The Amalgamated Coalfields Ltd. &
ANR Vs. The Janapada Sabha, Chhindwara  INSC 41 (10 February 1961)
SINHA, BHUVNESHWAR P.(CJ) WANCHOO, K.N.
GUPTA, K.C. DAS SHAH, J.C.
CITATION: 1964 AIR 1013 1963 SCR Supl. (1)
CITATOR INFO :
D 1965 SC1150 (9) R 1965 SC1153 (51,56) E
1970 SC 898 (14) RF 1971 SC 57 (4,11) RF 1977 SC1680 (7)
Coal Tax--Levy--Validity--Writ Petition, if
barred by res judicata--Enhanced levy after first imposition--Absence of
Previous sanction by Local Government--Legality of such levy--Constitution of
India, Arts. 19 (1) (f), 32, 141, 226--Central Provinces Local Self Government
Act, 1920 (C. P. IV of 1920), s. 51(2).
The 1st appellant in the first batch of appeals
had filed a writ petition in this Court challenging the notices calling upon
him to pay the tax of 9 pies per ton on coal including coal despatched outside
the State of Madhya Pradesh on two grounds, namely, that the levy of the tax by
the Independent Mining Board was invalid at the date of its initial imposition
and, 173 therefore, the respondent Sabha which was the successor of the Mining
Board could not continue the levy and also that on a proper construction of s.
51 of the Act, the levy could not be made. Another point namely, the increase
in the rate of tax from the original 3 pies to the 9 pies per ton at which the
tax was demanded was illegal was sought to be canvassed but was not allowed to
be argued by the Court as it had not been raised in the petition. The writ
petition was rejected.
The appellant challenged the levy of the tax
for the further periods byway of a writ petition before the High Court of
Madhya Pradesh on grounds distinct and separate from those which had been
rejected by this Court. The High Court dismissed the writ petition on the
ground that it was barred by res-judicata by reason of the earlier judgment by
this Court. In the case of the other appellants the High Court held that the
matter was also concluded on the authority of the decision of this Court. The
appellants in the first batch of appeals came by special leave and also filed
writ petitions challenging the validity of the levy.
Held, that while the general principle of
res-judicata applies to writ petitions under Art. 32 and Art. 226 of the
Constitution, in its application to Art. 32 of the Constitution, the doctrine
only regulates the manner in which the fundamental rights could be successfully
asserted and does not in any way impair or affect the content of the
Pandit M.S.M. Sharma v. Dr. Shree Krishna
Sinha,  1 S. 0. R. 96, Raj Lakshmi Dasi v. Banamali Sen,  S. C. R. 154
and Daryao v. State of U.P.,  1 S.C.R. 574, referred to.
Constructive res-judicata was a creature of
statute and its application could not be extended to other proceedings
particularly those questioning tax liability for different years.
Held, further, that the law declared by the
Supreme Court which is binding under Art. 141 of the Constitution of India is
that which has been expressly declared and any implied declaration though
binding was subject to revision by this Court when the point was subsequently
directly and expressly raised before this Court.
Held, further, that the procedure of
assessment of tax authorised by the relevant statutory provisions and the Rules
could not be said to be a capricious administrative or executive affair so as
to violate Art. 19(1) (f) of the Constitution.
174 Kunnathat Thathunni Moopil Nair v. State
of Kerala,  3 S. C. R. 77, distinguished.
As the Rule which prescribed the maximum rate
had itself been deleted it could not be said that there had been a levy in
excess of the maximum prescribed.
As neither the Act nor the Rules prescribed a
ceiling on the levy, the expression "first impositions occurring in s. 51(2)
would include every increase of the levy after its initial imposition and the
increased levy would require the previous sanction of the Local Government and
such sanction not being there, the levy at the rate of 9 pies per ton was
Considering the nature of the tax and the
periods for which it was assessed and in the absence of any provision, the
assessment once made by r. 10 was final and there could be no re-assessment.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 469, 470,506, 507 and 529 to 534 of 1962.
Appeals by special leave from the judgment
and order dated December 18, 1961, of the Madhya Pradesh High Court in Misc. Petition
Nos. 24, 29, 42, to 45, 58, 70, 95 and 213 of 1960.
WITH Petitions Nos. 70 and 71 of 1962.
Petition under Art. 32 of the Constitution of
India for enforcement of Fundamental rights.
Sachin Chaudhri, B. Sen, J. B. Dada-chanji,
O. C. Mathur and Ravinder Narain, for the appellants (in C. As. Nos. 469 and
470/62) and the Petitioners (in Petitions. Nos. 70 and 71 of 62).
A. V. Viswanatha Sastri, R. Ganapathy Iyer
and G. Gopalakrishnan, for the respondent (in C. As. Nos. 469 470, 506 and 507
of 62), Respondents Nos. 1 and 3 (in C. As. Nos. 529 to 534/62) and Respondent
No. 1 (in Petn. Nos. 70 and 71/62).
B. Sen and I. N. Shroff, for the appellants
(in C. As. Nos. 506 and 507/62).
175 N. C. Chatterjee, Y. S. Dharmadhikaree
and M. S. Gupta, for the appellants (in C. As. Nos. 529 to 534 of 62).
I. N. Shroff, for the respondents Nos. 2 and
4 (in C. As. 529 to 534 of 62).
