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2015 (4) TMI 194 - SUPREME COURT

2015 (4) TMI 194 - SUPREME COURT - [2015] 373 ITR 166 (SC), [2015] 79 VST 450 (SC) - Entitlement to refund of the cess paid together with interest at 12 per cent p.a. - The West Bengal Rural Employment and Production Act, 1976 and The West Bengal Primary Education Act, 1973 - whether insofar as interest is payable after the Amendment Act is concerned, such interest would only be payable after assessment orders are passed (which on facts here, we are informed, were passed on 27.07.1993 and therea .....

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r, it is clear that the refund will have to be made together with 12 per cent interest.

It is clear from a reading of Section 4B of the West Bengal Rural Employment and Production Act and Section 78C of the West Bengal Primary Education Act that where any sum is paid by or collected from an owner of a tea estate during a period commencing from 01.04.1981 or 14.04.1984, as the case may be, up to the date of the Amendment Act as rural employment cess or as education cess, such portion o .....

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se will cease to have any effect. Also, what would have been payable under the Act as unamended, is now payable only under the 1989 Amendment Act which has come into force with retrospective effect.

In the present case, the 1989 amendment Act expressly seeks to remove the basis of Buxa dooars's judgment by retrospectively changing the basis of the levy of the cesses mentioned above. In the present case, what is done away with by the Amending Act of 1989 is a declaratory judgment hold .....

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"cesses stayed" has reference to the interim order dated 25.01.1990 which had stated that there would be no enforcement of demand under the Act or Rules and in the meanwhile, assessment may be made. We have been informed that assessments were made with effect from July, 1993 onwards and consequential demands have been made with effect from 1995 onwards. It is clear, therefore, that the impugned judgment is right in holding that with regard to the payment of interest by the petitioner on the amou .....

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on is raised in this appeal which arises out of two judgments of this Court, namely, 'Buxa Dooars Tea Company Ltd. and others v. State of West Bengal and others' [(1989) 3 SCC 211] and 'Goodricke Group Ltd. and others v. State of W.B. and others' [1995 Supp. (1) SCC 707]. In the present appeal, we are concerned with The West Bengal Rural Employment and Production Act, 1976 and The West Bengal Primary Education Act, 1973. The High Court has found, based on a reading of the interim .....

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.1993 and thereafter).By an interim order dated 16.06.1983 in the Buxa Dooars Tea Company Ltd.'s case, this court held as hereunder: - "Rule NISI. There will be no order on stay application but if the petitioner succeeds in the writ petition, the State of West Bengal will refund the amount of cess collected with interest thereon @ 12% per annum from the date of collection." By the judgment delivered in Buxa Dooars Tea Company Ltd.'s case in 1989, this Court held that the chargi .....

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ntial assent has been taken on either of these legislative measures. The West Bengal legislature was swift to act after the judgment of this court. By the West Bengal Taxation Laws (Second Amendment) Act of 1989 amending the provisions of both the aforesaid Acts, the charging sections were substituted with retrospective effect, and the levy of the rural employment cess and education cess (which was levied under the earlier principal Acts on the basis of despatch of manufactured tea) was now levi .....

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pectively and retrospectively. Retrospective effect is given for the period covered by the anterior provisions which were struck down in Buxa Dooars. Once we hold that the defect pointed out in Buxa Dooars is rectified and remedied in the impugned enactment, it can certainly be given retrospective effect to cover the period covered by the earlier enactment which is not only a well-known but a frequently adopted measure by all the legislatures. For the above reasons, the writ petitions fail and a .....

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be no enforcement of demand under the Act or Rules. Status quo to be maintained as far as refund of Cess is concerned." Learned counsel for the appellant Shri Anip Sachthey has argued before us that the impugned judgment should be set aside on the ground that the interim order dated 16.06.1983 in the Buxa Dooars Tea Company Ltd.'s case did not survive as it was substituted by the final order in the Buxa Dooars Tea Company Ltd.'s case, which is to be found in Para 16 thereof, which .....

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is clear that no refund at all is payable. Mr. C. U. Singh, learned senior counsel appearing on behalf of the respondent, on the other hand, supported the judgment on both counts and submitted that the levy under the original Act no longer remained the same, so that the levy under the 1989 amendment was a separate and new levy of rural employment cess and education cess, and this being the position, the interim order as well as the final judgment in Buxa Dooars Tea Company Ltd.'s case still .....

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assessment and not before. We have heard learned counsel for the parties. In our opinion, Mr. C. U. Singh, learned counsel appearing on behalf of the respondents, is right in saying that the interim order dated 16.06.1983 is self operative. In any case, the final order in Buxa Dooars Tea Company Ltd.'s case did not say anything to the contrary, and when both the judgment and the interim order are read together, it is clear that the refund will have to be made together with 12 per cent inter .....

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he West Bengal Taxation Laws (Second Amendment) Act, 1989 as rural employment cess in respect of any period prior to the coming into force of the said Act, such portion of the said sum as may become payable in accordance with the provisions of this Act after the coming into force of the said Act shall, notwithstanding any judgment, decree or order of any court, be deemed to have been validly levied, paid or collected under this Act, and where after assessment or fresh assessment any portion of s .....

