23 February 1970
Supreme Court


Case number: Appeal (civil) 125 of 1967






DATE OF JUDGMENT: 23/02/1970


CITATION:  1971 AIR   57            1970 SCR  (3) 745  1970 SCC  (1) 509  CITATOR INFO :  R          1971 SC 231  (7)  D          1975 SC2037  (11)  RF         1975 SC2299  (190,607)  RF         1984 SC1780  (8,9,11)  D          1991 SC 704  (7)

ACT:      Retrospectivity--Madhya     Pradesh    Koyala     Upkar (Manyatakaran) Adhinayam (18 of 1964), ss. 2(a)(b) and 3(1)- Act purporting to validate levy of cess notwithstanding  the judgment of a court to the contrary, but nature and text  of amendment not specified-Effect of Validating Act.

HEADNOTE: In  1935,  the Independent Mining Local  Board,  Chhindwara, constituted  under  C.P. Local Self  Government  Act,  1920, resolved to levy a cess on coal extracted within the area at 3  pies per ton.  The sanction of the Local  Government,  as required by s. 51(2) of the Act, was obtained ’for the levy. In 1943, the levy was enhanced to 4 pies, in 1946 to 7  pies and  in 1947 to 9 pies.  The validity of the  enhanced  levy was  challenged  and this Court, in appeal,  held  that  the increased  levy would also require the previous sanction  of the  Local  Government  and such sanction  not  having  been obtained, the levy at a rate higher than 3 pies was illegal. The State Legislature thereafter enacted the Madhya  Pradesh Koyala  Upkar (Manyatakaran) Adhinayam, 1964.  Section  2(a) of  the Act defines ’Board’ to mean the  Independent  Mining Local Board, Chhindwara and its successor body the  Janapada Sabha, Chhindwara (appellant) constituted under the C.P. and Berar Local Government Act, 1948, and s. 2(b) defines ’cess’ to  mean  ’a cess imposed by the  Independent  Mining  Local Board, Chhindwara or its successor’.  Section 3(1)  provides that  ’notwithstanding  a  judgment  of  any  court,  cesses imposed, assessed or collected by the Board in pursuance  of the  notifications notices specified in the Schedule  shall, for  all purposes, be deemed to be, and to have always  been validly  imposed, assessed or collected as if the  enactment



under  which  they were issued stood amended  .-It  material times  so  as  to  empower  the  Board  to  issue  the  said notifications.   In  the Schedule were specified  the  three notifications enhancing the rate of cess.      On the question whether the enhanced levy was validated by the 1964 Act.      HELD  :  The  Act  did not give  legal  effect  to  the imposition of cess at the enhanced rates.      By  a fiction s. 3(1) of the 1964-Act deems the Act  of 1920  and the rules framed thereunder to have been  amended. But  the  text or even the nature of the amendments  is  not disclosed.   Section  51(2)  of the 1920 Act  could  not  be deemed  to have been repealed by the 1964 Act, because,  the latter  Act, in terms is limited in its application  to  the Independent   Mining  Local  Board,  Chhindwara,   and   its successor   body   and  only  in  -respect  of   the   three notifications specified in the Schedule.  An Act so  limited in  its  application  to one Local Board  and  to  specified notifications cannot repeal the sub-section which applies to all  Boards.   Nor  is  there  anything  to.  indicate  that notifications issued by the appellant-Board without the sanc L 10 Sup CI (NP)/70-3 746 tion  of  the State Government must be deemed to  have  been issued  validly.   Such  an intendment  cannot  be  implied, without  express language, in a taxing statute, It was  open to  the  Legislature  within certain  limits  to  amend  the provisions of an Act retrospectively and to declare what the law  shall be deemed to have been.  But the Legislature,  in the  present  case,  attempted to overrule or  set  aside  a decision of the court.  It is not open to the Legislature to say  that  a judgment of a court  porperly  constituted  and rendered  in  exercise. of its powers in  a  matter  brought before  it  shall be deemed to be ineffective  either  as  a precedent or between the parties. [750 E-F: 751 A-GI      Commissioner  of income-tax v. Ajax Products  Ltd.,  55 I.T.R.  741 (S.C.) and Commissioner of Income-tax v.  B.  M. Kharwar, [1967] 2 S.C.R. 650, followed.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 125 to 134 of 1967.      Appeals  from the judgment and order dated May 3,  1966 of  the Madhya Pradesh High Court in Misc.  Petitions  Nos., 552 of 1964 etc.      B.  Sen S. K. Seth and I. N. Shroff, for the  appellant (in As.  Nos. 125 to 133 of 1967).      I.  N. Shroff, for the appellant and respondent  no.  6 (in C.A.No. 134 of 1967).      N.  D. Karkhanis and A. G. Ratnaparkhi, for  respondent no. 1. .(in C.As. Nos. 125 to 133 of 1967).      Sachin Choudhary, R. K. P. Shankardass, A. K. Verma and O.C.  Mathur, for respondents Nos.  I and 2(in C.A. No.  134 of   1967)      The Judgment of the Court was delivered by      Shah, J. These appeals are filed by the Janapada Sabha, Chhindwara-hereinafter   called  ’the   Sabha’-against   the judgment of the High Court of Madhya Pradesh declaring  that the  Madhya Pradesh Koyala Upkar (Manyatakaran) ,  Adhiniyam [Madhya  Pradesh Coal Cess (Validation) Act 18 of 1964  does not "give legal effect to the imposition of cess at the rate of   4  pies,  7  pies  and  9  pies  per  ton   under   the notifications" issued by the Independent Mining Local  Board



