High Court · 2025

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith' the High Court may be pleased to issue a Writ, Order or Direction' more particularly one in the nature of Writ of Mandamus dectaring the Demand Notice the Demand Notice No.54SA/&E/S &Mt2O24' dated 30-07-2024 (received bv the petitioner on 30.8.2[z4)issued by the Assistant Director of Mines and Geology' Vikarabad is wholly illegal, arbitrary' without iurisdiction and violative of Articles '14 and 19 of the constitution of rndia and consequenfly decrare that the petitioner is not liable for payment of any amount as demanded in the said Demand Notice' dated 3o-o7-2024 ( l lA NO: 1 OF 2024 Petition trnrler l)ection 151 cpc praying that in the circurr s:ances stated in the affidavit {iled ir support of the petition, the High court m;ay tre pleased to suspend the Dr:marr i Notice No.545A/&E/S &M12024, dated 30-(r7-2024 issued by the Assistanl Dire ltor of Mines and Geology, Vikarabad. Counsel for the Pr:titioner: SRI KONDAVEETI RAVI, Sr. COUNSEI.., REp. FOR SRI KIRTHI TEJA KONDAVEETI Counsel for the Rr-'s6rc,ndents: SRI MOHD. IMRAN KHAN, ADDL ADVOCATE GENERAL The Court mad€ the lbllowing: ORDER I I I I I I I 1 I : HON'BLE SRIJUSTICE K. LAKSHMAN WRIT PETITION No.31340 oB' 2024 ORDER: Heard Mr. Kondaveeti Ravi, leamed Senior Counse I representing Mr. Kirthi Teja, teamed counsel for'the petitioner' Mr' Mohd. tmran Khan, learned Additionat Advocate General appearing on behalf olthe resPondents

2. CASE OFTHE PETITIONER: i) The petitioner herein has obtained quany lease for stone and metal over an extent of Acs'7-20 guntas in Survey No'50' situated at Allampatly Village, Vikarabad Mandat' Vikarabad District' for a period of fifteen (15) years vide proceedings dated 24'08'2018 The lease deed was also executed on the same day on the specific terms and conditions mentioned therein' ii) Pursuant to the said lease deed' the petitioner had entered into a Memorandum of Understanding (MOU) with Mr' L Sudarshan Reddy, a Govemment Contractor for supply of mineral for utilization of the same in Govemment works As per G'O'Ms'No 94' lnigation & CAD Department, dated 01'07 2003' scigniorage charges will be recovered from the contractor's bill for the material used for the .:L li&.1tt ta .tl&'x : 2 KI-,J \\ I, .lo:ll.l10 ot2024 Goverr rr :nt ,vork and will be directly paid into thr: Lir ,r. emment accolln. Iot the mineral excavated and supplied to lhe said contratr.'. -s:isniorage charges to an extent of Rs. I.g3.02.7,5r!,/_ rvere recovcr,:d l.r,rrn the bills paid to the petitioner and rvert directly remittcc tr th() I{cvcnue Flead of Account of Mines and (ieology Departnrcr r dur.ing the period from20l7-1gto2024.25. iii) frre Regionar vigirance and Enforccrr ent ()fficer, Hyderahaci alrng rvith Technical Staff inspected thc uorki r1g lease area of thc peli:ioner on 07.02.2024 and, 09.02.2024 respectivr:lr,. A report \virs sul,nritted to respondent No.4. Basing on tht siri, I report, rcspondcrr Ni,..t has issued a show_cause notice dated 03 iri.2024 stating that thc irslilionsl has excavated and transported nriner a. more than the pt rrn itr ed quantity of 295645MT. There ibre. res rr ndcnt No.4 soulcrr to rr:alize normal seigniorage fee of Rs. r,92. r 6.91 5 L and flve tinr,:s pe,alty of Rs.9,60,g4,625l_ and permit b: of Rs.1.53.71 .540,- DMFT of Rs.57,65,078/_, SMET of Rr;.3,81.339/- and 1.1'. ol Rs..l I,4.j39/_, making a total of Rs.l3 ,72,08.8qil_. iu) [t irs .lso aleged in the said show-cause noti,:e t]rat the aclual excaratcc quantity as per the carculation rvas arri,.ccl at 3,13,095M1-. hoi,ever, permits r.r,ere obtained only iirr 7.4:r0MT.. .:r a' 3 KL,J WP No 31140 of2024 Thus, according to respondent No 4' the petitioner transported excess quantity of 2,95,645MT' Fifteen (15) days lime was granted to the petitioner to submit explanation' but the same v) It is the specific contention ofthe petitioner herein that it has received the said show-cause notice dated 03 '06 '2024 only on 12.07.2024. [t has submitted explanation ot 29 '07 '2024 ' was received by respondent No'4 on 08'08'2024' Itis also specifically contended by the petitioner that despite making an attempt by the petitioner to serve the said explanation personally' respondent No'4 has received the same only on 08'08'2024' Without considering the said explanation, respondent No'4 has issued demand notice dated 30.07 .2l24directing the petitioner to remit the aforesaid amounts ' vi) lt is also the specific contention of the petitioner that after receipt of the explanation dated 08 08 2024' respondent No 4 has issued a demand notice dated 30 '07 2024 i'e ' back-dated' Therefore' the impugned demand notice is not on consideration of the explanation date<t 08'08'2024 and it is in violation of principles of natural justice. vii) The mineral which has been excavated has been utilized for Govemment work and as per G'O Ms'No 94' dated 01 07'2003' ' ,.r -.i .. 4 I L,j \\ P v( 31140 of2024 setgnrc,rate ii:c ,,vould be recovered from the contra jk)r,; bill and would be re r titted to the head of account of the concem:d dr.:p artrnent. An amrtr,t t 1 Rs. 1,g3,02,766/_ wasrecovered towards sei.qnicrage fce and remitterl to the Head oI. Account of Mines ancl ]linerals Departrne rt to - the years from 2\l7_lg to 2024_25. fhe sar e \1,as not considerer.l b, r.espondent No.4 in the impugned demand noti.;r . v ii I.itle order dated i0.09.2022 in W.p.No g39() c,f 2t)18 and batch, [_ igr r! r,Lrrt olAndhra pradesh held that rcspondert N(,.r. or any other Autlontl rrf the Slate cannot determine the culptbrliry of the person s tic to he in violation of the MDR Act or the Conr:essi,tn Rules or levl a rer altv and it is only a Court of competen j Lrr isdiction rvhich ctut sr) into thcse questions and levy penalties set o:tt under Rule - 2i r| he |elangana State Minor Minerar conccssror Rules, 1966 (l-cr shorr 'concession Rures') or under ani, cf tl e other provisions ri' he MMDR Act or the Concession Rr_rles. rcspondcrrt No. r has no jurisdiction to issuc demand rrotic,: dated erefore, .[.t

