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PETITIONER: THE AMALGAMATED COALFIELDS LTD. AND ANOTHER

       Vs.

RESPONDENT: THE JANAPADA SABHA, CHHINDWARA (And connected appeals)

DATE OF JUDGMENT: 10/02/1961

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1964 AIR 1013            1963 SCR  Supl. (1) 172  CITATOR INFO :  D          1965 SC1150  (9)  R          1965 SC1153  (51,56)  E          1970 SC 898  (14)  RF         1971 SC  57  (4,11)  RF         1977 SC1680  (7)

ACT: Coal  Tax--Levy--Validity--Writ Petition, if barred  by  res judicata--Enhanced  levy after first imposition--Absence  of Previous  sanction  by Local  Government--Legality  of  such levy--Constitution  of  India, Arts. 19 (1)  (f),  32,  141, 226--Central  Provinces Local Self Government Act, 1920  (C. P. IV of 1920), s. 51(2).

HEADNOTE: The 1st appellant in the first batch of appeals had filed  a writ petition in this Court challenging the notices  calling upon him to pay the tax of 9 pies per ton on coal  including coal  despatched outside the State of Madhya Pradesh on  two grounds, namely, that the levy of the tax by the Independent Mining  Board  was  invalid  at  the  date  of  its  initial imposition and,  173 therefore,  the respondent Sabha which was the successor  of the  Mining Board could not continue the levy and also  that on a proper construction of s. 51 of the Act, the levy could not be made.  Another point namely, the increase in the rate of  tax  from the original 3 pies to the 9 pies per  ton  at which  the  tax was demanded was illegal was  sought  to  be canvassed  but was not allowed to be argued by the Court  as it  had not been raised in the petition.  The writ  petition was rejected. The appellant challenged the levy of the tax for the further periods  byway of a writ petition before the High  Court  of Madhya  Pradesh on grounds distinct and separate from  those which had been rejected by this Court.  The High Court  dis- missed the writ petition on the ground that it was barred by res-judicata  by  reason  of the earlier  judgment  by  this Court.   In the case of the other appellants the High  Court

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held that the matter was also concluded on the authority  of the  decision  of this Court.  The appellants in  the  first batch  of appeals came by special leave and also filed  writ petitions challenging the validity of the levy. Held,  that  while  the general  principle  of  res-judicata applies to writ petitions under Art. 32 and Art. 226 of  the Constitution,   in  its  application  to  Art.  32  of   the Constitution,  the  doctrine only regulates  the  manner  in which the fundamental rights could be successfully  asserted and does not in any way impair or affect the content of  the fundamental rights. Pandit M.S.M. Sharma v. Dr. Shree Krishna Sinha, [1961] 1 S. 0. R. 96, Raj Lakshmi Dasi v. Banamali Sen, [1953] S. C.  R. 154  and  Daryao  v. State of U.P.,  [1962]  1  S.C.R.  574, referred to. Constructive res-judicata was a creature of statute and  its application  could  not  be extended  to  other  proceedings particularly  those questioning tax liability for  different years. Held,  further, that the law declared by the  Supreme  Court which is binding under Art. 141 of the Constitution of India is  that which has been expressly declared and  any  implied declaration  though binding was subject to revision by  this Court when the point was subsequently directly and expressly raised before this Court. Held,  further,  that  the procedure of  assessment  of  tax authorised  by  the relevant statutory  provisions  and  the Rules could not be said to be a capricious administrative or executive  affair  so as to violate Art. 19(1)  (f)  of  the Constitution. 174 Kunnathat Thathunni Moopil Nair v. State of Kerala, [1961] 3 S. C. R. 77, distinguished. As  the  Rule which prescribed the maximum rate  had  itself been deleted it could not be said that there had been a levy in excess of the maximum prescribed. As neither the Act nor the Rules prescribed a ceiling on the levy,  the  expression "first impositions  occurring  in  s. 51(2)  would  include every 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 rate of 9 pies per ton  was illegal. Considering the nature of the tax and the periods for  which it  was  assessed and in the absence of any  provision,  the assessment  once made by r. 10 was final and there could  be no re-assessment.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION:  Civil  Appeals  Nos.   469, 470,506, 507 and 529 to 534 of 1962. Appeals  by special leave from the judgment and order  dated December 18, 1961, of the Madhya Pradesh High Court in Misc. Petition Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960.                 WITH Petitions Nos. 70 and 71 of 1962. Petition  under  Art. 32 of the Constitution  of  India  for enforcement of Fundamental rights. Sachin Chaudhri, B. Sen, J. B. Dada-chanji, O. C. Mathur and Ravinder Narain, for the appellants (in C. As.  Nos. 469 and 470/62)  and the Petitioners (in Petitions.  Nos. 70 and  71 of 62). A.   V.  Viswanatha  Sastri,  R.  Ganapathy  Iyer   and   G.

