1961 (2) TMI 58 - SC - Indian Laws

Supreme Court Limits Tax Rate Increase, Emphasizes Procedural Compliance

AMALGAMATED COALFIELDS LTD. Versus JANAPADA SABHA CHHINDWARA

AMALGAMATED COALFIELDS LTD. Versus JANAPADA SABHA CHHINDWARA - 1961 AIR 964, 1962 (1) SCR 1 Issues Involved:1. Applicability of the doctrine of res judicata to writ petitions filed under Article 226 or Article 32 of the Constitution.2. Validity of the notices issued for coal tax.3. Whether the increase in tax rate from 3 pies to 9 pies per ton was valid.4. Reopening of assessments already finalized.5. Whether the tax imposed was in violation of the fundamental rights under Article 19(1)(f) of the Constitution.Issue-wise Detailed Analysis:1. Applicability of the Doctrine of Res Judicata:The High Court held that the appellants' claims were barred by res judicata due to the earlier decision of the Supreme Court in the case of Amalgamated Coalfields Ltd. The Supreme Court confirmed that the general principle of res judicata applies to writ petitions filed under Articles 226 and 32 of the Constitution. However, it emphasized that this principle should not be applied to cases involving different years. The Court stated, 'constructive res judicata which is a special and artificial form 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.' Therefore, the appellants were allowed to raise new contentions.2. Validity of the Notices Issued for Coal Tax:The Supreme Court examined the statutory provisions and the rules framed under the Central Provinces Local-Self Government Act, 1920. It noted that the scheme provided ample opportunity for assessees to object to notices of demand. The Court found that the tax was not a capricious administrative or executive affair and did not violate Article 19(1)(f) of the Constitution. The Court stated, 'the scheme of these Rules provides ample opportunity to the assessees to object to the notice of demand served on them.'3. Increase in Tax Rate from 3 Pies to 9 Pies per Ton:The appellants argued that the increase in the tax rate was invalid as it did not comply with Section 51(2) of the Act, which requires the previous sanction of the Provincial Government for the first imposition of any tax. The Court agreed, stating, 'if the rates are increased and levy is sought to be imposed on the altered rates, the imposition of the levy at these altered rates should be deemed to be included in the expression 'first imposition' under s. 51(2).' Since the sanction was not obtained, the increase to 9 pies per ton was invalid.4. Reopening of Assessments Already Finalized:The appellants contended that reopening assessments for periods already finalized was not permissible. The Court agreed, noting that Rule 10 provided finality to assessments once objections were considered. The Court stated, 'it is difficult to hold that the respondent is entitled to reopen assessments already made and rendered final under the said Rule.'5. Violation of Fundamental Rights under Article 19(1)(f):The appellants argued that the levy violated their fundamental rights under Article 19(1)(f) of the Constitution. The Court rejected this argument, distinguishing the present case from the Kunnathat Thathunni Moopil Nair case, where the impugned Act was struck down for being confiscatory and arbitrary. The Court found that the statutory provisions and rules in the present case were entirely different and did not violate Article 19(1)(f).Conclusion:The Supreme Court allowed the appeals and writ petitions, issuing an appropriate direction restraining the respondent from recovering the tax at a rate higher than 3 pies per ton and from reopening assessments already finalized. The Court emphasized that the increase in tax rates must comply with the procedural requirements of Section 51(2) of the Act. The appellants were entitled to their costs, with one set of hearing fees to be taxed.