Validating statute for mineral cess upheld only for past collections, not for fresh levy or recovery after the cutoff date.
A validating statute that gives temporary retrospective life to void mineral cess laws was confined to protecting past collections and preventing refunds; it did not authorise fresh levy or recovery after 4.4.1991 for earlier liabilities. Reading the Act with its objects, preamble and the absence of any saving clause, the Court treated section 2(2) as a refund-protection measure and section 2(3) as narrow and non-substantive. Article 265 required authority of law for every levy and collection, and once the deeming fiction ended on the cut-off date, no further taxing power remained. The Act was upheld only to the extent it barred refund of sums already collected.
Issues: Whether the Cess and Other Taxes on Minerals (Validation) Act, 1992 validated only the past collection of cess and other taxes on minerals, or also conferred a right on the States to levy and collect such dues after 4.4.1991 for liabilities accrued before that date.
Analysis: The Act was enacted in the background of earlier decisions striking down State mineral cess laws for want of legislative competence. Section 2(1) gave retrospective life to the scheduled State enactments only upto 4.4.1991, while section 2(2) protected actions taken and sums realised under those laws from challenge or refund. Reading the text with the statement of objects and reasons, the preamble, and the absence of any saving clause akin to section 6 of the General Clauses Act, 1897, the legislative purpose was found to be limited to validating past collections and preventing refunds. Article 265 of the Constitution of India required every levy and collection to have authority of law; once the deemed life of the validating fiction ended on 4.4.1991, no further authority remained to support fresh levy or collection for earlier periods. Section 2(3) was treated as a narrow refund-related provision and not as a source of substantive taxing power.
Conclusion: The validation Act did not authorise fresh levy or collection after 4.4.1991 in respect of liabilities accrued earlier, though it validated and protected amounts already collected before that date.
Final Conclusion: The earlier view upholding post-4.4.1991 recovery was rejected, the Bihar appeal was dismissed, the Karnataka and Andhra Pradesh matters were allowed, and the validation Act was upheld only to the extent that it barred refund of collections already made.
Ratio Decidendi: A validating statute that gives temporary retrospective life to void taxing laws, without a saving clause extending enforcement beyond the cut-off date, validates only past collections and does not authorise fresh levy or recovery after expiry of the deemed legal life.
TaxTMI 
AI Drafter ✕
TaxTMI 
