An interesting question is raised in this appeal
which arises out of two judgments of this Court, namely,
'Buxa Dooars Tea Company Ltd. and others v. State of West
Bengal and others' [(1989) 3 SCC 211] and 'Goodricke Group
Ltd. and others v. State of W.B. and others' [1995 Supp.
(1) SCC 707].
JUDGMENT In the present appeal, we are concerned with The
West Bengal Rural Employment and Production Act, 1976 and
The West Bengal Primary Education Act, 1973. The High
Court has found, based on a reading of the interim orders
passed in both Buxa Dooars Tea Company Ltd.'s case and
Goodricke Group Ltd.'s case, that for the period prior to
the Amendment Act of 1989, the respondent herein is
entitled to a refund of the cess paid by it together with
interest at 12 per cent per annum, and has further found
that insofar as interest is payable after the Amendment
Act is concerned, such interest would only be payable
after assessment orders are passed (which on facts here,
we are informed, were passed on 27.07.1993 and
thereafter).
By an interim order dated 16.06.1983 in the Buxa
Dooars Tea Company Ltd.'s case, this court held as
hereunder: -
“Rule NISI. There will be no order on stay
application but if the petitioner succeeds in the
writ petition, the State of West Bengal will
refund the amount of cess collected with interest
thereon @ 12% per annum from the date of
collection.”
By the judgment delivered in Buxa Dooars Tea Company
Ltd.'s case in 1989, this Court held that the charging
sections under both the aforesaid Acts were invalid both
on the ground of legislative competence as well as
violation of Article 301 inasmuch as the impugned JUDGMENT legislative measures were outside Entry 49 in List II of
the Seventh Schedule of the Constitution, which speaks of
“taxes of lands and buildings”; and it was further held
that the levy being on movement of goods, Article 301 of
the Constitution would be attracted and these levies are
not saved under Article 304(b) as no Presidential assent
has been taken on either of these legislative measures.
The West Bengal legislature was swift to act after
the judgment of this court. By the West Bengal Taxation
Laws (Second Amendment) Act of 1989 amending the
provisions of both the aforesaid Acts, the charging
sections were substituted with retrospective effect, and
the levy of the rural employment cess and education cess
(which was levied under the earlier principal Acts on the
basis of despatch of manufactured tea) was now levied on
the basis of production of tea leaves. A challenge to
this Amendment Act was made before this Court which
challenge failed in the second judgment referred to
hereinabove (in Goodricke Group Ltd.'s case).
The 1989 Amendment Act was upheld in the following
terms:
“Lastly, the learned counsel for the petitioners
questioned the validity of the retrospective effect
given to the impugned enactment. We fail to see
any substance in this submission. If the Act is
good, it is good both prospectively and
retrospectively. Retrospective effect is given for
the period covered by the anterior provisions which
were struck down in Buxa Dooars. Once we hold that JUDGMENT
the defect pointed out in Buxa Dooars is rectified
and remedied in the impugned enactment, it can
certainly be given retrospective effect to cover
the period covered by the earlier enactment which
is not only a well-known but a frequently adopted
measure by all the legislatures.
For the above reasons, the writ petitions
fail and are accordingly dismissed. The interim
orders made in these writ petitions shall also come
to an end. The petitioners shall pay the cesses
stayed by the orders of this Court along with
interest @ 12% p.a. There shall no order as to
costs.”
It is a little important to note that before the
final judgment in Goodricke Group Ltd.'s case , an interim
order was passed dated 25.01.1990 in the following terms:
“Issue notice. In the meantime the
assessment may be made as usual but there will be
no enforcement of demand under the Act or Rules.
Status quo to be maintained as far as refund of
Cess is concerned.”
Learned counsel for the appellant Shri Anip Sachthey
has argued before us that the impugned judgment should be
set aside on the ground that the interim order dated
16.06.1983 in the Buxa Dooars Tea Company Ltd.'s case did
not survive as it was substituted by the final order in
the Buxa Dooars Tea Company Ltd.'s case, which is to be
found in Para 16 thereof, which stated that the two West
Bengal Acts were declared void and consequential refund
ordered. There was no separate order as to payment of
interest in the final judgment and therefore the interim
order which merges with the final judgment had no
independent existence. He has also urged that since the
two West Bengal Acts were amended in 1989 with JUDGMENT
retrospective effect from 1981 and 1984 respectively, the
basis of the judgment in Buxa Dooars Tea Company Ltd.'s
case was removed and as a result, it is clear that no
refund at all is payable.
