Rajasthan High Court - Jodhpur
Best Chemical Limestone Indus.Pvt. Ltd vs State And Ors on 22 October, 2024
Author: Pushpendra Singh Bhati
Bench: Pushpendra Singh Bhati
[2024:RJ-JD:38774-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Writ Petition No. 2183/2003
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[2024:RJ-JD:38774-DB] (7 of 18) [CW-2183/2003]
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For Petitioner(s) : Mr. Vikas Balia, Senior Advocate
assisted by Mr. D.D. Thanvi
Mr. Amit Vyas
Mr. Sachin Saraswat
For Respondent(s) : Mr. Mahaveer Bishnoi, AAG
HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI
HON'BLE MR. JUSTICE MUNNURI LAXMAN Judgment Reserved on 18/09/2024, 09/10/2024 Pronounced on 22/10/2024 Per Dr. Pushpendra Singh Bhati, J:
1. Since all the instant petitions involve a common controversy though with marginal variation in the contextual facts, therefore, for the purposes of the present analogous adjudication, the facts and the prayer clauses are being taken from the above-numbered D.B. Civil Writ Petition No. 2183/2003, while treating the same as a lead case; rival submissions of the parties and the observations of the Court, in the present judgment, would also be based, particularly, on the factual matrix of the lead case. 1.1. The prayer clauses read as under:-
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[2024:RJ-JD:38774-DB] (8 of 18) [CW-2183/2003] "It is, therefore, respectfully prayed that this Hon'ble Court may be pleased to issue a writ of Mandamus, Certiorari or any other appropriate writ, order or direction; and
(i) quash the notice Annexure-1, Assessment order Annexure-3 and quash the assessment proceedings conducted by respondent No.4 and the demand of land tax raised pursuant to these assessment proceedings be also quashed; and
(ii) consequently a direction may be issued to the respondents to refund the amount of land tax recovered from the petitioner after 30.08.1991 in the name of land tax, with interest @ 24% per annum from the date of deposit till the date of refund within a given time; or
(iii) in the alternative the respondents may be directed to issue necessary orders within a given time for adjustment of the amount of land tax recovered from the petitioner after 30.08.1991 with interest @ 24% against the future payments of dead rent/royalty in respect of mining lease held by the petitioner; and
(iv) any other appropriate writ, order or direction which the circumstances of the case may warrant be also passed; and
(v) the petitioner be awarded the costs of this writ petition."
2. Brief facts of the case, as placed before the Court by Mr.Vikas Balia, learned Senior Counsel assisted by Mr. D.D. Thanvi, Mr. Amit Vyas and Mr. Sachin Saraswat, are that the Rajasthan State Legislature enacted the Rajasthan Land Tax Act, 1985 (hereinafter referred to as 'Act of 1985') imposing tax pertaining to the lands situated in area(s) other than the urban area(s) in the State of Rajasthan, which are extensively being put to use inter alia for the purposes of excavating or extracting ores or minerals so as to augment the revenue of the State. In this (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (9 of 18) [CW-2183/2003] regard, the Legislature also framed the Rajasthan Land Tax Rules, 1985 which came into force w.e.f. 01.08.1985. 2.1. The constitutional validity of the Act of 1985 was challenged before the learned Single Judge of this Hon'ble Court by the petitioner and others by way of bunch of writ petitions, which were dismissed; the said judicial determination upon being challenged before the Division Bench of this Hon'ble Court at Jaipur Bench, was upheld. Subsequently, the constitutional validity of the Act of 1985 was challenged before the Hon'ble Apex Court in the case of Federation of Mining Associations of Rajasthan v. State of Rajasthan, (Civil Appeal No. 4287 of 1988, decided on 30.08.1991), wherein the Hon'ble Apex Court held that the said enactment, insofar as it purports to levy a tax on 'mineral bearing lands', is ultra vires and void. However, it was observed that any tax collected under the statute so far need not be refunded by the State Government, and if any amount of tax remains to be paid in respect of earlier periods, it will have to be paid by the assessee(s).
2.2. In pursuance of the aforesaid judgment, the Respondent No.4-Assessing Authority, issued the demand notices to the petitioner, demanding the land tax which was due for the period prior to 30.08.1991. The action of issuance of such notices was challenged before this Hon'ble Court, which was transferred to the Rajasthan Taxation Tribunal, and decided vide its majority judgment dated 06.12.1996; whereby the learned Tribunal quashed the demand notices so made, and at the same time, directed the assessing authorities concerned to proceed afresh (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (10 of 18) [CW-2183/2003] with the assessment of tax after issuing notice(s) under Section 9 of the Act of 1985.
