# DISTRICT MINING OFFICER AND ORS v. TATA IRON AND STEEL CO. AND ANR

- **Citation:** [2001] Supp. 1 S.C.R. 147
- **Court:** Supreme Court of India
- **Decided:** 2001-07-31
- **Case number:** Civil Appeal Nos. 48034808 of 2001
- **Bench:** G.B. Pattanaik, S.N. Phukan, B.N. Agrawal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/district-mining-officer-and-ors-v-tata-iron-and-steel-co-and-anr-18041
- **Pages:** 42

## Headnote

B
Cess and Other Taxes on Minerals (Validation) Act, 1992:
Sections 2(1), 2(2) and 2(3)-Nature and scope of-Held, validated
only levy and collection of cess and other taxes imposed under the invalid C
state laws-But did not confer any right on state to levy, demand or collect
fresh cess collectable upto 4.4.1991-Recovery of dues even after 4.4.1991
would contravene provisions of Article 265 as it would amount to imposing
a tax without any authority of law-Duration of Validation Act being only for
a specified period and there being no saving clause, it is in the nature of D
temporary statute-Section 2(3) only provides a limited saving clause for
recovery of excess tax paid by assessee and does not confer a substantive
power to levy and collect cess even after expiry of 4. 4.1991--Constitution of
India, 1950 Article 265.
Constitution of India, 1950-Article 14 validation Act validating E
collection already made under the invalid state laws but not authorising fresh
collection and levy after 4.4.1991-Held, not violative of Article 14--Cess
and other Taxes on Minerals (Validation) Act, 1992.
General Clauses Act, 1897-Section 6-Applicability of-Held, not
applicable to temporary statutes-Cess and Other Taxes on Minerals F
(Validation) Act, 1992.
Interpretation of Statutes:
Legislative intent-Interpretation of-Held, a statute has to be construed
according to the intent of its makers-True and legal meaning of an enactment
has to be derived by considering the meaning of the words used in the enactment G
in the light of the mischief which the enactment intends to remedy.
Words and Phrases:
"Imposition and collection" Meaning of in the context of the preamble
of the Cess and Other Taxes on Minerals (Validation) Act, 1992.
H
147
A
148
SUPREME COURT REPORTS [2001] SUPP. I S.C.R.
In India Cement case and Orissa Cement case, this Court struck down
various State laws authorising levy on minerals as ultra vires on the ground
that the States were denuded of their power to levy tax on account of
declaration made by the Parliament CQntained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957. In view of the said
B judgments, State Government became liable to refund cess and other taxes
causing serious impact on State revenues and to prevent liability of refund,
the Cess and Other Taxes on Minerals (Validation) Act, 1992 was passed by
Parliament. Several writ petitions were filed in different High Courts
challenging the constitutional validity of the said Validation Act Patna High
Court while upholding the constitutional validity of the Validation Act held
C that it authorised retention of cess and taxes already collected under the
invalid state laws but did not authorise fresh recovery of any tax or cess after
4.4.1991 even if the liability was incurred under the validation laws before
4.4.1991. Consequently, since the State was restrained from realising any
demands, the present appeal was filed on behalf of the State of Bihar.
However, this Court in Kannadasan case upheld the constitutional validity of
D the Validation Act as well as the right of the State to levy and demand cess
collectable upto 4.4.1991. Several High Courts following the judgment of this
Court in Kannadasan case, upheld the right of the State Government to levy,
demand and collect tax which was collectable upto 4.4.1991. The said
judgments were also assailed by the assessees in different SLPs and transfer
E petitions before this Court Review Petitions were also filed by the assessees
against the judgment of Kannadasan case which were to be disposed of after
the disposal of present SLPs.
On behalf of State of Bihar it was contended that the Validation Act
authorised the State Governments to levy and realise tax which were due up
F to the date of validation, namely 4.4.1991 and there should not be any embargo
on the State's power to realise the same notwithstanding the fact that the life
of the validation was only upto 4.4.1991; that the Validation Act

## Text

_Characters 0–39,765 of 118,566. This is a partial read: ask again with offset=39765 for what follows._

DISTRICT MINING OFFICER AND ORS.
A
V.
TATA IRON AND STEEL CO. AND ANR.
JULY 31, 2001
[G.B. PATTANAIK, S.N. PHUKAN AND B.N. AGRAWAL, JJ.]
B
Cess and Other Taxes on Minerals (Validation) Act, 1992:
Sections 2(1), 2(2) and 2(3)-Nature and scope of-Held, validated
only levy and collection of cess and other taxes imposed under the invalid C
state laws-But did not confer any right on state to levy, demand or collect
fresh cess collectable upto 4.4.1991-Recovery of dues even after 4.4.1991
would contravene provisions of Article 265 as it would amount to imposing
a tax without any authority of law-Duration of Validation Act being only for
a specified period and there being no saving clause, it is in the nature of D
temporary statute-Section 2(3) only provides a limited saving clause for
recovery of excess tax paid by assessee and does not confer a substantive
power to levy and collect cess even after expiry of 4. 4.1991--Constitution of
India, 1950 Article 265.