Mr. C. U. Singh, learned senior counsel appearing on
behalf of the respondent, on the other hand, supported the
judgment on both counts and submitted that the levy under
the original Act no longer remained the same, so that the
levy under the 1989 amendment was a separate and new levy
of rural employment cess and education cess, and this
being the position, the interim order as well as the final
judgment in Buxa Dooars Tea Company Ltd.'s case still
remain intact. He further submitted that the interim
order was self operative inasmuch as interest became
payable at the rate of 12 per cent the moment the writ
petitions were finally decided in the petitioner's favour.
He also supported the second portion of the impugned
judgment saying that the final order in Goodricke Group
Ltd.'s case is to be read with the interim order thereof
and if so read, the result is that interest is only
payable under the new Act with effect from the date of
assessment and not before.
We have heard learned counsel for the parties. In
our opinion, Mr. C. U. Singh, learned counsel appearing on behalf of the respondents,JUDGMENTis right in saying that the interim order dated 16.06.1983 is self operative. In any
case, the final order in Buxa Dooars Tea Company Ltd.'s
case did not say anything to the contrary, and when both
the judgment and the interim order are read together, it
is clear that the refund will have to be made together
with 12 per cent interest.
But the matter does not end here. The Amendment Act
contains two very important provisions, namely, Section 4B
of the West Bengal Rural Employment and Production Act and
Section 78C of the West Bengal Primary Education Act.
Both the sections are set out hereinbelow: -
“4B. (1) Where any sum has been paid by, or
collected from, any owner of a tea estate during
the period commencing on the 1st day of April, 1981
and ending on the day immediately preceding the
date of coming into force of the West Bengal
Taxation Laws (Second Amendment) Act, 1989 as rural
employment cess in respect of any period prior to
the coming into force of the said Act, such portion
of the said sum as may become payable in accordance
with the provisions of this Act after the coming
into force of the said Act shall, notwithstanding
any judgment, decree or order of any court, be
deemed to have been validly levied, paid or
collected under this Act, and where after
assessment or fresh assessment any portion of such
sum is found to have been levied, paid or collected
in excess of the rural employment cess payable for
the said period shall be refunded to such owner in
accordance with the provisions of this Act and the
rules made thereunder.
(2) Where any assessment is purported to
have been made, or any order is purported to have
been passed on appeal, revision or review, by any
authority, or any appeal or application for
revision or review has been made before such
authority under this Act, or any order has been
passed by a court or where any sum has been paid or
collected as rural employment cess, before the JUDGMENT coming into force of the West Bengal Taxation Laws
(Second Amendment) Act, 1989, in respect of any
Act, assessment or fresh assessment shall,
notwithstanding such order on appeal, revision or
review, or the pendency of such appeal or
application for revision or review, or any order
passed by a court, be made in accordance with the
provisions of this Act within four years from the
date of coming into force of the said Act.
(3) Notwithstanding anything contained in
this Act, any default by an owner of a tea estate
to make payment of the rural employment cess or to
apply for registration or to file return in
accordance with the provisions of this Act after
the coming into force of the West Bengal Taxation
Laws (Second Amendment) Act, 1989 in respect of any
Act shall not be deemed to be a contravention of
such provisions if such owner makes payment of such
rural employment cess within one month or files
return within six months, as the case may be, from
the date of coming into force of the said Act.
(4) The amount of the rural employment cess
payable by any owner of a tea estate under sub-
section (2A) of section 4 of this Act in respect of
any period prior to the coming into force of the
West Bengal Taxation Laws (Second Amendment) Act,
1989, shall, notwithstanding anything contained in
this Act, be reduced by such amount of rural
employment cess payable in respect of such tea
estate on such quantity of green tea leaves
produced therein during the said period as may be
equivalent to the quantity of any tea despatched
for which such owner has purported to have enjoyed
or would have enjoyed exemption from payment of the
rural employment cess during such period, and it is
hereby declared that for determining the amount of
the rural employment cess to be reduced, each
kilogram of tea despatched during such period shall
be equivalent to four and a half kilograms of green
tea leaves produced in such tea estate.”
“78C. “Validation and exemption. (1) Where any sum
has been paid by, or collected from, any owner of a
tea estate during the period commencing on the 14th
day of April, 1984 and ending on the day
immediately preceding the date of coming into force
of the West Bengal Taxation Laws (Second Amendment)
Act, 1989 as education cess in respect of any
Act, such portion of the said sum as may become payable in accordance with the provisions of this
Act after the coming into force of the said Act
shall be deemed to have been validly levied, paid
or collected under this Act, and where after
assessment any portion of such sum is found to have
been levied, paid or collected in excess of the
amount payable as education cess for the said
period shall be refunded to such owner in
accordance with the provisions of this Act and the
rules made thereunder.
