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High Court Of Orissa
B. L. HANSARIA, K. C. JAGADEB ROY
ORISSA CEMENT LTD. - Appellant
Versus
UNION OF INDIA - Respondent
MISC. CASE APPEAL 2558 Of 1992
Decided On : 05/07/1992
CESS AND OTHER TAXES ON MINERALS (VALIDATION) ORDINANCE, 1992 - VALIDITY - SCOPE - COLLECTION OF CESS - POWER OF THE STATE GOVERNMENT - INTERPRETATION OF STATUTES - STATEMENT OF OBJECTS AND REASONS - RELEVANCE - LEGAL FICTION - EFFECT - REFUND OF CESS - CONDITION IMPOSED BY THE COURT.
Fact of the Case:
The petitioners challenged the validity of the Cess and other Taxes on Minerals (Validation) Ordinance, 1992, which was promulgated to validate the collection of cess and other taxes on minerals by the State Governments up to 4th April, 1991, despite the Supreme Court's decision in Orissa Cement Limited v. State of Orissa, AIR 1991 SC 1676, which had declared certain provisions of the Orissa Cess Act, 1962, as ultra vires.
Finding of the Court:
The Court held that the Ordinance was a valid exercise of legislative power and was not an encroachment on judicial power. The Court also held that the Ordinance did not violate Articles 14 and 301 of the Constitution. However, the Court held that the Ordinance did not prohibit the collection of cess which had become payable by 4th April, 1991, but had not been collected earlier.
Issues: 1. Whether the Cess and other Taxes on Minerals (Validation) Ordinance, 1992, was a valid exercise of legislative power or an encroachment on judicial power? 2. Whether the Ordinance violated Articles 14 and 301 of the Constitution? 3. Whether the Ordinance prohibited the collection of cess which had become payable by 4th April, 1991, but had not been collected earlier?
Ratio Decidendi: 1. The Court held that the Ordinance was a valid exercise of legislative power because the Parliament had the competence to enact a provision like the one at hand, and the Ordinance was not an encroachment on judicial power because it was a piece of validating enactment after taking care of the invalidity which had led to the enactment having been declared ultra vires. 2. The Court held that the Ordinance did not violate Articles 14 and 301 of the Constitution because the existence of different rates of cess in different States did not make the Ordinance violative of Article 14, and the Ordinance was not violative of Article 301 because it did not impose any new tax or cess. 3. The Court held that the Ordinance did not prohibit the collection of cess which had become payable by 4th April, 1991, but had not been collected earlier, because Section 2(1) of the Ordinance wanted to make "fully alive and operative" all the relevant provisions of the Orissa Cess Act, which contained its own machinery of assessment (and collection) of cess.
Final Decision: The Court vacated the stay orders passed earlier and allowed the Coalfields to collect the cess from the petitioners on the condition that if it would be ultimately found that the realization was not valid, it would refund the same with interest at the rate of 12% per annum from the date of realization till the date of refund.
HANSARIA, C. J.
( 1 ) CERTAIN provisions of the Orissa Cess Act, 1962 were declared ultra vires by the Supreme Court in Orissa Cement Limited v. State of Orissa, AIR 1991 SC 1676, judgement in which was pronounced on 4-4-1991. The ground was incompetency of the State Legislature in enacting those provisions. Despite the unconstitutionality of the provisions, the cess collected before 22-12-1989, the date on which this Court had rendered its judgement declaring the levy as unconstitutional, was allowed to be retained by the State. However, it was stated in paragraph 74 that the State cannot on any grounds of equity be permitted to retain cess collected on or after the date of the High Court's judgement. The result of this decision was that various States in the country (may it be stated that along with the aforesaid Orissa Act, the provisions of many other State Acts were also held as ultra vires) were required to refund a large amount of cess and other taxes collected by them. An Ordinance titled as "the Cess and other Taxes on Minerals (Validation) Ordinance, 1992" was, therefore promulgated on 15-2-1992, which by now has been replaced by the Act of the same name.
( 2 ) AFTER the Ordinance was promulgated, demands were made on the petitioners, inter alia, by the South-Eastern Coalfield Ltd. to pay cess, which became payable, according to the coalfields, by force of the Ordinance. The validity of the same has been assailed in these petitions.
( 3 ) THE first of such petitions was moved on 27-3-1992 when it was admitted and an interim order of stay of the demand was passed. This was in O. J. C. No. 2415 of 1992. Similar petitions were moved thereafter in which similar orders were passed. We are presently concerned with the question whether the interim stay should be allowed to continue or the same should be vacated.
( 4 ) AS we are concerned at this stage with the question relating to stay - to continue or not to continue it - what we shall state hereinafter has to be taken as our tentative view relating to the validity and scope of the Ordinance and the demand to pay cess due up to 4-4-1991, which had remained unpaid earlier.
( 5 ) WE may quote the relevant provision of the Ordinance. Section 2 alone is relevant, which reads as below :-"2. (1) The laws specified in the Schedule to this
Ordinance shall be, and shall be deemed always to have been, as valid as if the provisions contained therein relating to cesses or other taxes on minerals had been enacted by Parliament and such provisions shall be deemed to have remained in force up to the 4th day of April, 1991. (2) Notwithstanding any judgement, decree or order of any court, all actions taken, things done, rules made, notifications issued or purported to have been taken, done, made or issued and cesses or other taxes on minerals realised under any such laws shall be deemed to have been validly taken, done, made, issued or realised, as the case may be, as if this Section had been in force at all material times when such actions were taken, things were done, rules were made, notifications were issued, or cesses or other taxes were realised, and no suit or other proceeding shall be maintained or continued in any court for the refund of the cesses or other taxes realised under any such laws. (3) For the removal of doubts, it is hereby declared that nothing in Sub-Section (2) shall be construed as preventing any person from claiming refund of any cess or tax paid by him in excess of the amount due from him under any such laws. " in the Schedule, mention has been made, inter alia, about the Orissa Cess Act, 1962.
( 6 ) SHRI Das appearing for some of the petitioners has assailed the validity by contending that the Ordinance, which is a product of exercise of legislative power, has entrenched on judicial power which is not permissible. In this connection, mention has been made about some decisions of the Supreme Court, the latest of which is the one rendered in what is generall
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