. Section 8(1)(a) of the Act only contemplates coal despatched from a colliery to a person other than the owner. 5. Coal taken from the appellant's colliery to its power-house at the same place and within the same compound for consumption therein cannot be said to be "despatched" within the meaning of Section 8(1)(a) of the Act and cannot be charged to the duty prescribed thereby. 6. The provision of the Act empowering the Coal Board to collect the duty is not ultra vires the Constitution.
Issues: 1. Whether Section 8(1)(a) of the Coal Mines (Conservation and Safety) Act, 1952, which imposes a duty of excise on all coal raised and despatched from collieries in India, is a valid piece of legislation? 2. Whether the duty imposed by Section 8(1)(a) of the Act is a duty of excise or a sales tax? 3. Whether the requirement of despatch in Section 8(1)(a) of the Act is an essential prerequisite for the imposition of an excise duty? 4. Whether Section 8(1)(a) of the Act only contemplates coal despatched from a colliery to a person other than the owner? 5. Whether coal taken from the appellant's colliery to its power-house at the same place and within the same compound for consumption therein can be said to be "despatched" within the meaning of Section 8(1)(a) of the Act and can be charged to the duty prescribed thereby? 6. Whether the provision of the Act empowering the Coal Board to collect the duty is ultra vires the Constitution?
Ratio Decidendi: 1. The power to impose a duty of excise on coal is included in the power to regulate mines and mineral development given to Parliament by entry No. 54 of List I of the Seventh Schedule to the Constitution. 2. A duty of excise is a duty on goods and not on consumption or manufacture or sale. 3. The requirement of despatch in Section 8(1)(a) of the Act is not an essential prerequisite for the imposition of an excise duty, but only marks the point of time to which the legislature has chosen to defer the collection of the duty. 4. Section 8(1)(a) of the Act only contemplates coal despatched from a colliery to a person other than the owner. 5. Coal taken from the appellant's colliery to its power-house at the same place and within the same compound for consumption therein cannot be said to be "despatched" within the meaning of Section 8(1)(a) of the Act and cannot be charged to the duty prescribed thereby. 6. The provision of the Act empowering the Coal Board to collect the duty is not ultra vires the Constitution.
Final Decision: The appeal is allowed and the judgment and order of Sinha, J. are set aside. The appellant's application under Article 226 of the Constitution is allowed to the extent that a writ of mandamus will go to the Respondent, directing it to forbear from levying and collecting any duty of excise under Section 8(1)(a) of the Coal Mines (Conservation and Safety) Act, 1952, on coal taken from the appellant's colliery at Jaykaynagar to its power-house at the same place and within the same compound for consumption therein. There will be no order for costs.
( 1 ) THE controversy in this appeal is as to whether Section 8 (1) (a) of the Coal Mines (Conservation and Safety) Act, 1952, so far us it purports to impose a duty of excise on all coal raised and despatched from collieries in India, is a valid piece of legislation and even if it be valid, whether it applies to so much of the coal raised from the appellant's colliery as is consumed in its own power house. Logically, the second question should come first, because if the section does not apply to the appellant's colliery, it is immaterial to the appellant whether the section is valid or not. I shall, however, deal with the two points in the order in which they were argued.
( 2 ) THE controversy has arisen in the following way: The appellant, the Aluminium Corporation of India Ltd. , is a large concern, manufacturing aluminium and it has its factory at Jaykaynagar in the district of Burdwan. The plants in the factory are driven by electricity, for the supply of which the factory has its own power house. For feeding the power house, coal is required. The appellant has provided itself with a source for getting the coal by taking a lease of a colliery which is situated within the boundaries of the factory. Thus, the factory, the power house and the colliery are all situated within the same compound and all are owned by the appellant as parts of a single industrial unit.
( 3 ) THE colliery has an average annual output of 55,000 to 70,000 tons of coal. Of that quantity, the bulk is consumed in the power house for generation of the electricity used in the factory for the production of aluminium. The small remainder is sold to railway and other parties. A tabular statement filed by the appellant for five years shows that, on the average, about 50000 tons of coal were consumed in the power house and about 13000 tons were sold to third parties.
( 4 ) THE distance between the pithead of the appellant's colliery and its power house is about one furlong. The coal consumed in the power house is carried to it from the pithead by means of hand trolleys belonging to the appellant.
( 5 ) IN March, 1952, Parliament passed an Act, called the Coal Mines (Conservation and Safety) Act in order, as the preamble stated, to provide for the conservation of coal and make further provision for sefety in coal mines. The name of the Act is almost a misnomer, because by itself it makes no provision for the furtherance of either of its objectives and it only empowers the Central Government to exercise in that behalf such powers and take or cause to be taken all such measures as it may deem necessary or proper or as may be prescribed. But the Act also provides for the establishment of a body, called the Coal Board, and provides further that if the Board considers that for the furtherance of the objectives of the Act it is necessary that certain measures should be undertaken by it directly, it may undertake them. The Board is also empowered to administer a fund, called the Coal Mines Safety and Conservation Fund, and directed to apply the moneys for certain specified purposes, including the granting of subventions to collieries.
( 6 ) IT is validity of the provision made by the Act for feeding the fund which is the principal subject of controversy in this appeal. Section 11 of the Act provides that the Central Government may in each financial year pay to the Board a sum not exceeding the net proceeds of the duties of excise collected under Section 8 during the preceding financial year and Section 12 requires the sum so received by the Board to be credited to the Coal Mines Safety and Conservation Fund. The duty is thus collected under Section 8. That section provides for the levy of a duty of excise on coal and coke and also an additional duty of excise on coking coal. With the latter provision we are not concerned in this appeal. The former provision is contained in Section 8 (1) (a) and, so far as it is material, it enacts that,"w
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