(2) Where any assessment is purported to have
been made, or any order is purported to have been
passed on appeal, revision or review, by any
authority, or any appeal or application for
revision or review has been made before such
authority under this Act, or any order has been
passed by a court, or where any sum has been paid
or collected as education cess, before the coming
into force of the West Bengal Taxation Laws (Second
Amendment) Act, 1989, in respect of any period
prior to the coming into force of the said Act,
assessment or fresh assessment shall,
notwithstanding such order on appeal, revision or
review or the pendency of such appeal or
application for revision or review or any order
passed by any court, be made in accordance with the
provisions of this Act within four years from the
date of coming into force of the said Act.
(3) Notwithstanding anything contained in this
Act, any default by an owner of a tea estate to
make payment of the education cess or to apply for
registration or to file return in accordance with
the provisions of this Act after the coming into
force of the West Bengal Taxation Laws (Second
Amendment) Act, 1989 in respect of any period prior
to the coming into force of the said Act shall not
be deemed to be a contravention of such provisions
if such owner makes payment of such education cess
within three months or applies for registration
within one month or files return within six months,
as the case may be, from the date of coming into
force of the said Act.
(4) The amount of the education cess payable by
any owner of a tea estate under sub-section (2A) of
Section 78 of this Act in respect of any period
prior to the coming into force of the West Bengal
Taxation Laws (Second Amendment) Act, 1989, shall
notwithstanding anything contained in this Act, be
reduced by such amount of education cess payable in
respect of such tea estate on such quantity of
green tea leaves produced therein during the said
period as may be equivalent to the quantity of any
tea despatched for which such owner has purported to have enjoyed or would have enjoyed exemption
from payment of the education cess during such
period, and it is hereby declared that for
determining the amount of the education cess to be
reduced, each kilogram of tea despatched during
such period shall be equivalent to four and a half
kilograms of green tea leaves produced in such tea
estate.
(5) The provisions of this section shall have
effect, notwithstanding any judgment, decree or
order of any court, tribunal or other authority to
the contrary.”
It is clear from a reading of Section 4B and 78C
that where any sum is paid by or collected from an owner
of a tea estate during a period commencing from 01.04.1981
or 14.04.1984, as the case may be, up to the date of the
Amendment Act as rural employment cess or as education
cess, such portion of the said sum as may become payable
under the provisions of the Amendment Act shall,
notwithstanding any judgment, decree or order of any
court, be deemed to have been validly levied, paid or
collected under the Amendment Act.
In our view, the purport of these two sections is
clear. Whatever may have been the subject matter of Buxa
Dooars Tea Company Ltd.'s case, that is the subject matter
of the two Acts as originally enacted, will now,
notwithstanding the interim order or the final judgment in
Buxa Dooars Tea Company Ltd.'s case, be deemed to have
been validly levied, collected and paid as rural
employment cess and education cess under the Amendment Act. JUDGMENT
This being the case, it is clear that Section 4B and
Section 78C have changed the basis of the law as it
existed when Buxa Dooars Tea Company Ltd.'s case was
decided and consequentially, the judgment and interim
order passed in Buxa Dooars Tea Company Ltd.'s case will
cease to have any effect. Also, what would have been
payable under the Act as unamended, is now payable only
under the 1989 Amendment Act which has come into force
with retrospective effect.
Mr. C. U. Singh, however, referred us to 'Madan
Mohan Pathak v. Union of India and others' [1978 (3) SCR
334] and in particular to Justice P. N. Bhagwati's
judgment thereof, in which it has been decided by this
Court that a Legislative Act cannot directly undo a writ
of mandamus that is granted by an order of a superior
court. We are of the view that Madan Mohan Pathak's case
would not apply to the facts in the present case for the
simple reason that what has been undone by Section 4B and
Section 78C is not a mandamus issued by a superior court.
What is undone is the very basis of the judgment in Buxa
Dooars Tea Company Ltd.'s case by retrospectively changing
the levy of rural employment cess and education cess. It
must be understood that rural employment cess and
education cess continue to be the same cess whether before or after the Amendment Act. What has been changed is the basis for the said levy so as to undo the defects that
were found in the Buxa Dooars Tea Company Ltd.'s case
judgment. It is obvious that when the basis of Buxa
Dooars Tea Company Ltd.'s case has gone, on a
retrospective amendment of these two acts, the interim
order and the judgment and order in Buxa Dooars Tea
Company Ltd.'s case can no longer survive. For this
reason, we are of the view that the impugned judgment
needs to be set aside on this score. In fact, Madan
Mohan Pathak has been explained in Indian Aluminium
Company v. State of Kerala, [(1996) 7 SCC 637] as follows:
“49. In Madan Mohan Pathak v. Union of India [(1978)
2 SCC 50 : 1978 SCC (L&S) 103] , on the basis of a
settlement, bonus became payable by LIC to its Class
III and Class IV employees. In a writ, a Single
Judge of the Calcutta High Court issued mandamus
directing payment of bonus as provided in the
settlement. During the pendency of letters patent
appeal, LIC (Modification of Settlements) Act, 1976
was enacted denying bonus payable to the employees.