Constitution of India, 1950-Article 14 validation Act validating E
collection already made under the invalid state laws but not authorising fresh
collection and levy after 4.4.1991-Held, not violative of Article 14--Cess
and other Taxes on Minerals (Validation) Act, 1992.
General Clauses Act, 1897-Section 6-Applicability of-Held, not
applicable to temporary statutes-Cess and Other Taxes on Minerals F
(Validation) Act, 1992.
Interpretation of Statutes:
Legislative intent-Interpretation of-Held, a statute has to be construed
according to the intent of its makers-True and legal meaning of an enactment
has to be derived by considering the meaning of the words used in the enactment G
in the light of the mischief which the enactment intends to remedy.
Words and Phrases:
"Imposition and collection" Meaning of in the context of the preamble
of the Cess and Other Taxes on Minerals (Validation) Act, 1992.
H
147
A
148
SUPREME COURT REPORTS [2001] SUPP. I S.C.R.
In India Cement case and Orissa Cement case, this Court struck down
various State laws authorising levy on minerals as ultra vires on the ground
that the States were denuded of their power to levy tax on account of
declaration made by the Parliament CQntained in Section 2 of the Mines and
Minerals (Regulation and Development) Act, 1957. In view of the said
B judgments, State Government became liable to refund cess and other taxes
causing serious impact on State revenues and to prevent liability of refund,
the Cess and Other Taxes on Minerals (Validation) Act, 1992 was passed by
Parliament. Several writ petitions were filed in different High Courts
challenging the constitutional validity of the said Validation Act Patna High
Court while upholding the constitutional validity of the Validation Act held
C that it authorised retention of cess and taxes already collected under the
invalid state laws but did not authorise fresh recovery of any tax or cess after
4.4.1991 even if the liability was incurred under the validation laws before
4.4.1991. Consequently, since the State was restrained from realising any
demands, the present appeal was filed on behalf of the State of Bihar.
However, this Court in Kannadasan case upheld the constitutional validity of
D the Validation Act as well as the right of the State to levy and demand cess
collectable upto 4.4.1991. Several High Courts following the judgment of this
Court in Kannadasan case, upheld the right of the State Government to levy,
demand and collect tax which was collectable upto 4.4.1991. The said
judgments were also assailed by the assessees in different SLPs and transfer
E petitions before this Court Review Petitions were also filed by the assessees
against the judgment of Kannadasan case which were to be disposed of after
the disposal of present SLPs.
On behalf of State of Bihar it was contended that the Validation Act
authorised the State Governments to levy and realise tax which were due up
F to the date of validation, namely 4.4.1991 and there should not be any embargo
on the State's power to realise the same notwithstanding the fact that the life
of the validation was only upto 4.4.1991; that the Validation Act could not be
held to be a temporary statute and remains as a valid piece of legislation,
conferring the right to collect and make the levy which would be collectable
G upto 4.4.1991 and the provisions of General Clauses Act would be applicable;
that there was no quarrel with the constitutional proposition engrafted in
Article 265 of the Constitution that levy and collection should be by authority
of law. But in respect of minerals extracted upto 4.4.1991, if any cess or tax
was to be levied and collected in accordance with the machinery provided
for the same, that right of the State would not get frustrated, merely because
H the legislation in question in the eye of law was effective till 4.4.1991.
,.
•
DISTRICT MINING OFFICER v. TAT A IRON AND STEEL
149
On behalf of assessee it was contended that the Parliament in fact came A
forward with the Validation Act after different Cess Acts were struck down
on the ground of lack of legislative competence solely to ensure that the levies
collected are not required to be refunded by the States which would have a
serious impact on the State revenues of the concerned State Governments,
and therefore, in the absence of any law subsequent to 4.4.I 991 the authority B
to collect has disappeared and consequently the decision of this Court in
Kannadasam 's case holding that not only the taxes already collected need not
be refunded, but the taxes and cessess which have not already been collected
also be collected is not correct in law; that the right to levy and collect which
was there with the State having disappeared with effect from 4.4.1991, the
date on which the life of the Acts expires, unless there was any provision C
conferring the right upon the State to make levy or collect any levy, that
collection would be without the authority oflaw and would contravene Article
265 of the Constitution; that Section 2(2) of the Validation Act, on a plain
readings, would suggest, that it validates all the past Acts of collection but
has not conferred any right to make any fresh collection or levy any cess on
minerals; that the fact that Parliament did not provide ~aving clause is D
indicative of the true intention namely, the Parliament never permitted the
States to levy and collect the liabilities already accrued, but it only validated
the collection of cess already made under an invalid law which otherwise the
State would have been liable to refund; that the intention of the Parliament
in enacting the Validation A,_ct was only to save the State Governments from E
refunding the monies already collected under the Statutes declared void ab
initio by the Courts and it never intended to confer a right on the State to
make any fresh levy or collection in respect of the cess and taxes, which would
be collected upto 4.4.1991; that the deliberate and conscious omissions by
Parliament of a saving clause in the Validation Act, permitting levies or actions
after 4.4.1991 points to the only effect that Parliament did not intend any levy F
to be imposed or any collection to be made after 4.4.1991.