1962. September 24. The judgment of the Court
was delivered by GAJENDRAGADKAR, J.-These ten appeals and two writ petitions
have been placed for hearing together in a group, because they raise common
questions of law. The appellants in these matters are all colliers holding
mining leases under the Government of Madhya Pradesh for the extraction of coal
from collieries situated in the Chhindwara District. The respondent, Janapada
Sabha, Chhindwara, has issued notices against them calling upon them to pay
coal tax "'for coal manufactured at the mines, sold for export by rail or
sold otherwise than for export by rail within the jurisdiction of the original
Independent Mining Board for the said area It appears that the mining area in
question was within the territorial limits of the Independent Mining Local
Board which had the status and powers of a District Council under the Central
Provinces Local-Self Government Act, 1920 (hereinafter called the Act). The
respondent Sabha is the successor of the said Mining Board and, therefore,
claims to be entitled to continue the levy and recover the tax in question.
On March 12, 1935, the Mining Board
exercising its powers under section 51 of the Act, resolved to levy coal tax,
and accordingly, the first imposition made by it received the sanction of the
local Government on December 16, 1935, as per Notification No.
8700-2253-D-VIII. This notification came 'into force from January 1, 1936. On
December 16, 1935, the local Government notified the rules for the assessment
and 176 collection of the tax which it had framed in exercise of the powers
conferred on it by section 79 (1), clauses (xv), (xix) and (xxx). Rule 2 of
these Rules provided that the tax shall be payable by every person, firm or
company holding a mining lease for coal within the limits of the Independent
Mining Local Board's jurisdiction. Rule 3 provided that the tax shall be levied
@ three pies per ton on coal, coal dust or coke manufactured at the mines, sold
for export by rail or sold otherwise than for export by rail within the
territorial jurisdiction of the Independent Mining Local Board. In 1943, the
words "'coke manufactured at the mines" were deleted from Rule 3 and
the tax was confined to coal and coal dust. The rate thus prescribed was
increased from time to time. On December 22, 1943, the rate was made 4 pies per
ton; on July 29, 1946, it was made 7 Pies, per ton; and on July 1. 9, 1947, it
was made 9 pies.
The Mining Board continued to recover the tax
at the said rates until the Act was repealed in 1948 and in its place was
enacted the Central Provinces and Berar Local SelfGovernment Act, 1948 (No. 38
of 1948). The respondent Sabha has now taken the place of the said Mining Board
and has issued the notices against the several appellants, calling upon them to
pay the coal tax for the different periods mentioned in the said notices.
The appellants in Civil Appeals Nos. 469 and
470 of 1962 are : The Amalgamated Coalfields Ltd. and The Pench Valley Coal Co.
Ltd. They are companies in operated under the Indian Companies Act, 1913, and or
both have Shaw Wallace & Co., Ltd., as their Managing Agents. On August 23,
1958, notices were served on the two appellants calling upon them to pay Rs.
21,898/ 64 np and Rs. 11,838/9 np respectively as tax assessed @ 9 pies per ton
from ,,January 1, 1958, to June 30, 1958: This tax was claimed in respect of
coal which included coal despatched by the appellants outside the State of 177
Madhya Pradesh. The validity of these notices was challenged by the appellants
in this Court by their Writ Petition 'No. 31 of 1959. On February 10, 1961, the
said writ petition was dismissed by this Court and it was held that the notices
served on them were valid (Vide The Amalgamated Coalfields Ltd. v. The Janapada
On September 13, 1960 and March 2, 1961, two
notices of demand were served on the appellants calling upon them to pay Rs.
1,16,776/25 nP. and Rs. 65,261/19 nP. respectively in regard to the tax assessed
@ nine pies per ton on all coal despatched by the appellants from their
collieries for the half years ending June 30, 1958. December 31, 1958, June
30), 1959, December 31 1959, June 30, 1960 and December 31, 1960. The
appellants challenged the validity of these notices by a Writ Petition filed by
them in the High Court of Madhya Pradesh on April 1.2, 1961 (No. 95 of 1961).
Whilst the said writ petition was pending
before the High Court, the appellants filed another writ Petition in the same
High Court (No. 213 of 1961). By this writ petition, the appellants challenged
the validity of notices issued against them on June 9, 1959, by which coal tax
was demanded from them for a period between April 1, 1951 to December 31, 1957.
This tax was levied in respect of coal despatched by the appellants outside the
State of Madhya Pradesh. The amounts demanded were Rs. 1,92,144/66 nP. and Rs.
68,319/36 nP. respectively.
These two petitions along with eight others
were heard together by the High Court. So far as the appellants' petitions were
concerned, the High Court has held that the appellants' claims were barred by
res judicata by reason of the earlier decision of this Court in the case of the
Amalgamated Coalfields Ltd. (1). The appellants then applied for and obtained
special leave from (1)  1. S. C. R. 1.
178 this Court on April 23, 1962 and it is by
special leave thus granted to them that they have come to this Court in Civil
Appeals 469 & 470 of 1962.
The appellants have also filed two Writ
Petitions Nos. 70 & 71/1962 under Art. 32 of the Constitution. By these
writ petitions, the two appellants challenged the validity of the notices
served on them on Julie 9, 1959 as well as on September 13, 1960. The
appellants' case is that these notices are illegal and without jurisdiction and
so, they want them to be quashed by an appropriate writ or order issued against
the respondent in that behalf. Thus, the two appellants, the Amalgamated
Coalfields Ltd., and the Pench Valley Coal Co. Ltd.,, arc concerned with the
two appeals Nos 469 & 470/1962) and Writ Petitions 70 & 71/1962.