on  December  22,  1943, July 29, 1946  and  July  19,  1947 respectively,  "nor to anything done in pursuance  of  those notifications".      The Independent Mining Local Board, Chhindwara, a Board constituted  under  the Central  Provinces  Local  Self-Gov- ernment Act 4 of 1920, resolved on March 12, 1935 to levy  a cess under S. 51 of the Act at the rate of 3 pies per ton on coal  extracted  within  the area.  Sanction  of  the  local Government  -was  obtained to that levy.   On  December  22, 1943, the rate 747 was enhanced to 4 pies per ton : it was enhanced on July 29, 1946 to 7 pies per ton and on July 19, 1947 the cess was en- hanced to 9 pies per ton.  The Central Provinces Local Self- Government Act 4 of 1920 was repealed with effect from  June 11,  1948 by the C.P. and Berar Local Government Act  38  of 1948.   By  S. 192 of Act 38 of 1948 it was  enacted,  inter alia that all rules, bye-laws and orders made, notifications and notices issued, taxes imposed or assessed, cesses, fees, tolls  or  rates  levied under Act 4 of 1920  and  in  force immediately before the commencement of Act 38 of 1948  shall continue  to  be in force and shall be deemed to  have  been respectively  made,  issued, granted, imposed  or  assessed, levied and taken under Act 38 of 1948, and all rates,  taxes and  cesses  due  to the Independent Local  Board  shall  be deemed to be due to the Sabha to whose area they pertain.      The  levy- of coal cess by the Sabha was challenged  by the Amalgamated Coal fields Ltd. & Others on diverse grounds in  petitions  filed  in this Court under  Art.  32  of  the Constitution.   This  Court rejected the  petitions  holding that Act 4 of 1920 had received the assent of the  Governor- Gnereal and its validity was not liable to be challenged and that  "on  a proper interpretation of s. 51 of the  Act  the levy  of coal cess was not excluded from the purview of  the local  authority."  It was also held that the’ levy  of  the cess  was  valid  even after the coming into  force  of  the Government  of  India  Act, 1935, and  the  Constitution  of India,  in  view of s. 143 of the Government of  India  Act, 1935  and  Art.  277 of the  Constitution.   But  the  Court declined to allow the petitioners to urge that the  increase in  the rate of tax by Resolutions in the years  1943,  1946 and  1947  was  invalid : Amalgamated  Coal-fields  Ltd.  v. Janapadd Sabha, Chhindwara(1).      Validity  of the enhanced levy was then  challenged  in petitions  died before the High Court of Madhya  Pradesh  by the  Amalgamated  Coal-fields Ltd. and Others.   In  appeals against the order of the High Court of Madhya Pradesh,  this Court  held  that  since  ieither  the  Act  nor  the  Rules prescribed  a  ceiling on the levy,  the  Expression  "first imposition"  occurring  in  S.  51(2)  would  include  ,very increase  of the levy after its initial imposition  and  the increased  levy would require the previous sanction  of  the Local Government and such sanction not being there, the levy at  the  ate  of  9 pies per ton  was  illegal.   The  Court accordingly  allowed  the  appeals  and  ordered  that   the appropriate  directions  be ssued restraining  the  Janapada Sabha from recovering the tax at the rate higher than 3 pies per  ton and also restraining the Sabha from recovering  any additional tax in respect of the years for which (1) [1962] 1 S.C.R. 1. 748 tax had -already been assessed against, he petitioners : The Amalgamated   Coalfields   Ltd.  v.  The   Janapada   Sabha, Chhindwara(1).     To  rectify the defect pointed out by this Court in  the



