TaxTMI 
TaxTMI 
2011 (7) TMI 1300
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....nes and Minerals (Development and Regulation) Act, 1957 ('Act' for short) deals with Royalties in respect of mining leases. Sub-section (2) thereof requires the holder of a mining lease to pay royalty in respect of any mineral removed or consumed by him from the leased area at the rate for the time being specified in the Second Schedule to the Act, in respect of that mineral. Sub-section (3) thereof empowers the Central Government, by notification published in the official gazette, to amend the Second Schedule so as to enhance the rates at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification. 4. By notification dated 5.5.1987, the Central Government had amended the Second Schedule to the Act and increased the royalty in respect of (limestone) from Rs. 4.50 per tonne to Rs. 10 per tonne. By a subsequent notification dated 17.2.1992, the Second Schedule to the Act was again amended and the rate or royalty for limestone was increased from Rs. 10/-per tonne to Rs. 25/- per tonne. 5. The respective first respondent in these appeals (together referred to the 'contesting respondents') filed writ petitions challenging....
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....n them to pay interest at the rate of 24% per annum under Rule 64-A of the Rules, on the difference in royalty which had been withheld on account of the interim orders obtained by them and which were belatedly paid, after rejection of their writ petitions : SNo. Name of Lessee Writ Petition Number (where stay was obtained) Interest Demanded (in Rupees) Date of Demand 1. J. K. Synthetic Ltd WP No. 5721/1992. 6,98,54,031 6.11.1997 2. Birla Corporation Ltd. WP No. 6008/1992 5,99,81,784 24.7.1997 3. J. K. Udaipur Udyog Ltd. WP No. 3871/1993 1,12,76,364 12.3.1997 4. J. K. Synthetic Ltd WP No. 5300/1992. 20,04,474 24.7.1997 5. J. K. Corporation Ltd WP No. 5202/1992. 1,83,10,418 4.11.1996 6. Shree Cement Ltd. WP No. 5004/1992 2,91,89,622 21.1.1997 9. The contesting respondents at this stage again filed a second round of writ petitions challenging the notices demanding interest, contending that they were not liable to pay interest. They also challenged the validity of Rule 64-A of the Rules. During the pendency of those petitions, this Court in South Eastern Coalfields Ltd. vs. State of M.P. - 2003 (8) SCC 648, upheld the validity of Rule 64A. O....
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....ocate General and therefore, the order did not call for interference. The said orders are challenged in these appeals by special leave by the state government. 11. On the contentions raised, the following questions arise for consideration : (i) Whether the Advocate General appearing for the State had consented to award of interest at 12% per annum? (ii) When the High Court grants an interim stay of a demand for payment of money, in a writ petition challenging the levy which is ultimately dismissed, without any specific direction for payment of interest, whether the respondent can claim interest on the amount due for the period covered by the interim order? (iii) Whether Rule 64-A vests any discretion in the state government to charge interest at a rate less than 24% per annum in appropriate or deserving cases? (iv) Whether the rate of interest awarded at 12% per annum requires to be increased? Re : Question (i) 12. The first question is whether the order of the learned Single Judge is based on any consent and whether the learned Advocate General appearing for the state had conceded that the state government is entitled to interest at only 12% per annum. We extract below ....
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....the rate of interest. It would be nothing more than a statement made with reference to the decision in South Eastern Coalfields and such a statement would not come in the way of order being challenged if the state government is of the view that it is entitled to get a higher rate of interest. Re : Question (ii) 14. The contesting respondents filed the second round of writ petitions before the High Court challenging the demand for interest and the validity of Rule 64A, on two grounds : that Rule 64-A was invalid; that the rate of interest was excessive. The learned Single Judge negatived the first contention in view of the decision of this South Eastern Coalfields. He however accepted the second contention and restricted the rate of interest to 12% per annum. The contesting respondents have not challenged the order of the High Court holding that they are liable to pay interest at 12% per annum. They have in fact paid the interest at such rate. Before us, one of the contentions urged to resist the claim of the State for increase in the rate of interest, is with reference to the fundamental question about the liability itself. It was submitted that they were not liable to pay intere....
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....same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner in spite of his failure. We do not think that any such unjust consequence can be countenanced by the courts. As a matter of fact, the contention of the consumers herein, extended logically should mean that even the enhanced rates are also not payable for the period covered by the order of stay because the operation of the very notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is ununderstandable how the enhanced rates can be said to be payable but not the late payment surcharge thereon, when both the enhancement and the late payment surcharge are provided by the same Notification - the operation of which was stayed." (emphasis supplied) The above principles have been followed and reiterated by this Court in Rajasthan Housing Board vs. Krishna Kumari - 2005 (13) SCC 151 and Nav Bharat Ferro Allays Ltd vs. Transmission Corporation of Andhra Pradesh Ltd - 2011 (1) SCC 2....
