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TMI Blog2002 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... len) filed writ petitions in 1987 and Digvijay Cement in the year 1992. Their principal contention before the High Court was that the amount payable under clause 9A was in the nature of tax and there was no authority of law to impose that tax. Undoubtedly, no tax can be levied or collected except by authority of law. The contention of the writ petitioners did not find favour with the High Court and, therefore, these appeals were filed on grant of leave. Cement is a scheduled industry under the provisions of the Industries (Development and Regulation) Act, 1951 (for short, the "Act"). Section 18G of the Act, inter alia, empowers the Central Government to provide for regulating the supply and distribution of any article relatable to any schedule industry. The acute shortage of cement in the country resulted in the making of the Control Order in exercise of powers conferred by sections 18G and 25 of the Act. The cement manufacturing units in India were located in different places. Some of the units manufacturing cement were located at a long distance from consumption centres. A huge amount on freight had to be incurred in trans porting the cement from various factories to the market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1982; (ii) To review the incentives (including rebates and concessions) available to cement factories and suggest what change in these should be made to rapidly augment the domestic production of cement. In this connection, also review the incentives available for the erection of cement factories in remote, difficult and deficit areas and recommend what alternatives should be made in these to accelerate the production of cement in these areas in a cost-effective manner; (iii) To review the progress of modernization and introduction of technological improvements (including efficiency in the use of energy; research and development and quality control) in domestic cement factories and recommend measures (including system of incentives to accelerate these in order to reduce costs and effect economies in domestic production); and (iv) To consider any other matter relating to rational development of the cement industry." After detailed and exhaustive study of all aspects in relation to the cement industry, a large number of recommendations were made by the aforesaid committee including recommendation for a partial decontrol so that the cement manufacturers are allowed to sell a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy. It complimented the high level committee for departing from the conventional approach to the problems of pricing and distribution and submitted a report to the Government which will stimulate the cement industry and ensure its healthy growth. It appears that out of a large number of cement manufacturers in India, only four manufacturers, namely, the appellants, challenged clause 9A and consequent payment under the said clause, three of them filing the writ petitions after the liability to pay had been withdrawn and one manufacturer in September, 1986. The High Court by the impugned judgment did not accept the contention that the payment under clause 9A amounted to tax and, thus, upheld the validity of the impugned clause. The High Court held that the partial decontrol and the impugned contribution was one single integrated and inseverable package. The contention urged on behalf of the appellants is that the payment under clause 9A constitutes. levy and collection of tax without authority of law. It is contended that clause 9A is ultra vires section 18G of the Act. The impugned clause requires the manufacturers to compulsorily pay Rs. 9 per mt. on the non-levy cement produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 4, by such mode of transport in respect of such transaction shall be reimbursed to the producer by the Development Commissioner for Cement Industry from out of the Cement Regulation Account referred to in clause 11." Clause 10 provides for the maximum price at which cement could be sold. Clause 11 stipulates the maintenance of CRA and the purpose for which the amount credited into CRA could be spent. Clause 11 reads as under: "11. Cement regulation account.--(1) The Development Commissioner for Cement Industry shall maintain an account to be known as the Cement Regulation Account to which shall be credited the amounts paid by the producer under clauses 9 and 9A and such other sums of money as the Central Government may, after due appropriation made by Parliament by law in this behalf, grant from time to time. (2) The amount credited under sub-clause (1) shall be spent only for the following purposes, namely: (i) paying or equalizing the expenditure incurred by the producer on freight in accordance with the provisions of this order; (ii) equalizing concession, if any, granted in the matter of price, freight supplies to Government or public or for purposes of expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the cement producers were required to pay into CRA the difference between f.o.r. destination price charged by them and the retention price admissible to them, in respect of non-levy cement under clause 9A, they were required to pay in CRA Rs. 9 per metric tonne. According to the appellants, in respect of non-levy cement whatever money is paid by the buyer of the cement to them becomes their money and thereafter the requirement of payment as provided in the clause 9A is a compulsive payment and hence a tax. For such a tax, it is contended, there is no sanction of law. The contention is that the impugned clause is a compulsion on manufacturers of non-levy cement to pay Rs. 9 per metric tonne as above, which constitutes levy and recovery of tax that cannot be imposed by any subordinate legislation unless the principal statute specifically authorises such imposition. There is no such authorization in the Act. Therefore, it is contended that clause 9A is ultra vires the Act. In support of the submission that the impugned levy under clause 9A, in fact, is a tax, learned counsel for the appellants has placed reliance on the decision of the House of Lords in Attorney-General v. Wilts