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Gopalakrishnan, for the respondent (in C. As.  Nos. 469 470, 506  and  507 of 62), Respondents Nos.  1 and 3 (in  C.  As. Nos. 529 to 534/62) and Respondent No. 1 (in Petn.  Nos.  70 and 71/62). B. Sen and I. N. Shroff, for the appellants (in C. As.  Nos. 506 and 507/62).  175 N.   C.  Chatterjee, Y. S. Dharmadhikaree and M.  S.  Gupta, for the appellants (in C. As.  Nos. 529 to   534 of 62). I.  N. Shroff, for the respondents Nos. 2 and 4 (in  C.  As. 529 to 534 of 62). 1962.   September  24.   The  judgment  of  the  Court   was delivered by GAJENDRAGADKAR, J.-These ten appeals and two writ  petitions have  been placed for hearing together in a  group,  because they raise common questions of law.  The appellants in these matters  are  all colliers holding mining leases  under  the Government of Madhya Pradesh for the extraction of coal from collieries   situated  in  the  Chhindwara  District.    The respondent,  Janapada Sabha, Chhindwara, has issued  notices against  them calling upon them to pay coal tax  "’for  coal manufactured  at the mines, sold for export by rail or  sold otherwise than for export by rail within the jurisdiction of the  original Independent Mining Board for the said area  It appears  that  the mining area in question  was  within  the territorial  limits  of the Independent Mining  Local  Board which had the status and powers of a District Council  under the  Central  Provinces  Local-Self  Government  Act,   1920 (hereinafter  called the Act).  The respondent Sabha is  the successor of the said Mining Board and, therefore, claims to be  entitled  to continue the levy and recover  the  tax  in question. On  March 12, 1935, the Mining Board exercising  its  powers under section 51 of the Act, resolved to levy coal tax,  and accordingly,  the first imposition made by it  received  the sanction  of the local Government on December 16,  1935,  as per  Notification No. 8700-2253-D-VIII.   This  notification came  ’into  force from January 1, 1936.   On  December  16, 1935,  the  local  Government notified  the  rules  for  the assessment and 176 collection of the tax which it had framed in exercise of the powers  conferred  on it by section 79  (1),  clauses  (xv), (xix)  and (xxx).  Rule 2 of these Rules provided  that  the tax  shall  be  payable by every  person,  firm  or  company holding  a  mining lease for coal within the limits  of  the Independent  Mining  Local  Board’s  jurisdiction.   Rule  3 provided  that the tax shall be levied @ three pies per  ton on  coal, coal dust or coke manufactured at the mines,  sold for export by rail or sold otherwise than for export by rail within  the  territorial  jurisdiction  of  the  Independent Mining Local Board.  In 1943, the words "’coke  manufactured at  the  mines"  were deleted from Rule 3 and  the  tax  was confined  to coal and coal dust.  The rate  thus  prescribed was increased from time to time.  On December 22, 1943,  the rate was made 4 pies per ton; on July 29, 1946, it was  made 7 Pies, per ton; and on July 1. 9, 1947, it was made 9 pies. The  Mining Board continued to recover the tax at  the  said rates  until the Act was repealed in 1948 and in  its  place was  enacted  the Central Provinces and  Berar  Local  Self- Government Act, 1948 (No. 38 of 1948).  The respondent Sabha has  now  taken the place of the said Mining Board  and  has issued  the notices against the several appellants,  calling upon  them  to pay the coal tax for  the  different  periods mentioned in the said notices.

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The appellants in Civil Appeals Nos. 469 and 470 of 1962 are : The Amalgamated Coalfields Ltd. and The Pench Valley  Coal Co.  Ltd.  They are companies in  operated under the  Indian Companies  Act, 1913, andor  both have Shaw Wallace  &  Co., Ltd., as their Managing Agents.  On August 23, 1958, notices were  served on the two appellants calling upon them to  pay Rs.  21,898/ 64 np and Rs. 11,838/9 np respectively  as  tax assessed  @ 9 pies per ton from ,,January 1, 1958,  to  June 30,  1958:  This tax was claimed in respect  of  coal  which included coal despatched by the appellants outside the State of  177 Madhya   Pradesh.   The  validity  of  these   notices   was challenged  by  the appellants in this Court by  their  Writ Petition  ’No. 31 of 1959.  On February 10, 1961,  the  said writ  petition was dismissed by this Court and it  was  held that  the  notices  served  on them  were  valid  (Vide  The Amalgamated   Coalfields   Ltd.  v.  The   Janapada   Sabha, Chhindwara(1). On  September  13, 1960 and March 2, 1961,  two  notices  of demand  were served on the appellants calling upon  them  to pay  Rs. 1,16,776/25 nP. and Rs. 65,261/19 nP.  respectively in  regard  to the tax assessed @ nine pies per ton  on  all coal despatched by the appellants from their collieries  for the  half  years ending June 30, 1958.  December  31,  1958, June  30),  1959,  December  31  1959,  June  30,  1960  and December  31, 1960.  The appellants challenged the  validity of  these  notices by a Writ Petition filed by them  in  the High  Court of Madhya Pradesh on April 1.2, 1961 (No. 95  of 1961). Whilst  the said writ petition was pending before  the  High Court,  the  appellants filed another writ Petition  in  the same  High Court (No. 213 of 1961).  By this writ  petition, the  appellants  challenged the validity of  notices  issued against them on June 9, 1959, by which coal tax was demanded from them for a period between April 1, 1951 to December 31, 1957.  This tax was levied in respect of coal despatched  by the  appellants  outside the State of Madhya  Pradesh.   The amounts demanded were Rs. 1,92,144/66 nP. and Rs.  68,319/36 nP. respectively. These  two  petitions  along with eight  others  were  heard together  by  the  High Court.  So far  as  the  appellants’ petitions  were concerned, the High Court has held that  the appellants’ claims were barred by res judicata by reason  of the  earlier  decision  of this Court in  the  case  of  the Amalgamated  Coalfields   Ltd.  (1).   The  appellants  then applied for and obtained special leave from (1)  [1962] 1. S. C. R. 1. 178 this Court on April 23, 1962 and it is by special leave thus granted  to them that they have come to this Court in  Civil Appeals 469 & 470 of 1962. The appellants have also filed two Writ Petitions Nos. 70  & 71/1962  under Art. 32 of the Constitution.  By  these  writ petitions, the two appellants challenged the validity of the notices  served  on  them on Julie 9, 1959  as  well  as  on September  13,  1960.  The appellants’ case  is  that  these notices  are illegal and without jurisdiction and  so,  they want  them  to be quashed by an appropriate  writ  or  order issued against the respondent in that behalf.  Thus, the two appellants,  the Amalgamated Coalfields Ltd., and the  Pench Valley  Coal Co. Ltd.,, arc concerned with the  two  appeals Nos 469 & 470/1962) and Writ Petitions 70 & 71/1962. The other appeals arise from the writ petitions filed in the High  Court of Madhya Pradesh by the  respective  appellants

