Patna High Court
Tata Iron And Steel Co. Ltd. And Anr. vs Union Of India (Uoi) And Ors. [Alongwith ... on 17 January, 1996
Equivalent citations: 1996(2)BLJR832
Author: Bisheshwar Prasad Singh
Bench: Bisheshwar Prasad Singh, S. Sarup
JUDGMENT Bisheshwar Prasad Singh, J.
1. In this batch of writ petitions the issues involved being identical, they have been heard together, and are being disposed of by this common judgment. In all the write petitions the petitioners have challenged the constitutional validity of the Cess and other Taxes on Minerals (Validation) Act, 1992, which replaced the Cess and other Taxes on Minerals (Validation) Ordinance, 1992, The Ordinance was published in the Gazette of India (Extraordinary) on February 15, 1992, whereas the Act was assented to by the president of India on 4th April, 1992, and published in the Gazette on the same day.
The petitioners have also impugned the demands made for payment of cess under the said Ordinance and the Act. The impugned demands in C.W.J.C. No. 1280/92(R) are Annexures 7, 8, 13 and 14, in C.W.J.C. Nos. 1711/92(R) and 1702/92(R) are Annexures 4 and 5, in C.W.J.C. No. 1507/92/(R) are Annexure 8 series and in C.W.J.C. No. 1639/92(R)and Armexures 5 to 5/5. The impugned demands for payment of Cess under the Ordinance and the Act relate to the period till 4th April, 1991.
2. The contention of the petitioners is two fold. It is contended that the Ordinance as well as the Act, which later replaced the Ordinance, are unconstitutional and void for various reasons. Alternatively, even if the Act and the Ordinance are held to be valid, the respondents are not justified in issuing the impugned demand notice under the Ordinance and the Act, since neither the Ordinance nor the Act permitted or permits any fresh recovery of cess under the provisions of the law declared invalid by the Supreme Court. The erstwhile Ordinance and now the impugned Act merely seek to validate the cess already collected or realised, which collection or realisation has been declared invalid by the Supreme Court. The sole objective of the Act is to validate the collections and realisation already made till April, 1991, and does not permit or authorise making of any fresh demand of any cess.
3. Though there is no serious controversy on facts, it is useful to refer to the salient facts stated in C.W.J.C. No. 1280/92(R), as that would also disclose the background in which the impugned Ordinance and the Act were passed, and the impugned demands made.
The case of the petitioners is that petitioner No. 1 is an existing Public Limited Company within the meaning of Companies Act, 1956, and is engaged in the business of manufacturing and marketing of iron and steel and products thereof. For the purpose of its aforesaid business it requires coal, iron ore, chromite, dolamite, magnesite etc. In respect of such minerals petitioner No. 1 Company has several captive mines and quarries in the State of Bihar, Orissa, Madhya Pradesh and Karnataka. In the State of Bihar petitioners No. 1 Company has captive coal mines in the district of Dhanbad and Hazaribagh, as also iron ore mine and mines of other minerals in the State of Bihar. The second petitioner is a share holder of petitioner No. 1 Company as also the Principal Officer and Senior Executive of the Company. The petitioner-Company always paid, and continues to pay, royalty to the Central Government on the minerals mined by it in accordance with and under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957. The State of Bihar also commenced charging cess on the royalty paid by the petitioner-Company to the Central Government in purported exercise of authority under the Bengal Cess Act, 1880, which was made applicable to the State of Bihar. Several Ordinances and notifications were issued from time to time, whereby the cess was sought to be enhanced from time to time by the State of Bihar. The rate of cess was progressively increased, and this is apparent from the fact that in the year 1975 the cess payable was equal to 30 percent of royalty in respect of mines and minerals, but under the Bihar Cess (Amendment) Ordinance, 1985 it was enhanced to 500 percent of royalty on coal, or 30 percent of pit's mouth value, whichever as more. In respect of other minerals as well the cess was considerably enhanced to 300 percent in the case of bauxite, copper and iron ore extracted mechanically, and 200 percent in the case of lime stone and kynite. The petitioner-Company challenged the said levies of cess by the State of Bihar and the first Ordinance under which the cesses were sought to be levied, by filing a writ petition before this Court being C.W.J.C. No. 30 of 1978. The said writ petition was dismissed-vide judgment and order dated May 15, 1984, against which the petitioner-Company approached the Hon'ble Supreme Court by way of special leave. The Supreme Court by order dated 10th February, 1986, granted special leave, whereupon the appeal was registered as Civil Appeal No, 592 of 1986. The Supreme Court did not stay the recovery of the cess, but by its interim order provided that in case the appellant succeeded in the appeal, the excess amount so recovered shall be paid to the appellant with interest at the rate of 12 percent from the date of recovery. While the said Civil Appeal was pending before the Supreme Court, another writ petition filed by the Central Coal Fields Ltd. being C.W.J.C. No. 2517 of 1985 was dismissed by the Patna High Court on 7.12.1988. In the meantime, in respect of similar provision/levy by the State of Tamilnadu the Supreme Court rendered its judgment in the case of India Cement Ltd. v. State of Tamilnadu , holding that royalty is a tax, and as such cess on royalty being a tax on royalty was beyond the competence of State legislature, because Section 9 of the Central Act covered the field and the State legislature was denuded of its competence under Entry 23 of List II. In any event the cess on royalty could not be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land, but payment for the user of land. The Court also expressly held mat a tax on royalty could not be a tax on mineral rights and would, therefore, in any event be outside the competence of the State legislature. Obviously/therefore, the State could not justify the levy on the basis of Entry 50 of List II. Accordingly, the Court held that levy of cess on royalty payable on extraction of minerals levied under Section 155 of the Madras panchayat Act was invalid. Consequently, the Court held that royalty being a tax, cess on royalty levied by the State enactment was invalid on the grounds of legislative incompetence. It was held that Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1956 in terms provided that royalty payable under the second schedule of the Act shall not be enhanced more than once during a period of four years and, therefore, there was a clear bar on the State legislature taxing royalty so as to in effect amend second schedule of the Act of 1957. The judgment of the Supreme Court in India Cement was rendered on October 25, 1989.
4. In view of the judgment of the Supreme Court in India Cement, in the pending appeal of the petitioner-Company, being Civil Appeal No. 592 of 1986, an interim order was made on January 30, 1990 directing the State of Bihar not to enforce any demand for cess for the quarter ending December, 1989 and thereafter until further orders.
5. The Central Coal Fields Ltd. whose writ petition was dismissed by the Patna High Court on 7.12.1988, as noticed earlier, had also preferred an appeal to the Supreme Court, being Civil Appeal No. 1521 of 1990. By order dated 19th March, 1990, the said appeal was allowed and in view of the decision of the Court in India Cement Ltd., it was held that the order of the High Court could not be sustained The judgment and order of the High Court was, accordingly, set aside, and the writ petition was consequently allowed.
Another writ petition filed by the Central Coal Fields Ltd., being C.W.J.C. No. 2085/89 was allowed by the Patna High Court by judgment and order dated 6.11.1990 following the judgment of the Supreme Court in India Cement.
6. The case of the petitioners is that the appeal preferred by the petitioner-Company, namely, Civil Appeal No. 592 of 1986 came up for hearing before the Hon'ble Supreme Court along with the appeals arising out of the judgments of the High Court of Orissa and Madhya Pradesh. There were four sets of appeals from Orissa out of which Civil Appeal No. 2053 to 2080 of 1980 were filed by the petitioner-Company against of the Orissa High Court dated April 17, 1980. There was one appeal against the judgment of the Madhya Pradesh High Court. All the appeals involved common issues as to the validity of the levy of cess based on the royalty derived from mining lands by the States of Bihar, Orissa and Madhya Pradesh. In so far as the State of Bihar was concerned, the levy of Cess on royalty was authorised by the Cess Act of 1880. After referring to the relevant provisions of the Bihar statute the Court concluded that the case was indistinguishable from India Cement. The Court held that the levy of cess had to be struck down. The Court also noticed that a Bench of two judges of the Supreme Court had also heard an appeal by the assessee from a Judgment of the Patna High Court holding to the contrary viz., Civil Appeal No. 1521 of 1990. It had also been brought to the notice of the Supreme Court that the Patna High Court had recently invalidated the levy of Cess in Central Coal Fields Ltd. v. State of Bihar (C.W.J.C. No. 2085/89) by its judgment dated 16.11.1990 following India Cement. On the question of refund, however, the Supreme Court declined to give a direction for refund of any amount of cess 'collected until the date on which the levy in question has been declared unconstitutional'. In paragraph No. 74 of the Judgment in Orissa Cement v. State of Orissa , the Court observed:
For the reasons discussed above, we are of opinion that though the levy of the Cess was unconstitutional, there shall be no direction to refund to the assessees of any amount of Cess collected until the date on which the levy in question has been declared unconstitutional. This, in regard to the Bihar cases, will be the date of this judgment. In respect of Orissa, the relevant date will be 22.12.1989 on which date, the High Court, following India Cement declared the levy by the State Legislature unconstitutional. In respect of Madhya Pradesh, the relevant date will be the date of the judgment in Hiralal Ramswarup and connected cases (viz. M.P. 410/83 decided on 28.3.1986) in respect of the levy under State Act 15 of 1982. Though these are the dates of the judgments of the appropriate High Court, which may not constitute a declaration of law within the scope of Article 141 of the Constitution, it cannot be gainsaid that the State cannot, on any grounds of equity, be permitted to retain the cess collected on and after the date of the High Court's judgment.
7. The petitioners have stated that the Supreme Court had itself noticed the earlier orders passed by it on 19.3.1990 in Civil Appeal No. 1521 of 1990, as also the judgment of the Patna High Court dated 16.11.1990 which followed the judgment of the Supreme Court in India Cement case. However the Supreme Court while specifying the relevant date for the purpose of refund mentioned the date to be the date of judgment, namely, 4.4.1991. The petitioners have, therefore, sought clarification of the judgment by the Supreme Court. An application had bean filed for the purpose, which was pending before the Hon'ble Supreme Court of India.
8. The case of the petitioners is that in this background, with a view to nullify the judgment of the Hon'ble Supreme Court, and the respective judgments of the High Court concerned, an Ordinance was promulgated by the President of India on 15th February; 1992, namely, the Cess and other Taxes on Minerals (Validation) Ordinance, 1992, which was published in the Gazette of India (Extraordinary) Part II, Section 1 on the same day. The said Ordinance was challenged by the petitioner-Company which filed a writ petition before the Patna High Court being C.W.J.C. No. 943 of 1990(R), The matter was placed for admission before a Division Bench of the High Court on March 23, 1992, when the said writ petition was adjourned to 29.4.1992, permitting the petitioners to annex the notification/ordinance earlier promulgated by the Government/Governor of Bihar which had been sought to be validated by the impugned Ordinance of 1993. However, respondent Nos. 2 and 3, even during the pendency of the writ petition, purportedly exercising powers under the impugned Ordinance of 1992 sought to demand cess from the petitioners for the period January, 1990 to April 4, 1991 by issuing demand notices dated March 24, 1992 and March 26/1992 (Annexures 7 and 8). In the meanwhile, both the Houses of Parliament on April 2/3, 1992, passed the Cess and other Taxes on Minerals (Validation) Bill, 1992, which was in the same terms as the impugned ordinance of 1992, except for additional repeal and saving clause. The said Bill received the assent of the President on April 4, 1992, and was published in the Gazette of India (Extra ordinary) on April 4, 1992 as the Cess and other Taxes on Minerals (Validation) Act, 1992. In view of the Act the earlier writ petition filed by the petitioner/Company became infructious and, therefore, the instant writ petition was presented. The petitioners received another demand from 3rd respondent dated April 3, 1992, which was actually received oh April 7, 1992. In these circumstances, the petitioners have impugned the ordinance as also the Act as well as the notices of demand (Annexures 7, 8 and 13) served upon the petitioners.
