- (1.) THE Council for the respective parties have debated on the issue whether the royalty is a tax or not. Two judgments rendered by the Supreme Court in case of India Cement Ltd. & Ors., -vs - State of Tamil Nadu & Ors., 1990 1 SCC 12 and State of W.B. vs - Kesoram Industries Ltd. & Ors., 2004 10 SCC 201 are relied by both the parties on the aforesaid core issue. The Seven Judge Bench in case of India Cement while considering the issue as to whether the Cess can be imposed on the royalty held that the royalty is a tax. The Five Judge Bench in case of Kesoram Industries clarifies the judgment of the India Cement that there is a typographical omission as the Seven Judge Bench intended that the Cess on royalty is a tax and because of the omission of the words "Cess On" before the word "royalty" is a tax. It has been brought to the notice of this Court that subsequently the Supreme Court in case of Mineral Area Development Authority vs - Steel Authority of India, 2011 4 SCC 450 have referred the matter to Nine Judge Bench because of the aforesaid two conflicting decisions operating in the field.
(2.) IN addition to the questions being the core issue, in the instant writ petition, the respondent nos. 1 to 5 agitates further points relating to the entertainment of the writ petition under Article 226 of the Constitution of India firstly, the issue involved is contractual in nature and the High Court should seldom interfere secondly, there is an alternative efficacious remedy by way of an arbitration provided under the contract. Before addressing the aforesaid issues, the salient admitted facts are adumbrated herein below: The respondent no.1 is a Government of India Undertaken and the respondent nos. 3 and 5 are its subsidiaries producing the coal and selling it through Spot e -Auction Scheme to various traders dealing in coal. To facilitate the sale of the coal on uniform basis, Spot e -Auction Scheme is framed by the respondent no.1 which applies to all its subsidiaries as well. The terms and conditions of the Spot e -Auction Scheme are posted in the web site which contains the various clauses wherein clause 4.4 under the broad head "bidding process" requires the buyer to quote their 'bid price' per tonne in India Rupee as base coal price on FOR/FOB colliery basis, exclusive of other charges like statutory levies, surface transportation charges, sizing/beneficiation charges, taxes, cess, royalty, SED and any other charges as will be applicable at the time of delivery. It is also specifically mentioned in the said clause that those charges as well as the freight shall be on the Buyers' account. On payment of the price of the coal as well as the other taxes, levies or charges as applicable, a debit advice is issued by the respective coal companies that it is onward transportation between the period from 1st March, 2011 to 28th February, 2013. The writ petitioners after having adjusted successful bidders purchased the coal upon deposit of the price of the coal as well as the charges, levies and taxes as imposed by the Coal Companies.
(3.) IT is not in dispute that the Central Excise Duties is applicable on the transaction value as defined under Section 4 (3) (b) of the Central Excise Act, 1944 which was, in fact, charged by the Coal Companies on all component except on royalty and stowing excise duty. The Excise Authorities issued a summon under Section 14 of the Central Excise Act on the director of the respondent no.1 for non -payment of the excise duty on royalty and stowing charges. It was brought to the notice by the Excise Authorities that the excise duties is also payable on the said components and the Coal Companies are liable to pay the same. By a letter dated 5th March, 2013, the respondent no.1 informed all its subsidiaries to discharge the past Central Excise Duty liability for the period between 1st March, 2011 to 28th February, 2013 within 14 March, 2013 and to levy the Central Excise Duty on royalty and stowing excise duty component as well on and from 1st March, 2013. On the basis of the aforesaid instruction, the respondent no.3 issued instruction to its official on 8.03.2013 to take steps to raise supplementary bills on word wise and party wise basis from the period of 01.03.2011 to 28.02.2013 for payment of the excise duty on the royalty and stowing excise duty component. It was further expressed therein that the said amount might be recoverable from the parties after adjusting the quantities in the future sales. The petitioners in the aforesaid writ petitions have assailed the aforesaid memo dated March 5, 2013 and March 8, 2013 on the plea that the said respondent -authorities cannot deduct any amount in respect of the past completed transactions with the future transactions and have further took a plea that the royalty is a tax and, therefore, cannot be included within the definition of a transaction value enshrined under Section 4 (3) (b) of the Central Excise Act. Mr. Kalyan Kumar Bandopadhyay and Mr. Bikash Ranjan Bhattacharya, the learned Advocates appearing for the writ petitioners in the aforesaid writ petitions submit that the action of the respondent nos. 1 to 5 to relies the excise duty on the royalty and stowing excise duty is contrary to the decision of the Supreme Court rendered in case of India Cement . It is further submitted that the bench of lesser quorum in case of Kesoram Industries have taken a contrary view to the bench of larger quorum who decided the case of India Cement which was noticed in a subsequent judgment rendered in case of Mineral Area Development Authority vs - Steel Authority of India, 2011 4 SCC 450by the Supreme Court referring the matter to a larger bench and, therefore, is not binding precedent. It is audaciously submitted that so long the bench of larger quorum than the quorum who decided India Cement's case took a contrary view. The ratio of the India Cement's Case operates the field and have not lost his binding efficacy. It is further submitted that each auction on successful exclusion becomes a complete transaction and it is not open to the aforesaid respondents to release the amount from the future contract. By referring the definition of transaction value engrafted under Section 4 (3) (b) of the Central Excise Act excludes the "other taxes" and the royalty being a tax cannot be brought within the said definition. It is strenuously submitted that the said respondents themselves were averred of the aforesaid possession and in fact, have not imposed the excise duty on the component of royalty and the stowing excise duty. It is succinctly argued that the decision of the Excise Authorities to impose excise duty on the royalty and stowing excise duty was passed on concession and, therefore, cannot bind the writ petitioners. To controvert the stand of the aforesaid respondents that the judicial review is not permissible in respect of the contractual matters. It is submitted that the aforesaid respondents being an authority within the meaning of Article 12 of the Constitution of India, all auctions are amenable under the power of judicial review and, therefore, the writ petition is very much maintainable.;