High Court · 2012

The reply affidavits of the petitioners are essentially those of affirmation and reiteration of their averments in the writ petitions as well as denials of the factual assertions of the State respondents incompatible with th eir orientations.

12. In the above contentious backdrop, Mr Sahewalla has emphatically contended that Section 25-B of the 1997 Act is beyond legislative competence an d is, thus, unconstitutional, null and void. As the levy contemplated therein is on net profit, it is essentially a tax imposed on the mineral oil, a field excl usively within the legislative domain of the Parliament outlined by Entry-53 of List-I of Schedule 7 to the Constitution of India. As the impost in the alternat ive is also construable to be a tax on income as contemplated in Entry -82 of th e said List-I, the State Legislature obviously does not posses the competence of enacting any law thereon, thus, rendering Section 25-B non-est, he contended. W ithout prejudice to these impeachments, the learned senior counsel has argued th at Sections 3-A and 25-B of the 1997 Act are highly arbitrary, discriminatory an d unreasonable as thereby the entire land at the disposal of the petitioners is sought to be proclaimed as industrial land though a substantial portion thereof is utilized as road, office building, quarters etc. Further, in absence of any d eclaration under Section 3A that the land of the petitioners is an industrial si te, no levy contemplated under Section 25-B is permissible and, thus, the demand is wholly illegal and unauthorized, he urged. As the levy under Section 25-B is sans any unit of land measure but on profit without any reference to the area a ctually utilized by the petitioners for their operations, it is wholly arbitrary , illogical and irrational as well, he added. Mr Sahewalla pleaded that as the a ctivities of the petitioners, namely, extraction, exploration and transportation of the mineral oil/ crude oil do not amount to manufacture of any industrial pr oduct, the land used by them therefor are by no means industrial land as defined under Section 2(xv) of the Act 1936, as amended, and thus the levy of land reve nue is wholly incompetent.

13. Mr Sahewalla urged that as the petitioners’ activities are under a mining lease in terms of the 1948 Act and the 1959 Rules and they in complian ce of the stipulations thereof are paying royalty, surface rent and dead rent in respect of the extraction, Section 25-B is inapplicable in their case and, thus , the resultant demands are without jurisdiction. The learned senior counsel arg ued that the Government of Assam being a party to the mining lease which is a s tatutory agreement under the 1959 Rules, it is bound by the covenants thereof wh ich inter alia mandate against any demand for payment of land revenue and, thus, on that count as well the impugned demand is palpably illegal, null and void. R eferring in particular to Rule 13(2)(b) of the 1959 Rules, the learned senior co unsel insisted that as the surface rent referred to therein is synonymous with l and revenue, the levy under Section 25-B is incompetent. Referring to Section 28 of the Regulation, Mr Sahewalla has pleaded that in terms thereof as well, no l and revenue is realizable from the petitioners who are administrating their oper ations on the land at their disposal under the respective mining leases which su bsist as on date. That by means of royalty the petitioners are paying huge amoun ts annually to the State Government has been sought to be underlined by drawing the attention of this Court to the relevant averments in the pleadings. Mr Sahew alla in support of his contentions has placed reliance on the following decision s: i) Oil India Ltd.& Ors. -vs- State of Assam & Ors., 2006 (1) GLR 593 ii) Deepak Kumar Poddar -vs- State of Assam & Ors., 2010 (6) GLR 835 and the decision of the Gujarat High Court in First Appeal Nos. 5224 of 2001, 52 25 of 2001 with Civil Application Nos. 12963 of 2001 and 12964 of 2001 (D/D 1.12 .2005) (Oil & Natural Gas Corporation Ltd. -vs- Taluka Panchayat, Khambat & Anr. )