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has been passed by a court or where any sum has been paid or collected as rural employment cess, before the coming into force of the West Bengal Taxation Laws (Second Amendment) Act, 1989, in respect of any period prior to the coming into force of the said Act, assessment or fresh assessment shall, notwithstanding such order on appeal, revision or review, or the pendency of such appeal or application for revision or review, or any order passed by a court, be made in accordance with the provisio .....

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be a contravention of such provisions if such owner makes payment of such rural employment cess within one month or files return within six months, as the case may be, from the date of coming into force of the said Act. (4) The amount of the rural employment cess payable by any owner of a tea estate under sub-section (2A) of section 4 of this Act in respect of any period prior to the coming into force of the West Bengal Taxation Laws (Second Amendment) Act, 1989, shall, notwithstanding anything .....

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kilogram of tea despatched during such period shall be equivalent to four and a half kilograms of green tea leaves produced in such tea estate." "78C. "Validation and exemption. (1) Where any sum has been paid by, or collected from, any owner of a tea estate during the period commencing on the 14th day of April, 1984 and ending on the day immediately preceding the date of coming into force of the West Bengal Taxation Laws (Second Amendment) Act, 1989 as education cess in respect o .....

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the provisions of this Act and the rules made thereunder. (2) Where any assessment is purported to have been made, or any order is purported to have been passed on appeal, revision or review, by any authority, or any appeal or application for revision or review has been made before such authority under this Act, or any order has been passed by a court, or where any sum has been paid or collected as education cess, before the coming into force of the West Bengal Taxation Laws (Second Amendment) .....

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make payment of the education cess or to apply for registration or to file return in accordance with the provisions of this Act after the coming into force of the West Bengal Taxation Laws (Second Amendment) Act, 1989 in respect of any period prior to the coming into force of the said Act shall not be deemed to be a contravention of such provisions if such owner makes payment of such education cess within three months or applies for registration within one month or files return within six month .....

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herein during the said period as may be equivalent to the quantity of any tea despatched for which such owner has purported to have enjoyed or would have enjoyed exemption from payment of the education cess during such period, and it is hereby declared that for determining the amount of the education cess to be reduced, each kilogram of tea despatched during such period shall be equivalent to four and a half kilograms of green tea leaves produced in such tea estate. (5) The provisions of this se .....

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endment Act shall, notwithstanding any judgment, decree or order of any court, be deemed to have been validly levied, paid or collected under the Amendment Act. In our view, the purport of these two sections is clear. Whatever may have been the subject matter of Buxa Dooars Tea Company Ltd.'s case, that is the subject matter of the two Acts as originally enacted, will now, notwithstanding the interim order or the final judgment in Buxa Dooars Tea Company Ltd.'s case, be deemed to have be .....

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he 1989 Amendment Act which has come into force with retrospective effect. Mr. C. U. Singh, however, referred us to 'Madan Mohan Pathak v. Union of India and others' [1978 (3) SCR 334] and in particular to Justice P. N. Bhagwati's judgment thereof, in which it has been decided by this Court that a Legislative Act cannot directly undo a writ of mandamus that is granted by an order of a superior court. We are of the view that Madan Mohan Pathak's case would not apply to the facts i .....

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said levy so as to undo the defects that were found in the Buxa Dooars Tea Company Ltd.'s case judgment. It is obvious that when the basis of Buxa Dooars Tea Company Ltd.'s case has gone, on a retrospective amendment of these two acts, the interim order and the judgment and order in Buxa Dooars Tea Company Ltd.'s case can no longer survive. For this reason, we are of the view that the impugned judgment needs to be set aside on this score. In fact, Madan Mohan Pathak has been explaine .....

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ted denying bonus payable to the employees. The appeal was withdrawn. The validity of 1976 Act was challenged in this Court under Article 32 of the Constitution. A Bench of seven Judges had held that Parliament was not aware of the mandamus issued by the court and it was declared that the 1976 Act was void and writ of mandamus was issued to obey the mandamus by implementing or enforcing the provisions of that Act and directed payment of bonus in terms of the settlement. It was pointed out that t .....

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at the basis of the mandamus issued by the court could not be taken away by indirect fashion as observed at p. 743c to f. From the observations made by Bhagwati, J. per majority, it is clear that this Court did not intend to lay down that Parliament, under no circumstance, has power to amend the law removing the vice pointed out by the court. Equally, the observation of Chief Justice Beg is to be understood in the context that as long as the effect of mandamus issued by the court is not legally .....

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rala State Unit & Ors., [(2009) 8 SCC 46 at paragraph 65]. Bhagwati, J.'s judgment in Madan Mohan Pathak also makes it clear that Section 3 of the impugned Act in that case sought to modify a settlement dated 24th January, 1974 arrived at between the LIC and its employees. There was no reference to a Mandamus issued by the Calcutta High Court in the Statement of Objects and Reasons as a result of which Section 3 of the impugned Act did not contain a non-obstante clause referring to any j .....

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holding an impost or tax to be invalid, so that a validation statute can remove the defect pointed out by the judgment and amend the law with retrospective effect to validate such impost or tax - See: Madan Mohan Pathak v. Union of India, [(1978) 3 SCR 334 at 352 to 355]. In the present case, the 1989 amendment Act expressly seeks to remove the basis of Buxa dooars's judgment by retrospectively changing the basis of the levy of the cesses mentioned above. In the present case, what is done a .....

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