# THE STATE OF WEST BENGAL v. THE INDIAN IRON & S1EEL CO. LTD

- **Citation:** [1971] 1 S.C.R. 275
- **Court:** Supreme Court of India
- **Decided:** 1970-04-16
- **Bench:** J. C. Shah, K. S. llEGDB
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-state-of-west-bengal-v-the-indian-iron-s1eel-co-ltd-5015
- **Pages:** 8

## Headnote

Bengal Cess Act, 1880, Ss. 72, 102-Value of coal suppliod from colliery to owner's factory-Whether cess leviable thereon-Mode of computation of value--// can be question'd in suit or only by procedure prescribed by Act.
The respondent C~pany, which was itself primarily engaged in the ·
manufacture of iron ond steel products, owned a colliery. The coal raised
from this colliery was mainly used in the respondent's iron and steel factories though some coal was also sold to outsiders. In the years 1946-47,
1947-48 and 1948-49, the respondent Company lodged returns with the
Collector of Burdwan under s. 72 of the Bengal Cess Act, 1880 in which
the Company valued the coal supplied by the colliery to its factories at
o rate per ton less than the actual cost of raising the coal, an_d computed
the profits of the colliery on that basis. The Cess Deputy Colfecfor, who
was the assessing authority, rejected the returns and computed the profits
of the colliery for the putpose of assessment to the cess by valuing the
coal at the control rate in force at the time. The assessing authority
under the Bengal Primary Education Act, 1930, the provisions of which
were similar to the Bengal Cess Act, also computed the education cess
payable by the. Company for the years 1946-47 and 1947-48 on the same
basis. The Respondent Company paid the amounts assessed as cess under
each Act under protest and thereafter instituted a suit for refund of the
amount which it contended was collected from it in excess. It also prayed
for a declaration that it had earned no profits from the colliery <)uring
the three years from the coal consumed in its own steel factories and a•
such no cess could have been assessed and levied on it. The Trial Court
decreed the suit ·anrl an appeal to the High Court .was dismissed.
In the app"8l t~ this Court it was contended inter alia on behalf ot
the Respondent (i) that supply of coal made by the colliery to its factories
r.ould not be coMid~red a sale and without a sale, there could be no prolit;
-0ccordingly in comnming the. profit; of the colliery the value of the coal
supplied to its factcries should not have been taken into consideration;
and (ii) that in view of the decision of this court in Tata Iron and Sttel
Company's case it was not open to the assessing authority to value the
coal supplied to the tactories at the controlled rate; he should have dlsh1tegrated the ultim 1le profits earned and found out the profit earned by
the mine.
HELD : Allowi"~ the Appeal ;
(i) Indeterminio~ the profits earned by the colliery, it was op 'n to
the assessing authority to take into consideration the value of the coal
supplied to the factories and workshops of the Respondent Company.
!281 BJ
Tata Iron and Steel Co. Ltd. v. The State of Bihar,
[1963]
Supp. I
S.C.R. 199, followed.
·
(ii) The mode of computation is a matter for the assessing authoritie•
except where the computation is done in violation of any provision
276
iUPREME COURT lll!PO!l TS
[ 1971] 1 S.C.R.
law. If the respondent company· was aggrieved by the mode cif compuA
talion adopted
by the asgessing autliority, it should have agitated that
question firstly before that authority and thereafter before the appellate
authority. Having not done so, the company cannot be permitted to raise
that question in the present suit; otherwise the finality contemplated by
s. 102 of the Act would become illusory. The levy under the Act is imposed by a special law which law also provides its own remedies for correcting the errors that may be committed by the assessing authority. Where
B
a liability not ex.isling previously is created by a statutr- which statute at
the -same time provides a special or particular remedy for correcting any
mistake that may occur in its enforcement the aggrieved party must adopt
the form of remedy given by the statute and no other. [281 D-H; 282 A-BJ
Collector of South Arcot v. Mask & Co., 67, I.A. 222, distinguished.
Dhulabhai and Ors. v. The
State of Madhya
Pradesh

## Text

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275
THE STATE OF WEST BENGAL
v.
THE INDIAN IRON & S1EEL CO. LTD.
April 16, 1970
[J. C. SHAH AND K. S. llEGDB, JJ.]
Bengal Cess Act, 1880, Ss. 72, 102-Value of coal suppliod from colliery to owner's factory-Whether cess leviable thereon-Mode of computation of value--// can be question'd in suit or only by procedure prescribed by Act.
