Ultra Tech Cement
Ltd. (earlier Ultratech Cemco Ltd.) Vs. State of Maharashtra & ANR.
J U G D M E N T
R. V. Raveendran J.
1.
The
appellant (the term `appellant' refers to M/s Larsen & Toubro Ltd. till date
of its demerger in 2004 and thereafter to M/s. Ultra Tech Cement Ltd.) obtained
a mining lease for limestone from the Government of Maharashtra, as per lease
deed dated 12.2.1980. Under the terms of the said lease, the appellant as lessee
was required to pay dead rent as per clause V(1) and (2), royalty in terms of
clause V(3) and surface rent, water rate and cesses in terms of clauses V(4) of
the lease deed. In response to a notice served by the Collector on the
appellant demanding payment of surface rent (equal to non-agricultural
assessment) and the Zilla Parishad Cess (for short `ZP Cess') and Gram Panchayat
Cess (for short `GP Cess'), the appellant informed the Collector by letter
dated 3.1.1991, that it was not liable to pay the ZP cess and GP cess and that those
cesses may be deleted from the demand.
However by notice of demand
dated (nil) July 1991, revised by notice dated 28.1.1994, the Collector,
Chandrapur, reiterated the demand for surface rent as also the ZP and GP cesses
for the years 1987 to 1992, on the following ground: "The Government of Maharashtra
vide its letter Industries Energy and Labour Department (IND) No.TQCR-2176/45691/1172/IND-9
Bombay dated 13.06.1978 and Director, Geology & Mining, Govt.of
Maharashtra, Nagpur vide letter No.STC/295/39/2007 dated 09.06.1989 have issued
instructions regarding fixation of surface rent on the lease area used for mining
purpose. As per these directives and Rule 27(1)(d) of Mineral Concession Rules,
1960, the lessee is required to pay the surface rent at such rate not exceeding
the land revenue and the cesses assessable on the land. Since the mining operation
is the use of land other than the Agriculture purpose, the rate of
non-agricultural assessment, together with the cesses assessable on the land,
are applicable for levying the surface rent."
(emphasis
supplied)
2.
The
appellant was aggrieved by the demand in so far as it relates to ZP cess and GP
cess. According to appellant section 151(1) of Maharashtra Zilla Parishads and Panchayat
Samitis Act, 1961 (`Zilla Parishad Act' for short) exempted the lessees from
the state government from payment of the ZP cess. The appellant also contended
that it was not liable to pay the GP cess, as section 127 (1) of Bombay Gram
Panchayats Act, 1958 (`Panchayats Act' for short) provides for levy of GP cess
at the rate of one hundred paise on every rupee payable to the state government
as ordinary land revenues in the area within the jurisdiction of the Panchayat,
and as the appellant was exempted from paying land revenue under section 64 of the
Maharashtra Land Revenue Code, 1966 (`Revenue Code' for short) read with clause
VII(1) of the lease deed, it was not liable to pay the GP cess also. The appellant
admitted the liability to pay surface rent equal to non-agricultural assessment.
3.
On
the other hand, the respondents contend that the demand for ZP cess and GP cess
is authorized by Rule 27(1)(d) of the Mining Concession Rule, 1960 (`MC Rules'
for short) read with clause V(4) of the lease deed and the appellant is liable
for the same. The submission of the respondents is that they have not made any
demand for cess under the Zilla Parishads Act or Panchayats Act and that the
demand for ZP cess and GP cess is as a part of the surface rent. According to
the respondents, the reference to ZP cess and GP cess assessable on the land,
in the lease deed is only for the purpose of arriving at the figure of surface
rent. The respondents' submission is that though "cesses per se could not have
been levied under the Mineral Concession Rules", cesses assessable on the
land has been demanded as a mode of calculating the charges for the surface
area used by the lessee; and 4so long as the amount charged does not exceed the
land revenue plus ZP cess and GP cess assessable on the land, the lessees can
have no grievance.
4.
On
the rival contentions urged, two questions arise for our consideration: (i) Whether
the appellant is liable to pay ZP Cess? (ii) Whether the appellant is liable to
pay GP Cess?Re: Question No.(i)
5.