The appeal was withdrawn. The validity of 1976 Act
was challenged in this Court under Article 32 of the
Constitution. A Bench of seven Judges had held that
Parliament was not aware of the mandamus issued by
the court and it was declared that the 1976 Act was
void and writ of mandamus was issued to obey the
mandamus by implementing or enforcing the provisions
of that Act and directed payment of bonus in terms
of the settlement. It was pointed out that there was
no reference to the judgment of the High Court in
the Statement of Objects and Reasons, nor any non
obstante clause referring to the judgment of the
Court was made in Section 3 of the Act. Attention of
Parliament was not drawn to the mandamus issued by
the High Court. When the mandamus issued by the High
Court became final, the 1976 Act was held invalid.
Shri R.F. Nariman laid special emphasis on the
observations of learned Chief Justice Beg who in a
separate judgment had pointed out that the basis of
the mandamus issued by the court could not be taken
away by indirect fashion as observed at p. JUDGMENT 743c to f. From the observations made by Bhagwati,
J. per majority, it is clear that this Court did not
intend to lay down that Parliament, under no
circumstance, has power to amend the law removing
the vice pointed out by the court. Equally, the
observation of Chief Justice Beg is to be understood
in the context that as long as the effect of
mandamus issued by the court is not legally and
constitutionally made ineffective, the State is
bound to obey the directions. Thus understood, it is
unexceptionable. But it does not mean that the
learned Chief Justice intended to lay down the law
that mandamus issued by court cannot at all be made
ineffective by a valid law made by the legislature,
removing the defect pointed out by the court.”
This statement of law has been accepted in yet
another judgment of this Court. (See: State of Kerala v.
Peoples Union for Civil Liberties, Kerala State Unit &
Ors., [(2009) 8 SCC 46 at paragraph 65].
Bhagwati, J.’s judgment in Madan Mohan Pathak also
makes it clear that Section 3 of the impugned Act in that
case sought to modify a settlement dated 24th January, 1974
arrived at between the LIC and its employees. There was no
reference to a Mandamus issued by the Calcutta High Court
in the Statement of Objects and Reasons as a result of
which Section 3 of the impugned Act did not contain a non-
obstante clause referring to any judgment of any court.
The right given under the said judgment was therefore not
sought to be taken away by the impugned Act. Further,
inexplicably, the Letters Patent Appeal filed by the LIC
was not pressed as otherwise Section 3 of the impugned Act
would only have to be applied to the facts in that case to upset the Single JUDGMENTJudge judgment that had issued the Writ of Mandamus. Bhagwati, J. also went on to state that the
judgment given by the Calcutta High Court was not a mere
declaratory judgment holding an impost or tax to be
invalid, so that a validation statute can remove the defect
pointed out by the judgment and amend the law with
retrospective effect to validate such impost or tax – See:
Madan Mohan Pathak v. Union of India, [(1978) 3 SCR 334 at
352 to 355].
In the present case, the 1989 amendment Act expressly
seeks to remove the basis of Buxa dooars’s judgment by
retrospectively changing the basis of the levy of the
cesses mentioned above. In the present case, what is done
away with by the Amending Act of 1989 is a declaratory
judgment holding the above cesses to be invalid. On all
these grounds also the judgment in Madan Mohan Pathak’s
case is distinguishable.
However, insofar as interest is concerned, post
Goodricke Group Ltd.'s case, we are of the view that Mr. C.
U. Singh is correct in supporting the impugned judgment.
Goodricke Group Ltd.'s case made it clear that the
petitioners shall pay cesses stayed by an order of this
Court along with interest at 12 per cent per annum. The
expression “cesses stayed” has reference to the interim
order dated 25.01.1990 which had stated that there would be no enforcement of demand under the Act or Rules and in the meanwhile, assessment may be made. We have been informed
that assessments were made with effect from July, 1993
onwards and consequential demands have been made with
effect from 1995 onwards. It is clear, therefore, that the
impugned judgment is right in holding that with regard to
the payment of interest by the petitioner on the amount of
cess payable by virtue of the Goodricke Group Ltd.'s case,
interest would only be payable from the respective dates of
assessment for the various relevant periods till recovery.
On facts here, no question arises as to whether interest
would become payable from the date of demand or from the
date of the assessments inasmuch as counsel for the
respondents supports the impugned judgment on this score
and is not aggrieved thereby.
The respondents here have made payment of interest
from time to time to the State. These payments will be
adjusted against any sum that would become payable as a
result of this judgment.
The appeal is disposed of accordingly.
[ A.K. SIKRI ]
New Delhi; March 25, 2015. JUDGMENT