The State of West Bengal Vs. The
Indian Iron & Steel Co. Ltd. [1970] INSC 92 (16 April 1970)
16/04/1970 HEGDE, K.S.
HEGDE, K.S.
SHAH, J.C.
CITATION: 1970 AIR 1298 1971 SCR (1) 275 1970
SCC (2) 39
CITATOR INFO :
R 1978 SC1217 (25)
ACT:
Bengal Cess Act, 1880, Ss. 72, 102-Value of
coal supplied from colliery to owner's factory-Whether cess leviable
thereon-Mode of computation of value-If can be questioned in suit or only by
procedure prescribed by Act.
HEADNOTE:
The respondent Company, which was itself
primarily engaged in the manufacture of iron and steel products, owned a
colliery. The coal raised from this colliery was mainly used in the
respondent's iron and steel factories though some cog was also sold to
outsiders. In the years 1946-47, 1947-48 and 1948-49, the respondent Company
lodged returns with the Collector of Burdwan under s. 72 of the Bengal Cess
Act, 1880 in which the Company valued the coal supplied by the colliery to its
factories at a rate per ton less than the actual cost of raising the coal, and
computed the profits of the colliery on that basis. The Cess Deputy Collector,
who was the assessing authority, rejected the returns and computed the profits
of the colliery for the purpose of assessment to, the cess by valuing the coal
at the control rate in force at the time. The 'assessing authority under the
Bengal Primary Education Act, 1930, the provisions of which were similar to the
Bengal Cess Act, also computed the education cess payable by the Company for
the years 1946-47 and 1947-48 on the same basis. The Respondent Company paid
the amounts 'assessed as cess under each Act under protest and thereafter
instituted a suit for refund of the amount which it contended was collected
from it in excess. It also prayed for a declaration that it had earned no
profits from the colliery during the three years from the coal consumed in its
own steel factories and as such no cess could have been assessed and levied on
it. The Trial Court decreed the suit and an appeal to the High Court was
dismissed.
In the appeal to this Court it was contended
inter alia on behalf of the Respondent (i) that supply of coal made by the
colliery to its factories could not be considered a sale and without a sale,
there could be no profit; accordingly in computing the profits of the colliery
the value of the coal supplied to its factories should not have been taken into
consideration; and (ii) that in view of the decision of this Court in Tata Iron
and Steel Company's case it was not open to the assessing authority to value the
coal supplied to the factories at the controlled rate; he should have dis-
integrated the ultimate Profits earned and found out the profit 'earned by the
mine.
HELD : Allowing the Appeal (i) In determining
the profits earned by the colliery, it was open to the assessing authority to
take into consideration the value of the coal supplied-to the factories and
workshops of the Respondent Company. [281 B] Tata Iron and Steel Co. Ltd. v.
The State of Bihar, [1963] Supp. 1 S.C.R. 199, followed.
(ii) The mode of computation is a matter for
the assessing authorities except where the computation is done in violation of
any provision of 276 law. If the respondent company was aggrieved by the mode
of computation adopted by the assessing authority, it should have agitated that
question firstly before that authority and thereafter before the appellate
authority. Having not done so, the company cannot be permitted to raise that
question in the, present suit; otherwise the finality contemplated by s . 102
of the Act would become illusory.
The levy under the Act is imposed by a
special lay which law also provides its own remedies for correcting the errors
that, may be committed by the assessing authority. Where a liability not
existing previously is created by a statute which statute at the same time
provides a special or particular remedy for correcting any mistake that may
occur in its enforcement the aggrieved party must adopt the form of remedy
given by the statute and no other. [281 D-H; 282 A-B] Collector of South Arcot v.
Mask & Co., 67, I.A. 222, distinguished.
Dhulabhai and Ors. v. The State of Madhya
Pradesh and Anr. [1968] 3 S.C.R. 662, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 1729 of 1966.
Appeal from the judgment and decree dated
April 17, 1962 of the Calcutta High Court in Appeal from Original Decree No. 127
of 1955.
P. K. Chakravarti and Prodyot Kumar
Chakravarti, for the appellant.
M. C. Chagla and D. N. Mukherjee, for the
respondent.
B. Sen, G. S. Chatterjee, for the intervener.
The Judgment of the Court was delivered by
Hegde, J.-Two questions of law viz. (1) whether the levies impugned in the suit
from which this appeal arises, are invalid and (2) whether the civil courts
have jurisdiction to entertain that suit, arise for decision in this appeal by
certificate.