Disposing of the matters, the Court
HELD 1.1. The Cess and Other Taxes on Minerals (Validation) Act, G
1992 validated levy and collection of cess and other taxes on minerals imposed
under the invalid State laws but it did not confer any right on Stat,!'JO levy,
demand and collect fresh cess which would be collectable upto 4.4.1991. The
Validation Act does not authorise any fresh levy or collection in respect of
liabilities accrued prior to 4.4.1991 though it prohibits refund of the collection
already made prior to that date. 1187-Df
H
150
SUPREME COURT REPORTS [2001) SUPP. I S.C.R.
A
P. Kannadasan and Ors. v. State of Tamil Nadu and Ors .. [I996[ 5 SCC
670, overruled.
1.2. It is crystal clear from a plain reading of Section 2(I) of the Act
that it purports to validate certain State laws and actions taken and things
done thereunder, by providing that the provisions relating to cesses and other
B taxes on minerals fictionally must be held to have been enacted by the
Parliament and keeping those provisions alive till 4.4.1991. It may be borne
in mind that under the Validation Act, Parliament never re-enacted the I I
Acts mentioned in the Schedule, but merely provided the legislative
competence for those provisions in those Acts which related to cesses or taxes
C on minerals. The legislative history behind the enactment of the Validation
Act unequivocally points out to the fact that the State legislature had enacted
different statutes conferring right of levy and collection of cess and taxes on
minerals, and this Court came to the conclusion that the State legislature did
not have the right to make law conferring right to levy and collection on
minerals as the field had been occupied by the Union Legislature on the
D enactment of the Mines and Minerals Regulation and Development Act, I957.
The judgment of this Court in India Cement as well as in Orissa Cement
necessarily lead to a situation where under not only the I I Acts mentioned in
,;'
the Schedule of the ValidationiAct were declared null and void, but also the
collections made under such invalid law became refundable. Thus, Parliament
E came forward with a unique device of providing legislative competence in
respect of certain provisions of the State laws and that too only keeping the
Act alive upto 4.4.I99I, the date on which this Court delivered the judgment
in Orrisa Cement case. [174-G, H; 175-A-C, El
India Cement ltd. v. State a/Tamil Nadu. [199011 SCC 12 and Orissa
F Cement ltd. v. State of Orissa, [1991] Suppl. 1sec430, referred to.
2.1. A Statute has to be construed according to the intent of its makers
and the duty of the Court is to act upon the true intention of the legislature.
The function of the Courts is only to expound and not legislate. The process
of construction combines both literal and purposive approaches. In other
G words, the legislative intention i.e., the true or legal meaning of an enactment
is derived by considering the meaning of the words used in the enactment in
the light of any discernible purpose or object which comprehends the mischief
and its remedy to which the enactment is directed. It is also a cardinal principle
of construction that external aids are brought in by widening the concept of
context as including not only other enacting provisions of the same Statute but
H
DISTRICT MINING OFFICER v. TA TA IRON AND STEEL
J 5 J
its preamble, the existing state of law, other Statutes in pari materia and the A·
mischief which the Statutes was intended to remedy. [175-E, F, H; 176-C, El
State of Himacha/ Pradesh v. Kai/ash Chand Mahajan, [19921Suppl2 SCC
351 and The Reserve Bank of India v. Pearless General Finance and Investment
Co., [1987] t SCC 424, relied on.
Attorney-Genera/ v. HRH Prince Ernest Augustus, (1957) I All ER 49, B
referred to.
2.2. Bearing in mind the rules of construction and examining the
provisions of the validation Act, conclusion is irresistible that the Parliament
adopted a unique device of providing the legislative competence to certain
provisions of different State legislations which have already been struck down C
for lack of legislative competence. As the Parliament thought that on account
of the judgments of the Supreme Court the State Governments would be liable
to make refund of cess and other taxes collected by them, which was likely to
have a serious impact on State revenue, and to prevent liability of refund,
the Parliament intended to validate collection of levies already made by the D
State Government upto 4.4.1991. This conclusion is based on, not only the
language used in Section 2(1) but also the statement of Objects and Reasons,
which clearly enunciates the same. (176-B, C, D(
3. The expression 'imposition and collection' occurring in the Preamble
of the Act would mean, imposition or collection already made under the E
relevant State laws and the preamble cannot be construed to mean to confer
a further right of imposition and collection of cesses on the minerals extracted
upto 4.4.1992. That apart, the very heading of Section 2(1), namely,
"Validation of certain State laws and actions taken and things done
thereunder." Would suggest that the Parliament by legal fiction injected
legislative competence to the laws enacted by the State legislature and gave F
life to such laws upto 4.4.1991, the date on which the judgment of the Supreme
Court in Orissa Cement case was delivered, for the purpose of validating the
actions taken, things done under such laws declared void by the Supreme
Court. Thus, neither the language of Section 2(1) nor the objects and Reasons
appended to the Validation Act, confers a right on State Government to levy G
and collect cess or taxes on mineral which were collected upto 4.4.1991. But
it merely validated the collections already made under the State laws so that
State will not be burdened with the liability of refunding the amount already
collected under void laws. [ 178-A, B, C, D, Fl
4.1. Under Article 265 of the Constitution, no tax shall be levied or H
152
SUPREME COURT REPORTS [2001] SUPP. I S.C.R.