The other appeals arise from the writ
petitions filed in the High Court of Madhya Pradesh by the respective
appellants which were tried along with the writ petitions filed by the Amalgamated
Coalfields Ltd. & Anr. In dealing with these writ petitions, High Court has
held that the decision of this Court is the case of Amalgamated Coalfields
Ltd.(1) concludes the points raised by them in challenging the validity of the
notices, and so, following the said decision, the High Court has dismissed all
the said petitions. The appellants applied for and obtained special leave to
come to this Court against the said decisions and it is with the special leave
thus granted to them that these appellants have come before us.
Civil Appeal No. 506 arises from the decision
of the High Court of 'Madhya Pradesh dismissing the writ petition filed before
it by the appellant, the Central Provinces Syndicate (P) Ltd. By its writ
petition the appellant had challenged the validity of the notice served by the
respondent calling upon it to pay arrears of the tax amounting to Rs. 20,776/88
nP. being arrears from April 1, 1951 to June 30, 1959.
(1)  1 S.C.R. 1.
179 It appears that for the said period, the
appellant had been taxed by the respondent, but the said tax was not imposed on
coal which had been transported by the appellant outside the limits of the
State of Madhya Pradesh. The respondent now sought to reopen the assessment
levied against the appellant for that period by including a claim for tax in
respect of coal sold by the appellant outside the limits of the State.
The High Court has rejected the Writ Petition
and that decision 'has given rise to Civil Appeal No. 506 of 1962.
Civil Appeal No. 507 of 1962 arises from a
writ petition filed by the appellants M/s. Kanhan Valley Coal Co.
(Private) Ltd., in the High Court of Madhya
Pradesh in which the validity of the notice issued by the respondent calling
upon the appellants to pay the coal tax amounting to Rs.
10,970/as arrears from April 1, 1951 to June
30, 1959 has been challenged. The High Court has dismissed the writ petition,
and so, the appellants have come to this Court by their Appeal No. 507/1962.
Civil Appeals Nos. 529 to 534 of 1962 similarly
arise out of six writ petitions filed by the appellants M/s. Newton Chickli
Collieries (P) Ltd. & five others in the High Court of Madhya Pradesh
challenging the validity of the notices of demand served on them to recover by
way of arrears coal tax for the periods mentioned in the notices in regard to
coal sent by them outside the State of Madhya Pradesh for export.
These writ petitions were dismissed by the
High Court, and the appellants have, therefore, come to this Court by appeals
Nos. 529-534/1962. That, in brief, is the genesis of the ten appeals and two
writ petitions which have been grouped together for hearing in this Court.
It will thus be seen that Civil Appeals Nos.
469 & 470/1962 and Writ Petitions Nos. 70 & 71/1962 raise a preliminary
question about the applicability 180 of the doctrine of res judicata to writ
petitions filed under Art. 226 or to petitions under Art. 32, whereas the said
appeals and writ petitions as well as the other appeals raise an additional
question about the validity of the notices issued against the respective
appellants. We would, therefore, deal with civil appeals Nos. 469 and 4 70/1962
and Writ Petitions Nos. 70 and 71/1962. Our decision in these matters will
govern the other appeals in this group.
The first point which falls for our decision,
in these appeals is one of res judicata. The High Court has held that the
challenge made by the appellants against the validity of the demand notices
issued against them by the respondent is barred by res judicata by virtue of
the decision of this Court in the earlier case brought by the appellants
themselves before this Court. The Amalgamated Coalfields Ltd.(1) Before dealing
with this point it is necessary to refer to the said decision. In that case,
the validity of the impugned notices was challenged on two grounds ; it was
urged that the levy of the tax by the Independent Mining Board was invalid at
the date of its initial imposition in 1935 and so, the respondent Sabha which
was the successor of the said Mining Board could claim no authority to continue
the said tax. This contention was based on the assumption that before the power
conferred by s. 51 of the Act could be exercised,, the previous sanction of the
Governor-General had to be obtained, or that there should be fresh legislation
in that behalf. This Court held that the Act having received the assent of the Governor-general,
its validity cannot be challenged in view of the saving clauses in the proviso
to section 80A (3) and s.
84(2) of the Government of India Act, 1915.
That being so, it was not open to any party to suggest that any subsequent
amendments of the Government of India Act could affect the continued validity
and operation of the Act. The second contention raised was one of construction.
It was urged (1)  1 S.C.R. 1.
181 that on a fair construction of s. 51, the
coal tax was excluded from the purview of the local authority. The This
argument was based on the opening clause of s. 51 which provided that its
provisions would operate subject to the provision of any law or enactment for
the time being in force. It was suggested that this clause took in the
provisions of s. 80A(3) of the Government of India Act read with the Scheduled
Taxes Rules framed under that section, but this argument was also rejected. It
appears that at the hearing of the petition, the appellants also attempted to
take an additional point against the validity of the. impugned notices on the
ground that the rate of tax which had been increased from 3 pies to 9 pies per
ton was invalid. The appellants' case was that this increase was effected after
the commencement of the Government of India Act, and so, it was invalid. This
argument was not considered by the Court, because it was not even hinted in the
petition filed by the appellants and the Court thought that it would not be
proper to permit the appellants to raise that point at that stage. That is how
the appellants' challenge to the validity of the impugned notices served on
them on August 23, 1958 was repelled and the writ petition filed by them in
that behalf was dismissed.
It appears that the authority of the Janapada
Sabha to levy the impost under s.51 of the Act was challenged on another ground
in the case of Ram Krishna Ram Nath v, Janapad Sabha (1). This time the attack
against the competence of the janapad Sabha proceeded on the ground that in
repealing the Act of 1920, the subsequent Act of 1948 had not provided for the
continuance of the said power in the janapad Sabhas which were the successors
of the Independent Mining Boards.