9. It would be useful at this stage to notice the provisions of Cess and Other Taxes on Minerals (Validation) Act 1992. Since the Act is a short Act, containing only three sections the same reproduced below in extenso:
1.(1) This Act may be called the Cess and other Taxes on Minerals (Validation) Act, 1992.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 15th day of February, 1992.
2. (1) The laws specified in the schedules to this Act shall be, and shall be deemed always to have been, as valid as if the provisions contained therein relating to cesses or other taxes on minerals had been enacted by Parliament and such provisions shall be deemed to have remained in force up to the 4th day of April, 1991.
(2) Notwithstanding any judgment, decree or order of any court, all actions taken, things done, rules made, notifications issued or purported to have been taken, done, made or issued and cesses or other taxes on minerals realised under any such laws shall be deemed to have been validly taken, done, made, issued or realised, is the case may be, as if this section had been in force at all material times when such actions were taken, things were done, rules were made, notifications were issued or cesses or other taxes were realised, and no suit or other proceeding shall be maintained or continued in any court for the refund of the cesses or other taxes realised under any such laws.
(3) For the removal of doubts, it is hereby declared that nothing in Sub-Section(2) shall be construed as preventing any person from claiming refund of any cess or tax paid by him in excess of the amount due from him under any such laws.
3(1) The Cess and other taxes on Minerals (Validation ) Ordinance, 1992 is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done or taken under the corresponding provisions of this Act.
THE SCHEDULE (See Section 2)
1. The Andhra Pradesh( Mineral Rights) Tax Act,1975 (A. P. Act 14 of 1975)
2. xx xx xx xx xx xx
4. The Cess Act, 1880 ( Bengal Act 9 of 1880) as applicable in the State, of Bihar.
II. The Tamil Nadu Panchayat Act, 1958( Tamil Nadu Act XXXV of 1958).
10. Item 4 of the schedule mentions the Cess Act, 1880 (Bengal Act 9 of 1980) as applicable in the State of Bihar.
11. I shall first notice the submissions urged on behalf of the petitioners in so far as they relate to the first ground of attack, namely, the validity of the Act itself, and whether the Validating Act succeeds in parting validity to the levy of cess by the State in accordance with the Constitution. Mr. K.D. Chatterjee, counsel appearing on behalf of the petitioners in C.W.J.C. No. 1280 of 1992 submitted that the Validating Act purports to validate the imposition and collection of cess and certain other taxes on minerals under certain State laws. This is sought to be achieved by enacting by incorporation the provisions of the State laws mentioned in the schedules. It further provides that all action taken under the said provision of the State laws shall be deemed to have been taken as if the Act was in force when such actions were taken. The Act does not go any further, because there is no reference to the consequences that follow under the Constitution in respect of tax imposed by Parliament and the competence, if any of the States in respect of levy, assessment, collection/realisation by the states in respect of a Central Tax. In the present case, the Validation Act, which is deemed to have been passed by the Parliament is the Bengal Cess Act, 1880. If an Act of 1880 is retrospectively deemed to have been passed by the Parliament, then it is a fiction by which the legislative competence of Parliament is assumed. The Constitution does not permit legislative competence to be derived by fiction. Even if it is true that it is within the competence of Parliament to assume the existence of a fact (which did not exist) by a fiction, for the purpose of legislating on that subject matter, such fiction cannot warrant assumption of the legislative power itself. The deeming clause must carry the fiction to its logical conclusion, and in the instant case the logical conclusion is that if it is a parliamentary tax, it must go to the consolidated fund of India in accordance with Article 266 of the Constitution of India. The imposition, assessment and collection under the Cess Act by the State towards the consolidated fund of Bihar is not permissible under the Constitution. Validating the levy and collection and utilisation of tax by the States, as if the Validating Act was in force, does not remove the infirmity for which the State law was struck down by the Supreme Court.
12. Even if the Parliament enacts, if cannot assign tax to the State on which the taxing powers are not conferred by the Constitution. What has to go to the consolidated fund of the State is determined by the Constitution and cannot be determined by the Parliament. The object of the Act cannot be achieved by merely saying that the provisions of the State Act shall be deemed to be enacted by the Parliament. The Constitution envisages the manner in which tax imposed by Parliament and realised will not form part of the consolidated fund of India, but will be assigned to the State, or cases in which the Central Taxes and duties will be distributed between the States. These provisions are to be found in several Articles in Part XII of the Constitution of India. Cess or royalty (now a Parliamentary impost) does not come within any of those Articles. Counsel referred to Articles 268, 269, 270, 272 to reinforce this submission.
It was also submitted that the Bill which was enacted as the Validating Act did not receive the prior recommendation of the President before it was introduced or moved in either Houses of Parliaments Therefore, the Act cannot be held to be valid.
13. Mr. Gobind Das, counsel appearing on behalf of the petitioners in C.W.J.C. No.1507/92 submitted that in the Validation Act enacted, the Parliament had not applied its mind to remove the defects pointed out in the judgment in India Cement and Orissa Cement cases and had perfunctorily drafted the statute in a slip shod manner. Section 2 of the Validation Act declared the validity of the laws mentioned in the schedules, which was patently outside the jurisdiction of Parliament, inasmuch as the Cess Act, 1880, contained matters pertaining to land, enumerated/enlisted in List II of the 7th schedule. He further submitted that the quantum of levy and the manner of realisation determines the character of the levy (see ). In Orissa Cement case the Supreme Court found difficulties in determining the character of the Cess, as to whether it was with respect to land or minerals, in paragraph No. 34 of the report this aspect of the matter was dealt with they the Supreme Court. A question arose as to whether the legislation was with respondent to entries in List 1 i.e., land, or mineral, or whether it was with respect to matters of List I, Entry 54 or List II, Entry 18 or 49. In the Cess Act the provisions relating to land and mineral are so inextricably intertwined; that for the purpose of legislation they cannot be severed or identified. He relied upon decisions of the Supreme Court, and .
14. The validity of the Act was also challenged on the grounds that it infringed Article 14 of the Constitution of India. The submission advanced before us was that the levy of Cess on minerals in II different States varied from 10 percent to 400 percent on lime stone and 10 percent to 500 percent on other minerals. Different States imposed different rates of cess on royalty The levy was struck down as illegal, but such illegal imposition at different rates is sought to be justified by the Validation Act. Such enactment legislated by the Parliament results in discrimination between State and offended Article 14. of the Constitution. No public interest was served by such discrimination Counsel relied upon the judgment of the Supreme Court in .
It was also contended by him that the Validation Act was a colourable piece of legislation inasmuch as it sought to levy Cess and tax on land (Entry 180 of List-II) under pretence of imposing tax of mineral (Entry 54 List I).
It was lastly submitted that the legislation was enacted with a view to nullify the orders of the Supreme Court. The Supreme Court in Orissa Cement had passed the order based on equity and justice for the refund of the Cess illegally collected. This could not be nullified by resorting to legislative power of the State, because that would amount to interference with judicial powers vested in the Courts. He in particular relied upon the judgments of the Supreme Court in .
15. Mr. S. Pal, counsel appearing on behalf of the petitioners in C.W.J.C. No. 1639/92(R) and C.W.J.C. No. 1702/92(R) in addition to the submissions already noticed, submitted that the Act cannot be said to be a Validating Act, being a mere re-enactment of a State law held to be unconstitutional by the Supreme Court.
16. Counsel appearing for the petitioners in other writ petitions adopted the arguments noticed above.
17. On behalf of the State the learned Advocate General submitted the Section 2(i) of the Ordinance as well as the Act in clear language validated the Acts mentioned in the schedule by providing that the provisions contained therein relating to Cess and other taxes on minerals shall be deemed always as valid as if they had been enacted by Parliament itself. In view of the decision of the Supreme Court in India Cement and Orissa Cement the Central Government felt compelled to come forward to assist the State Government by providing validity to the Bengal Cess Act and other Acts. Since the aforesaid Acts had been struck down on the ground of legislative incompetence, and it was not in dispute that the Parliament was competent to enact such laws the Parliament enacted by incorporation those provisions of the Bengal Cess Act, which related to Cesses or other taxes on minerals. It was submitted that having regard to the decision of the Supreme Court in Krishna Chand Gangopadhaya v. Union of India the challenge to the validity of the Act on the grounds submitted by the petitioners was not sustainable. The Parliament had enacted, though by incorporation, legislation which it was competent to enact. This course was open to the Parliament, as held by the Supreme Court in Jaora Sugar Mills Pvt. Ltd. v. State of Madhya Pradesh AIR 1986 SC 416. He further contended that if the Parliament had legislative competence to legislate on the subject, in exercise of its plenary legislative authority, it could legislate prospectively as well as retrospectively.
It was further submitted that the submission urged on behalf of the petitioners that the legislative competence could not be acquired by fiction, was without any force in the facts of this case. In the instant case the legislative competence of the Parliament could not be challenged. Its power to legislate retrospectively cannot also be challenged. If the Parliament legislated by incorporation, and gave to the legislation retrospective effect, it was not by a fiction that the Parliament assumed legislative competence, but on account of the entries in List I of 7th Schedule which conferred power on the Parliament to legislate with regard to the subject in question. The retrospectivity granted to the legislation did create a fiction inasmuch as it was to be deemed as if the State laws, in so far as they related to cess and other taxes on minerals had been enacted by Parliament, and shall be deemed to have remained in force upto 4th day of April, 1991. This fiction, however, was not the source of legislative power but only the effect of exercise of legislative power.
18. Replying to the submission urged on behalf of the petitioners that the funds realised could not be assigned to the consolidated fund of the State, and that the failure to being the same to the consolidated fund of India resulted in violation of Article 266 of the Constitution, it was submitted that the decision in Jaora Sugar Mills Ltd. (supra) fully answered the question, It was held that the citizen has no right to say where the money goes, and the competence of the legislative action depends upon the realisation and its utilisation, but its validity can only be judged having regard to the competency of the legislature.