The respondent C~pany, which was itself primarily engaged in the ·
manufacture of iron ond steel products, owned a colliery. The coal raised
from this colliery was mainly used in the respondent's iron and steel factories though some coal was also sold to outsiders. In the years 1946-47,
1947-48 and 1948-49, the respondent Company lodged returns with the
Collector of Burdwan under s. 72 of the Bengal Cess Act, 1880 in which
the Company valued the coal supplied by the colliery to its factories at
o rate per ton less than the actual cost of raising the coal, an_d computed
the profits of the colliery on that basis. The Cess Deputy Colfecfor, who
was the assessing authority, rejected the returns and computed the profits
of the colliery for the putpose of assessment to the cess by valuing the
coal at the control rate in force at the time. The assessing authority
under the Bengal Primary Education Act, 1930, the provisions of which
were similar to the Bengal Cess Act, also computed the education cess
payable by the. Company for the years 1946-47 and 1947-48 on the same
basis. The Respondent Company paid the amounts assessed as cess under
each Act under protest and thereafter instituted a suit for refund of the
amount which it contended was collected from it in excess. It also prayed
for a declaration that it had earned no profits from the colliery <)uring
the three years from the coal consumed in its own steel factories and a•
such no cess could have been assessed and levied on it. The Trial Court
decreed the suit ·anrl an appeal to the High Court .was dismissed.
In the app"8l t~ this Court it was contended inter alia on behalf ot
the Respondent (i) that supply of coal made by the colliery to its factories
r.ould not be coMid~red a sale and without a sale, there could be no prolit;
-0ccordingly in comnming the. profit; of the colliery the value of the coal
supplied to its factcries should not have been taken into consideration;
and (ii) that in view of the decision of this court in Tata Iron and Sttel
Company's case it was not open to the assessing authority to value the
coal supplied to the tactories at the controlled rate; he should have dlsh1tegrated the ultim 1le profits earned and found out the profit earned by
the mine.
HELD : Allowi"~ the Appeal ;
(i) Indeterminio~ the profits earned by the colliery, it was op 'n to
the assessing authority to take into consideration the value of the coal
supplied to the factories and workshops of the Respondent Company.
!281 BJ
Tata Iron and Steel Co. Ltd. v. The State of Bihar,
[1963]
Supp. I
S.C.R. 199, followed.
·
(ii) The mode of computation is a matter for the assessing authoritie•
except where the computation is done in violation of any provision
276
iUPREME COURT lll!PO!l TS
[ 1971] 1 S.C.R.
law. If the respondent company· was aggrieved by the mode cif compuA
talion adopted
by the asgessing autliority, it should have agitated that
question firstly before that authority and thereafter before the appellate
authority. Having not done so, the company cannot be permitted to raise
that question in the present suit; otherwise the finality contemplated by
s. 102 of the Act would become illusory. The levy under the Act is imposed by a special law which law also provides its own remedies for correcting the errors that may be committed by the assessing authority. Where
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a liability not ex.isling previously is created by a statutr- which statute at
the -same time provides a special or particular remedy for correcting any
mistake that may occur in its enforcement the aggrieved party must adopt
the form of remedy given by the statute and no other. [281 D-H; 282 A-BJ
Collector of South Arcot v. Mask & Co., 67, I.A. 222, distinguished.
Dhulabhai and Ors. v. The
State of Madhya
Pradesh
and Anr.
C
[1968] 3 S.C.R. 662, referred to.
CIVIL APPEL!JATE JURISDICTION : Civil Appeal No. 1729 of
1966.
Appeal from the judgment and .decree dated April 17, 1962 of
the Calcutta High Court in Appeal from Original Decree No. 127.
of 1955.
P. K. Chakravarti and Prodyot Kumar Chakravarti, for the
appellant.
'
M. C. }:hagla anJ D. N. Mukherjee, for the respondent.
B. Sen, G. S. Chatterjee, for the intervener.
The Judgment of the Court was delivered by
Hegde, J.-Two questions of law viz. (1) whether the levies
impugned in the suit from which this appeal arises, are invalid and
(2) whether the civil courts have jurisdiction to entertain that
suit, arise for decision in this appeal by certificate.
The respondent company is the owner of Rarimagar colliery.