The respondent company is the owner of
Ramnagar colliery.
It is also the owner of iron and steel
factories and workshops at Hirapur and Kulti. Ramnagar colliery is a "coal
mine". The coal raised from the Ramnagar colliery is by and large used in
the manufacturing processes carried on in the iron and steel factories and
workshops at Hirapur and Kulti. Some coal was also sold by the respondent
company to outsiders. In the years 1946-47, 1947-48 and 1948-49, the respondent
company lodged a return before the Collector of Burdwan under s. 72 of the
Bengal Cess Act of 1880 (to be hereinafter referred to as the Act). Therein the
company valued the coal supplied by the colliery to the factories mentioned
earlier at Rs. 6,/11/5 per ton, a sum less than the actual cost of raising the
coal and computed the profits of the colliery on that basis. The company
adopted the same basis for the purpose of 277 paying education cess under s. 31
of the Bengal Primary Education Act, 1930. The provisions of the said Act in
the matter of levy of education cess are similar to that of the Act. The Cess
Deputy Collector who was the assessing authority under the Act as well as the
Collector of Burdwan, the assessing authority under the Bengal Primary
Education Act, rejected the returns submitted by the respondent company and
computed the profits of the colliery, valuing the coal supplied by it to the
factories mentioned at Rs. 12/8/- per ton which was the control rate at the
relevant time. On that basis the cess Deputy Collector called upon the
respondent company to pay Rs. 39,852/5/- as road cess and public works cess for
the years 1946-47, 1947-48 and 1948-49. The Collector of Burdwan computed the
education cess payable by the company for the years 1 946-47 and 1947- 48 at
Rs. 21,661 90 P. and called upon the company to pay the same. The respondent
company paid the said amounts under protest. Thereafter it instituted the
present suit for refund of Rs. 44,428/4/3, which according to it was the excess
amount collected from it. It also prayed for a declaration that it earned no
profits from the Ramnagar colliery during the years 1946-47, 1947-48 and
1948-49, from the coal consumed in its own workshops and factories and as such
no road or public works cess or education cess in respect of the same could
have being assessed and levied on it and that the impugned levies were ultra
vires.
The trial court decreed the suit as prayed
for. The appellant took up the matter in appeal to the High Court of Calcutta.
The High Court dismissed the appeal by its judgment dated April 17, 1962.
In order to decide the points in controversy,
it is necessary to read the relevant provisions of the Act. It is not necessary
to refer to the provisions of the Bengal Primary Education Act separately as
the provisions therein, relevant to the topics under discussion being similar
to those in the Act. The preamble to the Act says that it is a law relating to
rating for the construction, charges and maintenance of District communications
and other works of public utility and of Provincial Public Works within the
territories administered by the Lt. Governor of Bengal and to the levy of a
road cess and a public works cess on immovable property situate therein and to
the construction of local committees for the management of the proceeds of the
said road cess and also to provide for the construction and maintenance of
other works of public utility out of the proceeds of the' said road cess. It
was not disputed that the validity of education cess depends on our finding as
regards the validity of public works cess and road cess.
Section L12Supp.CI/71 278 5 of the Act which
is the charging section read at the relevant time:- "From and after the
commencement of this Act in ;any district or any part of a district, all
immovable property situate therein except as otherwise in section 2 provided,
shall be liable to the payment of a road cess and a public works cess."
Section 6 at the relevant time provided "The road cess and the public
works cess shall be assessed on the annual value of lands and until provision
to the contrary is made by Parliament, on the annual net profits from mines,
quarries, tramways, railways and other immovable property ascertained
respectively as this Act prescribed." That section further provides that
the rates at which such cesses respectively shall be levied for each year shall
be determined for such year in the manner prescribed in the Act. Part 11 of the
Act sets out the mode of assessment.
Chapter II lays down the procedure for the
valuation of lands. Chapter III provides for rating and levy of cesses.
Chapter IV prescribes the mode of valuation
and assessment of lands held rent free and payment and recovery of cesses in
respect thereof. Chapter V deals with valuation, assessment and levy of cess on
mines, railways and other immovable property. This chapter contains ss. 72 to
84.