19. The impugned Validation Act has been earlier reproduced in this judgment. A perusal of the Act would disclose that the Act is a Validation Act inasmuch as it seeks to validate the imposition and collection of Cesses and certain other taxes on minerals under certain State laws, which have been enumerated in the schedule. Item No. 4 of the schedule is the Cess Act, 1880, which is applicable in the State of Bihar. Section 2(1) of the Act provides that the laws specified in the schedule to the Act shall be deemed always to have been as valid as if the provisions contained therein relating to cesses and other taxes on minerals had been enacted by Parliament, and such provisions shall be deemed to have remained in force upto 4th day of April, 1991. The aforesaid sub-Section clarifies that the laws specified in the schedule, only inasmuch as they contain provisions relating to cesses and other taxes on minerals, shall be deemed to have been enacted by Parliament. It follows, therefore, that the Parliament did not purport to re-enact by incorporation the entire Cess Act, 1880. The re-enactment is only of the provisions contained therein which relate to cesses and other taxes on minerals. It would, therefore, not be correct to contend that the Parliament has enacted the entire Cess Act, 1880. Secondly, it is apparent that by the State legislatures are deemed to have been enacted the laws which have been enacted by the Parliament. Apparently because the Supreme Court held in India Cement and Orissa Cement that such laws relating to cesses and other taxes on minerals were outside the competence of the State legislature, it became necessary for the Parliament to intervene and to enact a law on that subject with a view to protect the States from the consequences that followed such declaration by the Supreme Court. It cannot be disputed that if the State lacked legislative competence to legislate on the subject, the Parliament undoubtedly had legislative competence to deal with the subject matter in question having regard to Article 248 read with Entry 97, of List I of the 7th Schedule of the Constitution. Thirdly, there is nothing in the Validation Act which seeks to validate the laws passed by the State legislature which are specified in the schedule. The Parliament took precaution to itself re-legislate on the subject matter in exercise of its legislative power, and instead of re-enacting the relevant provisions in, so many words, it chose to legislate by incorporation, a method of legislation well recognised by law. Lastly, the laws enacted were deemed to have remained in force upto 4th day of April, 1991. It is worth noticing that the Act was published in the Gazette of India (Extraordinary) on 4th April, 1992, though it purported to enact with retrospective effect a law which remained in force only upto 4th April, 1991. Apart from being retrospective in character, the statute can also be described as promulgating a temporary legislation.
20. The submission, therefore, that the Parliament did not have the competence to legislate on the subject which fell within the exclusive jurisdiction of the State legislature, proceeds on the erroneous assumption that the subject matter with which the Parliament dealt with in the Validation Act was a State subject contained in List II of the 7th Schedule. The legislation was with regard to the cesses and other taxes on minerals, and only so much of the laws specified in the schedule, to the Act were enacted by incorporation, which dealt with the aforesaid subject matter. In view of the judgments of the Supreme Court in India Cement and Orissa Cement it was obvious that the subject matter was outside the legislative competence of the States. This very conclusion leads to the irresistible inference that the Parliament would have legislative competence to deal with the subject matter in question having regard to Article 248 read with Entry 97 in List I of the 7th Schedule to the Constitution. It is equally futile to contend that the Parliament has assumed legislative competence by fiction. The submission proceeds on the erroneous assumption that the Cess Act, 1880 was re-enacted by the Parliament. As I have observed earlier, it is only the provisions, which relate to cesses arid other taxes on minerals that have been enacted by Parliament. The rest of the Cess Act was not affected in any manner by the impugned Validation Act. The submission of Mr. Gobind Das, Sr. Advocate, that it was not clear as to whether the legislation was in respect of matters contained in Entry 54 of List I of Entry 18 or 49 of List II cannot be accepted, because the earlier finding of the Supreme Court clearly put the subject matter beyond the legislative competence of the State legislatures and, therefore, the conclusion was irresistible that they fell within the domain of Parliament's competence. The provisions struck down by the Supreme Court in India Cement and Orissa Cement on the ground of legislative incompetence, obviously dealt with the subject matter not within the competence of the State legislature. If those provisions are re-enacted by the Parliament, the competence of the Parliament cannot be challenged.
21. The learned Advocate General has rightly placed considerable reliance upon two decisions of the Supreme Court. In Jaora Sugar Mills (Pvt. Ltd.) v. State of Madhya Pradesh , the Supreme Court dealt with a similar Validating Act, and the question arose in the following circumstances. The State of Madhya Pradesh had enacted the Madhya Pradesh Sugar Cane (Regulation of Supply and Purchase) Act, 1958, Section 23 thereof made sugar cane cess payable as prescribed by it. The validity of Section 23 of the Madhya Pradesh Act was challenged before the Madhya Pradesh High Court under Article 226 of the Constitution, but before the said writ petition could be disposed of, a similar provision in the Uttar Pradesh Sugar Cane Cess Act, 1956 had been struck down by the Supreme Court as unconstitutional in Diamond Sugar Mills Ltd. v. U.P. . The Madhya Pradesh as well as the Uttar Pradesh Act authorised the respective State Governments to impose a cess on the entry of cane in the premises of factory for use, consumption or sale. It was held by the Supreme Court that the proper meaning to be attached to the words 'local area' in entry 52 of the Constitution (when the area is a part of the State imposing the law) is an area administered by a local body like a Municipality, a District Board, a Local Board, a Union Board or a Panchayat area. The premises of a factory was, therefore, not a local area. In view of the decision of the Supreme Court, the Madhya Pradesh High Court struck down Section 23 of the Madhya Pradesh Act. On September 11, 1961 the Parliament enacted the Act in question, which received the assent of the President on the same day. The Act purported to validate the imposition and collection of cesses on sugar cane under ten different. Acts passed by the legislature of seven different States. Thereafter, a demand for payment of sugar cane cess was made against the appellant which challenged the validity of the demand on the ground that they were invalid because the Act under the authority of which they purported to have been made was itself ultra vires and unconstitutional. Ultimately, the matter was taken to the Madhya Pradesh High Court which held that, the provisions of the impugned Act were constitutionally valid, and that the demand for cess made by the concerned respondents could not be effectively challenged. The appellant preferred an appeal before the Supreme Court by a certificate granted by the High Court. The Supreme Court held that the constitutional position with regard to the legislative competence of the State legislatures on the one hand, and the central legislature on the other, in respect of the cess in question was not in doubt because in view of the earlier decision of the Supreme Court it was obvious that the cess in question was outside the legislative competence of the States. This very conclusion led to the irresistible inference that the Parliament would have legislative competence to deal with the subject matter in question having regard to Article 248 read with Entry 97 in List I of the 7th Schedule to the Constitution.
It was contended on behalf of the appellant before the Supreme Court that what the Act purported to do, and in fact and in substance had done, was to validate the invalid State statutes. The Act, in other words, did not represent the provisions enacted by Parliament as such, it represented an attempt made by Parliament to validate laws which were invalid on the ground that the State legislatures which enacted the said laws, had no legislative competence to do so. The Supreme Court considered the provisions of the impugned Act and thereafter held that where an impugned Act passed by the State legislature is invalid on the ground that the State legislature did not have legislative competence to deal with the topic covered by it, then the Parliament cannot validate such Act, because the effect of such attempted validation, in substance, would be to confer legislative competence on the State legislature in regard to a field or topic which by the relevant provision of the schedule in the Constitution, was outside its jurisdiction. If it is shown that the impugned Act purports to do nothing more than to validate the invalid State statutes, then of course such a Validating Act would be outside the legislative competence of the Parliament itself. Where a topic is not included within the relevant list dealing with, the legislative competence of the State legislatures, the Parliament, by making a law cannot attempt to confer such legislative competence on the State legislatures. The Supreme Court thereafter rejected the submission urged on behalf of the appellant in the following words:
(14) The difficulty in accepting Mr. Pathak's argument, however, a raised from the fact that the assumption on which the whole argument is founded, is not justified on a fair and reasonable construction of Section 3. Section 3 does not purport to validate the invalid State Statues. What Parliament has done by enacting the said Section is not to validate the invalid State Statutes, but to make a law concerning the cess covered by the said Statutes and to provide that the said law shall come into operation retrospectively. There is a radical difference between the two positions. Where the Legislature wants to validate an earlier Act which has been declared to be invalid for one reason or another, it proceeds to remove the infirmity from the said Act and validated its provisions which are free from any informity. That is not what Parliament has done in enacting the present Act. Parliament knew that the relevant State Acts were invalid, because the State Legislatures did not possess legislative competence to enact them. Parliament also knew that it was fully competent to make an Act in respect of the subject-matter covered by the said invalid State Statutes. Parliament, however, decided that rather than make elaborate and long provisions in respect of the recovery of cess, it would be more convenient to make a compendious provision such as is contained in Section 3. The plain meaning of Section 3 is that the material and relevant provisions of the State Acts as well as the provisions of notifications, orders and rules issued or made there under are included in Section 3 and shall be deemed to have been included at all material times in it. In other words, what Section 3 provides is that by its order and force, the respective cesses will be deemed to have been recovered, because the provisions in relation to the recovery of the said cesses have been incorporated in the Act itself. The command under which the cesses would be deemed to have been recovered would, therefore, be the common of Parliament, because all the relevant Sections, notifications, orders, and rules have been adopted by the Parliamentary Statute itself. We are, therefore, satisfied that the sole basis on which Mr. Pathak's argument rest is invalid, because the said basis is inconsistent with the plain and clear meaning of Section 3. As we have already indicated, Mr. Pathak does not dispute and rightly that it is competent to Parliament to make a law in respect of the cesses in question, to apply the provisions of such a law to the different States, and to make them retrospective in, operation. His whole contention is based on what he regards to be the true scope and effect of Section 3. If the construction which he places on Section 3 is rejected, the argument about the invalidity of the Act must likewise be rejected.
22 The other decision of the Supreme Court which deserves immediate notice is the decision in Krishnachandra Gangopadhaya v. Union of India . In the aforesaid matter the Supreme Court was dealing with the question whether a statute and a rule earlier declared by the Court to be unconstitutional or otherwise invalid, can be retroactive through fresh validation legislation enacted by the competent legislature. The petitioners before the Supreme Court had been granted a lease to quarry stones by the erstwhile proprietor whose ownership vested in the State by virtue of the Bihar Land Reforms Act. They were called upon to pay certain rents and royalties in respect of mining operation in view of the second proviso to Section 10(2) of the Bihar Land Reforms Act and Rule 20(2) of the Bihar Mines and Minerals Concession Rules, 1964, framed by the State Government. In the first round of litigation the State of Bihar lost and it was held in the case of Baijnath Kedia v. State of Bihar that the State legislature had no jurisdiction to enact the second proviso to Section 10(2) of the Bihar Act, because Section 15 of the Central Act read with Section 2 thereof had appropriated the whole field relating to mines and minerals for parliamentary legislation. In view of the judgment of the Supreme Court the action taken by the Bihar Government in modifying the terms and conditions of leases which were in existence and anterior to the rules, and the royalty, sought to be made on the strength of the amended Bihar Act and the rules were unsustainable. In these circumstances, Parliament intervened by enacting the Validation Act of 1969. It is useful to notice the provisions of the aforesaid Validation Act which were challenged before the Supreme Court because of the similarity of the language employed in that Act and the Act impugned in the instant writ petitions. The preamble reads as follows:
An Act to validate certain provisions contained in the Bihar Land Reforms Act, 1950, and the Bihar Minor Mineral Concession Rules, 1964 and action taken and things done in connection therewith.
