Holding

The Court found the view that a validated levy cannot be collected if not already collected to be untenable and referred the issue to a larger bench for clarification.

Summary

The Assistant Director of Mines & Geology appealed against the High Court's order upholding the levy of cess and other taxes under the Cess and Other Taxes on Minerals (Validation) Act, 1992, but holding that amounts not yet collected could not be collected. The Supreme Court earlier, in District Mining Officer v. Tata Iron and Steel Co., had validated the levy but barred collection of uncollected amounts. The bench, after examining the distinction between "levy" and "collect" under Article 265 of the Constitution, found the earlier view untenable, noting that levy and collection are successive stages and a validated levy should permit collection. Consequently, the Court declined to endorse the earlier conclusion and ordered that the matter be referred to a larger bench for a definitive ruling. The appeal was thus not disposed on merits but sent for further consideration.

Issues considered

Whether the Cess and Other Taxes on Minerals (Validation) Act, 1992 validates the levy of cess and other taxes prior to 4-4-1991 and permits collection of amounts not yet collected.
Whether the distinction between "levy" and "collect" under Article 265 of the Constitution precludes collection of uncollected taxes even if the levy is validated.
Whether the Supreme Court's earlier decision in District Mining Officer v. Tata Iron and Steel Co. correctly interpreted the Validation Act.

Subjects

Validation Actlevycollectionmineral taxesArticle 265larger benchtax lawcessmining

Judgment

[2008] 2 S.C.R. 32
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\

A ASSISTANT DIRECTOR OF MINES & GEOLOGY
..
v.
MIS DECCAN CEMENTS LTD. & ANR.
(Civil Appeal No. 5481 of 2002)
JANUARY 25, 2008
B
(DR. ARIJIT PASAYAT AND S.H. KAPADIA, JJ.)
..,
Gess and Other Taxes on Minerals (Validation) Act, 1992:
Minerals - Gess and other taxes on - Levy and collection
c of - Correctness of conclusions that "the levy was permissible
but amounts which have not already been collected, cannot
be collected" arrived at by Supreme Court in District Mining
Officer's case*- Referred to larger Bench.

D *District Mining Officer and Ors. Vs. Tata Iron and Steel
Co. and Anr. 2001 (7) SCC 358 - referred to.
Somaiya Organics (India) Ltd. and Anr. Vs. State of U. P
and Anr. 2001 (5) sec 519 - cited.
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 5481
E
of 2002.
From the final Judgment/Order dated 12.9.2001 of the High
Court of Judicature, Andhra Pradesh at Hyderabad in W.P. No.
6494/1992.
F WITH
C.A. Nos. 5483, 5484, 5487of2002, SLP (C) Nos. 10887-
10888, 10889-10891, 10892-10894/2002 and 10895-10896/
2002.
G Anoop G.. Chaudhary, M.N. Rao, Nagendra Rai, June
Chaudhari, T.V. Ratnam, Manoj Saxena, Rajnish Kr. Singh,
Devendra Kumar Singh, Rahul Shukla, Buddy A. Ranganadhan,
A. Ramesh, AV. Rangam, S. Udaya Kr. Sagar, Bina Madhavan,
MIS. Lawyer's Knit & Co., Ajay Sharma, B.V. Bairam Das, B.
H 32
ASSISTANT DIRECTOR OF MINES & GEOLOGY v. 33
M/S DECCAN CEMENTS LTD. & ANR. [PASAYAT, J.]