2.3. Resultantly, the respondent No.4 issued the impugned notices dated 26.04.1997 and 12.05.1997 assuming that the Land Tax is payable for the period 1986-1987 to 1990-1991 in view of the judgment rendered in the case of Federation of Mining Associations of Rajasthan (supra) as well as on the basis of the records available with the Assessing Authority for the period upto 29.08.1991. Subsequently, the Assessing Authority finalized the assessment of land tax and passed the impugned assessment order dated 30.05.1997.
2.4. Further, the State Government also launched an Amnesty Scheme dated 20.12.1999 in respect of the recovery of tax and the petitioner deposited a total amount of Rs.11,98,393/- as land tax.
2.5. The aforementioned judgment of the Tribunal dated 06.12.1996 was challenged before the Hon'ble Apex Court in the case of Damodar Pd. Ladha Vs. State of Rajasthan, (Civil Appeal No. 5066/1997, decided on 30.08.2001) wherein the Hon'ble Apex Court quashed the Tribunal's judgment dated 06.12.1996 and held that the observations of the Hon'ble Apex Court made in the judgment Federation of Mining Associations of Rajasthan (supra) does not empower the State to demand and collect tax under a void law, but merely casts an obligation on the assessee(s) in the case(s), wherein the adjudication has already been made, and the adjudicated amount has not been paid till 30.08.1991.
(Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (11 of 18) [CW-2183/2003] 2.6. In the above backdrop and being aggrieved by the impugned action on the part of the respondents, the present petitions have been preferred claiming the afore-quoted reliefs.
3. Learned Senior Counsel for the petitioner submitted that the State Legislature did not have the competence to legislate upon the matter relating to levy of a tax on 'mineral bearing land(s)' based on royalty derived from the same, and therefore, the Act of 1985 enacted by the State Legislature was declared void, prospectively, by the Hon'ble Apex Court vide its judgment rendered in the case of Federation of Mining Association of Rajasthan (supra), thereby restraining the State Government, for all times to come, from recovering any tax amount, as provided under the Act of 1985.
3.1. Learned Senior Counsel further submitted that the interpretation of the expression, "If any amount of tax remains to be paid in respect of earlier period it will have to be paid by the assessees" as occurring in the judgment rendered in the case of Federation of Mining Association of Rajasthan (supra), can never be construed as an enabling provision for the State so as to initiate a proceeding for raising the demand of tax, followed by collection thereof, under a void law; but it merely casts an obligation on the assessee(s), in case of an already existing adjudication in regard to payment of such tax. 3.2. Learned Senior Counsel also submitted the imposition of liability for deposition of tax and assessment made in this connection after 30.08.1991, followed by proceedings initiated for recovery thereof under the Amnesty Scheme, is nothing but a (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (12 of 18) [CW-2183/2003] mistake of law, on part of the respondents, which in the given circumstances, is not sustainable in the eyes of law. 3.3. Learned Senior Counsel further submitted that the assessment of tax qua the period upto 29.08.1991 made by the Respondent No.4, pursuant to the aforesaid judgment dated 06.12.1996 delivered by the learned Taxation Tribunal, was done only after the verdict in the case of Damodar Pd. Ladha (supra), and therefore, such assessment is wholly illegal and without jurisdiction, in light of the clarification made by the Hon'ble Supreme Court in the said precedent law. 3.4. In support of such submissions, reliance has been placed on the following judgments:
a. Kannadasan v. State of Tamil Nadu, 1996 (5) SCC 670; b. Gurnam Singh v. The State of Rajasthan (S.B. Civil Writ Petition No. 5462/1997 decided by a Single Bench of this Hon'ble Court at Jaipur Bench on 18.12.2006);
c. Commissioner of Sales Tax, UP v. Auriaya Chamber of Commerce, Allahabad, (1986) 3 SCC 50; and d. Patchala Seethramajah v. Commissioner of Income Tax (Writ Petition No. 13506/1999, decided by a Division Bench of the Hon'ble Andhra Pradesh High Court on 08.09.1999);
4. On the other hand, Mr.Mahaveer Bishnoi, learned Additional Advocate General appearing on behalf of the respondents, while opposing the aforesaid submissions made on behalf of the petitioner, submitted that the Hon'ble Apex Court in Federation of Mining Association of Rajasthan (supra), has only prospectively invalidated the Act of 1985, and therefore any tax (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (13 of 18) [CW-2183/2003] collected under the Statute so far, need not be refunded by the respondents, and in case any amount of tax remains to be paid in respect of earlier period, it will have to be paid by the assessee(s). 4.1. Learned counsel further submitted that to understand the true effect of the subsequent clarificatory judgment of Damodar Pd. Ladha (supra) wherein it was held that recovery of tax can take place only in situations where the adjudication has taken place before the earlier judgment of Federation of Mining Association of Rajasthan (supra), which was delivered on 30.08.1991. Therefore, in the present case, by virtue of Sections 8 & 9 of the Act of 1985, as soon as the amount of tax becomes due, it shall be deemed that the adjudication has already taken place, as a necessary corollary thereof, and in the present case, the amount of tax so became due, pertained to the period prior to 30.08.1991.