Rule
27 of the Mining Concession Rules, 1960 prescribes the conditions subject to which
a mining lease should be made. Clause (d) of sub-section (1) thereof is
relevant and is extracted below : "27. Conditions - (1) Every mining lease
shall be subject to the following conditions - xxxx xxxx (d) the lessee shall
also pay, for the surface area used by him for the purposes of mining
operations, surface rent and water rate at such rate, not exceeding the land
revenue, and cesses assessable on the land, as may be specified by the State
Government in the lease." (emphasis supplied)Clause 4 of Part V of the
lease deed reads thus:
"The
lessee/lessees shall pay rent and water rate to the State Government in respect
of all parts of the surface of the said lands which shall from time to time be
occupied or used by the lessee/lessees under the authority of those presents at
the rate of Rs...and Rs...respectively per annum per hectare of the area so
occupied or used and so in proportion for any area less than a hectare during the
period from the commencement of such occupation or use until the area shall
cease to be so occupied or used and shall as far as possible restore the
surface land so used to us in original condition. Surface rent and water rate shall
be paid as hereinbefore detailed in clause (2) provided that no such rent/water
rate shall be payable in respect of the occupation and use of the area
comprised in any roads or ways to which the public have full right of access.
1. Surface rent equal
the non-agricultural assessment.
2. Water rates not
exceeding the land revenue.
3. Cesses assessable on
the land (ZP and GP Cesses) subject to the revision of rates prescribed by
government from time to time." (emphasis supplied) A combined reading of
Rule 27(1)(d) of the Rules and Clause V(4) of the lease deed, makes it clear that
the lessee under the mining lease deed is liable to pay, in addition to dead
rent and royalty, the following amounts : (i) surface rent equivalent to non-agricultural
assessment; (ii) water rate not exceeding the land revenue and (iii) cesses
assessable on the land specified by the state government in the lease, that is
ZP cess and GP cess assessable on the land subject to revision of rates
prescribed by government from time to time.
1.
2.
3.
4.
5.
6.
What
is significant to note is that the State Government has stipulated in the lease
that the mining lessee shall pay ZP cess assessable on the land. It has not
used the words `an amount equivalent to ZP cess that could be or may be assessed
on the land.' The word `assessable' means liable to be assessed. Therefore when
Clause V(4) of the lease deed requires the lessee to pay ZP cess assessable on
the land, it would mean that the mining lessee 6would be liable to pay ZP
cess if it is so due under the Maharashtra Zilla Parishads Act.
7.
Section
151(1) of the Zilla Parishad Act which is relevant is extracted below: "151.
(1) - In the Vidarbha area of the State of Maharashtra, every malik- makhuza,
raiyat malik and occupant and every raiyat, other than a sub- tenant and lessee
from the State Government shall be liable in respect of the land held by him in
the district to pay cess for the purpose of this Act at the rate of twenty
paise or at such increased rate not exceeding two hundred paise as may be determined
by the State Government under section 155 on every rupee of the land revenue or
rent assessed or fixed on such land or the lease money payable in respect
thereof, whether or not such land revenue or rent or lease money or any portion
thereof has been released, compounded for or redeemed.
[Note : the words in italics
should be read as `at the rate of two hundred paise or at such increased rate
not exceeding seven hundred paise as may be determined by the concerned Divisional
Commissioner" after amendment of section 151(1) by Maharashtra Act 1 of
1993] (emphasis supplied)It is evident from the said provision of the Zilla
Parishad Act that a `lessee from the state government' is not liable to pay ZP
cess under section 151 (1) of the Zilla Parishads. The ZP cess can be levied
only in terms of and under the Zilla Parishads Act and cannot be levied by the
state government, under the terms of a contract. Where a particular cess is leviable
under an enactment, and the contract says that the lessee is liable to pay such
cess leviable under that enactment, but the enactment exempted a specified class
of persons (to which the lessee belongs) from paying the said cess, the state government
cannot make the lessee liable to pay the said cess on the ground that under the
contract entered under a different enactment, the lessee is liable to pay such
cess.
For example, if a
Sales Tax Act exempts the sale of particular goods from tax, the seller of such
goods cannot demand Sales Tax on the ground that the contract of sale provides
that the buyer is liable to pay all taxes leviable under any enactment. It
follows that if a lessee from the State Government is exempted from payment of ZP
cess leviable under section 151(1) of the Zilla Parishads Act, by section
151(1) itself, the State Government cannot `levy' the said ZP cess under a
contract entered in terms of the Mineral Concession Rules. For payment of a
cess under a particular Act, liability under that Act is condition precedent.