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which were tried along with the writ petitions filed by  the Amalgamated  Coalfields Ltd. & Anr.  In dealing  with  these writ  petitions,  High Court has held that the  decision  of this  Court  is the case of Amalgamated  Coalfields  Ltd.(1) concludes  the  points  raised by them  in  challenging  the validity  of  the  notices,  and  so,  following  the   said decision,  the  High  Court  has  dismissed  all  the   said petitions.  The appellants applied for and obtained  special leave  to come to this Court against the said decisions  and it is with the special leave thus granted to them that these appellants have come before us. Civil  Appeal No. 506 arises from the decision of  the  High Court of ’Madhya Pradesh dismissing the writ petition  filed before it by the appellant, the Central Provinces  Syndicate (P) Ltd.  By its writ petition the appellant had  challenged the validity of the notice served by the respondent  calling upon it to pay arrears of the tax amounting to Rs. 20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959. (1)  [1962] 1 S.C.R. 1.  179 It appears that for the said period, the appellant had  been taxed by the respondent, but the said tax was not imposed on coal which had been transported by the appellant outside the limits  of the State of Madhya Pradesh.  The respondent  now sought to reopen the assessment levied against the appellant for  that period by including a claim for tax in respect  of coal sold by the appellant outside the limits of the  State. The  High  Court  has rejected the Writ  Petition  and  that decision ’has given rise to Civil Appeal No. 506 of 1962. Civil  Appeal  No. 507 of 1962 arises from a  writ  petition filed  by  the  appellants  M/s.   Kanhan  Valley  Coal  Co. (Private) Ltd., in the High Court of Madhya Pradesh in which the validity of the notice issued by the respondent  calling upon  the  appellants to pay the coal tax amounting  to  Rs. 10,970/- as arrears from April 1, 1951 to June 30, 1959  has been  challenged.  The  High Court has  dismissed  the  writ petition, and so, the appellants have come to this Court  by their Appeal No. 507/1962. Civil Appeals Nos. 529 to 534 of 1962 similarly arise out of six  writ  petitions filed by the  appellants  M/s.   Newton Chickli Collieries (P) Ltd. & five others in the High  Court of Madhya Pradesh challenging the validity of the notices of demand served on them to recover by way of arrears coal  tax for  the periods mentioned in the notices in regard to  coal sent by them outside the State of Madhya Pradesh for export. These  writ petitions were dismissed by the High Court,  and the  appellants  have,  therefore, come  to  this  Court  by appeals  Nos. 529-534/1962.  That, in brief, is the  genesis of  the ten appeals and two writ petitions which  have  been grouped together for hearing in this Court. It will thus be seen that Civil Appeals Nos. 469 &  470/1962 and  Writ  Petitions Nos. 70 & 71/1962 raise  a  preliminary question about the applicability 180 of  the  doctrine of res judicata to writ-  petitions  filed under  Art. 226 or to petitions under Art. 32,  whereas  the said appeals and writ petitions as well as the other appeals raise  an  additional  question about the  validity  of  the notices issued against the respective appellants.  We would, therefore,  deal with civil appeals Nos. 469 and  4  70/1962 and  Writ  Petitions Nos. 70 and 71/1962.  Our  decision  in these matters will govern the other appeals in this group. The  first  point  which falls for our  decision,  in  these appeals  is  one of res judicata.  The High Court  has  held that  the  challenge  made by  the  appellants  against  the

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validity  of the demand notices issued against them  by  the respondent  is  barred  by res judicata  by  virtue  of  the decision  of this Court in the earlier case brought  by  the appellants  themselves  before this Court.  The  Amalgamated Coalfields Ltd.(1) Before     dealing with this point it  is necessary to refer  to the said decision.  In that case, the validity of the     impugned  notices was challenged on  two grounds  ;  it  was urged that the levy of the  tax  by  the Independent  Mining  Board was invalid at the  date  of  its initial  imposition  in 1935 and so,  the  respondent  Sabha which was the successor of the said Mining Board could claim no authority to continue the said tax.  This contention  was based  on the assumption that before the power conferred  by s. 51 of the Act could be exercised,, the previous  sanction of  the Governor-General had to be obtained, or  that  there should be fresh legislation in that behalf.  This Court held that  the  Act having received the assent of  the  Governor- General,  its validity cannot be challenged in view  of  the saving  clauses  in the proviso to section 80A  (3)  and  s. 84(2) of the Government of India Act, 1915.  That being  so, it was not open to any party to suggest that any  subsequent amendments  of the Government of India Act could affect  the continued  validity  and operation of the Act.   The  second contention raised was one of construction.  It was urged (1)  [1962] 1 S.C.R. 1.  181 that  on  a  fair construction of s. 51, the  coal  tax  was excluded from the purview of the local authority.  The  This argument  was  based on the opening clause of  s.  51  which provided  that its provisions would operate subject  to  the provision  of  any law or enactment for the  time  being  in force.   It  was  suggested that this  clause  took  in  the provisions of s. 80A(3) of the Government of India Act  read with  the Scheduled Taxes Rules framed under  that  section, but this argument was also rejected.  It appears that at the hearing  of the petition, the appellants also  attempted  to take  an  additional  point against  the  validity  of  the. impugned  notices on the ground that the rate of  tax  which had  been  increased  from  3 pies to 9  pies  per  ton  was invalid.   The appellants’ case was that this  increase  was effected  after the commencement of the Government of  India Act,  and  so,  it  was  invalid.   This  argument  was  not considered  by the Court, because it was not even hinted  in the  petition filed by the appellants and the Court  thought that  it  would not be proper to permit  the  appellants  to raise that point at that stage.  That is how the appellants’ challenge to the validity of the impugned notices served  on them  on August 23, 1958 was repelled and the writ  petition filed by them in that behalf was dismissed. It appears that the authority of the Janapada  Sabha to levy the  impost under s.51 of the Act was challenged on  another ground in the case of Ram Krishna Ram Nath v, Janapad  Sabha (1).   This  time the attack against the competence  of  the janapad Sabha proceeded on the ground that in repealing  the Act of 1920, the subsequent Act of 1948 had not provided for the  continuance  of the said power in  the  janapad  Sabhas which were the successors of the Independent Mining  Boards. Section  192(c) purported to provide that all  rates,  taxes and  cesses  due  to the District Council,  Local  Board  or Independent  Local  Board shall be deemed to be due  to  the Sabha to (1)  [1962] Supp. 3 S.C.R. 70. 182 whose  area  they  pertain.  But it was  obvious  that  this clause  could  apply  to, and save, only  rates,  taxes  and