Section 2 of the Act reads as follows:
2. Validation of certain Bihar State laws and action taken and things done connected therewith.
(1) The laws specified in the Schedule shall be and shall be deemed always to have been, as valid as if the provisions contained therein had been enacted by Parliament.
(2) Notwithstanding any judgment, decree or order of any court, all actions taken, things done, rules made, notification issued or purported to have been taken, done, made or issued and rents or royalties realised under any such laws shall be deemed to have been validly taken, done, made, issued or realised, as the case may be, as if this section had been in force at all material times when such action was taken, things were done, rules were made, notifications were issued, or rents or royalties were realised, and no suit or other proceeding shall be maintained or continued in any court for the refund of rents or royalties realised under any such laws.
(3) For the removal of doubts, it is hereby declared that nothing in Sub-Section (2) shall be construed as preventing any person from claiming refund of any rents or royalties paid by him in excess of the amount due from him under any such laws.
It will be noticed that the Validation Act impugned in Krishnachandra's case is almost verbatim the same as the Validation Act impugned in the instant writ petitions except that the subject matter and the Acts mentioned therein are different from those mentioned in the impugned Validation Act. The only other difference is that whereas the Validation Act impugned before us gives a limited life to the legislation retrospectively enacted, in Krishnachandra's case there was no such provision. The Validation Act in Krishnachandra's case was also passed in circumstances similar to those that compelled the Parliament to intervene by enacting the impugned validation Act. The Supreme Court after noticing its earlier decision in Jaora Sugar Mills observed:
It is a far constitutional cry from this position to the other proposition that where Parliament has power to enact on a topic actually legislates within its competence but, as an abbreviation of drafting, borrows into the statute by reference the words of a State Act not qua State Act but as a convenient shorthand, as against a longhand writing of all the sections into the Central Act, such legislation stands or falls on Parliament's legislative power, vis-a-vis the subject viz, mines and minerals. The distinction between the two legal lines may sometimes be fine but always is real. Jaora Sugar Mills illumined this basis difference.... No Parliamentary omnipotence to redraw Legislative Lists in the VII Schedule can be arrogated to confer on the State competence to enact on a topic where it is outside its Lists. But if Parliament has the power to legislate on the topic/it can make an Act on the topic by any drafting means/including by referential legislation.
The learned Solicitor General, in the course of his submissions made it clear that he did not want to vindicate the levy by any validation of the invalidated portion of Section 10 of the Bihar Act. He based his case on the success with which Parliament had legislated for itself, although adopting a shorthand form of incorporation referentially of a State Act and subordinate legislation given in the Schedule to the Validation Act. He also made it clear that Rule 20(2) had nothing to do with the Bihar Legislature but was the product of Parliamentary legislation by delegation in favour of State Government. Thus, in his view, the Parliament legislated for itself and statutorily adopted for itself the second proviso to Section 10 of the Bihar Act and the otherwise ultra vires Sub-rule (2) of Rule 20. If the re-enacting technique adopted for the referential or incorporating legislation was. insufficient in law, he failed. Otherwise, the Act and rules referred to in the Schedule to the Validation Act revived and became operational, retroactively. There is force in the submission that taking a total view of the circumstances of the Validation Act Parliament did more than simply validate an invalid law passed by the Bihar Legislature but did re-enact it with retrospective effect in its own right adding an amending Central Act to the statute book.
23. In my view, these two decisions of the Supreme Court squarely answer the question posed before us in favour of the State. On the basis of these decisions I have no hesitation in holding that the Validation Act cannot be impugned on the ground that it sought to re validate the State Act which had been declared unconstitutional by the Supreme Court. There is no escape from the conclusion that the Parliament re-enacted with retrospective effect some provisions in the State Acts which dealt with the subject matter within the Parliament's legislative competence, That the Parliament had competence to legislate on such subject matter cannot be disputed, and consequently, the Parliament had power to legislate on the topic; it could make an Act on the topic by any drafting means, including by referential legislation.
24. This takes me to the other submission urged by Mr. K.D. Chatterjee, Senior Advocate, that even if the Parliament passed the Validating Act, it did not succeed in imparting validity on the levy of cess by the State in accordance with the Constitution, inasmuch as it did not provide for the consequences that follow under the Constitution in respect of a tax imposed by Parliament, and the competence if any, of the State in respect of the levy, assessment, collection/realisation by the State in respect of a central tax. According to him, the entire constitutional scheme has been violated because the tax imposed by Parliament must either from part of the consolidated fund of India or must be assigned to the States or may be distributed between States as provided in several Articles under Chapter I, Part XII of the Constitution. He further developed this point by reference to Articles 266, 268, 269, 270 and 272 of the Constitution of India. The question is not res integra and stands answered by the Supreme Court in Jaora Sugar Mills case (Supra). A similar submission urged before the Supreme Court was rejected in the following words:
It will be noticed that the contention raised by Mr. Pathak on the basis of Article 266 makes ah assumption and that is that the cesses already recovered by the different States will not be transferred to the Consolidated Fund of India, but will remain with the respective States; and that such a position would invalidate the law itself. We are not prepared to accept this argument as well. What happens to the cesses already recovered by the respective States under their invalid laws after the enactment of the impugned Act, is a matter with which we are not concerned in the present proceedings. It is doubtful whether a plea can be raised by a citizen in support of his case that the Central Act is invalid because the moneys raised by it are not dealt with in accordance with the provisions of Part XII generally or particularly the provisions of Article 266. We will, however, assume that such a plea can be raised by a citizen for the purpose of this appeal. Even so, it is difficult to understand how the Act can be said to be invalid because the cesses recovered under it are not dealt with in the manner provided by the Constitution. The validity of the Act must be judged in the light of the legislative competence of the Legislature which passes the Act and may have to be examined in certain cases by reference to the question as to whether fundamental rights of citizens have been improperly contravened/or other considerations which may be relevant in that behalf. Normally, it would be inappropriate and indeed illegitimate to hold an enquiry into the manner in which the funds raised by an Act would be dealt with when the Court is considering the question about the validity of the Act itself. As we have just indicated, if the taxes or cesses recovered under an Act are not dealt with in the manner prescribed by the Constitution, what remedy a citizen may have arid how it can be enforced, are questions on which we express no opinion in this appeal....
Counsel submitted that the point was not urged before the Supreme Court in the manner urged before us. That to my mind does not affect the binding nature of the precedent. The law declared by the Supreme Court is binding upon this Court, and it matters little for this Court as to what arguments were or were not advanced before the Supreme Court while declaring the law.
25. Mr. K.D. Chatterjee, Senior Advocate, contended that even if Parliament can enact a law, it cannot assign a tax to the State on which taxing power is not conferred by the Constitution. What is to go to the consolidated fund of the State is determined by the Constitution and cannot be determined by Parliament. The object of the Act cannot be achieved by merely saying that the provisions of the State Acts shall be deemed to have been enacted by the Parliament.
There is nothing in the impugned Act with regard to the assignment of the tax collected or its distribution between States. It cannot, therefore, be urged that any provision in the impugned Acts runs contrary to the constitutional scheme with regard to the assignment to the States of the taxes realised, or their distribution between the States. We will not, therefore, be justified in assuming that the constitutional scheme will be violated. There are no facts on record to substantiate the plea that the constitutional scheme enshrined in Part XII of Chapter I of the Constitution has been violated. In any event, the levy of a tax is quite distinct from utilisation of the tax recovered. If the law imposing the levy is not unconstitutionally, the mere fact that the tax realised is not dealt with in accordance with the scheme under the Constitution, is no ground to invalidate the levy itself. In case such dispute arises between the States and the Union, that can be appropriately dealt with at the appropriate stage by the appropriate forum.
26. At this stage I may also deal with the submission urged by Mr. Gobind Das, Senior Advocate, in C.W.J.C. No. 1507/92(R). He submitted that the Supreme Court in Orissa Cement case in regard to the State of Bihar specified the relevant date for the purposes of refund to be the date of the Supreme Court's judgment i.e. 4.4.1991. According to him, this was patently erroneous, because the Supreme Court itself noticed two earlier Judgments, one of the Supreme Court itself and the other of the Patna High Court, which held the levy to be bad and granted relief accordingly. The Judgment of the Supreme Court was delivered on 19th March, 1990 in Civil Appeal No. 1521/90 against the judgment and order of the Patna High Court in C.W.J.C. No. 2517/85. By the aforesaid judgment the Supreme Court allowed the appeal and consequently allowed the writ petition, which had been dismissed by the High Court on 7.12.1988. In the other case the Patna High Court following the judgment in India Cement case allowed a writ petition being C.W.J.C. No. 2085/89 on 6.11.1990. He, therefore, submitted that the Supreme Court ought to have specified the date 6.11.90 or 7.12.88 as the relevant date for the purpose of refund of tax illegally collected. He, therefore, submitted that reference to the date of the Supreme Court judgment as the relevant date for the purpose of refund must be treated as per incuriam.
It appears from the facts stated in C.W.J.C. No. 1280/92 that in Civil Appeal No. 592/86, which was disposed of by the Supreme Court along with the connected matters including Orissa Cement case, an application has been filed by the petitioner for clarification of the judgment and order of the Supreme Court, with regard to the relevant date for the purpose of refund, and it is stated in the writ petition that the same is pending before the Supreme Court. We have no information as to whether the same has been disposed of. It also appears from Annexure 3 in C.W.J.C No. 1507/92(R) that the same question as to the relevant date for the purpose of refund, is pending before the Supreme Court in a batch of appeals arising from SLP Civil Nos. 2342 to 2362 of 1991, against the judgment of this High Court, in which Special leave has been granted on 30.7.91. Since this matter is pending before the Supreme Court, I do not consider it proper to express any opinion on the said question. Apart from this, I have my serious doubts as to whether the per incuriam rule can be applied to the judgment of a superior Court Moreover, having regard to the nature of the error pointed out, if the prayer is allowed, it would amount to further extending the scope and application of the per incuriam rule. So far the Courts have applied the rule only to cases where a judgment has been rendered in ignorance of a law or of a binding precedent. The extension of the rule to other errors in the judgment would amount to virtually an exercise of appellate or review jurisdiction, because such errors can be corrected in the appellate or review proceeding. The so called error pointed out by counsel for the petitioners is in relation to the date which is relevant for the purpose of refund of taxes illegally collected. The error is not on account of ignorance of any binding precedent, or of any law applicable to the subject in question. Strictly speaking, therefore, the per incuriam rule is not attracted, and I am not persuaded to enlarge the scope of the rule so as to enable the Court to correct other errors which may be corrected in review jurisdiction. In any event, since the question is pending consideration before the Supreme Court, it is not necessary to say anything on the merit of the submission.