A collected except by authority of law. It is thus explicit that not only the levy,
but also the collection of a tax must be under the authority of some law. The
authority of law refers to a valid law which in turn would mean that the tax
proposed to be levied must be within the legislative competence of the
legislature, imposing the tax and the law must be validly enacted. It must not
B also contravene the specific provisions of the Constitution and the tax in
question must be authorised by such valid law. The expression "levy and
collection" are used in Article 265 in a comprehensive sense and are intended
to include the entire process of taxation commencing from taxing Statute to
taking away of the money from the citizen. What the Article enjoins is that
every stage in this entire process must be authorised by law.
C
[178-H; 179-A, Bl
4.2. In the instant case, several tax legislations enumerated in the
Schedule to the Validation Act having been declared ultra vires, on the ground
that the State legislatures did not have the legislative competence to make
D the legislation, there existed no authority of law for making any levy or
collection of tax and cesses on minerals. The Parliamentary intervention was
by enacting the Validation Act and giving it retrospective effect and making
the law exist till 4.4.1991. What has been achieved is a valid and legal taxing
provision and then liy fiction, making the tax already collected to stand under
the re-enacted law. In the absence of any provisions in the Validation Act,
E the relevant provisions of the State laws, which stood expired on 4.4.1991, to
hold that the Validation Act authorises, imposing and collection of tax and
cesses on minerals, even after 4.4.1991, in respect of the minerals extracted
till 4.4.1991 on which the cess was collectable, would contravene Article 265
of the Constitution. 1179-C, D, El
F
5.1. A Statute can be said to be either perpetual or temporary. It is
1 perpetual when no time is fixed for its duration and such a Statute remains
in force until it is repealed which may be express or implied. But a Statute is
temporary when its duration is only for a specified time and such a Statute
expires on the expiry of the specified time, unless it is repealed earlier. The
G relevant provisions of the different State laws relating to cesses or taxes on
minerals having been deemed to have been enacted by Parliament and having
been deemed to have remained in force upto 4.4.1991 under the Validation
Act, those laws relating to cesses or taxes on minerals must be held to be
temporary Statute in the eye of law. Necessarily, therefore, its life expired
and it would be difficult to conceive that notwithstanding the expiry of the
H law itself, the collecting machinery under the law could be operated upon for
..
DISTRICT MINING OFFICER v. TATA IRON AND STEEL
J 53
making the collection of the cess or tax collectable upto 4.4.1991.
A
[180-A, B, CJ
5.2. To a temporary Statute, the provisions of Section 6 of the General
Clauses Act, 1987 will have no application. Very often legislature enacts in
the temporary Statute a saving provision, similar in effect to Section 6 of the
General Clauses Act. But in the absence of such a provision in the Validation B
Act in question, the life of such State laws stood expired on 4.4.1991.
Consequently, there would be no residuary provision or authority of law
conferring a power on the state to make and levy or collection of cess ·or taxes
one minerals, after the expiry of the relevant laws. [180-D, El
5.3. When Parliament enacted the Validation Act and infused life into C
the void Acts for lack of legislative competence, it must be assumed that the
Parliament knew the constitutional position and was fully aware of the position
of law and the necessity of providing a saving clause, in the event the
Parliament intended to confer a right of collection as well as levy subsequent
to 4.4.1991. The deliberate and conscious omission of the saving clause by the D
Parliament is of considerable significance and cannot be lightly brushed aside.
Section 2(1) of the Validation Act, having used the expression "upto 4.4.1991",
unequivocally indicates that what is validated is the process of levy and
collection made upto that date and no further. This being the position and
the Validation Act not having provided any provision, permitting levy or
collection after 4.4.1991 the Act never conferred a right of levy or colloection E
after 4.4.1991. [185-D-HI
P. Kannadasan and Ors., v. State of Tamil Nadu and Ors., [199615 SCC
670, overruled.
Joura Sugar Mills Pvt. Ltd v. State of MP., (1996) l SCC 523, referred to.
State of Orissa v. Bhupendra Kumar Bose, AIR (1962) SC 945; RC. Jail
v. Union of India, (19621 Supp. 3 SCR 436; Hansraj Moolji v. State of Bombay,
(19571 SCR 634 and T. Venkata Reddy and Ors. v. State of Andhra Pradesh,
(1985) 3 sec 198, held inapplicable.
Steavenson v. Oliver 1841 (151) ER 1024, referred to.
6. It was erroneously held in Kannadasan 's case that Article 14 would
be attracted unless the provisions of the Validation Act is interpreted to mean
that it not only validates the collection made but also entitles fresh collection
and levy, even after 4.4.1991 of the dues which was collectable upto 4.4.1991.
F
G
(186-DI H
154
SUPREME COURT REPORTS [2001] SUPP. 1 S.C.R.
A
P. Kannadasan and Ors., v. State of Tamil Nadu and Ors., 11996) 5 SCC
670, overruled.