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cesses  already due; it did not authorise the imposition  of fresh  cesses,  taxes or rates in future.   Having  realised that the relevant provision did not save future imposts,  an amending Act was passed in 1949 by which the said saving was extended  to  include  the right of the  janapad  Sabhas  to continue the levy of the impugned tax and this amendment was made retrospective f from June 11, 1948, when the parent Act had  come  into force.  In the case of Ram Krishna  (1)  the validity  and  effectiveness of this amendment of  1949  was challenged.   It was thus a basic challenge to the power  of the janapad Sabhas to levy any impost on the ground that the subsequent  amendment was invalid.  This Court repelled  the said challenge and held that the retrospective operation  of the  amendment was valid.  According to this  decision,  the Provincial  Legislature was competent to legislate  for  the continuance of the tax, provided the relevant conditions  of s.143(2) of the Government of India Act 1935 were satisfied. These  conditions required that the tax should be one  which was lawfully levied by a local authority for the purposes of a  local  area  at  the commencement  of  Part  III  of  the Government of India Act; that the identity of the body  that collects  the tax, the area for whose benefit the tax is  to be utilised and the purposes for which it is to be  utilised continue to be the same, and that the rate of the tax is not enhanced  nor is its incidence materially altered, so  that, in substance, it continues to be the same tax.  Since  these tests  were  satisfied by the impost levied by  the  janapad Sabha,  it was held that the impost was valid and  that  the retrospective amendment of s.192 was effective. The present proceedings constitute a third challenge to  the validity of the notices issued by the janapad Sabha, and  as we have already seen, the (1) [1962] Supp. 3 S.C.R. 70.  183 challenge  made  by the appellants by their  writ  petitions before  the High Court has been repelled on the  preliminary ground  that  it  is  barred  by  res  judicata.   In   that connection,  the first question to consider is  whether  the general principle of res judicata applies to writ  petitions filed under Art. 32 of the Constitution. This question has been considered by a special Bench of this Court  in the case of Pandit M. S. M. Sharms v.  Dr.   Shree Krishna  Sinha (1).  Chief justice Sinha, who delivered  the unanimous  opinion of the Court, has answered this  question in  the affirmative.  In that connection, the learned  Chief justice has referred to an earlier decision of this court in Raj Lakshmi Dasi v. Banamali Sen, (2) where it has been laid down   that  the  principle  underlying  res   judicata   is applicable  in respect of a question which has  been  raised and  decided  after  full’ contest, even  though  the  first Tribunal  which decided the matter may have no  jurisdiction to  try  the  subsequent suit and even  though  the  subject matter  of the dispute was not exactly the same in  the  two proceedings.   It ought to be added that the Tribunal  which had  tried the first dispute in that case was a Tribunal  of exclusive jurisdiction.  Then the points raised on behalf of the  petitioner  Sharma were considered and it  was  noticed that, in substance, they were the same points which had been agitated  before this Court on an earlier occasion  and  had been  rejected.  "In our opinion", said the  judgment,  "the questions determined by the previous decision of this  Court cannot  be reopened in the present case and must govern  the rights  and  obligations of the parties which  as  indicated above,  are  substantially the same."  Thus,  this  decision shows that even petitions filed under Art. 32 are subject to

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the general principle of res judicata. The question about the applicability of the doctrine of  res judicata to the petitions filed under (1) [1961] 1. S.C.R. 96. (2) [1953] S.C.R. 154. 184 Art. 32 came before this Court in another form in Daryao  v. The  State of U. P. (1), and in that case it has  been  held that where the petition under Art. 226 is considered on  the merits  as  a  contested matter and dismissed  by  the  High Court,  the decision pronounced is binding on  the  parties, unless  modified or reversed by appeal or other  appropriate proceedings  under  the Constitution, and so,  if  the  said decision  was  not  challenged  by  an  appropriate   remedy provided  by  the  Constitution, a writ  petition  filed  in respect  of the same matter would be deemed to be barred  by res  judicata.   Therefore, there can be no doubt  that  the general principle of res judicata applies to writ  petitions filed  under  Art.  32  or Art. 226.   It  is  necessary  to emphasise  that  the  application of  the  doctrine  of  res judicata  to the petitions filed under Art. 32 does  not  in any  way  impair or affect the content  of  the  fundamental rights  guaranteed to the citizens of India.  It only  seeks to  regulate  the manner in which the said rights  could  be successfully asserted and vindicated in courts of law. The  question in the present appeals, however,  is  somewhat different.    The  notices  which  are  challenged  by   the appellants in the present proceedings are in respect of  the tax levied for a period different from the period covered by the  notices  issued  on  August 23,  1958  which  were  the subject-matter   of  the  earlier  writ   proceedings   (The Amalgamated Coalfields Ltd. ( 2 ) ) . Where the liability of a tax for a particular year is considered and decided,  does the  decision  for  that  particular  year  operate  as  res judicata in respect of the liability for a subsequent year ? In a sense, the liability to pay tax from year to year is  a separate and distinct liability; it is based on a  different cause of action from year to year, and if any points of fact or  law  are considered in determining the liability  for  a given  year,  they  can generally be  deemed  to  have  been considered  and decided in a collateral and incidental  way. The (1) [1962] 1 S. C. R. 574. (21 (1962) 1 S. C. R. 1.  185 trend ’of the recent English decisions on the whole  appears to be, in the words of Lord Radcliffe, ’,,that if is more in the public interest that tax and rate assessments should not be   artificially  encumbered  with  estoppels  (I  am   not speaking,  of  course,  of the  effect  of  legal  decisions establishing  the law, which is quite a  different  matter), even  though  in  the  result,’  some  expectations  may  be frustrated  and some time wasted." (vide Society of  Medical Officers  of  Health v. Hope Valuation  Officer  (1)).   The basis  for  this  view  is  that  generally,  questions   of liability  to  pay  tax are  determined  by  Tribunals  with limited  jurisdiction and so, it would not be  inappropriate to assume that if they decide any other questions incidental to  the  determination  of the liability  for  the  specific period, the decisions of those incidental questions need not create  a  bar of res judicata while  similar  questions  of liability for subsequent years are being examined. In that connection, it would be interesting to refer to four English  decisions.  In the case of Broken Hill  Proprietary Co.  Ltd.  and  Municipal Council of Broken  Hill,  (2)  the