14. While adopting generally the above contentions, Mr Buzar Baruah has argued that a plain reading of Section 25-B would disclose that the levy con templated thereunder is in fact not a tax on land as no unit thereof has been sp ecified to measure the same. According to the learned counsel, the impost envisa ged therein is in essence a taxation on the profit from petroleum and petroleum products which is obviously beyond the competence of the State Legislature, a fi eld being constitutionally reserved for the Parliament in Entry-53 of List-I of Schedule 7 to the Constitution of India. While reiterating that the purported la nd revenue sought to be realized under Section 25-B is in disguise a tax on inco me as envisioned in Entry-82 of List-I of Schedule 7 to the Constitution of Indi a, a domain reserved for the Parliament, he contended that the only refuge of th e State respondents to save the provision is Entry-49 of List-II of Schedule 7 t o the Constitution of India. Mr Buzarbaruah, however, pleaded that such an endev our to be valid and legally cognizable, the levy under Section 25-B has to be es sentially based on unit of land measure. As the phraseology applied in Section 2 5B does not permit such an interpretation, it is apparently ultra vires the Cons titution, he maintained. According to Mr Buzarbaruah, as Section 25-B contemplat es tax on the income derived from the activities related to petroleum and petrol eum productions and not one on land, it is stillborn in law and is liable to be adjudged as such. The learned counsel echoed the plea of Mr Sahewalla to the eff ect that the activities of the petitioners do not amount to manufacture and, thu s, Section 2(xv) of the Act 1936, as amended, is wholly inapplicable to them and that consequently the demand for land revenue is non-est in law. He reiterated as well that in the teeth of the stipulations contained in the mining lease whic h is statutory in nature, Section 25-B cannot equip the State respondents to rea lize land revenue as endeavoured. According to the learned counsel, the second p roviso to Section 28 of the Regulation is also of no avail as the same does not efface the sanction of exemption from land revenue qua the petitioners in view o f the subsisting mining leases under the 1959 Rules involving the land at their disposal. In any case as the land of the petitioners stretch over several parts of the State, demand of land revenue raised district wise irrespective of the a ctual utilization thereof is illogical, arbitrary, unreasonable and unfair on th at count as well, and thus, the same is liable to be adjudged illegal and discri minatory. The following decisions were relied upon by Mr Buzarbaruah in support of his contentions: i) ii) C 32 iii) Ajoy Kumar Mukherjee -vs- Local Board of Barpeta, AIR 1965 SC 1561 Union of India & Ors. -vs- J.G. Glass Industries Ltd. & Ors. (1998) 2 SC State of W.B. -vs- Kesoram Industrial Ltd. & Ors. (2004) 10 SCC 201

15. Dr. Todi in reply has insisted that the impost predicated by Sec tion 25-B is directly relatable to Entry-45 of List-II of Schedule 7 to the Cons titution of India and, thus, the plea of want of legislative competence of the S tate Legislature is wholly misconceived. According to the learned senior counsel , the activities in which the petitioners are engaged amount to manufacture and, thus, the land at their disposal is industrial land as contemplated in Section 20-A of the Act 1936, as amended by the Act 1990. The learned senior counsel ref erred to downloads from the websites of the petitioners to authenticate the subm ission vis-à-vis the nature of the activities engaged in by the petitioners. Dr. Todi argued that for quantifying the levy under section 25-B, the land of the p etitioners as a composite whole is construed to be proportionate to the profit e arned by them and, thus, no separate unit of land measure is essential for compu tation of the land revenue. The learned senior counsel pleaded that the profit c onceptualized to be the unit of the levy is only a measure of revenue to be real ized and that the same per se does not nix Section 25-B to be a provision within the ambit of Entry-45 of List-II of Schedule 7 to the Constitution of India. As the validity of Section 20A inserted by the 1990 Amendment of the Act 1936 has not been challenged and the petitioners have been paying land revenue before enh ancement, they are estopped from impugning the validity of Section 25-B or quest ioning their liability to pay the same at the enhanced rate in terms thereof, he urged. Dr. Todi maintained that in the face of Section 25-A and the manufacturi ng process pursued by the petitioners, the necessity of a fresh declaration unde r Section 3-A of the Act 1997 is uncalled for. Referring to the provisions of th e Act 1948, the 1959 Rules as well as the stipulations in the mining leas of the petitioners, the learned senior counsel has urged that royalty, surface rent an d dead rent are independent of the land revenue realizable for the land at their disposal. He relied on the second proviso to Section 28 of the Regulation to as sert the validity of the impugned demands. Dr. Todi fairly submitted that the im position of land revenue at the enhanced rate with retrospective effect may not, however, be tenable but is realizable from 25.5.97, the date from which the Act 1997 had been enforced. To buttress his arguments, Dr. Todi placed reliance on the following decisions of the Apex Court: i) 62 ii) C 32 State of Mysore & Ors. -vs- M.L. Nagade and Gadag & Ors., AIR 1983 SC 7 Union of India & Ors. -vs- J.G. Glass Industries Ltd. & Ors. (1998) 2 SC

16. Mr Buzarbaruah in reply dismissed the reliability of the website downloads as unimpeachable testimony of the nature of the activities undertake n by the petitioners to arrive at a conclusion that those amount to manufacture of industrial products. He sought to plead that whereas the notion of manufactur e encompasses the concept of production, the reverse is not true. As in any view of the matter, the website downloads indicate that the petitioners are engaged in a process of production, the same by no means amount to manufacture. Accordin g to Mr. Buzarbaruah, the interpretation sought to be provided to the second pro viso to Section 28 is impermissible in view of the fundamental precept of statut ory interpretation that a proviso only carves out an exception to the parent pro vision but does not supplant the same. The following decisions in addition were relied upon by him: Hindusta Ideal Insurance Co. Ltd. -vs- Life Insurance Corporation of In Sree Raghuthilakathirtha Sreepadangalavaru Swamiji -vs- The State of Mys