4.2. Learned counsel also submitted that the judgments in the cases of Federation of Mining Association of Rajasthan (supra) as well as Damodar Pd. Ladha (supra), though were rendered by three-Judges Bench of the Hon'ble Apex Court, but in the given circumstances and the manner in which the same have been harped upon by the petitioner, do not render any assistance to the petitioner's claim, in the case at hand. Therefore, the petitioner, in the light of the aforementioned precedent law is not entitled to claim the refund of the amount in question. 4.3. In support such submissions, learned AAG relied upon the judgment rendered by the Hon'ble Apex Court in the case of (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (14 of 18) [CW-2183/2003] Mineral Area Development Authority and Anr. Vs. Steel Authority of India and Anr., 2024 SCC Online SC 1796.
5. Heard learned counsel for the parties as well as perused the record of the case, alongwith the judgments cited at the Bar.
6. This Court observes that the core of the matter dates back to the year 1985, wherein the Rajasthan State Legislature enacted the Act of 1985 imposing tax on the mineral bearing lands situated in area(s) other than the urban area(s) in the State of Rajasthan.
7. Thereafter, the determination in regard to constitutional validity of the Act of 1985 came to be made by the Hon'ble Apex Court in the case of Federation of Mining Associations of Rajasthan (supra) wherein it was held that the enactment insofar as it purports to levy a tax on 'mineral bearing lands' is ultra vires; relevant portion of the said judgment is reproduced as hereunder:
"8. Counsel for the respondents has, however, rightly pointed out that the declaration of invalidity of the levies should only be prospective and not retrospective. Both in India Cement [(1990) 1 SCC 12] as well as in Orissa Cement [1991 Supp (1) SCC 430 : JT 1991 (2) SC 439] cases, this Court has, for reasons discussed therein, declared similar legislations invalid only prospectively. In paragraphs 71 and 72 of the judgment in Orissa Cement case [1991 Supp (1) SCC 430 : JT 1991 (2) SC 439] , it has been held that the levy of such tax in a State should be declared to be unconstitutional only with effect from the date of the first judgment which declares the legislation to be invalid and not earlier. In the present case, since the High Court has upheld the levy and the levy is being declared unconstitutional only by this order, we direct that (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (15 of 18) [CW-2183/2003] our declaration will take effect only from the date of this judgment. In other words, any tax collected under the statute so far need not be refunded by the State Government and if any amount of tax remains to be paid in respect of earlier periods, it will have to be paid by the assessee. However, as and from the date of this judgment, the impugned tax imposed by the Act in question will not be enforceable."
8. In pursuance of the aforesaid judgment, the Respondent No.4 i.e., the Assessing Authority, issued the impugned demand notices to the petitioners, which were challenged and quashed by learned Rajasthan Taxation Tribunal; following the directions of the Tribunal, the Assessing Authority (Respondent No. 4) issued the impugned notices and passed the impugned assessment order.
9. The aforementioned judgment of the learned Tribunal was challenged before the Hon'ble Apex Court in the case of Damodar Pd. Ladha v. State of Rajasthan, Civil Appeal No. 5066/1997, decided on 30.08.2001; the relevant portion of the said judgment is reproduced as hereunder:
"To us it appears that the expression "if any amount of tax remains to be paid in respect of earlier period it will have to be paid by the assessee" can never be construed to be an enabling provision for the State to initiate a proceeding for making the demand and collection under a void law, but it merely cast an obligation on the assessee where there has already been adjudication, but the adjudicated amount has not been paid till the date of the judgment in question."