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question which fell for decision was how the average  annual value  of a mine for rating purposes had to  be  determined, and it was held by the Privy Council that the said value was to be ascertained by dividing the value of the output during the  three years by three, not by multiplying it by 205  and dividing  it  by  365.  One of the points  which  the  Privy Council  had  to consider was whether  a  contrary  decision reached  by the High Court of Australia between the  parties as  to  the valuation for a previous year, operated  as  res judicata.   In rejecting the plea that the principle of  res judicata applied, Lord Carson. observed that ""the  decision of the High Court related to a valuation and a liability  to a tax in a previous year, and no doubt as regards that year, the  decision  could  not be  disputed.   The  present  case relates  to  a  new  question, viz.,  the  valuation  for  a different year and the liability for that year.  It is not (1) [1960] A. C. 551, 563, (2) [1926] A. C. 94. 186 eadem questio, and therefore, the principle of res  judicata cannot apply." (p. 100). It,  however,  appears  that in the  same  year,  the  Privy Council came to a somewhat contrary decision in the case  of Hoystead  v. Commissioner of Taxation.(1) In that case,  the question  which arose for decision was about  the  deduction claimable  under  ther  elevant provision of  the  Land  Tax Assessment  Act, 1916 (Aust.) Upon the assessment for  1919- 20,  the  Commissioner allowed only one deduction  of  5,000 lbs. contending that the beneficiaries were not joint owners within the meaning of the Act.  The case was then stated  to the  full  Bench which upheld the  Commissioner’s  view  and rejected  the  argument that the Commissioner  was  estopped from coming to that conclusion in view of his decision in  a previous  year.   When  the matter  went  before  the  Privy Council, it reversed the decision of the Full Court, because it  held that the Commissioner was estopped, even though  in the  previous litigation no express decision had been  given whether  the  beneficiaries  were  joint  owners,  it  being assumed  and admitted that they were, and the Privy  Council thought  that the matter so admitted was fundamental to  the decision  then  given.   It would thus  be  seen  that  this decision  applied the principle of res judicata  even  where there  was no express decision on the point, but  the  point had been conceded in the earlier proceedings. In  1960, the House of Lords had occasion to  consider  this question in the case of Society of Medical Officer of Health (2).  We have already quoted one statement of ’the law  from the  speech of Lord Radcliffe in that case.  In  that  case, the  main reason given for repelling the application of  the principle  of  res judicata in rating cases,  was  that  the jurisdiction of the Tribunal which deals with those cases is limited,  in  that its function begins with  and  ends  with deciding  the  assessment  or liability of a  person  for  a terminable period.  Besides, it was (1) [1926] A. C. 155. (2) [1960] A. C. 551, 563.  187 held  that the position of a valuation officer is that of  a neutral official charged with the recurring duty of bringing into  existence a valuation list, and he cannot properly  be described  as  a party so as to make the proceedings  a  lis inter partes.  In coming to the conclusion that the doctrine of  res  judicata  would  not  apply  in  such  cases,  Lord Radcliffe  was  influenced  by  the  consideration  that  if decisions  in rating cases are to be treated  as  conclusive

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for  all  time that Would be to impose  a  needlessly  heavy burden  upon  the  administration of  rating  (p.566).  This decision purported to approve of the view taken in the  case of   the  Broken  Hill  Proprietary  Co.  Ltd.(1)   and   to distinguish the view taken in the Hoystead case. (2) Lord  Radcliffe had occasion to return to the  same  subject again  in Gaffoor v. Income-tax Commissioner.  (3)  Speaking for the Privy Council, Lord Radcliffe considered the problem of  the  application  of res  judicata  to  taxation  cases, examined  it in detail and came to the conclusion  that  the said  doctrine did not apply to tax cases in the sense  that the  decision  for the levy of a tax for one year  does  not operate  as res judicata in dealing with the question  of  a tax for the subsequent year.  On this occasion, emphasis was not placed so much on the limited nature of the jurisdiction of  the Tribunal that deals with tax cases, but it was  held that even if the matter goes to a High Court on a  statement of  the case, the decision of the High Court would also  not create  a bar of res judicata in dealing with the tax  claim for  a  subsequent year.  "’The critical thing,"  said  Lord Radcliffe,  "’is  that  the  dispute  which  alone  can   be determined  by  any decision given in the  course  of  these proceedings  is limited to one subject only, the  amount  of the  assessable income for the year in which the  assessment is challenged." He, no doubt, recognised that in the process of  arriving at the necessary decision, it was  likely  that the  consideration  of  questions of law  turning  upon  the construction of the ordinance or of other statutes or (1) [1926] A.C. 94. (2) [1926] A.C. 155, (3) [1961] 2 W.L.R.794. 188 upon  the general law, may be involved, but he thought  that the  decision  of  those  questions  should  be  treated  as collateral  or incidental to what is the only issue that  is truly  submitted  to  determination  (pp.  800-801).    This decision   would,   therefore,   support   the   appellants’ contention  that the High Court was in error  in  dismissing their  writ  petitions on the preliminary ground  that  they were barred by res judicata. In  considering  this  question,  it  may  be  necessary  to distinguish  between  decision  on questions  of  law  which directly  and substantially arise in any dispute  about  the liability for a particular year, and questions of law  which arise  incidentally  or  in a  collateral  manner,  as  Lord Radcliffe himself has observed in the case of the Society of Medical  Officers  of Health, (1) that the effect  of  legal decisions establishing the law would be a different  matter. If,  for  instance,  the validity of  a  taxing  statute  is impeached by an assessee who is called upon to pay a tax for a particular year and the matter is taken to the High  Court or brought before this Court and it is held that the  taxing statute  is  valid,  it may not be easy  to  hold  that  the decision on this basic and material issue would not  operate as res judicata against the assessee for a subsequent  year. That, however, is a matter on which it is unnecessary for us to  pronounce  a definite opinion in the present  case.   In this connection, it would be relevant to add that even if  a direct  decision  of this Court on a point of law  does  not operate as res judicata in a dispute for a subsequent  year, such a decision would, under Art. 141, have a binding effect not  only  on the parties to it, but also on all  courts  in India  as a precedent in which the law is declared  by  this Court.  The question about the applicability of res judicata to such a decision would thus be a matter of merely academic