Mafat Lal Industries ltd., v. Union of India, [1997) 5 SCC, followed.
7. It cannot be held that Section 2(3) of the Act confers a substantive
B power to levy and collect cess and other taxes on minerals even after expiry
4.4.1991. The said section which has been introduced for removal of difficulty
only provide a limited saving clause, conferring a right of refund on the
assessee, if such assessee has paid in excess of what is due and the said
provision cannot be invoked to give a wider interpretation of Section 2(1) or
C Section 2(2). [ 186-FJ
D
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos. 48034808 of 2001.
From the Judgment and Order dated 17.1.96 of the Patna High Court
in C.W.J.C. Nos. 1280, 1507, 1639, 1702, 1711 and 1870 of 1992 (R)
WITH
C.A. Nos. 4809-4850/2001, R.P. (C) No.1432/97 in C.A. No. 9850/96
R.P. (C) No. 1460/97 in W.P. (C) No. 408/96, R.P. (C) No. 1423/97 in w:P.
(C) No. 518/95, C.A. Nos. 4851-93/2001, R.P. (C) No. 966/98 in C.A.No.
9917/96, C.A. Nos. 4894-4911/2001, T.P. (C) No. 708/98, R.P. (C) No.
E
1636/98 in C.A. No. 9914/96, R.P. (C) No. 1581/98 in C.A. No. 9915/96,
C.A. Nos. 4912-24/2001, W.P. (C) Nos. 594, 649/98, C.A. Nos. 4925-27/
2001, 1664-65, 1666-67, 1668-69/99, R.P. (C) No. 2363/98 in C.A. No.
9913/96, R.P. (C) No. 2364/98 in C.A. No. 9905196, R.P. (C) No. 2365/98
in C.A. No. 9912/96, C.A. Nos. 3883-87/99, T.P. (C) No. 452/99, W.P. (C)
F Nos. 156, 160, 161, 166, 408/99, T.P. (C) No. 771/99, C.A. Nos. 4928-29/
2001, T.P. (C) Nos. 471, 465, 483, 485/99, W.P. (C) No. 129/2000, T.P. (C)
Nos. 797/99, 172/2000, 173 and 173A/2000, W.P. (C) No. 403/2000, C.A.
No. 4930/2001, T.P. (C) No. 480/99, 390/2000 and C.A. No. 4931 of2001.
Rakesh Dwivedi, A.K. Ganguli, Ranjit Kumar, K. Parasaran, K.K.
G Venugopal, Dr. AM. Sighyim, M.L. Jaiswal, S.K. Gambhir, Shanti Bhushan,
N.N. Goswami, Anoop G. Choudhary, B.B.Singh, Ms. Binu Tamta,
Krishnamurthi Swami, Ajit Kumar Sinha, P.N. Gupta, Shahid Rizvi, Ms.
Gauri Rasgotra, Suman J. Khaitan, Mrs. Sarla Chandra, S.K. Kulkarni, D.L.
N. Rao, Ms. Sangeeta Kumar, Vijay Kumar, A.V. Rangam, A Ranganadhan,
Praveen Kumar, Anil Sharma, Avanish Sharma, Vivek Gambhir, U.A. Rana,
H Arvind Kumar, Ms. Shalini Mittal, K.V. Viswanathan, K.V. Venkataraman,
-
•
DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.] 155
Sudhir Kumar Gupta, Ms. Sheetal Sharma, S. Chakraborty, K.V. Sreekumar, A
Ramesh Babu M.R, T.N. Singh, Anip Sachthey, Ms. Sandhya Rajpal, Arijit
Prasad, Prakash Shrivastava, P.S. Narasimha, P. Sridhar, V.G. Pragasam,
Badri Prasad Singh, Ravinder Narain, A.K. Jain, Ms. Deepa Das, S.
Dukumaran, S. Ganesh, M.C. Dhingra, K.N. Srivastava, Ms. Gauri Rasgotra,
Suman Jyoti Khaitan, Dhruv Mehta, S.K. Mehta, C.L. Kalia, Ms. Shobha,
S.R. Ghosh. S.V. Bairam Das, Dinesh Kumar Garg, Ms. Sangeeta Manda!, B
Ms. Varsha Choudhary, Krishnanand Pandeya, Rakesh K. Sharma, Deba Prasad
; Mukherjee, B.K. Satija, Gopal Prasad, B.B. Singh, Mrs. Rekha Pandey, Mrs.
Sunita Sharma, A.S. Rawat, D.S. Mahra, N. Ganpathy, B. Partha Sarthy,
Satish, K. Agnihotri, R.M. Sharma, Rohit K. Singh, Anil Kumar Pandey,
Mrs. Arnita Gupta, Sakesh Kumar, Sanjay R. Hegde, Satya Mitra, A.
Mariarputham, Mrs. Aruna Mathur, T.V. Ratnam and K. Subba Rao, Advs. C
with them for the appearing parties.
The Judgment of the Court was delivered by
PATTANAIK, J. Delay condoned.
D
Leave granted in all the SLPs.