It is also the owner of iron and steel factories and workshops at
Hirapur and Kulti. Ramnagar colliery is a "coal mine". The. coal
raised from the Ramnagar colJiery is by and large used in the
manufacturing processes carried on in the iron and steel factories
and workshops at Hirapur and Ku!ti. Some coal was also sold by
the respondent company to outsiders. In the years 1946-47, 194 7-48
and 1948-49, the respondent company lodged a return before the
Collector of Burdwan under s. 72 of the Bengal Cess Act of 1880
(to be hereinafter referred to as the Act). Therein the company
valued the coal supplied by the colliery to the factories mentioned
earlier· at Rs. 6/11/5 per ton, a sum less than the actual-cost of
-raising the coal and computed ~ts
ol. the colliery on that
basis. 'The company adoptec:1-the same. basis for the purpose of
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w. BENGAL v. IRON AND STEEL co. (Hegde, J.)
277
I.
paying education cess under s. 31 of the Bengal Primary Education Act, 1930. The provisions of the said Act in the matter of
levy of education cess are similar. to that of the Act. The Cess
Deputy Collector who was the assessing authority under the Act
as well as the Collector of Burdwa.n, the assessing authority under
the Bengal Primary Education Act, rejected the returns submitted
11
by the respondent company and computed the profits of the colliery, valutng the coal supplied by it to the factories mentioned at
Rs. 12/8/- per ton which was the control rate at the relevant
time. On that basis the cess Deputy Collector called upon the
respondent company to pay Rs. 39,852/5/- as road cess a.nd
public works cess for the years 1946-47, 1947-48 and 1948-49.
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The Collector of Burdwan computed the education cess payable
by the company for the years 1946-47 and 1947-48 at Rs. 21,661 '
90 P. and called upon· the company to pay the same. The respondent· company paid tll.e said amounts under protest. Thereafter it
instituted the present suit for refund of Rs. 44,428/4/3, which
according to it was the excess amount collected from it. It also
prayed for a declaration tltat it earned no profits from the RamD
nagar colliery during the years 1946-47, 1947-48 and 1948-49,
from the coal consumed in its own workshops and factories and as
such no road or public works cess or education cess in respect of
the same could have been assessed and levied on it and ·that the
impugned levies were 11Jtr11 vires.
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The trial court decreed the suit as prayed for. The appellant
took up the matter in appeal to the High Court of Calcutta. The.
High Court dismissed the appeal by its judgment dated April 17,
1962.
In order to decide the points in controversy, it is necessary to
read the relevant provisions of the Act. · It is not necessary to
refer to the provisions of the Benglll Primary Ed.ucation Act separatel_Y ·as the provisions therein, relevant to the topics under discussion being similar to those in the Act. The preamble to the
Act says that it is a law relating to rating for the construction,
charges and maintenance of District communications and other
works of public utility and of Provincial Public Works within the
territories administered by the Lt. Governor of Bengal and to the
levy of a road cess and a public works cess on immovable property
situate therein and to the construction of local committees f.or the
management of the proceeds of the said road cess and also to provide for the construction and maintenance of other works of public
utility out of the proceeds of the said road cess .. It was not disputed that the validity of education c~ss depends on our finding
as regards the validity of pablic works cess and road cess. Sec•ion
Ll2Supp.CI/71
278
SUPREME COURT REPORTS
[1971] l S.C.R.
5 of the Act which is the charging section read at the relevant
time:-
"From and after the commencement of this Act in
any district or any part of a district, all immovable property situate therein, except as otherwise in section 2
provided, shall be liable to the payment of a road cess
and a public works cess."
Section 6 at the relevant time provided :
"The road cess and the public works cess shall be "
assessed on the annual value of lands and until provision
to the contrary is made by Parliament, on the annual net '
profits from mines, quarries, tramways, railways and
other immovable. property ascertained respectively as
.this Act prescribed."
That :section further provides that the rates at which such
cessi;s respectively shall be levied for each year shall be determined for such year in the manner prescribed in the Act. Part II
of the Act sets out the mode of assessment. Chapter II lays down
the procedure .for the valuation of lairids.
Chapter Ill provides
for rating and levy of cesses. Chapter IV prescribes the mode of
valuation and assessment of lail.ds held rent free and payment and
recovery of cesses in respect thereof. Chapter V deals with valuation, assessment and levy of cess on mines, railways and other
immovable property. This chapter cc:ntains ss. 72 to 84. Section
72 at the relevant time read :
"On the commencement of this Act in any district
and thereafter before the close of each year, the Collector of the district shall cause a notice to be served upon
the owner, chief agent, manager or occupier of every
mine, quarry, tramway, railway and other immovable
property not included within the provisions of Chapter
II; such notice shall be in the form in Schedule E contained and shall require such owner, chief agent, manager or occupier to lodge in the office of such Collector
within two months a return of the net annual profits of
such property calculated on the average o.f the annual
net profits thereof for the last three 'years for which accounts have been made up.