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significance. In  the present appeals, the question which arises  directly for our decision is : does the principle (1)  [1960] A.C. 551, 563. 189 of  constructive res judicata apply to petitions under  Art. 32  or Art. 226 where the dispute raised is in respect of  a year  different  from the year involved in a  prior  dispute decided  by this Court ? We have already noticed the  points actually decided by this Court against the appellants on the earlier occasion (vide The Amalgamated Coalfields  Ltd.(1)). One  of the points sought to be raised was in regard to  the validity of the increase in the rate of tax from 3 pies to 9 pies per ton; and since this point had not been taken in the petition and relevant material was not available on  record, this Court refrained from expressing any opinion on it.  The appellants  contend  that  the order passed  by  this  Court refusing permission to the appellants to raise this point on the  earlier  occasion  does not mean that  this  Court  has decided  the point on the merits against the appellants;  it may  mean  that the appellants were given liberty  to  raise this point later: but even otherwise, the point has not been considered   and  should  not  be  held  to  be  barred   by constructive  res  judicata  . It is  significant  that  the attack  against the validity of the notices in  the  present proceedings is based on grounds different and distinct  from the grounds raised on the earlier occasion.  It is not as if the  same ground which was urged on the earlier occasion  is placed  before the Court in another form.  The  grounds  now urged  are  entirely distinct, and so, the decision  of  the High   Court  can  be  upheld  only  if  the  principle   of constructive  res  judicata  can be said to  apply  to  writ petitions filed under Art. 32 or Art. 226.  In our  opinion, constructive res judicata which is a special and  artificial form  of  res judicata enacted by section 11  of  the  Civil Procedure  Code  should  not generally be  applied  to  writ petitions  filed  under Art. 32 or Art. 226.   We  would  be reluctant to apply this principle to the present appeals all the  more  because  we  are dealing  with  cases  where  the impugned   tax  liability  is  for  different   years.    In dismissing  the appellants’ petitions on the ground  of  res judicata, the High Court has no doubt referred to (1)  [1962] 1. S. C. R. 1. 190 Art.  141  under  which the law declared by  this  Court  is binding  on all Courts within the territory of  India.   But when  we are considering the question as to whether any  law has been declared by this Court by implication, such implied declaration,  though binding must be held to be  subject  to revision by this Court on a proper occasion where the  point in  question is directly and expressly raised by  any  party before this Court.  Therefore, we are inclined to hold  that the  appellants  cannot be precluded from  raising  the  new contentions on which their challenge against the validity of the notices is based. The  first. ground urged by the appellants on the merits  is that  the levy authorised to be imposed by the Act  and  the Rules  framed  thereunder violates  the  fundamental  rights guaranteed  to  the citizens under Art. 19 (1)  (f)  of  the Constitution,  and in support of this Arguments reliance  is placed on the decision of this Court in Kunnathat  Thathunni Moopil  Nair v. The State of Kerala (1).  In that case,  the impugned  Act  was  struck down  because  it  suffered  from several   serious  infirmities;  it  was   confiscatory   in character  and its provisions in regard to the levy  of  the

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impost  were  so arbitrary and unreasonable that  the  Court took  the view that the Legislature had  completely  ignored the legal position that the assessment of a tax on person or property  was at least of a quasi-judicial character.   This conclusion  was  based on the examination  of  the  relevant statutory  provisions.  in  the present  case,  we  are  not satisfied  that this decision can assist the  appellants  at all, because the nature of the statutory provisions and  the Rules  framed  under  the  Act in  the  present  appeals  is entirely different. At  this  stage, it is necessary to refer  to  the  relevant statutory  provisions and the Rules.  Section 51 of the  Act (which,  in substance, corresponds to section 90 of the  Act of 1948) reads thus (1)  [1961] 3 S. C. R. 77.  191               "51. (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 other than those specified in  sections               24, 48, 49 and 50.               (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.               x          x           x          X" Sub-section  (3)  and the proviso are not relevant  for  our purpose. Then  we  go  to  section 79  which  confers  power  on  the Provincial Government to make Rules.  Section 79 (1)(xv)  is relevant for our purpose.  It provides that :               "The  Provincial  Government  may  make  rules               consistant  with this Act and with  reference,               if necessary, to the varying circumstances  of               different  local areas, as to  the  assessment               and   collection  of  the  cases   and   rates               specified  in sections 48, 49 & 50 and of  any               tax, toll or rate imposed under section 51, as               to  the maximum amounts or rates at which  any               of  them may be imposed, as to the  prevention               of  evasion of assessment or payment  thereof,               as  to  the  agency by  which  they  shall  be               assessed  and collected, and as to the  manner               in which account thereof shall be rendered  by               District Councils." In pursuance of the powers conferred on the local Government by  s.  79,  rules have been framed on  December  16,  1935. Rules  3 to 10 deal with the question of the impost  of  tax and provide how decisions made in that behalf by appropriate authorities 192 become final.  Rule 3 prescribed the rate at 3 pies per ton, Rule   4   provides  that  the  figures  reported   by   the concessionaires and the Railway companies half yearly to the Dy.  Commissioner, shall be the basis for the assessment  of the tax.  Under Rule 5, every mining lessee has to submit  a statement  half  yearly.  On receipt of the  statement,  the assessment has to be made by the Chairman of the Independent Mining Local Board under Rule 6. A notice of demand  follows under  rule  7.  Fifteen days’ period is  given  for  filing objections   under   Rule  8.  Rule  9  provides   for   the Consideration  and disposal of the objections, and  Rule  10