27. It was then contended by him that the levy of cess on minerals in 11 different States at different rates is sought to be justified by passing a law which validates the levies under the different State enactments. It was, therefore, submitted that the same law justifies the levy of tax at different rates on the same minerals in different States and, therefore, offended Article 14 of the Constitution of India. The submission must be considered in the background in which it became necessary for the Parliament to pass the Validation Act. Before the decision in India Cement, the levies under different State enactments were being collected under the State laws at different rates. It was only after the judgment in India Cement case that it was held that the State legislatures lacked legislative competence to legislate on the subject in question. The Supreme Court in India Cement and in Orissa Cement, though finding the law to be unconstitutional, did not pass an order for the refund of all taxes illegally collected. In fact, in Orissa Cement it was clarified that in view of the earlier judgment of the Supreme Court in Murthy's case, the States may have justification for imposing and collecting the tax, but after the same was declared invalid, they had no right to collect the tax. It was for this reason the different dated were specified for different States for the purpose of refund. The effect of the Validation Act is to specify the same date, namely, 4th April, 1991, as the relevant date for all the States, because by reason of the Validation Act, the central law ceases to be effective after 4th April, 1991. It cannot be disputed that if the State legislatures were competent to legislate on the subject, and different State laws provided different rates of cess on royalty, the same could not be challenged on the ground of infringement of Article 14 of the Constitution of India. Considering the background facts, and having regard to the purpose for which the law was passed, and the objective sought to be achieved, it cannot be said that the Validation Act was discriminatory merely because different rates of Cess on royalty were prescribed for different States. The dominant objective of the Act was to validate the levies already made, and not to legislate on the subject by making a law imposing cess on royalty. It Was because of this objective which the law sought to achieve, that the law was given a limited life i.e. till 4th April, 1991. The legislate history and the March of events, earlier justified by a Supreme Court judgment, could not be ignored by the Parliament and, therefore, taking into account the reality of the situation, the Parliament was left with no option but to validate the levy of cess on royalty till 4th April, 1991, the date of the Supreme Court judgment in Orissa Cement. The law ceases to have any effect after that date, which makes it clear that the legislation was not with a view to levy cess on royalty, but only to validate what had happened in the past. In these circumstances, it would be difficult to hold that the Validation Act was discriminatory, keeping in view the primary objective which the Act sought to achieve. Indeed, even the Supreme Court in India Cement as well as in Orissa Cement did not direct refund of the entire tax illegally collected, because having regard to the relevant background facts, even the Supreme Court found reasonableness in protecting the larger public interest by permitting the retention of the tax illegally collected, as otherwise it would have exposed the States and public interest to devastating consequences.
28. The nest important question which arises for consideration is as to the effect of the aforesaid Ordinance and the Validation Act on the liability of the petitioners to pay Cess in respect of the period prior to 4.4.1991. The petitioners contend that the Ordinance and the Act did nothing more than absolve the States concerned of their liability to refund cess illegally collected before 4.4.1991. Under the judgment and order of the Supreme Court in Orissa Cement, different dates had been specified for different States in the matter of refund, and the States were liable to refund Cess illegally collected after the specified dates. The Act only sought to specify one date in respect of all the States, namely, 4.4.1991, and absolved the States of their liability to refund the Cess illegally collected before that date, which otherwise would have been refundable in view of the judgment and order of the Supreme Court in Orissa Cement case. Their categorie case is that the impugned Act did not create a liability against the petitioners so as to compel them to pay cess on royalty which had remained unpaid, even after the expiry of the Act. On the other hand, the learned Advocate General contends that under the impugned Act an obligation arose for the petitioners to pay the Cess on royalty as if the State laws in question had been validity enacted by the Parliament, If a liability arose under the Act, that liability could be enforced despite the expiry of the Act The petitioners contend that the impugned Act being a temporary Act, the provision of Section 6 of the General Clauses Act is not attracted. There is nothing in the Act to support the plea of the State that the liability incurred by the petitions towards payment of cess on royalty could be enforced even after the expiry of the Act. The petitioners submit that the Press statement issued in connection with the promulgation of the Ordinance, and the statement of objects and reasons in relation to the impugned Act in question, also support the plea of the petitioners. The language employed by the legislature in enacting the Ordinance as well as the Act is quite explicit and unambiguous, and clearly spells out the real intention of the Parliament. It is submitted that if the provisions of the impugned Act are analysed, it would be apparent that neither in express words not by implication the impugned Act envisages the consequences which flow from Section 6 of the General Clauses Act, inasmuch-as there is nothing in the impugned Act to save any right, privilege, obligation or liability acquired, accrued or incurred under the impugned Act, nor is there any saving clause to save the penalty, forfeiture or punishment incurred in respect of any offence committed. There is nothing to show that the Act provided for the continuance of any investigation, legal proceeding or remedy in respect of any such, right privilege/obligation, liability, penalty, forfeiture or punishment under the impugned Act. There is no provision for the institution, continuance or enforcement of any investigation, legal proceeding or remedy under the impugned Act. All that the Act provides is that notwithstanding any judgment, decree or order of any Court, all actions taken, things done, rules made, notifications issued or purported to have been taken, done made or issued, and cesses or other taxes on minerals realised, under any such law shall be deemed to have been validly taken, done, made issued or realised, as the case may be, as if Sub-Section (2) had been in force at all material times when such actions were taken, things were done, rules were made, notifications were issued or cesses or other taxes were realised. It is emphasised that the use of the past tense connotes that the Act only saved things done in the past, and did not justify the enforcement of any liability or the continuance or any proceeding in the future. This has been opposed by the Advocate General, who contends that the impugned Act had consequences of an enduring nature, and one such consequence, namely, the creation of a liability for payment of cess on royalty, being of enduring nature, survived the expiry of the Act. It could, therefore, be enforced even after the expiry of the Act. In fact, he contended that Section 6 of the General Clauses Act would also apply.
29. Sub-Section (1) of Section 2 of the Act makes it abundantly clear that the impugned Act does not enact by validation a perpetual law, but a temporary Act. Sub-Section (1) or Section 2 provides that the laws specified in the schedule to the Act shall be deemed always to have been as valid as if the provisions contained therein relating to cesses and other taxes on minerals had been enacted by Parliament and such provision shall be deemed to have remained in force upto the 4th day, of April, 1991. It is well-settled that a statute is temporary when its duration in only for a specified time. A perpetual statute remains in force unless it is repealed, but it is considered to be perpetual in the sense that it is not abrogated by efflux of time. In contrast, a temporary statute expires on the expiry of the time unless it is repeals earlier. It cannot, therefore, be disputed that the impugned Act enacted by validation laws that were deemed to have remained in force upto 4th day of April, 1991 and therefore promulgated a temporary law. Counsel for the petitioners submitted that in view of the catena of decisions of the Supreme Court it must be held that to the expiry of a temporary Act, Section 6 of the General Clauses Act, 1897, has no application, since in terms, it is limited to repeals. In this connection reliance has been placed on the decisions of the Supreme Court in State of Uttar Pradesh v. Jagmander Das : State of Orissa v. Bhupendra Kumar : and Gopi Chand v. Delhi Administration. In Gopichand the Supreme Court observed:
It is argued that, in dealing with this point, it would not be permissible to invoke the provisions of Section 6 of the General Clauses Act because the said Section deals with the effect of repeal of permanent statutes. This argument no doubt is well-founded. As Caries has observed as a general rule, unless it contains some special provisions to the contrary, after a temporary Act has expired, no proceedings can be taken upon it, and it ceases to have any further effect.
In Jamander Das the Court observed:
When a statute is repealed or comes to an automatic end by efflux of time, no prosecution for Acts done during the continuance of the repealed or expired Act can be commenced after the date of its repeal or expiry, because that would amount to enforcement of a repealed or a dead Act. In case of repeal of statutes this rule stands modified by Section 6 of the General Clauses Act. An expiring Act, however, is not governed by the rule enunciated in that Section.
In the State of Orissa v. Bhupendra Kumar the Court held:
It is true that the provisions of Section 6 of the General Clauses Act in relation to the effect of repeal do not apply to a temporary Act.
As observed by Patanjali Shastri, J. (as he then was) in Section Krishnan v. State of Madras , "a general rule in regard to a temporary statute is that in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires."
I have, therefore, no doubt in holding that the impugned Act enacted by validation a temporary law and therefore Section 6 of the General clauses Act has no application upon its expiry. I may at this stage refer to the decision relied upon by the learned Advocate General/ Amadalvalasa Cooperative Agricultural and Industrial Society Ltd. v. Union of India and Anr.. The learned Advocate General contends that as in the aforesaid case, the provision of Section 6 of the General Clauses Act should be applied to the instant case as well. The submission ignores the fact that in the case with which the Supreme Court was concerned, the Act provided that the expiry shall not affect anything done or omitted to be done before such expiry, and Section 6 of the General Clauses Act, 1897, shall apply upon the expiry of the Act as if it were repealed by Central Act. It is, therefore, obvious that the expiring Act itself provided in clear terms for the application of Section 6 of the General Clauses Act and, therefore, in view of the saving provision in the temporary statute itself Clause 6 of the General Clauses Act became applicable. In the impugned Act admittedly there is no provision similar to Section 6 of the General Clauses Act nor is there any saving clause, which may justify the application of the principles contained in Section 6 of the General Clauses Act. The judgment relied upon by the Advocate General, therefore, does not apply to the facts of this case.
30. Having ruled out the application of Section 6 of the General Clauses Act, the petitions contend that on a plain reading of the provisions of the impugned Act and giving to the words employed their normal grammatical meaning, and on a fair construction of the provisions, it must be held that no action can be taken after the expiry of the Act in pursuance of the provisions of the State Act. The plain meaning of the words employed by the legislature is only that any action that may have been taken in the past, including realisation of Cess or other taxes on minerals, shall be deemed to have been validly taken, done or realised. It was contended that the Statement of objects and reasons relating to the Act and the Press not issued in connection with the promulgation of the Ordinance also support the view canvassed by the petitioners. It was indeed submitted that having regard to the clear words employed by the legislature, there is no need to take any external aid with a view to construe the provisions, but even if such external aid in the form of Press Note or statement of objects and reasons in taken into account, that will support the case of the petitioners. The Press note and the statement of objects and reasons have been annexed as Annexure-6 in C.W.J.C. No. 1507/92(R). The Press note issued on 17th February, 1992, only two days after the promulgation of the Ordinance is in the following terms:
ORDINANCE TO VALIDATE CESSES AND CERTAIN OTHER TAXES ON MINERALS AND CERTAIN STATE LAWS.
The Government of India has decided to validate the collection of Cesses and other levies on minerals imposed by State Governments under various State Laws upto 4.4.1991, the date on which Supreme Court of India invalidated certain State Laws while disposing of a series of Civil Appeal cases pending before the Court. An Ordinance to this effect has been promulgated by the President of India on 15th February, 1992.
2. Acts passed by various State Governments imposing cesses and other taxes on minerals have been struck down by various Courts including the Supreme Court. As a result of these judgments State Governments became liable to refund Cess and other taxes collected by them. Since refund was likely to have a serious impact on State revenues and having regard to the fact that it is extremely difficult to ensure that the levies collected are refunded to the large numbers of end users of minerals who have actually borne the burden of such levies, the Government has issued this Ordinance to validate collection of such levies by the State Governments upto the date of the final order by the Supreme Court, viz., 4th April, 1991. The State Governments will not be able to retain levies collected beyond this date.