Section 192(c) purported to provide that all
rates, taxes and cesses due to the District Council, Local Board or Independent
Local Board shall be deemed to be due to the Sabha to (1)  Supp. 3 S.C.R.
182 whose area they pertain. But it was
obvious that this clause could apply to, and save, only rates, taxes and cesses
already due; it did not authorise the imposition of fresh cesses, taxes or
rates in future. Having realised that the relevant provision did not save
future imposts, an amending Act was passed in 1949 by which the said saving was
extended to include the right of the janapad Sabhas to continue the levy of the
impugned tax and this amendment was made retrospective f from June 11, 1948,
when the parent Act had come into force. In the case of Ram Krishna (1) the
validity and effectiveness of this amendment of 1949 was challenged. It was
thus a basic challenge to the power of the janapad Sabhas to levy any impost on
the ground that the subsequent amendment was invalid. This Court repelled the
said challenge and held that the retrospective operation of the amendment was
valid. According to this decision, the Provincial Legislature was competent to
legislate for the continuance of the tax, provided the relevant conditions of
s.143(2) of the Government of India Act 1935 were satisfied.
These conditions required that the tax should
be one which was lawfully levied by a local authority for the purposes of a
local area at the commencement of Part III of the Government of India Act; that
the identity of the body that collects the tax, the area for whose benefit the
tax is to be utilised and the purposes for which it is to be utilised continue
to be the same, and that the rate of the tax is not enhanced nor is its
incidence materially altered, so that, in substance, it continues to be the
same tax. Since these tests were satisfied by the impost levied by the janapad
Sabha, it was held that the impost was valid and that the retrospective
amendment of s.192 was effective.
The present proceedings constitute a third
challenge to the validity of the notices issued by the janapad Sabha, and as we
have already seen, the (1)  Supp. 3 S.C.R. 70.
183 challenge made by the appellants by their
writ petitions before the High Court has been repelled on the preliminary
ground that it is barred by res judicata. In that connection, the first
question to consider is whether the general principle of res judicata applies
to writ petitions filed under Art. 32 of the Constitution.
This question has been considered by a
special Bench of this Court in the case of Pandit M. S. M. Sharms v. Dr. Shree
Krishna Sinha (1). Chief justice Sinha, who delivered the unanimous opinion of
the Court, has answered this question in the affirmative. In that connection, the
learned Chief justice has referred to an earlier decision of this court in Raj
Lakshmi Dasi v. Banamali Sen, (2) where it has been laid down that the
principle underlying res judicata is applicable in respect of a question which
has been raised and decided after full' contest, even though the first Tribunal
which decided the matter may have no jurisdiction to try the subsequent suit
and even though the subject matter of the dispute was not exactly the same in
the two proceedings. It ought to be added that the Tribunal which had tried the
first dispute in that case was a Tribunal of exclusive jurisdiction. Then the
points raised on behalf of the petitioner Sharma were considered and it was
noticed that, in substance, they were the same points which had been agitated
before this Court on an earlier occasion and had been rejected. "In our
opinion", said the judgment, "the questions determined by the
previous decision of this Court cannot be reopened in the present case and must
govern the rights and obligations of the parties which as indicated above, are
substantially the same." Thus, this decision shows that even petitions
filed under Art. 32 are subject to the general principle of res judicata.
The question about the applicability of the
doctrine of res judicata to the petitions filed under (1)  1. S.C.R. 96.
(2)  S.C.R. 154.
184 Art. 32 came before this Court in another
form in Daryao v. The State of U. P. (1), and in that case it has been held
that where the petition under Art. 226 is considered on the merits as a
contested matter and dismissed by the High Court, the decision pronounced is
binding on the parties, unless modified or reversed by appeal or other
appropriate proceedings under the Constitution, and so, if the said decision
was not challenged by an appropriate remedy provided by the Constitution, a
writ petition filed in respect of the same matter would be deemed to be barred
by res judicata. Therefore, there can be no doubt that the general principle of
res judicata applies to writ petitions filed under Art. 32 or Art. 226. It is
necessary to emphasise that the application of the doctrine of res judicata to
the petitions filed under Art. 32 does not in any way impair or affect the
content of the fundamental rights guaranteed to the citizens of India. It only
seeks to regulate the manner in which the said rights could be successfully
asserted and vindicated in courts of law.
The question in the present appeals, however,
is somewhat different. The notices which are challenged by the appellants in
the present proceedings are in respect of the tax levied for a period different
from the period covered by the notices issued on August 23, 1958 which were the
subject-matter of the earlier writ proceedings (The Amalgamated Coalfields Ltd.
( 2 ) ) . Where the liability of a tax for a particular year is considered and
decided, does the decision for that particular year operate as res judicata in
respect of the liability for a subsequent year ? In a sense, the liability to
pay tax from year to year is a separate and distinct liability; it is based on
a different cause of action from year to year, and if any points of fact or law
are considered in determining the liability for a given year, they can
generally be deemed to have been considered and decided in a collateral and
The (1)  1 S. C. R. 574.
(21 (1962) 1 S. C. R. 1.
185 trend 'of the recent English decisions on
the whole appears to be, in the words of Lord Radcliffe, ',,that if is more in
the public interest that tax and rate assessments should not be artificially
encumbered with estoppels (I am not speaking, of course, of the effect of legal
decisions establishing the law, which is quite a different matter), even though
in the result,' some expectations may be frustrated and some time wasted."