This batch of cases relate to the Cess and other Taxes of Minerals
(Validation) Act, 1992 [hereinafter referred to as 'the Act']. The question for
consideration is, by the aforesaid Act, what in fact has been validated, is it
only the taxes on minerals already realised under the invalid.law or the right E
to levy tax and realise the same, which became due upto 4th of April, 1991?
Several cases arising from different States have been tagged on to the main
matter arising out of the judgment of the Patna High Court, were listed
together, but we think it appropriate to decide the Bihar matter, so that the
law laid down therein would be followed in other cases. Incidently, the
earlier judgment of this Court arising out of the said Validation Act in relation F
to the levy of tax on minerals in the State of Tamil Nadu in the case of
P. Kannadasan and Ors. v. State a/Tamil Nadu and Ors., (1996] 5 SCC 670,
is required to be reconsidered and it is for that purpose, these cases have been
referred to a three Judge Bench. In the case arising out of the judgment in
Patna High Court in S.L.P. (Civil) No. 13102-13107 of 1996, the State through G
the District Mining Officer is the petitioner and by the impugned judgment,
the High Court though has upheld the validity of the Validation Act, but has
held that the said Validation Act does not authorise the recovery of any tax
or cess after 4.4.91, even if the liability was incurred under the Validated
laws before 4.4.1991 and consequently, the demand raised ·by the State were
quashed and the State was restrained from taking any steps to realise such H
,
156
SUPREME COURT REPORTS [2001] SUPP. I S.C.R.
A demand. Be it be stated that a batch of writ petitions were filed by several
assessees, assailing the legality of the demands raised by the Mining Authorities
for payment of cess in respect of such dues, which would be leviable till 4th
of April, 1991. In the batch of cases relating to State of Madhya ·Pradesh,
after the Judgment of this Court in Kannadasan 's case, the State of Madhya
B Pradesh issued notice to several asses~ees, raising the demand and such demand
was assailed by filing writ petitions in the High Court. Applications had been
filed in this Court for getting those writ petitions transferred, but no order of
transfer has been passed by this Court and as such the writ petitions are still
pending before the High Court of Madhya Pradesh and we, therefore, do not
propose to deal with those matters, since the High Court can well dispose of
C the same, on the basis of our judgment in the Bihar Case. Civil Appeal No.
9917 of 1996, however is directed against the judgment of Madhya Pradesh
High Court dated 10.5.1995. Before the High Court, the validity of the
Ordinance No. 7of1992 as well as Cess Validation Act 16of1992 had been
assailed. The High Court, by the impugned judgment upheld the validity of
the aforesaid Validation Act. We are in respectful agreement with the said
D conclusion and hold the Validation Act to be constitutionally valid. Hence no
interference is called for in the Civil Appeal. But the dispute, whether fresh
notice could be issued for collection and levy of dues in respect of liability
accrued till 4.4.91 is the subject matter in pending writ petitions in the High
Court. In the cases arising out of the judgment in Kamataka High Court, the
E High Court has followed the judgment of this Court in Kannadasan and thus
upheld the right of the State to levy demand and collect, which was collectable
upto 4.4.1991 and the assessees are challenging the said judgment in this
Court. Several Writ Petitions were filed under Article 32, challenging the
constitutional validity of the Validation Act as well as for quashing the demand
notices dated 1.8.98 and 2.9.98, issued by the Department of Mines and
F Zoology in the State of Kamataka. In the cases arising out of judgment of
Andhra Pradesh High Court, the High Court followed the judgment of this
Court in Kannadasan and upheld the Constitutional validity of the Validation
Act as well as the right of the State of make the demand upto 4.4.1991 and
this judgment of the Andhra Pradesh High Court is being assailed by the
G assessees in different special leave petitions. In Kannadasan's case, which
arises out of the judgment of Madras High Court, after the judgment of this
CoJrt, review petitions were filed by the assessees and this Court had merely
directed those review petitions to be tagged on to the special leave petitions
filed against the judgment of Patna High Court, but in those petitions, no
fomtal notice had been issued to the State of Tamil Nadu and necessarily
H therefore, those review petitions have to be de-linked and only after disposal
'
•
DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.) 57
of the special leave petitions filed, arising out of the judgment of Patna High A
Court, the review petitions can be listed for observance of formalities and
disposal.
Though large number of counsel argued for different sets of persons,
but basically two contentions were advanced. One by Mr. Rakesh Dwivedi,
the learned senior counsel, appearing for the State of Bihar, contending that B
the Validation Act authorises the State Governments to levy and realise tax
which were due up to the date of validation, namely, 4.4.1991 and there
should not be any embargo on the State's power to realise the same
notwithstanding the fact that the life of the Validation Act was only upto
4.4.1991. This stand of Mr. Dwivedi, learned senior counsel appearing for C
the State of Bihar was supported by Mr. Chaudhary, appearing for the State
of Madhya Pradesh, Mr. Sanjay Hegde, appearing for the State of Karnataka
as well as Mr. Mariarputham, appearing for the State of Tamil Nadu. According
to Mr. Dwivedi, the judgment of this Court in Kannadasan's case squarely
covers the point and has rightly been decided and the same does not require
any reconsideration. On behalf of different sets of assessees, arguments were D
advanced by different counsel, particularly by Mr. Shanti Bhushan, Mr.
