1962 (9) TMI 60 - SC - Indian Laws

Supreme Court Upholds Res Judicata in Writ Petitions on Tax Levy; Emphasizes Statutory Compliance

AMALGAMATED COALFIELDS LTD. Versus JANAPADA SABHA CHHINDWARA

The Supreme Court held that the doctrine of res judicata applies to writ petitions under Articles 32 and 226, barring challenges already decided involving ... - Issues Involved1. Applicability of the doctrine of res judicata to writ petitions under Articles 32 and 226 of the Constitution.2. Validity of the notices issued for the levy of coal tax.3. Compliance with statutory provisions and rules for the imposition and collection of coal tax.4. Reopening of assessments for previous years.Issue-wise Detailed Analysis1. Applicability of the Doctrine of Res Judicata to Writ Petitions under Articles 32 and 226The High Court held that the appellants' challenge against the validity of the demand notices was barred by res judicata due to an earlier decision by the Supreme Court in a similar case involving the same parties. The Supreme Court reaffirmed that the general principle of res judicata applies to writ petitions filed under Articles 32 and 226. This principle was established in earlier cases such as Pandit M. S. M. Sharma v. Dr. Shree Krishna Sinha and Daryao v. The State of U.P.. The Court emphasized that the application of res judicata does not impair the fundamental rights but regulates their assertion in courts of law. However, the Court distinguished between decisions on liability for different years, noting that tax liability for different years constitutes separate causes of action. Consequently, the principle of constructive res judicata, which is a special and artificial form of res judicata under Section 11 of the Civil Procedure Code, should not generally apply to writ petitions under Articles 32 or 226, especially when dealing with tax liabilities for different years.2. Validity of the Notices Issued for the Levy of Coal TaxThe appellants argued that the levy of coal tax at the increased rate of 9 pies per ton was invalid as it did not comply with the statutory requirements. The Court examined the relevant statutory provisions and rules, including Section 51 of the Central Provinces Local-Self Government Act, 1920, and the rules framed under Section 79 of the Act. The Court found that Rule 3, which initially prescribed the tax rate at 3 pies per ton, was subsequently deleted. Therefore, the contention that the tax rate could not exceed 3 pies per ton was not valid. However, the Court held that any increase in the tax rate required the previous sanction of the Provincial Government under Section 51(2). Since the increased rate of 9 pies per ton did not have such sanction, the notices demanding tax at this rate were invalid.3. Compliance with Statutory Provisions and Rules for the Imposition and Collection of Coal TaxThe Court reviewed the statutory framework and rules governing the imposition and collection of coal tax. Section 51(1) authorized the imposition of tax by a resolution passed by a majority of not less than two-thirds of the members present at a special meeting. Section 51(2) required the previous sanction of the Provincial Government for the first imposition of any tax. The Court interpreted 'first imposition' to include any fresh imposition at an increased rate, not just the initial levy. The rules provided a detailed procedure for assessment and collection, including the submission of statements by mining lessees, assessment by the Chairman of the Independent Mining Local Board, and finality of assessments under Rule 10. The Court concluded that the statutory provisions and rules provided ample opportunity for assessees to object to demand notices, ensuring that the tax imposition was not arbitrary or capricious.4. Reopening of Assessments for Previous YearsThe appellants contended that once an assessment was made for a specific period, it became final and could not be reopened. The Court agreed, noting that Rule 10 provided finality to assessments made by the Chairman or the Independent Mining Local Board. The rules did not contain provisions for reopening assessments, unlike Sections 34 and 35 of the Indian Income Tax Act. Therefore, the respondent was not justified in issuing notices for additional tax for years already covered by final assessment orders. The Court emphasized that the finality of assessments worked against both the respondent and the assessees.ConclusionThe Supreme Court allowed the appeals and writ petitions, issuing an order restraining the respondent from recovering tax at a rate higher than 3 pies per ton and from reopening assessments for years already covered by final orders. The appellants were entitled to their costs, with one set of hearing fees to be taxed.