Coal cess liability, limitation, and statutory collection rules confirmed; consignee liable where freight was payable at destination.

Coal cess litigation turned on limitation, post-repeal validity, and statutory allocation of liability. The special limitation period for Central Government suits applied, and the claim was filed within time because the right to sue arose on demand and refusal. The levy and recovery of coal cess remained valid after repeal of the ordinance and commencement of the Constitution, as accrued liabilities and remedies were saved, and the impost retained its character as an excise duty despite collection through freight surcharge. Where freight was payable at destination, the governing rules made the consignee liable, so liability could not be fastened on the consignor contrary to the statutory collection scheme.

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Issues: (i) Whether the suit for recovery of coal cess was barred by limitation; (ii) whether the levy and recovery of coal cess remained valid after repeal of the ordinance and the commencement of the Constitution; (iii) whether the consignee or the consignor was liable for payment of the cess where freight was payable at destination.

Issue (i): Whether the suit for recovery of coal cess was barred by limitation.

Analysis: The applicable period was held to be the special sixty-year period governing suits by the Central Government, read with the corresponding article fixing commencement of time from the point when the right to sue accrues. The Court distinguished between the maintainability of a suit and the article governing limitation. Since no specific article applied to a private suit for recovery of a statutory cess, the residuary provision would apply to such a case, but not to a suit by the Government within the special article. On the facts, the right to sue accrued when payment was demanded and refused, and the suit was filed within time.

Conclusion: The suit was not barred by limitation and this issue was decided against the appellant.

Issue (ii): Whether the levy and recovery of coal cess remained valid after repeal of the ordinance and the commencement of the Constitution.

Analysis: The Court held that the original ordinance, being treated as continuing until repealed, was saved in respect of accrued liabilities by the express saving provision applying the General Clauses Act. The repeal did not destroy rights, liabilities, or remedies already accrued. The saved liability also continued to have force under the constitutional saving provision until altered, repealed, or amended by competent authority. The impost was characterised as an excise duty on production or manufacture, and the collection mechanism by surcharge on freight did not change its essential character. The levy therefore was not shown to be without authority of law.

Conclusion: The levy and recovery of the cess were valid and this issue was decided in favour of the revenue.

Issue (iii): Whether the consignee or the consignor was liable for payment of the cess where freight was payable at destination.

Analysis: The rules framed under the ordinance provided distinct modes of recovery depending on whether freight was prepaid at consignment or collected at destination. Where freight was payable at destination, the rule made the consignee liable. The provision for refunds and recoveries did not enlarge liability beyond the persons made statutorily liable under the collection rule. The contractual basis relied on below could not override the statutory allocation of liability.

Conclusion: The consignee alone was liable on the facts, and the decree against the consignor was not sustainable.

Final Conclusion: The dismissal of one appeal and allowance of the other reflected a mixed outcome: the cess demand was upheld in principle, but liability could be fastened only on the statutorily designated consignee and not on the consignor.

Ratio Decidendi: A statutory impost that is in essence an excise duty may be collected through a machinery provision at a convenient stage without losing its character, and a saving clause preserves accrued liabilities and remedies notwithstanding repeal or constitutional transition; liability must, however, be confined to the person expressly made liable by the governing collection rule.

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