Section 72 at the relevant time read "On
the commencement of this Act in any district. and thereafter before the close d
each year, the Collector of the district shall cause a notice to be served upon
the owner, chief agent, manager or occupier of every mine, quarry, tramway,
railway and other immovable property not included within the provisions of
Chapter 11; such notice shall be in the form in Schedule E contained and shall
require such owner, chief agent, manager or occupier to lodge in the office of
such Collector within two months a return of the net annual profits of such
property calculated on the average of the annual net profits thereof for the
last three years for which ac- counts have been made up.
Such Collector may in his discretion extend
the time allowed for lodging such return." Section 72A prescribes the
penalty for omitting to lodge a return. Section 73 prescribes the manner of
submitting the return 279 when the property lies in different districts.
Section 74 provides for the submissions of the return when property is partly
in and partly outside the State. Section 75 is important for our present
purpose. That section at the relevant time read :
"If such return be not furnished within
the period of two months from the date on which such notice was served or
within any extended time allowed by the Collector of the district or if such
Collector shall deem that any return made in pursuance of such notice is untrue
or incorrect, such Collector shall proceed to ascertain and determine by such
ways or means as to him shall seem expedient, the annual net profits of such
property calculated as aforesaid." Section 76 as it stood at the relevant
time provided that if the Collector is unable to ascertain the annual net
profits of any property assessable under Chap. V in accordance with the
provisions of s. 75, he may, by such ways and means as shall seem to him
expedient ascertain and determine the value of such property and shall
thereupon determine six per centum on such value to be the annual net profits
thereon.
Section 78 provides for the issue of a notice
of valuation to the person concerned. The other provisions in that Chapter are
not relevant for our present purpose. Now we come to s. 102 in Chapter VII.
That section reads "Every person who shall deem himself to be aggrieved by
any valuation made by a Collector under the provisions of section 75 or 76 may,
within one month after the issue of the ,notice mentioned in section 78 and
every person who shall deem himself to be aggrieved by any valuation made by
the Collector under the provisions of any other section of this Part may within
one month after the posting up of a copy of the valuation roll as mentioned in
section 35, prefer his objections to the Collector; and if such objections, or
any of them, are disallowed, may within one month of such disallowance, appeal
to the Commissioner against such valuation, and the decision of the
Commissioner shall be final.
Before proceeding to discuss the questions of
law arising in this appeal, it is necessary to mention that the respondent
company had unsuccessfully appealed against cesses imposed on it.
It was urged on behalf of the respondent that
supply of coal made by Ramnagar colliery to the factories and workshops cannot
be considered as a sale and without a sale, there can be no profit; and hence
in computing the profits of the colliery the value of the 280 coal supplied to
the factories and workshops mentioned earlier should not have been taken into
consideration. This contention has to be rejected in view of the decision- of
this Court in Tata Iron and Steel Co. Ltd. v. The State of Bihar(1). The ratio
of that decision directly bears on the- point under consideration. It may be
noted that the appellant therein as well as respondent in this appeal are both
Tata concerns. In that case the appellant company was the owner of certain
mines in Bihar from where it extracted iron ore which it utilized in its
factory at Jamshedpur for making iron and steel. Under ss. 5 and 6 of the Act
as amended in Bihar all immovable property situate in any part of the State of
Bihar was liable to the payment of local cess which in the case of mines was to
be assessed on the annual profit earned by them. For the assessment years
1954-56, the company was assessed by the Cess Deputy Collector on the basis
that it had made profits cf Rs. 4/7/- per ton of iron ore extracted. Tata Iron
and Steel Co. Ltd.
claimed that it was not liable to the payment
of cess as it did not sell any ore as such and could not therefore be treated
as having made any profit' from the mines within the meaning of s. 6 of the
Act. The question in that case was whether the appellant company could in law
be said to have derived "profit" from the mines when the ore
extracted was not sold by it as such but was utilised by it for the purpose of
manufacturing finished products which it sold.