(vide Society of Medical Officers of Health v. Hope Valuation Officer (1)). The
basis for this view is that generally, questions of liability to pay tax are
determined by Tribunals with limited jurisdiction and so, it would not be
inappropriate to assume that if they decide any other questions incidental to
the determination of the liability for the specific period, the decisions of
those incidental questions need not create a bar of res judicata while similar
questions of liability for subsequent years are being examined.
In that connection, it would be interesting
to refer to four English decisions. In the case of Broken Hill Proprietary Co.
Ltd. and Municipal Council of Broken Hill, (2) the question which fell for
decision was how the average annual value of a mine for rating purposes had to
be determined, and it was held by the Privy Council that the said value was to
be ascertained by dividing the value of the output during the three years by
three, not by multiplying it by 205 and dividing it by 365. One of the points
which the Privy Council had to consider was whether a contrary decision reached
by the High Court of Australia between the parties as to the valuation for a
previous year, operated as res judicata. In rejecting the plea that the
principle of res judicata applied, Lord Carson. observed that ""the
decision of the High Court related to a valuation and a liability to a tax in a
previous year, and no doubt as regards that year, the decision could not be
disputed. The present case relates to a new question, viz., the valuation for a
different year and the liability for that year. It is not (1)  A. C. 551,
563, (2)  A. C. 94.
186 eadem question, and therefore, the
principle of res judicata cannot apply." (p. 100).
It, however, appears that in the same year,
the Privy Council came to a somewhat contrary decision in the case of Hoystead
v. Commissioner of Taxation.(1) In that case, the question which arose for
decision was about the deduction claimable under the relevant provision of the
Land Tax Assessment Act, 1916 (Aust.) Upon the assessment for 191920, the
Commissioner allowed only one deduction of 5,000 lbs. contending that the
beneficiaries were not joint owners within the meaning of the Act. The case was
then stated to the full Bench which upheld the Commissioner's view and rejected
the argument that the Commissioner was estopped from coming to that conclusion
in view of his decision in a previous year. When the matter went before the
Privy Council, it reversed the decision of the Full Court, because it held that
the Commissioner was estopped, even though in the previous litigation no
express decision had been given whether the beneficiaries were joint owners, it
being assumed and admitted that they were, and the Privy Council thought that
the matter so admitted was fundamental to the decision then given. It would
thus be seen that this decision applied the principle of res judicata even
where there was no express decision on the point, but the point had been
conceded in the earlier proceedings.
In 1960, the House of Lords had occasion to
consider this question in the case of Society of Medical Officer of Health (2).
We have already quoted one statement of 'the law from the speech of Lord
Radcliffe in that case. In that case, the main reason given for repelling the
application of the principle of res judicata in rating cases, was that the
jurisdiction of the Tribunal which deals with those cases is limited, in that
its function begins with and ends with deciding the assessment or liability of
a person for a terminable period. Besides, it was (1)  A. C. 155.
(2)  A. C. 551, 563.
187 held that the position of a valuation
officer is that of a neutral official charged with the recurring duty of bringing
into existence a valuation list, and he cannot properly be described as a party
so as to make the proceedings a lis inter partes. In coming to the conclusion
that the doctrine of res judicata would not apply in such cases, Lord Radcliffe
was influenced by the consideration that if decisions in rating cases are to be
treated as conclusive for all time that Would be to impose a needlessly heavy
burden upon the administration of rating (p.566). This decision purported to
approve of the view taken in the case of the Broken Hill Proprietary Co.
Ltd.(1) and to distinguish the view taken in the Hoystead case. (2) Lord
Radcliffe had occasion to return to the same subject again in Gaffoor v.
Income-tax Commissioner. (3) Speaking for the Privy Council, Lord Radcliffe
considered the problem of the application of res judicata to taxation cases,
examined it in detail and came to the conclusion that the said doctrine did not
apply to tax cases in the sense that the decision for the levy of a tax for one
year does not operate as res judicata in dealing with the question of a tax for
the subsequent year. On this occasion, emphasis was not placed so much on the
limited nature of the jurisdiction of the Tribunal that deals with tax cases,
but it was held that even if the matter goes to a High Court on a statement of
the case, the decision of the High Court would also not create a bar of res
judicata in dealing with the tax claim for a subsequent year. "'The
critical thing," said Lord Radcliffe, "'is that the dispute which alone
can be determined by any decision given in the course of these proceedings is
limited to one subject only, the amount of the assessable income for the year
in which the assessment is challenged." He, no doubt, recognised that in
the process of arriving at the necessary decision, it was likely that the
consideration of questions of law turning upon the construction of the
ordinance or of other statutes or (1)  A.C. 94.
(2)  A.C. 155, (3)  2 W.L.R.794.
188 upon the general law, may be involved,
but he thought that the decision of those questions should be treated as
collateral or incidental to what is the only issue that is truly submitted to
determination (pp. 800-801). This decision would, therefore, support the
appellants' contention that the High Court was in error in dismissing their
writ petitions on the preliminary ground that they were barred by res judicata.
In considering this question, it may be
necessary to distinguish between decision on questions of law which directly
and substantially arise in any dispute about the liability for a particular
year, and questions of law which arise incidentally or in a collateral manner,
as Lord Radcliffe himself has observed in the case of the Society of Medical
Officers of Health, (1) that the effect of legal decisions establishing the law
would be a different matter.
