INDIA BUSINESS WORLD - JANUARY 16^th - JANUARY 31^st - 2008

MINERALS LEVY ISSUE GOES TO LARGER SC BENCH

The Supreme Court has referred to a larger bench the controversial issue that the levy of cess under the Cess and Other Taxes on Minerals (Validation) Act was permissible but that amounts which have not already been collected, cannot be collected. A bench comprising justices Arijit Pasayat and S H Kapadia said: "We, therefore, refer the matter to a larger bench to test the correctness of the conclusions that the levy was permissible by the Validation Act, but amounts which have not already been collected, cannot be collected." The bench said it appears that this court (SC) in District Mining Officer and Ors. vs Tata Iron and Steel Co. case was of the view that the levy may have been validated but that did not authorise collection.

There are different stages in the matter of imposition of tax or cess. First is the source of power for levying tax or cess as the case may be. The second is the actual levy by an adjudication or assessment order. Finally, comes the question of collection. That being so, collection is a natural corollary of the levy. It is inconceivable that the levy is valid but collection can be held to be impermissible. This is an irreconcilable situation, the court said. "We, therefore, find it difficult to agree with the view expressed in District Mining Officer's case regarding impermissibility of collection," said justice Pasayat.

The bench noted that in another case however, the apex court took into account the conceptual difference between 'levy' and 'collect'. It had said that in taxing statute the words 'levy' and 'collect' are not synonymous terms. While 'levy' would mean the assessment or charging or imposing tax, 'collect' in Article 265 of the Constitution would mean the physical realisation of the tax which is levied or imposed. Collection of tax is normally a stage subsequent to the levy of the same. The enforcement of levy could only mean realisation of the tax imposed or demanded, the court had said.

SC was hearing an appeal of the assistant director of mines & geology which had challenged the order of a high court. The high court relying on the district mining officer's case had held that though levy up to April 4, 1991 was permissible, no collection of cess could be made against Deccan Cement.