The statement of objects and reasons dated 20th February, 1992, is as follows:
STATEMENT OF OBJECTS AND REASONS Certain State Acts imposing Cesses and other taxes on minerals had been struck down by Courts including the Supreme Court of India in different cases. As a result of judgments in there cases, State Governments became liable to refund cesses, and other taxes collected by them. Since refund was likely to have a serious impact on State revenues of the concerned State Governments and having regard to the fact that it is extremely difficult to ensure that the levies collected are refunded to the large number of end users of minerals who have actually borne the burden of such levies, the Cess and other Taxes on Minerals (Validation) Ordinance, 1992 (Ordinance 7 of 1992) was promulgated by the President on the 15th February 1992, to Validate collection of such levies by State Governments up to the 4th day of April, 1991.
2. The Bill seeks to replace the aforesaid Ordinance.
30. It appears from the later decisions of the Supreme Court that earlier the Supreme Court did not approve of parliamentary debates, press notes or even objects and reasons as extrinsic aid to the construction of a statute. Debates in Parliament on a Bill was not regarded as admissible for construction of an Act which was ultimately enacted. However, on many occasion legislative history within circumspecting limits has been consulted by Courts in resolving ambiguities. In regard to statement of objects and reasons it was observed by Sinha, C.J. in State of West Bengal v. Union of India :
It is well-settled that the statement of objects and reasons coming on a Bill when introduced in Parliament cannot be used to determine the true meaning and effect of the substantive provision of the statute. They cannot be used except for the limited purpose of understand the background and the antecedent state of affairs leading up to the legislation.... A statute is the expression of the collective intention of the legislature as a whole, and any statement made by an individual, albeit a Minister, of the intention and object of the Act, cannot be used to cut down the generality of the words used in the statute.
In , Ashivani Kumar Ghose v. Arbind Base, Patanjali Shastri C.J. observed:
As regards the propriety of the reference to the statement of objects and reasons it must be remembered that it seeks only to explain what reasons induced the mover to introduce the Bill in the House and what objects he sought to achieve. But those objects and reasons may or may not correspond to the objective which the majority of the members had in that when they passed it into law. The Bill may have undergone radical changes during its passage through the house or houses, and there is no guarantee that the reasons which led to its introduction and the objective thereby sought to be achieved have remained the same throughout till the Bill emerges from the House as an Act of the legislature, for they do not form part of the Bill and are not voted upon by the members.
32. Having regard to various other pronouncements of the Supreme Court it now appears to be well-settled that a Court may refer to statement of objects and reasons for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute, and the evil which the statute sought to remedy.
33. Mr. Govind Das placed reliance upon two decisions of the Supreme Court in Bengal Immunity Co. v. State of Bihar and , Kanai Lal Sur v. Paramnidhi Khan, wherein the observations in Heydon's case was approved, but their Lordships observed in Kanai Lal:
However, in applying these observations to the provisions of any statute, it must always be borne in mind that the first and primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself. If the words used are capable of one construction only then it would not be open to the Courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.
The words used in the material provisions of the statute must be, interpreted in their plain grammatical meaning and it is only when such words are capable of two constructions that the question of giving effect to the policy or object of the Act can legitimately arise. When the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the Act whilst the other construction is likely to assist the achievement of the said policy, then the Courts would prefer to adopt the latter construction.
Mr. S. Pal also relied upon several decisions of the Supreme Court and submitted that even if external aid to construction was permissible, the statement of objects and reasons and the Press note issued supported the plea of the petitioners. In particular, he refereed to the decisions, Commissioner of Income Tax v. Smt. Sodra Devi Doypack Systems Pvt. Ltd. v. Union of India C.D. Shang v. S.D. Baijal Orient Paper and Industries Ltd. v. State of Orissa and Directorate of Enforcement v. Deepak Mahajan and 1993 (1) All England Reporter 244 Papper v. Hart. All these decisions only reiterate the view that the objects and reasons of the statute should be taken into consideration in interpreting the provisions of the statute in case of doubt with a view to assertion the mischief sought to be remedied by the legislature, and the object and purpose for which the legislation was enacted. In Doypack Systems the Supreme Court quoted with approval the observations of Lord Reid in 1975 AC 591, which is as follows:
We often say that we are looking for the intention of Parliament, but that is not-quite accurate. We are seeking the meaning of the words which the Parliament used, We are seeking not what the Parliament meant but the true meaning of what they said.
34. Keeping in view these principles the provisions of the impugned Act have to be examined for their true meaning and import. One cannot, however, lose sight of what preceded the promulgation of the Ordinance and the enactment of the impugned Act. As noticed earlier, in India Cement, and later in Orissa Cement, the Supreme Court held that the levy of Cess on royalty was beyond the legislative competence of the State legislatures. The said Acts inasmuch as they sought to impose Cess on royalty were quashed and the natural consequence would have been that the petitioners would have been entitled to the refund of the tax illegally collected, The Supreme Court, however, took notice of the fact that levy was earlier upheld by the Supreme Court in H.R.S. Murthy v. Collector of Chitoor , and amounts had been collected on the basis that the said decision was the correct position. In India Cement, therefore, the levy of the Cess was declared to be ultra vires the powers of the State legislature only prospectively. In Orissa Cement the Court noticed all the relevant facts and finally directed that the levy of Cess though unconstitutional, there shall be no direction to refund to the assessee of any amount of Cess collected until the date on which the levy in question had been declared unconstitutional. In regard to Bihar cases the relevant date was the date of the judgment (4.4.1991), but in respect of Orissa the relevant date was 22.12.1989 and in case of Madhya Pradesh it was 28.3.1986. The Court was of the view that the States could not on any ground of equity be permitted to retain the Cess collected on or after the date of the judgment of the High Court. Accordingly, the Court directed the refund of the amount so collected after the relevant dates indicated by the Court. It would, therefore, appear that even according to the judgment of the Supreme Court, refund of the cess illegally collected was not allowed in respect of any period prior to the date of judgment in India Cement case, and prior to the dates specified in respect of different States in Orissa Cement case. However, the State was liable to refund the Cess illegally collected after those dated. There is nothing in Orissa Cement case, which governs the Bihar cases, about the liability of the assesses to pay Cess on royalty not recovered from them, but pertaining to the period prior to 4.4.1991. In one case, however, which related to the State of Rajasthan the Court made a specific direction. In , The Federation of Mining Association of Rajasthan v. State of Rajasthan and Ors. the Court made a specific direction in the following terms:
In the present case since the High Court has upheld the levy and the levy in being declared unconstitutional only by this order, we direct that 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 even any amount of tax remains to be paid in respect of earlier period, 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.
No such direction has been made by the Supreme Court in Orissa Cement case which governs the cases from the State of Bihar. However, it is under the provisions of the impugned Act that demands have been made from the 'petitioners for payment of Cess on royalty under the purported exercise of authority under the said Act, and therefore this Court is called upon to interpret the Act, and to find the consequences that follow.
35. I have already held that the impugned Act enacts a temporary law, and that upon its expiry Section 6 of the General Clauses Act has no application. What now requires to be considered is as to what is the effect of the expiry of a temporary statute on legal proceedings in relation to matters connected with such Act, and whether rights or liabilities acquired or incurred, can be enforced after the expiry of a temporary statute, particularly when the expiring statute does not contain a saving provision similar in effect to Section 6 of the General Clauses Act, The authorities cited at the bar, to which I shall presently refer, make a clear distinction between rights and obligations created by a temporary statute which are of enduring nature and therefore survive even after the expiry of the temporary statute, and those which are not. In the latter class of cases, the normal rule is that proceedings taken against a person under a temporary statute, or any appointment, notification, order or rule made or issued, ipso facto terminate, and come to and end with the expiry of the temporary statute. At times, courts have found difficulty in distinguishing what rights are or are not of enduring nature. But the consensus of judicial opinion is that the question is essentially one of the construction of the Act. The nature of the rights and obligations resulting from the provisions of a temporary Act and their character, may have to be regarded in determining whether the said right or obligation is enduring or not See State of Orissa v. Bhupendra Kumar .
36. In S. Krishan v. State of Madras , the Supreme Court had occasion to consider the provisions of the Preventive Detention (Amendment) Act, 1951 which amended the Prevention of Detention Act, 1950 and continued the operation of the Parent Act till 31.3.52. Under the provisions of the Act, by reason of the amendment, where detention orders were in force on the date of amendment of the Act, the person detained could be detained for a period longer than three months if an advisory board reported that there were sufficient grounds for detention within ten weeks from the commencement of the amendment Act. The Act amended did not in express terms prescribe any maximum period of detention. In these circumstances the Court held that by extending the duration of the old Act till 1.4.52, an overall time limit was fixed beyond which preventive detention under the Act could not be continued. It was observed by Patanjali Shastri, J. (as he then was):
The general rule in regard to a temporary statute is that, in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires.
Mahajan. J. (as he then was) in his concurring opinion observed:
It may be pointed out the Parliament may well have thought that it was unnecessary to fix any maximum period of detention under the new statute which was of a temporary nature and whose own tenure of life was limited to one year. Such temporary statutes cease to have any effect after they expire, they automatically come to an end at the expiry of the period for which they have been enacted and nothing further can be done under them.
The same view was reiterated in State v. Jagmander Das . In that case a prosecution was commenced against the respondent on 16th January, 1950 for the infringement of Section 2 of the Non-Ferrous Metals Control Order 1952, and order made under the Defence of India Act. The said Act expired on 30th September, 1946, together with all rules and orders made thereunder. The respondent prayed for quashing of the proceeding on the ground that the trial could not be continued because the Defence of India Act and the Rules framed thereunder had expired, and because the Government of India Act, 1935 had also been repealed by the Constitution. Having failed before the trial Magistrate and the Sessions Judge, the respondent approached the High Court which upheld his contention and quashed the prosecution. The High Court took the view that: the Defence of India Act expired on 30th September 1946; the Ordinance XII of 1946, however, remained in force. This Ordinance had amended Section 1(4) of the Defence of India Act and the amendment remained in force so long as the Ordinance was not repealed. That Ordinance was, however, repealed by Act II of 1948 and this appeal came into effect from the 5th of January, 1948, and as the prosecution in this case was not started before that date, therefore, nothing could be said to have been done under the Ordinance which was saved after 5-1-1948.
It held that the liability of the present respondent to be punished arose under the Defence of India Act and not under the Ordinance which merely extended the period during which they could be prosecuted and punished and that had their prosecution started during the life of the Ordinance or during the life of the Defence of India Act it could then be argued that the continuation of the prosecution was something done, or a liability incurred, under the Ordinance and could be carried on under the saving clause of Act II of 1948, but that as no prosecution was commenced at all before 5-1-1948 and there was nothing done, there was no liability incurred which could possibly be affected by the repeal of the Ordinance. Approving the view of the High Court, the Supreme Court held:
In our judgment, no grounds exist for taking a view contrary to the one expressed by the High Court. It is quite clear that the life of the Defence of India Act haying expired on the 30th of September, 1946 in the absence of a saving clause no prosecution for infringement of its provisions could be commenced after the expiry of the life of the Act, Section 6 of the General Clauses Act not being applicable to such a case. Such a saving clause was, however, provided by the Ordinance XII of 1946. That Ordinance itself was repealed by Act II of 1948, and as nothing was done in this case before the 5th of January, 1948 no fresh proceedings could be commenced after that date for violation of the provisions of the Defence of India Act.