U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies being enabled to act under the powers conferred upon them without fear of technical and vexatious objections being taken to the powers which they used. All that may be readily accepted but it cannot possibly give to any official a right to act outside the law; nor can the law be unreasonably strained in order to legalise that which it might be perfectly reasonable should be done if, in fact it was unauthorized. The real answer to such an argument is to be found in this, that in times of great national crisis Parliament should be, and generally is, in continuous session, and the powers which are required for the purpose of maintaining the integrity of the country, both economic and military, ought always to be obtained readily from loyal Houses of Parliament. The only question here is, were such powers granted? There are only two sources from which those powers can possibly be derived. One is the Act creating the Ministry, and the other the Regulations under the Defence of the Realm Act. Neither of these either directly or, in my opinion, by inference, enabled the Food Controller to levy the payment of any sums of money from any of His Majesty's subjects. The statute of 1916 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; [1965] 2 SCR 577. In this case the Government of Madras passed various orders for procurement and distribution of paddy and rice. Persons were appointed as procuring agents and wholesalers and their duty was to procure rice from specified areas at prices specified by the Government from time to time and to deliver it at prices so specified to the Government or to the persons nominated by it or to other licensed purchasers. The purchasing agents were to get the difference between the purchase price and the sale price. During the year 1947-48, the Government increased the price and this resulted in excess profits to procuring agents. The Government insisted that this excess sum so earned by the procuring agents should be paid to the Government and this sum was directed to be collected as surcharge. It was held by the Supreme Court that recovery of this money amounted to a tax imposed by an executive fiat without any legislative sanction on the capital value of the stocks of foodgrains held on a particular date. This court observing that if there is no legal basis for these demands by the Government, it is not possible to characterise them anything else than as taxes; they were im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court is only about the validity of clause 9A for want of legal sanction to impose the levy and collect that amount and not about the validity of the partial decontrol. From the affidavit of the respondents filed in this court as well, it appears that on payment of the sale price of the non-levy cement by the buyers to the sellers, i.e., the cement manufacturers, the amount so paid becomes their property--amount belongs to them, though they may have passed on the burden to the customers, it cannot be held that the appellants are merely holders of that amount. It would be useful in this connection to quote from the affidavit filed on behalf of the Ministry of Commerce and Industry, Department of Indus trial Policy and Promotion which itself shows that the money received by sale of non-levy cement becomes the money of the sellers. The affidavit states: "Further, it was contemplated that the non-levy open market cement price would be far higher than the levy price or the controlled price by much more than the required contribution of Rs. 9 per mt. and as a result, the said contribution of Rs. 9 on the non-levy cement would be easily and effortlessly passed on by the cement manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the sum which is the difference between the sale price and the retention price. Under these circumstances, it was held that the steps taken by the Government by the fixation of the retention price for each producer and the sale price and the provision for payment to the Aluminium Regulation Account were necessary in the interests of the consumers so as to maintain supply of aluminium consistent with the demand thereof and to make it available to the consumer at a fair price. Likewise, in B.D. Aggarwala v. Union of India, ILR [1974] 2 Delhi 520, the Delhi High Court was concerned with the validity of clause 9. In that case, the contention that was urged was: "the requirement in clause 9 that every producer should pay to the Controller the balance that remains from out of the f.o.r. destination price, and the provision in clause 11(4) enabling the Government to disburse the unspent amount in the Cement Regulation Account in any manner it likes, amount to a colourable exercise of the taxing power of the State, and beyond the legislative competence of the executive under section 18G of the Act, in as much as the out-right deprivation of the balance of the freight in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principle, however, cannot be extended so as to validate a levy which has no sanction of law, however, laudable may have been the object to introduce it and howsoever laudable may have been the purpose for which the amount so collected may have been spent. It is clear from the above discussion that the impugned levy under clause 9A is a compulsory exaction. The amount paid by the customers of non-levy cement belongs to the appellants. Such a levy amounts to levy of tax and, therefore, is invalid for want of sanction to levy such a tax. Clause 9A is, therefore, ultra vires section 18G of the Act. To this extent we set aside the impugned judgment of the High Court. The next question is: whether the appellants are entitled to refund of the contribution made by them under clause 9A of the Control Order? There is no automatic right of refund. In Mafatlal Industries Ltd. v. Union of India [1997] 5 SCC 536; [1998] 111 STC 467, the Constitution Bench has held that the right to refund of tax paid under an unconstitutional provision of law is not an absolute or an unconditional right. Similar is the position, even if article 265 can be invoked. The principles of unjust enrichment are ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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