TMI Blog1961 (2) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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. Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember 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 ₹ 1,92,144/66 nP. and ₹ 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 this Court on April 23, 1962 and it is by special leave thus granted to them that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute a third challenge to the validity of the notices issued by the janapad Sabha, and as we have already seen, the 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 ([1961] 1. S.C.R. 96). 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, ([1953] S.C.R. 154.) 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular 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 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 ( [1960] A. C. 551, 563). 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 ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation 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 ( [1960] A. C. 551, 563.). 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inguish 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, ( [1960] A.C. 551, 563.) 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titions on the ground of res judicata, the High Court has no doubt referred to 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 ([1961] 3 S. C. R. 77). In that case, the impugned Act was struck down because it suffered from several serious infirmities; it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed 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 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 id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition 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 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 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 authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific 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 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 in the notification of December 16, 1935. Since coal is described as manufactured at the mines, the argument is that it is in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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