Statutory exemption controls cess liability: a lease cannot impose Zilla Parishad or Gram Panchayat cess without legal basis.

A contractual clause requiring payment of mining-related cesses is enforceable only to the extent the cess is actually leviable under the governing statute. Where the Maharashtra Zilla Parishads and Panchayat Samitis Act exempted a lessee from the State Government, no Zilla Parishad cess could be recovered despite the lease deed. Likewise, where the Bombay Gram Panchayats Act linked cess to ordinary land revenue, and the lease exempted the lessee from land revenue under the Maharashtra Land Revenue Code, no Gram Panchayat cess arose. A lease cannot create cess liability in the absence of a statutory basis.

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Issues: (i) Whether the mining lessee was liable to pay Zilla Parishad cess where the governing statute exempted lessees from the State Government; (ii) Whether the mining lessee was liable to pay Gram Panchayat cess where the lease and the land revenue code exempted it from land revenue.

Issue (i): Whether the mining lessee was liable to pay Zilla Parishad cess where the governing statute exempted lessees from the State Government.

Analysis: Rule 27(1)(d) of the Mineral Concession Rules, 1960 and the lease deed required payment of cesses assessable on the land, but only if such cess was legally leviable under the governing enactment. Section 151(1) of the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961 expressly excluded a lessee from the State Government from liability to pay Zilla Parishad cess. A contractual clause could not override the statutory exemption or create a cess liability where none existed under the statute.

Conclusion: The lessee was not liable to pay Zilla Parishad cess.

Issue (ii): Whether the mining lessee was liable to pay Gram Panchayat cess where the lease and the land revenue code exempted it from land revenue.

Analysis: Section 127(1) of the Bombay Gram Panchayats Act, 1958 linked Gram Panchayat cess to the amount payable as ordinary land revenue. Section 64 of the Maharashtra Land Revenue Code, 1966 permitted exemption from land revenue by special contract, and the lease deed contained such an exemption. Since no land revenue was payable, the statutory basis for Gram Panchayat cess was absent, and the lease clause could operate only where the cess was otherwise payable under the Act.

Conclusion: The lessee was not liable to pay Gram Panchayat cess.

Final Conclusion: The demand for the two cesses could not be sustained because the lease deed incorporated statutory liabilities only to the extent those liabilities existed under the relevant enactments.

Ratio Decidendi: A contractual stipulation to pay a cess is enforceable only when the cess is actually leviable under the governing statute, and a statutory exemption or absence of underlying land revenue liability prevents contractual recovery of that cess.

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