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CASE NO.: Appeal (civil)  5481 of 2002

PETITIONER: Assistant Director of Mines & Geology

RESPONDENT: Deccan Cements Ltd. & Anr.

DATE OF JUDGMENT: 25/01/2008

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: JUDGMENT O R D E R  (With C.A. No. 5483 of 2002, C.A. No. 5484 of 2002, C.A.  No.5487 of 2002, SLP (C) No.10887-10888/2002, SLP (C)       No.10889-10891/2002, SLP (C) No.10892-10894/2002, SLP  (C) No.10895-10896/2002)

Dr. ARIJIT PASAYAT, J.

1.      During the hearing of these appeals reliance was placed  by the respondents in C.A. No.5481/2002 on a decision of this  Court in District Mining Officer and Ors.  v. Tata Iron and  Steel Co. and Anr. (2001 (7) SCC 358). Appellant in the said  appeal placed reliance on Somaiya Organics (India) Ltd. and  Anr. v. State of U.P. and Anr. (2001 (5) SCC 519).

2.      High Court in the order impugned relied on District  Mining Officer\022s case (supra) to hold that though levy upto  4.4.1991 was permissible, no collection of cess could be made.   3.      In District Mining Officer\022s case (supra) it was, inter-alia,  observed as follows:

\023\005.We do find considerable force in the  aforesaid submission, as in our view, the  interpretation we have already given to the  Validation Act was the real intention of  Parliament and it never intended to confer a  right of collection of cess.  In agreement with  the conclusion arrived at by the Patna High  Court, we hold the Validation Act to be valid,  but such validated Acts do not authorize 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.\024

4.      It is to be noted that in the said case the validity of the  cess and other taxes under the Cess and Other Taxes on  Minerals (Validation) Act, 1992 (hereinafter referred to as the  \021Validation Act\022) was under consideration.  This Court held  that the Validation Act did not suffer from any invalidity.   Having observed so, the aforesaid conclusions were arrived at  regarding impermissibility for collection not already made.  In  Somaiya Organics (India)\022s case (supra) the conceptual  difference between \023levy\024 and \023collect\024 was noted in the

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following words : \02329. Reading the two paras 89 and 90 together  it does appear that this Court regarded the  declaration of the provisions being illegal  prospectively as only meaning that if the  States had already collected the tax they would  not be liable to pay back the same. It is the  States which were protected as a result of the  declaration for otherwise on the conclusion  that the impugned Acts lacked legislative  competence the result would have been that  any tax collected would have become  refundable as no State could retain the same  because levy would be without the authority of  law and contrary to Article 265 of the  Constitution. At the same time, it was clearly  stipulated that the States were restrained from  enforcing the levy any further. The words used  in Article 265 are \023levy\024 and \023collect\024. In taxing  statute the words \023levy\024 and \023collect\024 are not  synonymous terms (refer to CCE v. National  Tobacco Co. of India Ltd. (1972 (2) SCC 560) at  p.572), while \023levy\024 would mean the  assessment or charging or imposing tax,  \023collect\024 in Article 265 would mean the  physical realisation of the tax which is levied  or imposed. Collection of tax is normally a  stage subsequent to the levy of the same. The  enforcement of levy could only mean  realisation of the tax imposed or demanded.  That the States were prevented from recovering  the tax, if not already realised, in respect of the  period prior to 25-10-1989 is further evident  from para 90 of the judgment. The said para  shows that as on the date of the judgment, for  the period subsequent to 1-3-1986 the  demand of the Central Excise Department on  the alcohol manufactured was over Rs.4  crores. The Court referred to its orders dated  1-10-1986  and 16-10-1986 whereby the State  Government was permitted to collect the levy  on alcohol manufactured in the Company\022s  distilleries. With respect to the said amount of  Rs.4 crores, it was observed that \023it is,  therefore, necessary to declare that in future  no further realisation will be made in respect  of this by the State Government from the  petitioners\024. The implication clearly was that if  out of Rs.4 crores the State Government had  collected some levy the balance outstanding  cannot be collected after 25-10-1989. \023

5.      It appears in District Mining Officer\022s case (supra) this  Court was of the view that the levy may have been validated  and that did not authorize collection.  It is to be noted that  there are different stages in the matter of imposition of tax or  cess.  First is the source of power for levying tax or cess as the  case may be.  The second is the actual levy by an adjudication  or assessment order.  Sometimes, the quantification of the  amount payable is done in the adjudication/assessment order.   Finally, comes the question of collection.  That being so,  collection is a natural corollary of the levy.  It is inconceivable  that the levy is valid but collection can be held to be  impermissible.  This is an irreconcilable situation.                    

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6.      We, therefore, find it difficult to agree with the view  expressed in District Mining Officer\022s case (supra) regarding  impermissibility of collection in the portion quoted above.   

7.      The matter can be looked from another angle.  Supposing  somebody has paid the taxes and in other words there has  been collection of the amount levied.  There may be another   person who may not have paid it.  The latter person cannot be  placed at a better footing than the former one.                            8.      We, therefore, refer the matter to a larger bench to test  the correctness of the conclusions that the levy was  permissible by the Validation Act, but amounts which have  not already been collected, cannot be collected.  The records  may be placed before Hon\022ble the Chief Justice of India for  appropriate directions.

9.      Ordered accordingly.