1992 (11) TMI 272 - HC - Indian Laws

Court declares levies under Cess Acts unconstitutional, restricts State and coal companies from imposing cess. No refunds allowed.

The court declared the levies under the Cess Act, 1880, West Bengal Primary Education Act, 1973, and West Bengal Rural Employment and Production Act, ... - Issues Involved:1. Legislative competence of the State legislature to levy cess on coal under the Cess Act, 1880, West Bengal Primary Education Act, 1973, and West Bengal Rural Employment and Production Act, 1976.2. Jurisdiction of the High Court under Article 226 of the Constitution in light of the West Bengal Taxation Tribunal Act, 1987.3. Validity of the amendments to the West Bengal Primary Education Act, 1973, and West Bengal Rural Employment and Production Act, 1976, made by the West Bengal Taxation Laws (Amendment) Act, 1992.4. Propriety of vacating the interim order dated 10th December 1991.5. Whether the appellate court can decide the main issue at the interlocutory stage.6. Refund of cess collected under the impugned provisions.Detailed Analysis:1. Legislative Competence of the State Legislature:The appellants argued that the levies under the Cess Act, 1880, West Bengal Primary Education Act, 1973, and West Bengal Rural Employment and Production Act, 1976, were beyond the legislative competence of the State legislature. The court examined whether these levies were 'pari materia' with those declared unconstitutional by the Supreme Court in India Cement Ltd. v. State of Tamil Nadu and Orissa Cement Ltd. v. State of Orissa. The court held that there was no substantive difference between the levies considered in those cases and the levies challenged here. The court concluded that the provisions of the Cess Act, 1880, the West Bengal Primary Education Act, 1973, and the West Bengal Rural Employment and Production Act, 1976, were beyond the competence of the State Legislature and were, therefore, ultra vires and void.2. Jurisdiction of the High Court:The State contended that the jurisdiction of the High Court under Article 226 was ousted by Sections 6 and 14 of the West Bengal Taxation Tribunal Act, 1987, as amended by the West Bengal Taxation Tribunal (Amendment) Act, 1992. The court examined Article 323B of the Constitution and the relevant provisions of the Tribunal Act. It held that the exclusion of the High Court's jurisdiction could only be achieved by a law validly made under Article 323B, which requires the State Legislature to have the competence to make laws on the matter. Since the State Legislature lacked competence, the Tribunal Act's provisions excluding the High Court's jurisdiction were ineffective.3. Validity of the Amendments:The amendments to the West Bengal Primary Education Act, 1973, and the West Bengal Rural Employment and Production Act, 1976, made by the West Bengal Taxation Laws (Amendment) Act, 1992, were also challenged. The court held that the amendments did not change the character of the levies, which remained unconstitutional. The court noted that the amendments were an attempt to cure the lacuna in the original Acts but did not succeed in doing so.4. Propriety of Vacating the Interim Order:The interim order dated 10th December 1991, which restrained the recovery of cess, was vacated by the trial judge on 7th May 1992, after the Supreme Court vacated a similar stay order. The court found that the trial judge's decision to vacate the interim order was proper, given the Supreme Court's order.5. Appellate Court's Power at Interlocutory Stage:The State argued that the appellate court should not decide the main issue at the interlocutory stage. The court rejected this argument, stating that in appropriate cases, the court could decide the main issue at the interlocutory stage, especially when the questions involved are pure questions of law covered by the Supreme Court's decisions.6. Refund of Cess:The court held that although the levies were unconstitutional, the appellants would not be entitled to a refund of any cess collected up to the date of the judgment. The court followed the principles laid down by the Supreme Court in India Cement and Orissa Cement, which directed that no refund should be made for cess collected up to the date of the judgment declaring the levy unconstitutional.Conclusion:The court declared the levies under the Cess Act, 1880, West Bengal Primary Education Act, 1973, and West Bengal Rural Employment and Production Act, 1976, as well as their amendments, unconstitutional and restrained the State from levying any such cess further. The court also restrained Coal India Limited and Eastern Coalfields Limited from including any amount on account of cess in their bills. The judgment's operation was stayed for four weeks to allow for any further orders.