If, for instance, the validity of a taxing
statute is impeached by an assessee who is called upon to pay a tax for a
particular year and the matter is taken to the High Court or brought before
this Court and it is held that the taxing statute is valid, it may not be easy
to hold that the decision on this basic and material issue would not operate as
res judicata against the assessee for a subsequent year.
That, however, is a matter on which it is
unnecessary for us to pronounce a definite opinion in the present case. In this
connection, it would be relevant to add that even if a direct decision of this
Court on a point of law does not operate as res judicata in a dispute for a
subsequent year, such a decision would, under Art. 141, have a binding effect
not only on the parties to it, but also on all courts in India as a precedent
in which the law is declared by this Court. The question about the
applicability of res judicata to such a decision would thus be a matter of
merely academic significance.
In the present appeals, the question which
arises directly for our decision is : does the principle (1)  A.C. 551,
189 of constructive res judicata apply to
petitions under Art.
32 or Art. 226 where the dispute raised is in
respect of a year different from the year involved in a prior dispute decided
by this Court ? We have already noticed the points actually decided by this
Court against the appellants on the earlier occasion (vide The Amalgamated
One of the points sought to be raised was in
regard to the validity of the increase in the rate of tax from 3 pies to 9 pies
per ton; and since this point had not been taken in the petition and relevant
material was not available on record, this Court refrained from expressing any
opinion on it. The appellants contend that the order passed by this Court
refusing permission to the appellants to raise this point on the earlier
occasion does not mean that this Court has decided the point on the merits
against the appellants; it may mean that the appellants were given liberty to
raise this point later: but even otherwise, the point has not been considered
and should not be held to be barred by constructive res judicata . It is
significant that the attack against the validity of the notices in the present
proceedings is based on grounds different and distinct from the grounds raised
on the earlier occasion. It is not as if the same ground which was urged on the
earlier occasion is placed before the Court in another form. The grounds now
urged are entirely distinct, and so, the decision of the High Court can be
upheld only if the principle of constructive res judicata can be said to apply
to writ petitions filed under Art. 32 or Art. 226. In our opinion, constructive
res judicata which is a special and artificial form of res judicata enacted by
section 11 of the Civil Procedure Code should not generally be applied to writ
petitions filed under Art. 32 or Art. 226. We would be reluctant to apply this
principle to the present appeals all the more because we are dealing with cases
where the impugned tax liability is for different years. In dismissing the
appellants' petitions on the ground of res judicata, the High Court has no
doubt referred to (1)  1. S. C. R. 1.
190 Art. 141 under which the law declared by
this Court is binding on all Courts within the territory of India. But when we
are considering the question as to whether any law has been declared by this
Court by implication, such implied declaration, though binding must be held to
be subject to revision by this Court on a proper occasion where the point in
question is directly and expressly raised by any party before this Court.
Therefore, we are inclined to hold that the appellants cannot be precluded from
raising the new contentions on which their challenge against the validity of
the notices is based.
The first. ground urged by the appellants on
the merits is that the levy authorised to be imposed by the Act and the Rules
framed there under violates the fundamental rights guaranteed to the citizens
under Art. 19 (1) (f) of the Constitution, and in support of this Arguments
reliance is placed on the decision of this Court in Kunnathat Thathunni Moopil
Nair v. The State of Kerala (1). In that case, the impugned Act was struck down
because it suffered from several serious infirmities; it was confiscatory in
character and its provisions in regard to the levy of the impost were so
arbitrary and unreasonable that the Court took the view that the Legislature
had completely ignored the legal position that the assessment of a tax on
person or property was at least of a quasi-judicial character. This conclusion
was based on the examination of the relevant statutory provisions. in the
present case, we are not satisfied that this decision can assist the appellants
at all, because the nature of the statutory provisions and the Rules framed
under the Act in the present appeals is entirely different.
At this stage, it is necessary to refer to
the relevant statutory provisions and the Rules. Section 51 of the Act (which,
in substance, corresponds to section 90 of the Act of 1948) reads thus (1)
 3 S. C. R. 77.
191 "51. (1) Subject to the provisions
of any law or enactment for the time being in force, a District Council may, by
a resolution passed by a majority of not less than two-thirds of the members
present at a special meeting convened for the purpose, impose any tax, toll or
rate other than those specified in sections 24, 48, 49 and 50.
(2) The first imposition of any tax, toll or
rate under sub-section (1) shall be subject to the previous sanction of the
x x x X" Sub-section (3) and the proviso
are not relevant for our purpose.
Then we go to section 79 which confers power
on the Provincial Government to make Rules. Section 79 (1)(xv) is relevant for
our purpose. It provides that :
"The Provincial Government may make
rules consistent with this Act and with reference, if necessary, to the varying
circumstances of different local areas, as to the assessment and collection of
the cases and rates specified in sections 48, 49 & 50 and of any tax, toll
or rate imposed under section 51, as to the maximum amounts or rates at which
any of them may be imposed, as to the prevention of evasion of assessment or
payment thereof, as to the agency by which they shall be assessed and
collected, and as to the manner in which account thereof shall be rendered by
District Councils." In pursuance of the powers conferred on the local
Government by s. 79, rules have been framed on December 16, 1935.