9.1. Thus, from the aforementioned observation of the Hon'ble Apex Court, it is clear that the tax shall be paid only in those (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (16 of 18) [CW-2183/2003] cases where adjudication has already been completed and where only the adjudicated amount remains to be paid.
10. This Court further observes that in order to understand the process of adjudication, it is pertinent to refer to Sections 8 & 9 of the Act of 1985, which are reproduced as follows:
"8. Provisional Assessment - Where a land holder -
(a) fails to file prescribed return; or
(b) fails to deposit the amount of tax for any period; or
(c) files incorrect return; or
(d) evades or avoids the payment of tax for any period;
the Assessing Authority may, after such enquiry as he considers necessary, proceed to provisionally assess to the best of his judgment the amount of tax payable by such land-holder for such period.
9. Assessment - (1) After all the returns relating to a year have become due, the Assessing Authority shall, with regard to every land-holder liable to pay tax for such year or part thereof, proceed to determine the annual value and assess the amount of tax.
(2) Where the returns filed by a land-holder appear to disclose the annual value correctly, the Assessing Authority may determine the annual value and assess the tax accordingly. (3) The Assessing Authority may, on being satisfied-
(a) that no returns have been filed; or
(b) that returns showing incorrect annual value or the amount of tax have been filed; or
(c) that there are reasons to make enquiry.
fix a date and require the land-holder to appear before him on such date and produce books of accounts and other evidence for assessment of tax.
(4) The Assessing Authority may issue summons to any person requiring him to appear for being examined or to produce any document in his possession for assessment of tax with regard to any land-holder.
(5) After recording the oral evidence, if any, and examining the books of accounts and other documents produced before him and (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (17 of 18) [CW-2183/2003] making such enquiry as he considers necessary, the Assessing Authority may-
(a) determine the annual value and assess the tax as disclosed by the land-holder; or
(b) refuse to accept the annual value as disclosed by the landholder and made determination of annual value and assessment of tax to the best of his judgment." 10.1. This Court, upon a close perusal of Sections 8 & 9 of the Act of 1985, observes that the same relate to final and provisional assessments and a closer scrutiny thereof reveals that the assessment process qua the mining matters is largely a formality. This is because mining leases come with deeds that specify important details, including the amount of dead rent and royalty rates. The lessee concerned must submit returns to the Mining Authorities, outlining all necessary information to calculate the annual value as defined in the Act of 1985.
10.2. This Court also observes that the Hon'ble Apex Court in Federation of Mining Associations of Rajasthan (supra) while declaring the Act of 1985 as prospectively unconstitutional, held that only those taxes which were pending from before, can be recovered, and no tax shall be levied under the Act of 1985, post 30.08.1991; further the tax which has already been levied under the Act of 1985 shall be not be refundable.
10.2.1. Thereafter, in the judgment of Damodar Pd. Ladha (supra) the Hon'ble Apex Court clarified the position that only such tax can be recovered, which were adjudicated upon, prior to 30.08.1991. This Court further observes that in the present case, upon the accrual of the tax liability, the adjudication also (Downloaded on 22/10/2024 at 09:52:20 PM) [2024:RJ-JD:38774-DB] (18 of 18) [CW-2183/2003] automatically took place by virtue of Sections 8 & 9 of the Act of 1985, prior to 30.08.1991, and the State has issued the impugned notices merely as a part of its modus operandi to recover the tax amount.
10.2.2. This Court, in light the aforementioned factual matrix and judgments of the Hon'ble Apex Court, finds that the adjudication, as a necessary corollary of the provisions of Section 8 & 9 of the Act of 1985, took place prior to 30.08.1991 and that such tax amount has been paid by the petitioner in pursuance of the impugned notices and impugned assessment orders issued by the respondent no. 4, and therefore, the said amount need not be refunded, in view of the law laid down in the case of Federation of Mining Associations of Rajasthan (supra).
11. The judgments cited at the Bar on behalf of the petitioners also do not render any assistance to their case, as laid herein.
12. In view of the above, this Court does not find it a fit case so as to grant the relief prayed for by the petitioners in the instant petitions.
13. Consequently, the present writ petitions are dismissed. All pending applications stand disposed of.
(MUNNURI LAXMAN),J (DR. PUSHPENDRA SINGH BHATI),J SKant/-
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