Such Collector may iin his discretion extend the time
allowed for lodging such return."
Section 72A prescribes the penalty for omitting to lodge a
return. Section 73 prescribes the manner of submitting the return
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w. BENGAL v. IRON AND STEEL co, (Hegde, J.)
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when the property lies in different districts. Section 7 4 provide~
for the submissions of th.~ return when property is partly in and
partly outside the State. Section 7 5 is important for our present
purpose. That section at the relevant time read :
"If such return be not furnished within the period c{
two months from the date on which such notice was
served or within any extended time allowed by the Collector of the district or if such Collector shall deem that
any return made in pursuance of such notice is untrue
or incorrect, such Collector shall proceed to ascertain
and determine by such ways or means as to him shall
seem expendient, the annual net profits of such property
calculated ·as aforesaid."
Section 76 as it stood at the relevant time provided that if the
Collector is unable to ascertain the annual net profits of any property assessable urider Chap. V in accordance with the provisions
of s. 75, he may, by such ways and means as shall seem to him
expedient ascertain and determine the value of such property and
shal! thereupon determine six per centum on such value to be
the annual net profits thereon. Section 78 provides for the issue
of a notice of valuation to the persc·n concerned. The other provisions in that Chapter are not relevant for our present purpose.
Now we come to s. I 02 in Chapter VII. That section reads :
"Every person who shall deem himself to be
aggrieved by any valuation made by a Collector under
the provisions of section 75 or 76 may, within one
month after the issue of the ,notice mentioned in sect'.on
78 and every person who shall deem himself to
be
aggrieved by any valuation made by the Collector under
the provisions of any other section c.f this Part may within one month after the posting up of a copy of the valuation. roli as mentioned in section 35, prefer his objections to the Collector; and if such objections, or any of
them, are disallowed, may within one month of such
disallowance, appeal to the Commissioner against such
valuation, and the decision of the Commissioner shall
be final."
Before proceeding to discuss the questions of law arising in this
appeal, it is necessary to mention that the respcl!ldent company
had unsucces~fully appealed against cesses imposed on it.
It wa3 urge:! on behalf of the respondent that supply of coal
made by Ramnagar colliery to the factories and workshcps cannot
be considered as a sale and without a sale, there can be no profit;
and hence in computing the profits of the colliery the value of the
280
SUPREME COURT REPORTS
[l97lJ I S.C.R.
coal supplied to the factories and workshops mentioned earlier
should not have been taken into consideration. This contention has
to be rejected in view of the decision of this Court in 1a'a lro;1v
and Steel Co. Ltd. v. The State of Bihar(1 ). The ratio of that dccisio'l clirectly bears on the point under consideration. It may be
noted that the appellant :herein as well as respondent in thb appeal
are both Tata concerns. In that case the appellant company was
the owner of certain mines in Bihar from where it extrnctcd :iron
ore which it utilized in its factory at Jamshedpur for making imn
and steel. Under ss. 5 and 6 of the Act as amended in Bihar all
immovable property situate in any part of the State of Bihar was
liable to the payment of local cess which in the case of mines was
to be assessed on the annual profit earned by them. For the assessment years 1954-56, the company was assessed by the Cess
Deputy Collector on the basis that it had made profits of Rs. 4/7 /-
per ton of iron ore extracted. Tata Iron and Steel Co. Ltd.
claimed that it was not liable to the payment of cess as it did not
sell any ore as such and could not therefore be treated-. as having
made 'any profit' from the mines within the meaning of s. 6 of the
Act. The· question in that case was whether the appell2:1t company could in Jaw be said to have derived "profit" from the mines
when the ore extracted was not sold by it as such but was utilised
by it for the purpose of manufacturing finished products which it
sold. This Court ruled in Jhat appeal that on a true construction
of ss. 6 and 72 of the Act as amended in Bihar-v·hich amendments are not material for the decision of this case,-where activities other than mere winning the ore are carried on by an assessee
with a view to convert the ore into a finished product and there
is a transaction of sale of the ultimate product, the profit derived
from the working cf the mine is imbedded in the final realisation,
and the profit,which ace.rues to the assessee from the mi•rring operation can be disintegrated from the total profit and ascertained and
cess levied thereon. Mr. Chagla, learned Counsel for the assessee
tried to distinguish that decisiOj'l on the ground that in Tata Iron
and Steel case, the iron ore won became imbedded in the steel produced but that is not the position' in the present case us no part
of the coal raised got imbedded in the ultimate product namely
the steel.
