Cess demand on railway profits held unsustainable where assessment had to be limited to immovable property-linked net profits.

A belated writ challenge to a cess demand was not barred merely by delay and laches, because laches is a discretionary rule and may yield where the demand is manifestly illegal and the delay is reasonably explained. The cess under the Bengal Cess Act had to be assessed with reference to net profits attributable only to the immovable property used for the railway business, not the net profits of the railway undertaking as a whole. A demand based on the entire business income was beyond the statutory charge and unsustainable, so the cess was required to be recomputed on the correct basis.

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Issues: (i) whether the writ petition challenging the cess demand for the earlier years could be rejected solely on the ground of delay and laches; (ii) whether cess under the Bengal Cess Act had to be assessed on the net profits of the railway undertaking as a whole or only on the net profits attributable to the immovable property used for the railway business, and whether the demand already raised was sustainable.

Issue (i): whether the writ petition challenging the cess demand for the earlier years could be rejected solely on the ground of delay and laches.

Analysis: The rule against entertaining stale claims is a rule of practice and discretion, not an absolute bar. The effect of delay depends on the facts of each case, including whether the claim complained of is manifestly illegal and whether any accrued rights of others would be disturbed. Since the legality of the demand had already been examined in relation to the later years, and the earlier challenge was pursued in connected proceedings with an explanation for the omission to raise the issue earlier, the delay by itself did not justify refusal of relief.

Conclusion: The writ petition could not be dismissed solely on the ground of laches and delay; the assessee succeeded on this issue.

Issue (ii): whether cess under the Bengal Cess Act had to be assessed on the net profits of the railway undertaking as a whole or only on the net profits attributable to the immovable property used for the railway business, and whether the demand already raised was sustainable.

Analysis: Under the statutory scheme, the charge to cess arises in relation to immovable property and the assessment has to be made on the net profits referable to such property. A demand based on the income of the railway business as a whole exceeds the statutory basis of charge and is without authority. The earlier determination on the same legal position governed the present demand also, and the assessee undertook not to claim refund from the District Board if recomputation led to a lower liability, making relief appropriate.

Conclusion: The demand based on the net profits of the entire railway undertaking was unsustainable, and the cess had to be recomputed on the basis of the net profits attributable only to the immovable property; this issue was decided in favour of the assessee.

Final Conclusion: The challenge to the cess demand for the earlier years succeeded in substance, the writ relief was granted, and the cess authorities were directed to reassess liability on the correct statutory footing.

Ratio Decidendi: Where cess is statutorily chargeable only with reference to immovable property, a demand assessed on the net profits of the business undertaking as a whole is ultra vires, and manifest illegality is not insulated from writ relief merely because the challenge is belated if the delay is reasonably explained.

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