This Court ruled in that appeal that on a
true construction of ss. 6 and 72 of the Act as amended in Bihar which amend-
ments are not material for the decision of this case,-where activities other
than mere winning the ore are carried on by an assessee with a view to convert
the ore into a finished product and there is a transaction of sale of the
ultimate product, the profit derived from the working of the mine is embedded
in the final realisation, and the profit which accrues to the assessee from the
mining operation can be disintegrated from the total profit and ascertained and
cess levied thereon. Mr. Chagla, learned Counsel for the assessee tried to
distinguish that decision on the ground that in Tata Iron and Steel case, the
iron ore won became imbedded in the steel produced but that is not the position
in the present case as no part of the coal raised got imbedded in the ultimate
product namely the steel. This difference in fact has no bearing on the ratio
of the decision. The rule laid down in Tata Iron and Steel case is that where
the profit derived from the working of a mine is imbedded in the profits earned
by the sale of the ultimate product, it is open for the 'assessing authority to
disintegrate that profit and find out the profits earned by the mine. The fact
that in the one case the winning was that of the iron and in the other it is
coal makes no difference in principle. In that case this Court ruled that the
winning of the ore and converting it into a finished product (1) [1963] Supp.
1, S.C.R. 199.
281 could not be construed as two
transactions conducted by them but it should be viewed as a single integrated
undertaking for the production of steel and steel products. Similar is the
position in the present case. Hence we hold that it was open to the assessing
authority to take into consideration the value of the coal supplied to the
factories and workshops referred to earlier in computing the profits of the
colliery.
Mr. Chagla next assailed the cesses imposed
on another ground. He contended that in view of the decision of this Court in
Tata Iron and Steel Company's case(1) it was not open to the assessing
authority to value the coal supplied to the factories and workshops at the
controlled rate; he should have, as suggested in that decision disintegrated
the ultimate profits earned and found out the profit earned by the mine. We I
are of the opinion that it is impermissible for us to go into that question in
these proceedings. The liability to pay tax is one thing and mode of
computation of the net profits is 'another. The mode of computation is a matter
for the assessing authorities except where the computation is done in violation
of any provision of law.
If there was any mistake in the computation,
that mistake should have been got rectified by following the procedure
prescribed. in the Act. If the respondent company was aggrieved by the mode of
computation adopted by- the assessing authority, it should have agitated that
question firstly before that authority and thereafter before the appellate
authority. Having not done so, the company cannot be permitted to raise that
question in the present suit;
otherwise the finality contemplated by s. 102
of the Act would become illusory. It is true, as observed by Lord Thankerton in
Collector of South Arcot v. Mask & Co.(2) that it is settled law that the
exclusion of jurisdiction of a civil court is' not to be readily inferred but
that such exclusion must either be explicitly expressed or clearly implied. It
is also well settled as observed by his Lordship that even if the jurisdiction
is so excluded, the civil courts have jurisdiction to examine into cases where
the provisions of the Act have not been complied with, or the statutory
tribunal has not acted in conformity With the fundamental principles of
judicial procedure. In the present case what is contended is not that any
provision in the Act had been ignored by the assessing authority but that s. 72
thereof has not been properly interpreted by that authority. If the provisions
of the Act form a precise, self contained code, as we hold them to be, the
assessee cannot be permitted to challenge the levy on the ground that the levy
imposed on him is excessive. It must be remembered that the levy under the Act
is imposed by a special law which law also provides its own remedies for
correcting the errors that may be committed by the assessing authority.
(1) [1963] Supp. S.C.R.199 (2) 67, I.A. 222;
282 Where a liability not existing previously
is created by a statute which statute at the, same time provides a special or
particular remedy for correcting any mistake that may occur in its enforcement
the aggrieved party must adopt the form of remedy given by the statute and no
other. In Dhulabhai and ors. v. The' State of Madhya Pradesh and anr., (3) our
present Chief Justice speaking for the Court has formulated the circumstances
under 'Which the jurisdiction of the civil court can be invoked in the matter
of a levy of tax. Therein this Court has laid down that where the statute gives
a finality to the orders of the special tribunals, the civil courts'
jurisdiction must be held to be excluded, if there is adequate remedy to do
what the civil court would normally do in a suit. It is further 1-aid down in
that case that questions of the correctness of the Asses sment apart, from its
constitutionality are for the decision of the authorities and a civil suit does
not lie if the orders of the authority are declared final or there is an
express prohibition under the particular Act. We do not think that the civil
courts have jurisdiction to examine the correctness of the computation of the
net profits made by the authorities under the Act.
For the reasons mentioned above, this appeal
is allowed and the suit brought by the respondent company dismissed with costs
throughout.
R.K.P.S. Appeal allowed.
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