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lays  down  that if no objection is  filed,  the  Chairman’s assessment shall be final, if any objection is received, the Independent Mining Local Board’s decision shall be final and shall  be communicated to the assessee as soon as  possible. It  would  thus  be  seen that the  scheme  of  these  Rules provides ample opportunity to the assessees to object to the notice  of  demand served on them and in  fact,  the  demand notices  are substantially based on the figures supplied  by the  railway  companies  and  the  concessionaires  and  the statements   submitted   by   the   assessees    themselves. Therefore,  it would be idle to suggest that the  impost  of the tax authorised by the relevant statutory provisions  and the Rules is a capricious administrative or executive affair and  so,  should  be held to violate Art.  19(1)(f)  of  the Constitution. Then it is urged that the demand of the tax @ 9 ’es per  ton is invalid, because it is inconsistent with Rule 3 which has prescribed the maximum rate permissible to be levied against the assessees. We  have  already noticed that s. 79(1)(XV)  authorised  the making of a rule as to the maximum amounts or rates at which any of the articles can be taxed.  This was introduced by an amendment made in 1933 by C.P. Act VII of 1933, and so,  the argument is that Rule 3 which provides that the tax shall be levied @ 3 pies per ton must be deemed to pro-  193 vide for the maximum rate which can be levied and that is  3 pies  per ton and no more.  This argument is no doubt  well- founded.,  because Rule 3 will have to be read in the  light of the power conferred on the local Government by s.  79(XV) and that would mean that the rate of 3 pies per ton has been prescribed by the Rule of the maximum rate permissible.  But this  argument  ignores  the fact that this  Rule  has  been subsequently deleted by a notification on September 6,  1943 published  in the Government Gazette on September 10,  1943. When  this notification was cited before us, the  appellants conceded that the argument based on the construction of Rule 3 was not available to them.  Therefore, the contention that Rule  3  prohibits  the levy at a rate higher  than  3  pies cannot  succeed since the Rule itself has been  subsequently deleted and was not a part of the Rules at the relevant time when the impugned notices were issued. It is then argued that the impost of the tax at the rate  of 9 pies per ton is not valid, because it does not comply with the requirements of s. 51(2) of the Act, and that raises the question  of the construction of the said section.   Section 51(1)  authorises  the imposition of the tax,  provided,  of course, the procedure prescribed by it and the  requirements laid  down by it are satisfied.  Sub-Section (2)  then  lays down  that the first imposition of any tax shall be  subject to the previous sanction of the Provincial Government.   The appellants  contend  that  in the context,  the  "first  im- position" means not only the first imposition in the  sense- of  an  initial  imposition, but  it  includes  every  fresh imposition levied at an increased rate.  On the other  hand, the  respondent  Sabha contends that  the  first  imposition means  only  the initial levy or impost and cannot  take  in subsequent  imposts or levies.  ’In this connection,  it  is relevant  to remember that sub-section (2) was added by  the same Amending Act by which s. 79(XV) was amended, and 194 so,  it  would not be unreasonable to assume that  when  the legislature gave power to the local Government to  prescribe by  rules  the maximum rates permissible to  be  levied,  it introduced  sub-section (2) in s. 51 because it was  thought

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necessary   that  whenever  the  rates  were  changed,   the imposition of the tax at the increased rates should  receive the   previous   sanction  of  the   Government.    If   the respondent’s  construction is accepted, it would  mean  that the  respondent should obtain the previous sanction  of  the Government  at  the initial levy and thereafter  may  go  on increasing  the  rate  of the levy  to  any  extent  without securing the sanction of the Government in that behalf.  Now that Rule 3 has been deleted and no maximum has been or  can be prescribed by the Rules, it would be unreasonable to hold that  the  respondent is given an  unfettered  and  unguided authority  to  levy the impost in question at  any  rate  it likes.   Since  no ceiling has been placed by the  Rules  in that behalf, it would, we think be fair to hold that if  the rates are increased and levy is sought to be imposed on  the altered  rates, the imposition of the levy at these  altered rates  should  be deemed to be included in  the  express  on "first  imposition"  under  s. 51(2).   We  are,  therefore, inclined to accept the appellants’ construction of s. 51(2). That  being  so,  it is necessary  to  enquire  whether  the imposition  of  the tax @ 9 pies has received  the  previous sanction of the local Government. During  the  course  of his arguments, Mr.  Sastri  for  the respondent  attempted  to  suggest that  sanction  had  been obtained for the increase in the rates from time to time and a  typed summary of the notifications issued in that  behalf was  supplied to us at the time of arguments.  This  summary refers  to the three increments made in 1943, 1946 and  1947 respectively to which we have already referred.  The summary read  as if the increments had been sanctioned by the  State Government.   But  Mr. Sachin Choudhury for  the  appellants contended that the 195 summary  supplied  by  the  respondent  was  incomplete  and inaccurate and that the examination of the Gazette in  which the  notifications  were  published,  would  show  that  the amendments in the rates had been made not with the  previous sanction  of the Government, but by the Mining  Local  Board itself.   Two  of  these notifications  were  then  produced before us by the respondent, and they supported the  conten- tion  made by Mr. Choudhury.  Therefore, the  argument  that the imposition @ 9 pies per ton has received the sanction of the Government must fail, and so, the impugned notices which seek to recover the tax from the appellants @ 9 pies per ton must  be held to be invalid  The respondent is  entitled  to levy  tax  only  @  3 pies per ton  because  that  levy  has received  the  sanction  of  the  Government,  but  if   the respondent intends to increase the rate of the said tax,  it must follow the procedure prescribed by s.51(2), provided of course,  it is open to the respondent to increase  the  said tax. There  is  yet  another point on which  the  appellants  are entitled to succeed, and that has reference to the fact that the respondent is seeking to reopen some of the  assessments made  by  it against the appellants.  The argument  is  that once an assessment is made for a specific period, it becomes final  and  it  is  not open to  the  respondent  to  demand additional  amount  by  way of tax in respect  of  the  said period.  The genesis of the tax is somewhat interesting.  It appears  that  roads  were constructed  by  the  Independent Mining  Local Board at enormous cost at the request  of  the Mining  interests  and even debt had to be incurred  by  the Board for completing the work of the construction of  roads. Since the mining companies received substantial benefit from these  roads,  the Legislature thought of levying a  tax  on