Rules 3 to 10 deal with the question of the
impost of tax and provide how decisions made in that behalf by appropriate
authorities 192 become final. Rule 3 prescribed the rate at 3 pies per ton,
Rule 4 provides that the figures reported by the concessionaires and the
Railway companies half yearly to the Dy. Commissioner, shall be the basis for
the assessment of the tax. Under Rule 5, every mining lessee has to submit a statement
half yearly. On receipt of the statement, the assessment has to be made by the
Chairman of the Independent Mining Local Board under Rule 6. A notice of demand
follows under rule 7. Fifteen days' period is given for filing objections under
Rule 8. Rule 9 provides for the Consideration and disposal of the objections,
and Rule 10 lays down that if no objection is filed, the Chairman's assessment
shall be final, if any objection is received, the Independent Mining Local
Board's decision shall be final and shall be communicated to the assessee as
soon as possible.
It would thus be seen that the scheme of
these Rules provides ample opportunity to the assessees to object to the notice
of demand served on them and in fact, the demand notices are substantially
based on the figures supplied by the railway companies and the concessionaires
and the statements submitted by the assessees themselves.
Therefore, it would be idle to suggest that
the impost of the tax authorised by the relevant statutory provisions and the
Rules is a capricious administrative or executive affair and so, should be held
to violate Art. 19(1)(f) of the Constitution.
Then it is urged that the demand of the tax @
9 'es per ton is invalid, because it is inconsistent with Rule 3 which has prescribed
the maximum rate permissible to be levied against the assessees.
We have already noticed that s. 79(1)(XV)
authorised the making of a rule as to the maximum amounts or rates at which any
of the articles can be taxed. This was introduced by an amendment made in 1933
by C.P. Act VII of 1933, and so, the argument is that Rule 3 which provides
that the tax shall be levied @ 3 pies per ton must be deemed to pro193 vide for
the maximum rate which can be levied and that is 3 pies per ton and no more.
This argument is no doubt well-founded., because Rule 3 will have to be read in
the light of the power conferred on the local Government by s. 79(XV) and that
would mean that the rate of 3 pies per ton has been prescribed by the Rule of
the maximum rate permissible. But this argument ignores the fact that this Rule
has been subsequently deleted by a notification on September 6, 1943 published
in the Government Gazette on September 10, 1943.
When this notification was cited before us,
the appellants conceded that the argument based on the construction of Rule 3
was not available to them. Therefore, the contention that Rule 3 prohibits the
levy at a rate higher than 3 pies cannot succeed since the Rule itself has been
subsequently deleted and was not a part of the Rules at the relevant time when
the impugned notices were issued.
It is then argued that the impost of the tax
at the rate of 9 pies per ton is not valid, because it does not comply with the
requirements of s. 51(2) of the Act, and that raises the question of the
construction of the said section. Section 51(1) authorises the imposition of
the tax, provided, of course, the procedure prescribed by it and the
requirements laid down by it are satisfied. Sub-Section (2) then lays down that
the first imposition of any tax shall be subject to the previous sanction of
the Provincial Government. The appellants contend that in the context, the
"first imposition" means not only the first imposition in the sense
of an initial imposition, but it includes every fresh imposition levied at an
increased rate. On the other hand, the respondent Sabha contends that the first
imposition means only the initial levy or impost and cannot take in subsequent
imposts or levies. 'In this connection, it is relevant to remember that
sub-section (2) was added by the same Amending Act by which s. 79(XV) was
amended, and 194 so, it would not be unreasonable to assume that when the
legislature gave power to the local Government to prescribe by rules the
maximum rates permissible to be levied, it introduced sub-section (2) in s. 51
because it was thought necessary that whenever the rates were changed, the
imposition of the tax at the increased rates should receive the previous
sanction of the Government. If the respondent's construction is accepted, it
would mean that the respondent should obtain the previous sanction of the
Government at the initial levy and thereafter may go on increasing the rate of
the levy to any extent without securing the sanction of the Government in that
behalf. Now that Rule 3 has been deleted and no maximum has been or can be
prescribed by the Rules, it would be unreasonable to hold that the respondent
is given an unfettered and unguided authority to levy the impost in question at
any rate it likes. Since no ceiling has been placed by the Rules in that
behalf, it would, we think be fair to hold that if the rates are increased and
levy is sought to be imposed on the altered rates, the imposition of the levy
at these altered rates should be deemed to be included in the express on
"first imposition" under s. 51(2). We are, therefore, inclined to
accept the appellants' construction of s. 51(2).
That being so, it is necessary to enquire
whether the imposition of the tax @ 9 pies has received the previous sanction of
the local Government.
During the course of his arguments, Mr.
Sastri for the respondent attempted to suggest that sanction had been obtained
for the increase in the rates from time to time and a typed summary of the
notifications issued in that behalf was supplied to us at the time of
arguments. This summary refers to the three increments made in 1943, 1946 and
1947 respectively to which we have already referred. The summary read as if the
increments had been sanctioned by the State Government. But Mr. Sachin
Choudhury for the appellants contended that the 195 summary supplied by the
respondent was incomplete and inaccurate and that the examination of the
Gazette in which the notifications were published, would show that the
amendments in the rates had been made not with the previous sanction of the
Government, but by the Mining Local Board itself. Two of these notifications
were then produced before us by the respondent, and they supported the contention
made by Mr. Choudhury. Therefore, the argument that the imposition @ 9 pies per
ton has received the sanction of the Government must fail, and so, the impugned
notices which seek to recover the tax from the appellants @ 9 pies per ton must
be held to be invalid The respondent is entitled to levy tax only @ 3 pies per
ton because that levy has received the sanction of the Government, but if the
respondent intends to increase the rate of the said tax, it must follow the
procedure prescribed by s.51(2), provided of course, it is open to the
respondent to increase the said tax.