Krishna Prasad, B. Partha Sarthy, Mohanprasad Meharia for A
the appearing parties.
The Order of the Court was delivered by
Dr. ARIJIT PASAYAT, J. 1. During the hearing of these
appeals reliance was placed by the respondents in C.A. B
No.5481/2002 on a decision of this Court in District Mining
Officer and Ors. v. Tata Iron and Steel Co. and Anr. (2001 (7)
SCC 358). Appellant in the said appeal placed reliance on
Somaiya Organics (India) Ltd. and Anr. v. State of UP and
Anr. (2001 (5) sec 519). c
2. High Court in the order impugned relied on District
Mining Officer's case (supra) to hold that though levy upto
4.4.1991 was permissible, no collection of cess could be made.
3. In District Mining Officer's case (supra) it was, inter-
0
alia, observed as follows:
" .... We do find considerable forc;e in the aforesaid
submission, as in our view, the interpretation we have
already given to the Validation Act was the real intention
of Parliament and it never intended to confer a right of E
collection of cess. In agreement with the conclusion arrived
at by the Patna High Court, we hold the Validation Act to
be valid, but such validated Acts do not authorize any
fresh levy or collection in respect of liabilities accrued
prior to 4.4.1991, though it prohibits refund of the collection F
already made prior to that date."
4. It is to be noted that in the said case the validity of the
cess and other taxes under the Cess and Other Taxes on
Minerals (Validation) Act, 1992 (hereinafter referred to as the
'Validation Act') was under consideration. This Court held that G
the Validation Act did not suffer from any invalidity. Having
\ observed so, the aforesaid conclusions were arrived at
...,,, regarding impermissibility for collection not already made. !n
Somaiya Organics (lndia)'s case (supra) the conceptual ·
difference between "levy" and "collect" was noted in the following H
34 SUPREME COURT REPORTS [2008] 2 S.C.R.
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\.._

J.
A words:
"29. Reading the two paras 89 and 90 together it does
appear that this Court regarded the declaration of the
provisions being illegal prospectively as only meaning that
if the States had already collected the tax they would not
B be liable to pay back the same. It is the States which were
protected as a result of the declaration for otherwise on
the conclusion that the impugned Acts lacked legislative -r
competence the result would have been that any tax
collected would have become refundable as no State could
c retain the same because levy would be without the authority
of law and contrary to Article 265 of the Constitution. At the
same time, it was clearly stipulated that the States were
restrained from enforcing the levy any further. The words
used in Article 265 are "levy" and "collect". In taxing statute
D the words "levy" and "collect" are not synonymous terms
(refer to CCE v. National Tobacco Co. of India Ltd. (1972
(2) sec 560) at p.572), while "levy" would mean the
assessment or charging or imposing tax, "collect" in Article
265 would mean the physical realisation of the tax which
E is levied or imposed. Collection of tax is normally a stage
subsequent to the levy of the same. The enforcement of
levy could only mean realisation of the tax imposed or
demanded. That the States were prevented from
recovering the tax, if not already realised, in respect of the
F period prior to 25-10-1989 is further evident from para 90
of the judgment. The said para shows that as on the date
of the judgment, for the period subsequent to 1-3-1986
the demand of the Central Excise Department on the
alcohol manufactured was over Rs.4 crores. The Court
referred to its orders dated 1-10-1986 and 16-10-1986
G
whereby the State Government was permitted to collect
the levy on alcohol manufactured in the Company's ...
•
I
distilleries. With respect to the said amount of Rs.4 crores,
it was observed that "it is, therefore, necessary to declare
that in future no further realisation wil_I be made in respect
H
t· ASSISTANT DIRECTOR OF MINES & GEOLOGY v. 35
M/S DECCAN CEMENTS LTD. & ANR. [PASAYAT, J.]

of this by the State Government from the petitioners". The A
implication clearly was that if out of Rs.4 crores the State
Government had collected some levy the balance
outstanding cannot be collected after 25-10-1989."
5. It appears in District Mining Officer's case (supra) this
Court was of the view that the levy may have been validated B
and that did not authorize collection. It is to be noted that there
't are different stages in the matter of imposition of tax or cess.
First is the source of power for levying tax or cess as the case
may be. The second is the actual levy by an adjudication or
assessment order. Sometimes, the quantification of the amount c
payable is done in the adjudication/assessment order. Finally,
comes the question of collection. That being so, collection is a
natural corollary of the levy. It is inconceivable that the levy is
valid but collection can be held to be impermissible. This is an
irreconcilable situation. D
6. We, therefore, find it difficult to agree with the view
~ expressed in District Mining Officer's case (supra) regarding
~
impermissibility of collection in the portion quoted above.
7. The matter can be looked from another angle. E
Supposing somebody has paid the taxes and in other words
there has been collection of the amount levied. There may be
another person who may not have paid it. The latter person
cannot be placed at a better footing than the former one.
8. We, therefore, refer the matter to a larger bench to test F
the correctness of the conclusions that the levy was permissible
by the Validation Act, but amounts which have not already bean
collected, cannot be collected. The records may be placed
before Hon'ble the Chief Justice of India for appropriate
directions. G
,...
9. Ordered accordingly.
''
' R.P. Referred to larger bench.

H