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....ld far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the Court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing, wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed." 17. It is therefore evident that whenever there is an interim order of stay in regard to any revision in rate or tariff, unless the order granting interim stay or the final order dismissing the writ petition specifies otherwise, on the dismissal of the writ petition or vacation of the interim order, the beneficiary of the interim order shall have to pay interest on the amount withheld or not paid by virtue of the interim order. Where the statute or contract specifies the rate of interest, usually interest will have to be paid at such rate. Even where there is no statutory or contractual provi....
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....ies that every mining lease shall be subject to the conditions mentioned therein. Clause (5) of Rule 27 refers to determination : "(5). If the lessee makes any default in the payment of royalty as required under section 9 or payment of dead rent as required under section 9A or commits a breach of any of the conditions specified in sub-rules (1), (2) and (3), except the condition referred to in clause (f) of sub-rule (1), the state government shall give notice to the lessee requiring him to pay the royalty or dead rent or remedy the breach, as the case may be, within sixty days from the date of the receipt of the notice and if the royalty or dead rent is not paid or the breach is not remedied within the said period, the state government may, without prejudice to any other proceedings that may be taken against him, determine the lease and forfeit the whole or part of the security deposit." The above provision is accordingly incorporated in clause (2) of Part IX of the standard form of lease (Form K). 20. The rate of interest at 24% was substituted in clause (3) of Part VI of the standard form of lease, by the very same amendment which substituted the said percentage in Rule 64A n....
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....form of lease (Form K) was also amended increasing the rate of interest payable on all dues as 24% per annum. We extract below clause (3) of Part VI of Form K for ready reference : "3. Should any rent, royalty or other sums due to the State Government under the terms and conditions of these presents be not paid by the lessee/lessees within the prescribed time, the same, together with simple interest due thereon at the rate of twenty four per cent per annum may be recovered on a certificate of such officer as may be specified by the State Government by general or special order, in the same manner as an arrears of land revenue." The said clause in Form K makes it clear that the rate of interest should be 24% per annum and there is no discretions in the state government to charge interest at any lesser rate. 22. It is true that annual interest at 24% per annum appears to be marginally higher than the standard market lending rate of interest. But it is not penal in nature. Revenue from mining constitutes one of the major sources of non-tax revenue of the State Governments. Mining lessees are expected to pay the mining dues promptly and without default. If a lesser rate of interest ....
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....metime the bank rate of interest has been below 12%. The High Court has, therefore, rightly (and reasonably) opined that upholding entitlement to payment of interest at the rate of 24% per annum would be excessive and it would meet the ends of justice if the rate of interest is reduced from 24% per annum to 12% per annum on the facts and in the circumstances of the case. We are not inclined to interfere with that view of the High Court but make it clear that this concession is confined to the facts of this case and to the parties herein and shall not be construed as a precedent for overriding Rule 64A of the Mineral Concession Rules, 1960. It is also clarified that the payment of dues should be cleared within six weeks from today (if not already cleared) to get the benefit of reduced rate of interest of 12%; failing the payment in six weeks from today the liability to pay interest @24% per annum shall stand." (emphasis supplied) Therefore, it is clear that the concession extended in that case by permitting interest only at 12% per annum was confined to the facts of that case and to the parties therein and is not be treated as a precedent, for nullifying or overriding Rule 64-A o....
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....nature inasmuch as it works out to 25.5 per cent per annum. The learned counsel also submitted that the petitioners understood the decision in Adoni Ginning as relieving them of their obligation to pay interest for the period covered by the interim order and that since they were acting bona fide they should not be mulcted with such high rate of interest. We cannot agree that the rate of late payment surcharge provided by clause 7(b) is penal, but having regard to the particular facts and circumstances of this case and having regard to the fact that petitioners could possibly have understood the decision in Adoni Ginning as relieving them of their obligation to pay interest/late payment surcharge for the period of stay, we reduce the rate of late payment surcharge payable under clause 7(b) to eighteen per cent. But this direction is confined only to the period covered by the stay orders in writ petitions filed challenging the notification dated 21.4.1990 and limited to 1.3.1993 the date on which those writ petitions were dismissed." (emphasis supplied) Therefore, whenever there is a challenge to a levy or challenge to an increase in the tariff or rates, and an order of interim st....