There is yet another point on which the
appellants are entitled to succeed, and that has reference to the fact that the
respondent is seeking to reopen some of the assessments made by it against the
appellants. The argument is that once an assessment is made for a specific
period, it becomes final and it is not open to the respondent to demand
additional amount by way of tax in respect of the said period. The genesis of
the tax is somewhat interesting. It appears that roads were constructed by the
Independent Mining Local Board at enormous cost at the request of the Mining
interests and even debt had to be incurred by the Board for completing the work
of the construction of roads.
Since the mining companies received
substantial benefit from these roads, the Legislature thought of levying a tax
on coal, and that is the origin of the tax. When the first notification was
issued on December 16, 1935 it authorised and sanctioned the imposition by the
Independent 196 Mining Local Board at Chhindwara in the Chhindwara District
"of a tax at 3 pies per ton on coal, coal dust or coke, manufactured at
the mines, sold for export by rail or sold otherwise than for export by rail,
within the jurisdiction of the Independent Mining Local Board." This tax
was recovered by the Board and thereafter by the respondent in respect of coal
whether sold inside the district of Chhindwara or sold outside the district of
Chhindwara or even outside the State of Madhya Pradesh. In other words, the
total coal produced by each mining lease-holder substantially came to be taxed.
But after the Constitution came into force, doubts arose as to whether Art. 286
of the Constitution did not preclude the respondent from recovering tax in
respect of coal exported out of the State of Madhya Pradesh, and in view of the
advice given to the respondent by the Government of Madhya Pradesh, the
respondent did not collect the tax in respect of coal which was exported by
rail outside the State of Madhya Pradesh from about 1952.
The respondent wanted to consult legal
opinion on this point, but the State Government refused permission to the
respondent to incur expenditure in that behalf.
Subsequently however, this question came to
be decided by the High Court of Madhya Pradesh in a writ petition filed by M/s.
Newton Chickli Collieries (Pvt.) Ltd. (No. 265 of 1957). The High Court held
that the tax levied by the janapada Sabhas under s.51 of the Act did not amount
to a sales tax nor to an excise duty and so, the respondent thought that it could
levy tax even on coal exported by rail outside the State of Madhya Pradesh. In
fact after this judgment was pronounced by the High Court on August 6, 1958,
the Provincial Government withdrew its instructions to the respondent not to
levy tax on exported coal. That is how the respondent has issued notices
against the appellants in respect of coal exported by rail out of the State of
Madhya Pradesh in regard to the years for which assessment has already been
levied against the 197 appellants for the coal not so exported, and the
contention of the appellants is that this reopening of the assessment is not
permissible under the Rules.
This contention appears to be well-founded.
We have already seen the scheme of the Rules and we have noticed that Rule 10
provides that if no objection is filed, the Chairman's assessment shall be
final and if an objection is received, the decision of the Mining Board would
be final. In other words, the scheme clearly provides that at the end of each
six monthly period, the tax has to be assessed, notices to be issued to the
assessee, his objections to be considered and the tax to be ultimately
determined in the light of the decision on the said objections; and under Rule
10, the two decisions specified therein become final. It may be that the Rules
do not prescribe any limitation within which these steps have to be taken by
the respondent for each period, but that is another matter. In view of the
provisions of Rule 10, it is difficult to hold that the respondent is entitled
to reopen assessments already made and rendered final under the said Rule.
There is no other provision for reopening assessment as we have under sections
34 & 35 of the Indian Income Tax Act, and so,. the respondent is not
justified in issuing notices for the years which arc covered by assessment
orders already passed. The finality provided for by Rule 10 will work as much
against the respondent as against the assessees.
In support of the appeals, another argument
was sought to be raised against the increase of the rates. It was urged that
the tax is in the nature of an excise duty or a sales-tax and, therefore, any
increase in the said tax beyond the limit of 3 pies--the continuance of which
has been saved by the provisions of Art. 143 of the Government of India Act, 1935 and Art. 277 of the Constitution-will be invalid. This argument is based on
the terms used 198 in the notification of December 16, 1935. Since coal is described as manufactured at the mines, the argument is that it is in the
nature of an excise duty and since the notification also refers to coal sold
for export by rail or sold otherwise than for export by rail, it is' argued
that it is a sales-tax. On the other hand, the respondent contends that it is
neither a sales-tax nor an excise duty and as such, the rate can be increased
subject, of course, to the requirements of s. 51 (2) of the Act. It appears
that by notification issued on September 6, 1943, the preamble of the Rules was
modified by substituting for the words "'coal, coal dust or coke" by
"coal and dust coal" and by deleting the words "'manufactured at
Curiously enough, these amendments have not
been made in the original notification itself. We have already noticed that
this latter notification deleted Rule 3. Some arguments were urged before us by
learned counsel on both sides as to the effect of this notification which
modified the preamble to the Rules. We do not, however, think it necessary to
consider these arguments in the present appeals because of our conclusion that
the impugned notices levying the tax @ 9 pies per ton are invalid for two
reasons: the increase in the rates has not been sanctioned by the State
Government under s. 51 (2) and an attempt to recover at the increased rate the
tax for the years already covered by assessment orders passed in that behalf,
is barred by Rule 10.
The result is, the appeals and the writ
petitions are allowed and an appropriate direction or order is issued
restraining the respondent from recovering the tax at a rate higher than 3 pies
per ton and also restraining the respondent from recovering any additional tax
in respect of the years for which tax has already been assessed against the
appellants. The same will be the order in the other companion appeals. The 199
appellants will be entitled to their costs, but one set of bearing fees will be
Appeals and writ petitions allowed.