Therefore if ZP cess is not due or payable by a lessee under the ZP Act, the
State cannot say that the amount is due under the lease deed executed in terms of
the Mineral Concession Rules.
8.
The
effect of clause V(4) of the lease deed providing that the mining lessee shall
pay `ZP cess assessable on the land' is this: if it is liable to be paid under the
Zilla Parishads Act, that should be paid by the lessee and payment thereof is a
term of the lease; and if the lessee is not liable to pay ZP cess in view of
the exemption under the ZP Act, it is not payable. The position would have been
different if the lease deed had stipulated that the lessee is liable to pay as
consideration, in addition to other sums payable, a sum equivalent to ZP cess
under Zilla Parishad Act, irrespective of whether the lessee is liable to pay
such cess under the Zilla Parishads Act or not. If the lease deed had contained
such a term, the lessee would have been liable to pay a sum equivalent to ZP cess,
irrespective of his liability under the Zilla Parishads Act.
9.
We
may in contrast, refer to the term in the lease regarding payment of surface rent.
The clause says what is payable is `surface rent equal the non-agricultural
assessment'. The clause does not say that the lessee is liable to pay
`non-agricultural assessment' assessable on the land. Consequently, irrespective
of whether non-agricultural assessment is leviable or not under the Maharashtra
Land Revenue Code, 1966, the lessee shall be liable to pay an amount equivalent
to non-agricultural assessment, as surface rent. What is payable under the contract
is `surface rent' and non-agricultural assessment is made only the basis for
quantification of the surface rent. But the wording relating to payment of ZP
cess and GP cess, are significantly different from the wording relating to
payment of surface rent.
10.
There
is yet another indication that what is required to be paid in ZP cess, only if
it is leviable under Zilla Parishads Act. Clause V(4) provides 9that the mining
lessee shall pay "cesses assessable on the land (ZP and GP cesses) subject
to the revision of rates prescribed by Government from time to time." This
refers to revision by the State Government in exercise of the power under
section 151(1) of Zilla Parishads Act and not in exercise of any power under the
lease deed, as a lessor. This also shows that ZP cess as revised under the
Zilla Parishads Act is payable only if it is payable under the Zilla Parishads
Act and not otherwise. Re: Question No.(ii)
11.
Section
127 of the Bombay Gram Panchayats Act, 1958 deals with levy and collection of
cess. The said section is extracted below : "(1) The State Government
shall levy cess at the rate of one hundred paise, on every rupee of every sum payable
to the state government as ordinary land revenue in the area within the jurisdiction
of a panchayat and thereupon, the state government shall (in addition to any cess
leviable under the Maharshtra Zilla Parishads and Panchayat Samitis Act, 1961)
levy and collect such cess in such area. (2) to (4) deleted by Maharashtra Act
10 of 1992. (5) For the purpose of levying and collecting the cess referred to
in sub- section (1), in the Bombay area athe provisions of section 144
(including the Fourth Schedule), 145, 147 and 149, in the Vidarbha area, the provisions
of section 151, and in the Hyderabad area, the provisions of section 152 of the
Maharashtra Zilla Parishad and Panchayat Samitis Act, 1961, shall apply thereto
as they apply to the levy of cess leviable under section 144, section 151, or
as the case may be, section 152 of that Act." (emphasis supplied)Section
64 of the Maharashtra Land Revenue Code, 1966 (`Code' for short) reads thus:
"64. All land
liable to pay revenue unless specially exempted. All land, whether applied to
agricultural or other purposes, and wherever situate, is liable to the payment
of land revenue to the State Government as provided by or under this Code
except such as may be wholly exempted under the provisions of any special contract
with the State Government, or an any law for the time being in force or by
special grant of the State Government. But nothing in this Code shall be deemed
to affect the power of the Legislature of the State to direct the levy of revenue
on all land under whatever title they may be held whenever and so long as the
exigencies of the State may render such levy necessary."