imposition  of the cess, the Legislature of  Madhya  Pradesh enacted  the  Madhya  Pradesh  Koyala  Upkar  (Manyatakaran) Adhiniyam  Act  18 of 1964.  By S. 2(a) "Board"  means  "the Independent  Mining  Local  Board,  Chhindwara,  constituted under the Central Provinces Local Self Government Act,  1920 (IV  of 1920), and its successor body, the  Janapada  Sabha, Chhindwara,  constituted  under the  Central  Provinces  and Berar  Local  Government  Act, 1948  (XXXVIII  of  1948)  ". Section  2 (b) defines "cess" as meaning "a cess imposed  by the  Independent  Mining  Local Board,  Chhindwara,  or  its successor  body,  on coal, coal dust or coke, from  time  to time,  as the case may be, produced or manufactured  at  the mines, sold for export outside the State, or sold  otherwise than for export by rail within the territorial  jurisdiction of the said Board", and by s. 2(c) "enactment" is defined as meaning  "the Central Provinces Local Self  Government  Act, 1920 (IV of 1920), or the Central Provinces and Berar  Local Government  Act, 1948 (No.  XXXVIII of’ 1948), as  the  case may be, and rules made thereunder".  By S. 3 it is provided                    "(1)  Notwithstanding anything  contained               in any judgment, decree or order of any Court,               cesses  imposed,  assessed  or  collected   or               purported  to have been imposed,  assessed  or               collected  by  the Board in pursuance  of  the               notifications/notices  specified in the  Sche-               dule shall, for all purposes, be deemed to be,               and  to  have always  been,  validly  imposed,               assessed  or  collected as  if  the  enactment               Under which they were so issued stood  amended               at  all  material times so as to  empower  the               Board to issue the said  notifications/notices               and accordingly : -                     (a)  all  acts,  proceedings  or  things               done  or taken by the Board or by any  officer               of   the   Board  in   connection   with   the               imposition,  assessment or collection of  such               cess shall, for all purposes, be deemed to  be               and  to  have  always been done  or  taken  in               accordance with law;                     (b)  any  cess  imposed or  assessed  in               pursuance  of the  said  notifications/notices               before  the  20th  day of May,  1964  but  not               collected  before such date may  be  recovered               (after assessment of the cess where necessary)               in the manner provided therefor;                     (c)  no  suit or other proceeding  shall               be  maintained  or  continued  in  any   Court               against the Board or any person (1) [1963] Supp.  1 S.C.R. 172. 749 or authority whatsoever for the refund of any cess so paid;       (d) no  Court  shall  enforce  any  decree  or   order directing the refund of any cess so paid.       (2) For  the removal of doubts, it is hereby  declared that  nothing  in  sub-section (1)  shall  be  construed  as preventing any person-       (a) from questioning in accordance with the provisions of  the  enactment,  the assessment of  such  cess  for  any period.       (b) for  claiming  refund of the cess paid to  him  in excess of the amount due from him under the enactment." In the Schedule, notifications dated December 22, 1943, July 29, 1946 and July 19, 1947, enhancing the rate of cess  were referred to.       The  levy of coal cess validated by the provisions  of



