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1962 (9) TMI 85

nd 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. 2. 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 recei .....

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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 [1962]1SCR1 . 4. On September 13, 1960 and March 2, 1961, two notices of demand were served on the appellants calling upon them to pay ₹ 1,16,776/25 nP. and ₹ 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 12, 1961 (No. 95 of 1961). 5. 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 S .....

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20,776/88 nP. being arrears from April 1, 1951 to June 30, 1959. 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. 10. 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. 11. Civil Appeals Nos. 529 to 534 of 1962 similarly arise out of six writ petitions filed by the appellant .....

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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 that on a fair construction of s. 51, the coal tax was excluded from the purview of the local authority. 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 .....

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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. 15. 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 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. 16. This question has been considered by a special Bench of this Court in the case of Pandit M. S. M. Sharma v. Dr. Shree Krishna Sinha .....

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nt 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. 18. 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. [1962]1SCR1 ) 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 trend of the recent English decisions on the whole appears to be, in the wor .....

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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. 21. In 1960, the House of Lords had occasion to consider this question in the case of Society of Medical Officers of Health [1960] A.C. 551. We have alre .....

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he necessary decision, it was likely that the consideration of questions of law turning upon the construction of the ordinance or of other statutes or 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. 23. 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, [1960] A.C. 551 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 tax for a particular year and the matter is taken t .....

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, 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 from 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 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 fr .....

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ax, 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." 28. 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 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 objec .....

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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 imposition" 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 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 thou .....

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rom 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. 33. 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 coal .....

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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 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 are covered by assessment orders already passed. The finality p .....

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