(emphasis
supplied)
The term `land revenue'
is defined in section 2(19) of the said Code as under:- "(19) "land
revenue" means all sums and payments, in money received or legally claimable
by or on behalf of the State Government from any person on account of any land
or interest in or right exercisable over land by or vested in him, under whatever
designation such sum may be payable and any cess or rate authorised by the State
Government under the provisions of any law for the time being in force; and
includes premium, rent, lease money, quit rent, judi payable by an inamdar or any
other payment provided under any Act, rule, contract or deed on account of any land."
12.
Section
127(1) of the Panchayats Act casts a liability to pay one hundred paise as cess
on every rupee of every sum payable to the state government as ordinary land revenue.
This cess is described as Gram Panchayat cess or GP cess. The effection of
section 127(1) is that wherever land revenue is payable by a person, such person
liable to pay the land revenue, will also have to pay GP cess equal to the amount
of the land revenue. Therefore only a person who is liable to pay land revenue
will be liable to pay GP cess. Section 64 of the Land Revenue Code provides
that all lands are liable to payment of land revenue to the state government except
such as may be wholly exempted under the provisions of the special contract with
the state government. Clause VII(1) of the lease deed dated 12.2.1980 between
State Government and the appellant provides such exemption as it says the lessee
shall not be liable to pay land revenue.
We extract below clause
(1) of Part VII of the lease deed for ready reference: "Lessee to pay
rents and royalties, taxes, etc. 1. The lessee/lessees shall pay the rent,
water rate and royalties reserved by this lease at such times and in the manner
provided in the PARTS V and VI of these presents and shall also pay and
discharge all taxes, rates assessment and impositions whatsoever being in the nature
of public demands which shall from time to time be charged, assessed or imposed
by the authority of the Central and State Governments upon or in respect of the
premises and works of the lessee/lessees in common with other premises and works
of the like nature except demands for land revenues." (emphasis supplied)
13.
Even
under Clause V(4) of the lease deed, what is liable to be paid is `surface
rent' which is equivalent to the non-agricultural assessment, and not land revenue,
that is non-agricultural assessment itself. Thus there is a special contract
between the State and the appellant whereby the appellant is exempted from
paying land revenue. If the appellant is not liable to pay the land revenue, it
will not be liable to pay any GP cess, as section 127(1) 12makes it clear that
the said cess is payable only on the amount payable as land revenue. If no amount
is payable as land revenue, it follows as no amount is payable as GP cess. Therefore
appellant is not liable to pay GP cess under the Panchayats Act. Clause V(4) of
the lease deed requires payment of GP cess only if it is payable under the
Panchayats Act. For the reasons stated while dealing ZP cess, we hold that the
appellant is not liable to pay GP cess also.Conclusion
14.
The
object of clause V(4) of the lease deed is clear. Normally, all leases will
contain a provision as to who will be liable to pay the rates, taxes, cesses on
the property leased. If the lease deed is silent, then the lessor would be
liable to bear and pay the rates, taxes and cesses. Therefore, where the
understanding is that the lessee should be liable to pay the rates, taxes and
cesses in addition to the rent or premium, the lease deed will provide specifically
that the lessee shall bear and pay all rates, taxes and cesses. But this is
always on the assumption that there is a liability under the respective enactments
to pay any rates, taxes, cesses in respect of the property. All that clause
V(4) of the lease deed provides is that the lessee should bear and pay the ZP
cess and GP cess, if it is leviable under the respective enactments.
15.
In
view of the above, we accept the contention of the appellant that it is not
liable to pay ZP cess or CP cess to the State Government under the lease deed.
It is however made clear that if the said cesses (ZP cess and CP cess) become payable
by the appellant by virtue of any amendment to the provisions of the respective
enactments under which such cesses are leviable, then the appellant may have to
pay the same. Be that as it may.
16.
The
appeal is therefore allowed. The judgment of the High Court is set aside. The
writ petition filed before the High Court stands allowed and the demand notices
dated (nil) July 1991 as amended on 28.10.1994 in regard to the period 1987 to 1992
is quashed in so far as the demand for payment of ZP cess and CP cess.
...............................................J.
[ R. V. Raveendran ]
...............................................J.
[A. K. Patnaik]
...............................................J.
[Sudhansu Jyoti Mukhopadhaya)
New
Delhi
September
27, 2011
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