Section 102(4) of the Government of India Act, under the provisions of which possibly the prosecution of the respondents for offences committed by them could have been justified and continued, was also repealed by the Constitution on the 26th of January, 1950 a few days after this prosecution was commenced. Section 6 of the General Clauses Act has no application to the repeal of a statute made by Parliament in England and the repeal of which has been brought about by the Constitution of India.
Earlier in the judgment their Lordships stated the principle in the following words:
When a statute is repealed or comes to an automatic end by efflux of time, no prosecution for acts done during the continuance of the repealed or expired Act can be commenced after the date of its repeal or expiry because that would amount to the enforcement of a repealed or a dead Act. In cases of repeal of statutes this rule stands modified by Section 6 of the General Clauses Act, An expiring Act however is not governed by the rule enunciated in that section.
On the 30th March 1946, before the expiry of the Defence of India Act, the Governor-General promulgated an Ordinance "The Defence of India (Second Amendment) Ordinance" No. XII of 1946. This Ordinance amended Section 1(4) of the Defence of India Act by adding a saving clause in the following terms:
But its expiry under the operation of this sub-Sections shall not affect-
(a) the previous operation of, or anything duly done or suffered under this Act or any rule made thereunder or any order made under any such rule....
The saving clause is almost in the same terms as Sections 6(a), (b), (c), (d) and (e) of the General Clauses Act. Thus the saving clause achieved the purpose which otherwise would have been achieved, it if was a case of a repeal, by Section 6 of the General Clauses Act.
By virtue of the provisions of the saving clause "for things done or omitted to be done under the Defence of India" the prosecution could be commenced even after the expiry of the Act. The saving clause added in the Act by the Ordinance clearly permitted a prosecution for offences committed before the expiration of Defence of India Act even after its expiry.
In Rayala Corporation v. Director of Enforcement AIR 1970 SC 494, relied upon by the petitioners, pursuant to a raid of the premises of accused No. 1 on 20th and 21st December, 1966, a complaint was filed in the court of Chief Presidency Magistrate, Madras on 17th March, 1968 charging the accused inter-alia with violation of Rule 132A(2) of the Defence of India Rules punishable under Rule 132A(4), which Rule was in force when it was alleged to have been contravened by the accused. Rule 132A as a whole ceased to be in existence as a result of the Notification issued on 30th March, 1965 by which the Defence of India (Amendment) Rules, 1965 were promulgated, Clause 2 whereof reads as follows:
In the Defence of India Rules, 1962, Rule 132A (relating to prohibition of dealings in foreign exchange) shall be omitted except as respects things done or omitted to be done under that rule.
Accepting the plea that the prosecution could not be initiated after the omission of Rule 132A, the Supreme Court observed:
The argument of Mr. Sen was that, even if there was a contravention of Rule 132A(2) by the accused when that Rule was in force, the act of contravention cannot be held to be a "thing done or omitted to be done under that rule", so that, after that rule has been omitted, no prosecution in respect of that contravention can be instituted. He conceded the possibility that, if a prosecution had already been started while Rule 132A was in force, that prosecution might have been competently continued. Once the Rule was omitted altogether, no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to agree with the submission of Mr. Sen that the language contained in Clause 2 of the Defence of India (Amendment) Rules, 1965 can only afford protection of action already taken while the rule was in force, but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had cased to exist. On this interpretation, the complaint made for the offence under Rule 132A(4) of the D.I. Rs., after 1st April, 1965 when the rule was omitted, has to be held invalid.
The Court referred to and followed the general principle enunciated in S. Krishan and Jagmandar as (supra).
37. On the other hand, the learned Advocate General strenuously relied upon several decision of the Supreme Court which I must notice. In State of Orissa Bhupendra Kumar Bose . The relevant facts of the case are that the petitioner had challenged the elections held for the Cuttack Municipality as invalid and claimed an injunction restraining the respondents from functioning as elected Councillors, and the Chairman and the Vice Chairman amongst them form discharging their duties as such. It appears that during December 1957 to March 1958 elections were held for the cuttack Municipality under the provisions of Orissa Municipal Act 1950, and 27 persons were elected as Councillors. One of the defeated candidates challenged the said election and the High Court allowed the writ petition holding that the qualifying date for determining the age qualification of voters under Section 13 of the Orissa Municipal Act had been published by the State Government only of 10th January, 1958, though the Parliamentary electoral roll had already been published on December 23, 1957. In consequence the claim and objections had been invited for a period of 21 days from the said date to the 12th January, 1958. As a result of the delay made in publishing the qualifying date for determination of age qualification of voters, the citizens of Cuttack were in fact given only 2 days time of file their claims and objections, whereas they were entitled to 21 days under the rules. The High Court, therefore, held that this drastic abridgement of the period for filing claims and objections had materially affected the results of the elections. It was also found that whereas a candidate was entitled to 15 clear days for the purpose of canvassing, the notification issued under the rules curtailed this period to 14 days. On such findings the elections were set aside and appropriate orders of injunction issued. The judgment of the High Court was pronounced on December 11, 1958. The State of Orissa took the view that in view of the findings made by the High Court, the validity of election to other Municipalities might also be exposed to the risk of challenge. Therefore, the Governor of Orissa promulgated the impugned Ordinance on January 15, 1959, which had the effect of validating the election to the Cuttack Municipality so that the said Municipality began to function once again. It also validated the electoral roll prepared in respect of other Municipalities in the State of Orissa and this sought to save elections held or to be held in respect of the said Municipalities from possible challenge. The Ordinance lapsed on April 1, 1959. The said Ordinance was challenged by the petitioner on the ground that Section 4 and 5(1) thereof were unconstitutional. The High Court allowed the writ petition, which compelled the State of Orissa, as also the elected Councillors, to move the Supreme Court.
Before the Supreme Court it was contended by the writ petitioner that the Ordinance was a temporary Statute which was bound to lapse after the expiration of the prescribed period and so, as soon as it lapsed, the invalidity in the Cuttack Municipality election which had been cured by it, revived. The contention was negatived by the Supreme Court. After noticing the principle laid down in Section Krishan (supra) and noticing the general rule in regard to a temporary statute that in the absence of special provision to the contrary proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires, and noticing the decision in Wicks v. Director of Public Prosecution 1947 SC 362 and the general rule stated by Craies, the Court observed:
In our opinion, it would not be reasonable to hold that the general rule about the effect of the expiration of a temporary Act on which Mr. Chetty relies is inflexible and admits of no exceptions. It is true for instance that offences committed against temporary Acts must be prosecuted and punished before the Act expires. If a prosecution has not ended before that day, as a result of the termination of the Act, it will ipso facto terminate. But is that an inflexible and universal rule? In our opinion, what the effect of the expiration of a temporary Act would be must depend upon the nature of the right or obligation resulting from the provisions of the temporary Act and upon their character whether the said right and liability are enduring or not. As observed by Parker, B. in the case of Steavenson v. Oliver 1841 151 ER 1024 at pp. 1026-1027.
there is a different between temporary statutes and statutes which are repealed; the latter (except so far as they relate to transactions already completed under them) become as if they had never existed; but with respect to the former, the extent of the restrictions imposed, and the duration of the provisions, are matters of construction.
In this connection, it would be useful and interesting to consider the decision in the case of Steavenson 1841 151 ER 1024 at pp. 1026-1027 itself. That case related to 6th Geo. 4, c. 133, Section 4 which provided that every person who held a commission or warrant as surgeon or assistant-surgeon in His Majesty's navy or army, should be entitled to practise as an apothecary without having passed the usual examination. The statute itself was temporary and it expired on August 1, 1826. It was urged that a person who was entitled to practise as an apothecary under the Act would lose his right after August 1, 1826 because there was no saving provision in the statute and its expiration would bring to end all the rights and liabilities created by it. The Court rejected this contention and held that the person who had acquired a right to practise as an apothecary, without having passed the usual examination, by virtue of the provision of the temporary Act. would not be deprived of his right after its expiration. In dealing With the question about the effect of the expiration of the temporary statute, Lord Arbinger, C.B. observed that It is by no means a consequence of an Act of Parliament's expiring, that rights acquired under it should likewise expire. Take the case of a penalty imposed by an Act of Parliament would hot a person who had been guilty of the offence upon which the legislature had imposed the penalty while the Act was in force, be liable to pay it after its expiration? The case of a right acquired under the Act is stronger. The 6 Geo, 4, C. 133, provides that parties who hold such warrants shall be entitled to practise as apothecaries; and we cannot engraft on the statute a new qualification, limiting that enactment.... Take the case of a penalty imposed by a temporary statute for offences created by it. If a person is tried and convicted under the relevant provisions of the temporary statute and sentences to undergo imprisonment, could it be said that as soon as the temporary statute expires by efflux of time, the detention of the offender in jail by virtue of the order of sentence imposed upon him would cease to be valid and legal? In our opinion, the answer to this question has to be in the negative. Therefore, in considering the effect of the expiration of a temporary statute, it would be unsafe to law down any inflexible rule. If the right created by the State is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired. If a penalty had been incurred upon a person, the imposition of the penalty had been incurred upon a person, the imposition of the penalty would survive the expiration of the statute. That appears to be the true legal position in the matter.
The above decision does lay down the proposition that the effect of expiration of temporary Act is dependent upon the nature of the right or obligation resulting from the provisions of the temporary Act, and upon their character, whether the said rights and liabilities are enduring or not.
38. In , Velji Lakshamsi and Co. and Ors. v. Benett Coleman and Co. a question arose as to whether a permission granted by the Municipal Commissioner to raise temporary structure under the city of Bombay (Building Works Restriction) Act, 1944, subject to the condition that the same would be pulled down whenever required to give effect to any improvement scheme, could be acted upon, and the local authority could take steps for eviction for the purpose of demolition of the structure so raised after the expiry of the Act. The Court reiterated the principle laid down in State of Orissa v. Shupendra (supra) and held that under the Bombay Act 1944 the Municipal Commissioner had plenary power under Section 3 of the Act to authorise by means of written permission the construction of any building or structure in the scheduled area subject to such conditions as he might have thought fit to specify in the permission. Since the permission in that case had been granted subject to the express condition that the complainant shall pull down or remove the temporary structure in question whenever called upon to do so, and the same having been annexed to and made to go with the ownership of the structure, it could be enforced by the Municipal Commissioner under Regulation 36 and 38 of the special Regulation made by the Arbitrator which became part and parcel of Bombay Town Planning Act 1954. It was further held that the provisions of Section 3 and 8 of the Bombay Act 1944 were permanent as to the restriction, rights and obligations imposed, acquired and incurred therein. A fortiori, rights acquired by the Municipal Commissioner by virtue of the express conditions imposed by the Municipal Commissioner by virtue of the express conditions imposed by him while granting the permission were not subject to the time limit, and did not lapse with the expiry of the Act. Accordingly, the notice for demolition after the expiry of the Bombay Act 1944 was justified.