Act 18 of 1964 was again challenged by the Central Provinces Syndicate  Ltd.  and other producers of coal,  by  petitions filed  in the High Court of Madhya Pradesh.  It was  claimed by the petitioners that Act 18 of 1964 was "ultra vires  and ineffective",  and the notices issued pursuant thereto  were liable  to  be quashed.  Dixit, C.J., and  Pandey,  J.,  who heard  the petitions differed.  In the view of  the  learned Chief Justice the Amending Act which purported to amend  Act 4  of 1920 by seeking to empower the Mining Board  to  issue the  notifications  specified  in the Schedule  to  the  Act without  reviving the Act of 1920 was ineffective, and  that in any event the Act did not validate the levy of coal  cess which  had  been  imposed  under  the  three  notifications. Pandey,  J.,  expressed a contrary view.  He held  that  the provisions of s. 3 of Act 18 of 1964 were not invalid,  "nor were they ineffective".  The petitions were then referred to Shiv  Dayal, J. The learned Judge agreed with  Dixit,  C.J., and  held that Act 18 of 1964 did not give legal  effect  to the  imposition of cess at the rate of 4 pies, 7 pies  or  9 pies   per  ton  under  the  notifications  issued  by   the Independent  Mining  Local  Board nor to  anything  done  in pursuance of those notifications.      The  preamble of the Act states that it is "An  Act  to validate  the imposition and collection of cess on  coal  by certain  local  authorities".  Act 18 of 1964  is  a  taxing statute which purports to rectify the defects pointed out by this Court.  This Court declared invalid the levy of cess by the  Independent Mining Local Board, Chhindwara, at  a  rate exceeding three pies per ton.  If 750 the  Act does not by the plain language used  therein  carry out the object, the Court will not be justified in supplying deficiencies  in  the Act.  As observed by Rowlatt,  J.,  in Cape Branty Syndicate v. Commissioners of Inland Revenue(’)               "In  a  taxing Act one has to look  merely  at               what  is clearly said.  There is no  room  for               any  intendment.  There is no equity  about  a               tax.   There  is no presumption as to  a  tax.               Nothing  is  to be read in, nothing is  to  be               implied.   One  can only look  fairly  at  the               language used" These  observations were approved by the House of  Lords  in Canadian  Eagle  Oil Co. Ltd. v. King (2) . This  Court  has also adopted the same rule in Commissioner of Income-tax  v. Ajax Products Ltd.(’); and Commissioner of Income-tax v.  B. M. Kharwar (4)      The  relevant  words  which  purport  to  validate  the imposition, assessment and collection of cess on coal may be recalled  : they are "cesses imposed, assessed or  collected by  the  Board  in pursuance  of  the  notifications/notices specified in the Schedule shall, for all purposes, be deemed to be, and to have always been validly imposed, assessed  or collected  as  if  the enactment under which  they  were  so issued stood amended at all material times so as-to  empower the Board to issue the said notifications notices".  Thereby the  enactments,  i.e., Act 4 of 1920 and the  Rules  framed under  the,  Act, pursuant to which  the  notifications  and notices were issued, must be deemed to have been amended  by the  Act.   But  the Act does not  set  out  the  amendments intended to be made in the enactments.  Act 18 of 1964 is  a piece of clumsy drafting.  By a fiction it deems the Act  of 1920  and the, rules framed thereunder to have been  amended without  disclosing  the  text or even  the  nature  of  the amendments.      Mr.  B. Sen appearing on behalf of the Sabha  contended



that  the  intention of the Legislature was to  repeal  with retrospective  effect sub-s. (2) of s. 51 of Act 4 of  1920. By s. 51 of Act 4 of 1920 it was provided:       ....................................                    "(1) Subject to the provisions of any law               or  enactment for the time being in  force,  a               District  Council may, by a resolution  passed               by  a majority of not less than two-thirds  of               the  members  present  at  a  special  meeting               convened for the purpose, impose any tax, toll               or rate (1) 12 T.C. 358.            (2) 27 T.C. 205 (H.L.) (3) 55 I.T.R. 741 (S.C.)    (4) [1967] 2 S.C.R. 650. 751               (2)   The first imposition of any tax, toll or               rate under sub-section (1) shall be subject to               the   previous  sanction  of  the   Provincial               Government. But  the Act in terms is limited in its application  to  the Independent   Mining  Local  Board,  Chhindwara,   and   its successor  body the Janapada Sabha,  Chhindwara  constituted under  Act  38  of 1948, and only in respect  of  the  three notifications specified in the Schedule.  Obviously the  Act limited to one local Board in its application and to certain specific  notifications cannot operate to repeal the  clause insofar as it applied to other Boards.      The nature of the, amendment made in Act 4 of 1920 has. hot been indicated.  Nor is there anything which enacts that the  notifications issued without the sanction of the  State Government must be deemed to have been issued validly  under S. 51(2), without the sanction of the-Local Government.,  On the words used in the Act, it is plain that the  Legislature attempted  to  overrule or set aside the  decision  of  this Court.    That,  in  our  judgment,  is  not  open  to   the Legislature  to do under our constitutional scheme.   It  is open  to the Legislature within certain limits to amend  the provisions  of an Act retrospectively and to.  declare  what the law shall be deemed to have been, but it is not open  to the Legislature to say that, a judgment of a Court  properly constituted  and  rendered in exercise of its  powers  in  a matter  brought before it shall be deemed to  be  ineffecive and the interpretation of the law shall be otherwise than as declared by the Court.       This  Court  in The Amalgamated  Coalfields  Ltd.’s(1) case  held that the cess was not validly imposed and  levied because  the  sanction  of  the  State  Government  was  not obtained  at the time of enhancing the rate of levy of  tax. That  judgment was binding between the parties and  also  by virtue of Art. 141 binding on all Courts in the territory of India.  The Legislature could not say that that  declaration of  law was either erroneous, invalid or ineffective  either as a precedent or between the parties.       It  is  unnecessary  then  to  consider  whether   the repealed Act may be amended without reenactment.       The  appeals fail and are dismissed with  costs.   One hearing. fee. V.P.S.                       Appeals dismissed., (1) [1963] Supp.  1 S.C.R. 172. 752