Parasaran, Mr. KK Venugopal, Dr. A.M. Singhvi, Mr. AK Ganguli and Mr.
Ranjit Kumar, all senior counsel, and the essential contention was that the
Parliament in fact came forward with the Validation Act after different Cess
Acts were struck down on the ground of lack of legislative competence solely E
to ensure that the levies collected are not required to be refunded by the State
which would have a serious impact on the State revenues of the concerned
State Governments, and therefore, in the absence of any law subsequent to
4.4.1991 the authority to collect has disappeared and consequently the decision
of this Court in Kannadasan's case holding that not only the taxes already
collected need not be refunded, but the taxes and cesses which have not F
already been collected also be collected is not correct in law. It was also
further contended that this Court while examining the provisions of the
Validation Act in the light of the purpose that was sought to be achieved by
the Parliament has not borne in mind the very Statement of Objects and
Reasons as well as the language of Section 2 of the Validation Act, and the G
absence of a provision in the Validation Act, corresponding to the provisions
contained in Section 6 of the General Clauses Act. It is the uniform contention
of all the counsel appearing for different sets of assessees that the judgment
of this Court in Kannadasan conferring right on the State to levy and collect
the taxes on minerals, which could be leviable until 4th April, 1991, would
run contrary to Article 265 of the Constitution and would traverse beyond the H
158
SUPREME COURT REPORTS [2001) SUPP. I S.C.R.
A object of the Validation Act, and consequently it would be appropriate for
this larger Bench to re-consider the earlier judgment of two Judge Bench in
Kannadasan's case.
Before we proceed further in enumerating and examining the contentions
raised by the counsel for the parties, it would be appropriate to notice the
B history leading to the enactment of the Validation Act. The States of Andhra
Pradesh, Bihar, Karnataka, Madhya Pradesh, Tamil Nadu, Maharashtra and
Orissa had enacted several legislations authorising levy on minerals. In the
case of India Cement ltd. v. State of Tamil Nadu, (1990] I Supreme Court
Cases 12, a Seven Judge Bench of this Court came to hold that the levy in
C question is essentially a levy on minerals and is relatable to Entries 23 and
50 of List II, but on account of declaration made by Parliament contained in
Section 2 of Mines and Minerals (Regulation and Development) Act, 1957,
the State Legislatures have been denuded of the power to levy tax on minerals
and, as such, the imposition of tax on minerals under Section 115 of the
Tamil Nadu Panchayat Act, 1958 is ultra vires. This Court further hold that
D the earlier decision of this Court in HRS Murthy's case-[ 1964] 6 Supreme
Court Reports 666, has not been correctly decided. Sometime thereafter a
Three Judge Bench of this Court decided the case of Orissa Cement,-[1991]
Suppl. 1 Supreme Court Cases 430, and following the larger Bench decision
of this Court in India Cement declared identical levies imposed by the States
E of Orissa, Bihar and Madhya Pradesh to be incompetent and void. The Court
further held that the decision to be operative prospectively with effect from
the date of the judgment i.e. 4.4.1991 so far as the State of Bihar is concerned,
and 22.12.1989 so far as Orissa was concerned, the date on which the Orissa
High Court struck down the levy, and 28.3.1989 so far as Madhya Pradesh
was concerned, the date on which the Madhya Pradesh High Court struck
F down the levy. It is after the aforesaid two judgment the Parliament came
forward initially by promulgating an Ordinance, called the Cess and other
Taxes on Minerals (Validation) Ordinance, 1992, and thereafter by replacing
the same by Act 16 of 1992 which was published in the Gazette of India on
4.4.1992. Under Section 2 of the Validation Act the Parliament by legal
G fiction purports to have enacted the provisions of the Acts mentioned in the
Schedule keeping the provisions of such Act to have remained in force upto
4th April, 1991. The Schedule consists of 11 different Acts, which Acts had
been declared by this Court to be ultra vires as the State Legislatures were
denuded of their powers to make those laws in view of declaration made by
the Parliament contained in Section 2 of Mines and Minerals (Regulation and
H Development) Act, 1957. In the eye of law, therefore, those 11 Acts must be
..
DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.J ]59
held to have been enacted by the Parliament upto 4th April, 1991. After the A
enactment of the Validation Act Writ Petitions were filed in the High Court
challenging the Validity of the said Validation Act. Those Writ Petitions
having been dismissed by the High Court, the matter was carried to this
Court in Kannadasan 's case and the said case was disposed of by judgment
dated July 26, 1996, reported in [1996] 5 sec, 670. A two judge Bench of B
· this Court considered the 7 contentions raised by the assessee and rejected all
the contentions and held as follows:-
(i)
That by enacting the Validation Act, the Parliament does not seek
to over-turn the decision rendered by this Court.