39. In Venkata Reddy v. State of Andhra Pradesh , by an Ordinance of 1984 promulgated by the Governor of Andhra Pradesh, the posts of part-time village officers were abolished. A question arose as to whether after the lapse of the Ordinance which was not replaced by an Act of the legislature, the posts of part-time village offices revived. The question was answered in the negative by the Supreme Court. It was held that Section 3 or the Ordinance abolished the posts of part-time village officers on the commencement of the Ordinance, and further declared that every person who held the post of part time village officer would cease to hold the post with effect from that date. These two matters became accomplished facts on January 6, 1984 irrespective of whether the holders of these posts were paid any amount contemplated under Section 5 of the Ordinance. Even if the Ordinance ceased to operate from a subsequent date by reason of Clause 2 of Article 213 of the Constitution, the effect of Section 3 of the Ordinance was irreversible except by express legislation.
40. In A.K. Roy Union of India the Supreme Court noticing the earlier decisions of the Court observed that enduring right and obligations can be created by Ordinances. The learned Advocate General also relied upon a decision of the Supreme Court in Binod Gurudas Rajkar v. National Insurance Co. Ltd. . In my view that decision does not help the Advocate General, because in that case it was held by the Court that by the change of law, the remedy of the claimant had not been affected at all and, therefore, Section 6 of the General Clauses Act was not attracted.
41. Lastly, the learned Advocate General relied upon a decision of the Supreme Court, . In my view, as earlier observed, that judgment does not support the plea of the State because under Section 13 of the Act with which that case was concerned, it was specifically provided that the expiry and Section 6 of the General Clauses Act, 1897, shall apply upon the expiry of the Act as if it were repealed by a Central Act. In view of the specific provision applying Section 6 of the General Clauses Act, the proceeding could be continued and premium due could be realised even after the expiry of the temporary Act.
42. In view of the authorities considered above, it must be held that the general rule in regard to a temporary statute, is that in the absence of special provision to the contrary, proceedings which are being taken against a person under it will ipso facto terminate as soon as the statute expires. Such temporary statutes cease to have any effect after they expire; they automatically come to an end at the expiry of the period for which they have been enacted, and nothing further can be done under them. Section 6 of the General Clauses Act has application only to repealed statutes and not to temporary statutes. However, the general rule is not inflexible. There are exceptions to the rule. What will be the effect of the expiration of a temporary Act must depend upon the nature of the right or obligation resulting from the provisions of the temporary Act and upon their character, whether the said right and liability are enduring or not. Similarly, transactions already completed under temporary statutes cannot be reopened. Consequently, if the right created by the temporary statutes is of an enduring character and has vested in the person, that right cannot be taken away, because the statute by which it was created has expired. If a penalty had been incurred upon a person, the imposition of the penalty would survive the expiration of the statute.
43. Having regard to the law well settled by decisions of the Supreme Court, and without resorting to any external aid, I now purpose to consider the provisions of the Act to bring out their true scope and effect. The relevant provisions have been quoted earlier in this judgment. A careful perusal of the said provisions brings out the true legislative intent. The Act commands us to assume that the laws specified in the schedule were always as valid as if the provisions contained therein relating to Cesses or other taxes on minerals had been enacted by Parliament. We must also imagine that these provisions remained in force only upto 4th day of April, 1991. We should also not lose sight of the fact that the Ordinance as well as the Act, which replaced the Ordinance, were promulgated in the year 1992. The Act created a temporary law and gave life to the relevant provisions contained in the laws specified in the schedule only upto 4th day of April, 1991. The Parliament was not exercising its plenary legislative power with a dominant view to promulgate a law relating to Cesses and other taxes on minerals, because if that had been the intention, it would have promulgated a perpetual law, and not a temporary law. The objective sought to be achieved by such legislation was to give validity to the laws included in the Schedule, and to give them life upto 4th April, 1991. This conclusion is also reinforced by the fact that the different State laws provided different rates of cess and tax in respect of the same minerals. Mr. Gdbind Das was at pains to point out that is the Parliament really intended to legislate providing for imposition of tax and Cess on minerals, it would have provided an uniform rate, and would not have permitted different rates in respect of the same minerals in different States, as that would have offended Article 14 of the Constitution of India. It has, therefore, been contended before us with some force, that the intention of the Parliament was not to impose a tax, but merely to grant legal sanction to what had happened in the past under a law declared void. The laws had been struck down on the ground of legislative incompetence of the States. The Parliament, therefore, intervened and gave to the laws sanctity by deeming that the laws were promulgated by the Parliament itself. Since it did not intend the laws to continue in the future, it was given only a temporary life which came to an end after 4th day of April, 1991. It is also conspicuous that the Parliament did not incorporate in the Act a provision in same or similar terms as Section 6 of the General Clauses Act, either expressly or impliedly Obviously, therefore, once the temporary law came to an end, it was dead for all purposes, and could not be revived or deemed to exist for the purpose of creating a liability and enforcing the same. If that were the intention of the Parliament, it would have certainly incorporated a provision similar to Section 6 of the General Clauses Act, or would have expressed its intention to do so in clear terms. The Parliament was aware that upon the expiry of the temporary laws sought to be validated, proceeding could not be taken upon it, since the laws ceased to have further effect. In my view, this is a very conspicuous feature of the Act and given a clear indication that the Parliament did not intend the laws to be effective after 4th day of April, 1991 for any purpose whatsoever. It only legalised all that was done before that date. It did not provide that on the basis of the laws so validated, any liability could be imposed or realised after 4th April, 1991, though in clear terms, it granted validity to all actions taken, things done, rules made, notifications issued etc. notwithstanding any judgment, decree or order of any Court. The actions taken and recoveries made, therefore, were legalised, but nothing more was provided, which could justify the imposition of liability and its collection after the relevant date, namely, 4th April, 1991.
44. If the Parliament really intended to enforce the obligations accrued or liabilities incurred under the temporary laws, it would have certainly provided a saving clause which either expressly or by necessary implication saved such obligations or liabilities and sanctioned the continuance of proceedings to enforce them.
45. Clause 2 of Section 2 is couched in the past tense in respect of all matters stated therein. Obviously, therefore, the Parliament only intended to legalise and validate all that had been done, but did not grant authority to do so in future. If the contention of the State is to be upheld, namely, that the liability incurred under the validated laws could be enforced after 4th day of April, 1991, that would amount to giving life to the laws after 4.4.1991, which is contrary to the clear intention of the Parliament. Upon the expiry of a temporary law, completed transactions cannot be reopened, nor are consequences of enduring nature affected. In the absence of a saving clause, the laws did not exist at all, so as to authorise the enforcement of obligations or liabilities accrued ox incurred, after 4.4.1991. It is not as if the Parliament was not aware of the true legal position, because in large number of such legislation's, where the legislature intends to keep the provisions alive for the limited purpose of completing the proceedings already taken or enforcing the obligations and liabilities accrued or incurred, the legislature has expressed its intention in clear words. I do not find either an express or implied expression of such a legislative intent in the Act in question.
46. It appears that the demands raised against some of the petitioners in the instant cases were raised after the promulgation of the Ordinance which was repealed by the Act. Sub-Section (2) of Section 3 of the Act provides that notwithstanding such repeal, anything done or any action taken under the said Ordinance shall be deemed to have been done and taken under the corresponding provisions of the Act. It is not worthy that the Act was given retrospectivity, and was deemed to have come into effect on the same day as the Ordinance, namely, 15th February, 1992. The Ordinance as well as the Act so far the relevant provisions are concerned, are in the same terms. It, therefore, follows that what cannot be done under the Act could not be done under the Ordinance. If the Act did not permit raising of fresh demands or the enforcement of the liability incurred under the temporary law which had expired, such a demand could not be raised under the Ordinance as well. Moreover, nothing had been done under the Ordinance except that a demand was made. If such a demand could not be made under the provisions of the Act, the same could not be made under the Ordinance as well. Counsel for the petitioners has rightly relied upon the decision of the Supreme Court, reported in 1980(1) SCC 150. Sub-Section (2) of Section 3 therefore cannot save the actions if any taken, which could not be taken under the Act.
47. The learned Advocate General after the close of the arguments made available to us a copy of a Division Bench judgment of the Madras High Court dated 27.6.1994 rendered in Writ Petition No. 2353/84 and connected matters (S. Kumaresen v. State of Tamilnadu etc. etc.) and placed reliance upon the finding recorded in the said judgment to the effect that in view of the provisions of the Validation Act, 1992 the State was not prohibited from collecting Cess and surcharge which had become payable by 4th April, 1991, but not already collected. The learned Judges have also referred to a Division Bench order of the Orissa High Court in Orissa Cement Ltd. and Anr. v. Union of India and Ors. . Unfortunately, the main thrust 4 of the argument in the Madras decision was with regard to the legislative competence of the State legislature to provide for such a levy and to enforce or to recover local Cess and local Cess surcharge invoking the power under Sections 116 and 117 of the Tamilnadu Panchayat Act, 1958 in respect of the amounts due to the State in return for the mining lease or mining concession granted by the State. The Court held that the State legislature had no legislative competence to provide for such levy, but went on to hold that in view of the Validation Act of 1992 it was open to the State to recover Cess and surcharge which had become payable by 4th April, 1991, but not already collected. The arguments which have been advanced before us, were not considered in the aforesaid decision. Perhaps, such contentions were not urged before the Honble Judges. In the Orissa decision their Lordships had not expressed a final opinion in the matter, but only expressed a tentative view that the Ordinance, and for that matter the Act, did not prohibit collection of Cess which had become payable by 4th April, 1991. The Orissa High Court was merely disposing of a stay application and, therefore, their Lordhips expressed only a tentative opinion justifying refusal of stay.
48. I have, therefore, no hesitation in coming to the conclusion that the Act was promulgated for a limited purpose. The Parliament intervened and granted sanctity to laws declared void by the Supreme Court only with a view to absolve the States of their liability to refund the taxes illegally collected, as that would have cast a heavy financial burden on the States. It also provided for the same cut off dates specified in the Supreme Court Judgment. The Parliament did not intend to keep alive after 4.4.91 the obligations or liabilities accrued or incurred under the temporary laws, and therefore did not provide for the enforcement of such obligations or liabilities in future. As a result the taxes collected before 4.4.1991 are not required to be refunded, but the Act does not sanction the recovery of any tax after 4.4.1991.
49. In view of my above findings, I partly allow the writ petitions. It is hereby declared that the impugned Ordinance, and the impugned Act that followed, are constitutionally valid. However, the Act does not authorise the recovery of any tax or Cess after 4.4.1991, even if the liability was incurred under the validated laws before 4.4.1991. Consequently, the several demands made by the respondents in the writ petitions before this Court are quashed and the State is restrained from taking any step to realise such demands. In the facts and circumstances of the cases however, there shall be no order as to cost.
S. Sarup, J.
I agree.