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coal,  and  that is the origin of the tax.  When  the  first notification  was issued on December 16, 1935 it  authorised and sanctioned the imposition by the Independent 196 Mining Local Board at Chhindwara in the Chhindwara  District "of  a  tax at 3 pies per ton on coal, coal  dust  or  coke, manufactured  at the mines, sold for export by rail or  sold otherwise  than for export by rail, within the  jurisdiction of  the  Independent  Mining  Local  Board."  This  tax  was recovered  by the Board and thereafter by the respondent  in respect  of  coal  whether  sold  inside  the  district   of Chhindwara  or  sold outside the district of  Chhindwara  or even  outside the State of Madhya Pradesh.  In other  words, the   total  coal  produced  by  each  mining   lease-holder substantially came to be taxed.  But after the  Constitution came into force, doubts arose as to whether Art. 286 of  the Constitution did not preclude the respondent from recovering tax  in respect of coal exported out of the State of  Madhya Pradesh,  and in view of the advice given to the  respondent by the Government of Madhya Pradesh, the respondent did  not collect  the  tax in respect of coal which was  exported  by rail  outside the State of Madhya Pradesh from  about  1952. The  respondent  wanted  to consult legal  opinion  on  this point,  but the State Government refused permission  to  the respondent   to   incur   expenditure   in   that    behalf. Subsequently  however, this question came to be  decided  by the High Court of Madhya Pradesh in a writ petition filed by M/s.   Newton  Chickli Collieries (Pvt.) Ltd.  (No.  265  of 1957).   The  High  Court held that the tax  levied  by  the janapada  Sabhas under s.51 of the Act did not amount  to  a sales  tax  nor  to an excise duty and  so,  the  respondent thought that it could levy tax even on coal exported by rail outside  the  State of Madhya Pradesh.  In fact  after  this judgment was pronounced by the High Court on August 6, 1958, the  Provincial Government withdrew its instructions to  the respondent  not to levy tax on exported coal.  That  is  how the respondent has issued notices against the appellants  in respect of coal exported by rail out of the State of  Madhya Pradesh  in  regard to the years for  which  assessment  has already been levied against the 197 appellants for the coal not so exported, and the  contention of  the appellants is that this reopening of the  assessment is not permissible under the Rules. This contention appears to be well-founded.  We have already seen  the scheme of the Rules and we have noticed that  Rule 10  provides that if no objection is filed,  the  Chairman’s assessment  shall be final and if an objection is  received, the  decision of the Mining Board would be final.  In  other words,  the scheme clearly provides that at the end of  each six  monthly period, the tax has to be assessed, notices  to be  issued to the assessee, his objections to be  considered and the tax to be ultimately determined in the light of  the decision on the said objections; and under Rule 10, the  two decisions  specified therein become final.  It may  be  that the Rules do not prescribe any limitation within which these steps  have to be taken by the respondent for  each  period, but  that is another matter.  In view of the  provisions  of Rule  10,  it is difficult to hold that  the  respondent  is entitled  to  reopen assessments already made  and  rendered final under the said Rule.  There is no other provision  for reopening  assessment as we have under sections 34 &  35  of the  Indian Income Tax Act, and so,. the respondent  is  not justified in issuing notices for the years which arc covered by assessment orders already passed.  The finality  provided

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for  by Rule 10 will work as much against the respondent  as against the assessees. In support of the appeals, another argument was sought to be raised against the increase of the rates.  It was urged that the  tax is in the nature of an excise duty or  a  sales-tax and,  therefore,  any increase in the said  tax  beyond  the limit of 3 pies--the continuance of which has been saved  by the  provisions of Art. 143 of the Government of India  Act, 1935 and Art. 277 of the Constitution-will be invalid.  This argument is based on the terms used 198 in  the  notification of December 16, 1935.  Since  coal  is described as manufactured at the mines, the argument is that it  is  in  the  nature of an  excise  duty  and  since  the notification also refers to coal sold for export by rail  or sold  otherwise than for export by rail, it is’ argued  that it  is  a  sales-tax.  On the  other  hand,  the  respondent contends  that it is neither a sales-tax nor an excise  duty and  as such, the rate can be increased subject, of  course, to  the  requirements of s. 51 (2) of the Act.   It  appears that  by  notification  issued on  September  6,  1943,  the preamble  of the Rules was modified by substituting for  the words "’coal, coal dust or coke" by "coal and dust coal" and by   deleting  the  words  "’manufactured  at  the   mines". Curiously enough, these amendments have not been made in the original notification itself.  We have already noticed  that this latter notification deleted Rule 3. Some arguments were urged  before us by learned counsel on both sides as to  the effect  of this notification which modified the preamble  to the  Rules.   We  do not, however,  think  it  necessary  to consider  these arguments in the present appeals because  of our conclusion that the impugned notices levying the tax @ 9 pies  per ton are invalid for two reasons: the  increase  in the  rates has not been sanctioned by the  State  Government under  s. 51 (2) and an attempt to recover at the  increased rate  the  tax for the years already covered  by  assessment orders passed in that behalf, is barred by Rule 10. The  result  is,  the appeals and  the  writ  petitions  are allowed  and  an appropriate direction or  order  is  issued restraining the respondent from recovering the tax at a rate higher  than  3  pies  per  ton  and  also  restraining  the respondent from recovering any additional tax in respect  of the  years for which tax has already been  assessed  against the  appellants.   The same will be the order in  the  other companion appeals.  The 199 appellants  will be entitled to their costs, but one set  of bearing fees will be taxed.                          Appeals and writ petitions allowed.