(ii) A perusal of Section 2 of the impugned enactment and Section 2 c
of the 1969 Validation Act considered in Krishna Chandra
Gangopadhyaya would show that Section 2 of the impugned
enactment is a faithful reproduction and repetition of Section 2 of
the 1969 Validation Act, word to word. The only additional words
are in Section 2(1 ), viz. 'and such provisions shall be deemed to D
have remained in force upto the 4th day of April, 1991.
(iii) The preamble of the Act stating "to validate imposition and
collection of cesses and certain taxes on minerals under certain
State laws" as well as the provisions of the Validation Act create
the levy as well as validate the recovery already made and the E
expression 'collection' does not mean what is already collected
alone but means the future collection as well. Neither the preamble
nor Section 2 say that what has already collected alone is validated.
(iv) The contention of the assessee that a Parliamentary enactment
will not permit the levy of taxes and cesses at different rates in
F
different States in the country as that would be discriminatory
and validation of Article 14 of the Constitution is misconceived
as Parliament has intervened and by enacting the impugned law
in exercise of its undoubted power validated the levy and all that
flows from it.
(v) The contention of the assessee that the denudation of the power G
of the State legislature to levy taxes on minerals is not an absolute
and unlimited one, is wholly misconceived, particularly in view
of the decision of this Court in India Cement and Orissa Cement.
(vi) The contention of the assessee that the taxes realised by virtue of
the Validation Act can only be realised for the purpose of H
A
B
c
D
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SUPREME COURT REPORTS [2001] SUPP. I S.C.R.
Regulation of Mines and Minerals Development is also based
upon a misconception about the law relating to taxes and what is
levied under the impugned enactment is a tax/cess and not a fee
and as such, it is not necessary that element of quid pro quo
should be established in each and every case.
(vii) Merely because the levy created by an enactment is limited to a
particular period, the Act itself cannot be said to be a temporary
Statute and the Act very much continues in force and will remain
in force till Parliament chooses to repeal it and, therefore, Section
6 of the General Clauses Act should apply. Notwithstanding the
cessation of levy created by Section 2(1) with 4th day of April,
1991, the machinery requisite for realising and refunding the taxes/
cesses yet to be collected or wrongly collected, as the case may
be, is kept alive and it cannot be suggested with any reasonableness
that the said machinery is kept alive only for the purposes of
refunding the excessively collected taxes but not for collecting/
recovering the uncollected/unrecovered taxes and cesses.
With the aforesaid conclusions this Court dismissed the appeals preferred
by the assessee against the judgment of the Madras High Court.
The Patna High Court disposed of the batch of Writ Petitions on 17th
E January, 1996 before the judgment of this Court in Kannadasan's case. In the
impugned judgment the High Court has held that:
(a) the Parliament has not enacted the entire Cess Act of 1880 but
has merely re-enacted the provisions contained therein which relate
to cess and other taxes on minerals;
F
(b) The laws which have been enacted by the State Legislature are
deemed to have been enacted by the Parliament.
(c) It became necessary for the Parliament to intervene and to enact
a law with a view to protect a State frol)l the consequences that
G
followed declaration made by the Supreme Court in India Cement
and Orissa Cement.
(d) The Parliament took precaution to itself re-legislate on the subject
matter in exercise of its legislative power and it chose to legislate
by incorporation, a method of legislation well recognised by law.
H
(e) The laws enacted were deemed to have remained in force upto
DISTRICT MINING OFFICER v. TATA IRON AND STEEL CO. [PATTANAIK, J.J 161
4th April, 1991.
(f)
The Statute in question can be described as promulgated a
temporary legislation.
A
(g) The submission that Parliament did not have the competence to
legislate on the subject matter fell within the exclusive jurisdiction
of the State Legislature, proceeds on the erroneous assumption B
that the subject matter with which the Parliament dealt with in the
Validation Act was a State subject contained in List II of 7th
Schedule.
(h) The competence of Parliament to make enactment is beyond
challenge.
C
(i)
The Validation Act cannot be impugned on the ground that it
sought to re-validate the said Act which was declared
unconstitutional by the Supreme Court. The power of the
Parliament to legislate retrospectively cannot be disputed.
Consequently the Parliament had power to legislate on the topic D
it could make an Act on the topic by any drafting means including
by referential legislation.
U)
There is nothing in the impugned Act with regard to the assignment
of the taxes collected or its distribution between the States. It
cannot therefore be urged that any provision in the impugned Act E
runs contrary to the constitutional scheme with regard to the
assignment to the States of the taxes realised, or their distribution
between the States.
(k) Considering the background, facts and having regard to the purpose
for which the law was passed and the ?bjective sought to be F
achieved it cannot be said that the Validation Act was
discriminatory merely because different rates of cess on royalty
were prescribed for different States. The dominant objective of
the Act was to validate the levies already made, and not to legislate
on the subject by naming a law imposing cess on royalty. It was G
because of this objective which the law sought to achieve, that
t~e law was given a limited life i.e. till 4th April, 1991. The
legislative history and the march of events, earlier justified by a
Supreme Court judgment, could not be ignored by the Parliament
and, therefore, taking into account the reality of the situation, the
Parliament was left with no option but to validate the levy of cess H
162
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on royalty till 4th April, 1991, the date of the Supreme Court
judgment in Orissa Cement.