This difference in fact has no bearin_g on the ratio of
the decision.
The rule laid down in Tata Iron and Steel case is
that where the profit derived from the working of a mine is imbedded in the profits earned by the sale of the ultimate product, .it
is open for the ·assessing authority to disintegrate that profit and
find out the profits earned by the mine. The fact that in the one
case the winrning was that of the iron and in the other it is coal
makes no difference in principle. In that case this Court ruled that
the. winning of the ore and converting it into a finished product
[I] [i963) Supp, I, S.C.R. 199.
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w. BENGAL v. IRON AND STEEL co. (Hegde, J.)
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could not be construed as two transactions conducted by them but
it should be viewed as a single integrated undertaking for the production of steel and steel products. Similar is the position in the
present case.
Hence we hold that it was open to the assessing
authority to take into consideratioo the value of the coal supplied
to the factories and workshops referred to earlier in computing the
profits, of the colliery.
Mr. Chagla next assailed the cesses imposed on another
ground. He contended that in view of the decision of this Court
in Tata Iron and Steel Company's case( 1) it was not open to the
assessing authority to value the coal supplied to the factories and
workshops at the controlled rate; he should have, as suggested in
that decision disintegrated the ultimate profits earned and found
out the profit earned by the mine. We are of the opinion that it
is impermissible for us to go iinto that question in these proceed- .
ings. The liability to pay tax is one thing and mode of computation ct' the net profits is another. The mode oil computation is
a matter for the assessing authorities except where the computation is done in violation of any provision of law. If there was any
mistake in the computation, that mistake should have been got
rectified by following the procedure prescribed in the Act. If ·the
respondent company was aggrieved by the mode of computation
. adopted by the assessing aut'hority, it should have 'agitated that
question firstly before that authority, and thereafter before the
appellate authority. Having not done so, the company cannot be
permitted to raise that question in the present suit; otherwise the
finality contemplated by s, 102 of the Act would become illusory.
It is true, as observed by Lord Thankerton in Col/ecror of South
Arcot v. Mask & Co.( 2) that it is settled law that the exclusion of
jurisdiction of a civil court is not to be readily inferred but that
such exclusion must either be explieiily expressed or clearly implied. It is also well settled as observed by his Lordship that even
if the jurisdiction is so excluded, the civil courts have jurisdiction
lo examine into cases where the provisions of the Act have not
been complied with, or the statutory tribunal has not 'acted in conformity with the fundamental principles of judicial procedure. In
the present case what is contended is not that any provision in the
Act had been ignored by the assessinl! authority but that s. 72
thereof has not been properly interpreted by that authority. If the
provisions of the Act form a precise, self contained code, as we
hold them to be, the assessee cannot be permitted to challenge the
levy on the ground that the levy imposed on him is excessiver It
must be remembered that the levy under the Act is imposed bv a
special law which law also provides its own remedies' for correcting
the errors that may be committed by the
assessing authority.
(!) (1963] Supp. S,C,R.\99
(2) 67, I.A. 222;
282
SUPREME COURT REPORTS
(1971 J 1 S.C.R,
Where a liability not existing previously is created by a statute
which statute at the same time provides a special or particular
remedy for correcting any mistake that may occur in its enforcement the aggrieved party must adopt the form of remedy given
by the statute and no other. , In Dhulabhai and ors. v. The State
of Madhya Pradesh and anr.,( 8 ) our present Chief Justice speaking for the Court. has formulated the circumstances under which
the jurisdiction of the civil coun can be invoked in the matter of
a levy f>f tax. Therein this Court has !aid down that where the
statute gives &•fttlality to the orders of the special tribunals, the
civil courts' jurisdiction must be held to be excluded, if there is
adequate remedy to do what the civil court would normally do in
a suit.
It is further laid down in that ease that questions of the
correctness of the a.ssessment apart from its constitutionality are
lor the decision of the authorities and a civil suit does not lie if the
·orders of the authority are declared final or there is an express
prohibition under the particular Act.
We do not think that the
civil courts have jurisdiction to examine the correctness of the
computation of the net profits made by the authorities under the
Act.
For the reasons mentioned above, this appeal is allowed and
the suit brought by the respondent company dismissed with costs
throughout.
R.K.P.S.
Appeal allowed.
(I) [1968] 3 S.C.R. 662
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