30.07.2024. 3 r-'( \_],NTION OF THE RESPONDENTS: i) Flesprt rclent No.4 has filed counter contending thzl :rs pr:r the guideline s o l' re snondent No.2, the DGpS Survey of the quarrv lcase a 5 KL,I W.P. No 11340 of2024 was conducted by the Empanellod Agency' IWs Rehoboth Surveys' Hyderabad in the presence of the Surveyor of Mines Depa(ment and lease holder. Basing on the said report' respondent No'4 has issued the show-cause notice dated 03 '06 '2024 demanding an atnount of Rs. 1,92,16,925l- towards seigniorage fee and five times penalty etc' The said notice was sent to the petitioner through registered post with acknowledgment due' The same was returned un-served with an ,door [ocked'. The said postal cover retumed to endorsement respotrdent No.4 on 12'07 '2024 Therefore' respondent No'4 served the said show-cause notice dated 03 '06'2024 on the petitioner through Special Messen ger on 12 '07 202-4' Despite granting fifteen (15) days time from the date of receipt of said notice, the petitioner failed to submit any explanation 'Iherefore' respondent No'4 has issued demand notice to the petitioner directing it to pay an amount of Rs.13,72,08,846/- under various heads The said notice was also retumed un-served with an endorsement 'door locked' on 09 '08'2024 ' After receipt of the demand notice' the petitioner submittcd reply on 08.08.2024 by putting back-date as 30'07'2024' ii) Therefore, the petitioner cannot contend that thc demand notice is without consideration of explanation dated 08'08 2024' it'*-.,..;. 6 KI,,J \\oto113{0of2024 I{owev,:r. r-cspondent No.4 has served the said denrancl notjcr: on the petitioner on 12.09.2024 by rvay of Special Messenger.. .lt e:e is no error in lh,:.,r i,l tlemand notice. iii) U/ th the aforesaid submissions, respondc.nt No..:t .;r,ught to dismiss thc pl c:;ent writ petition. 1 'l'hr: pstllisnsr filed reply affidavit aclverting to thc rlbresaid contentirx.; I rl r.espondent No.4 s. ANl.l ,YSIS ANI) FINDINGS OF' THE COUITT i) Thc rLfbresaid rival submissions would rer,,:al ,.hat the petitione' hercirL has obtaincd quarry lease for stone and r)elal c ver an extent ol' :\cs 7.20 guntas in Survey No.50 of Allarnpirlh V illage, VikarabaC ir4 a lial and District, fbr a period of fifteep ( 5 I \ ears on 24.08.20.8 arrrl a lcase <Ieed was executed on the same dr1. tt is the specific contentrf,n of the petitioner that it has entered intr l\{()ll with Mr. L. !iur.larrhan Reddy. Government Contractor lbr su1 rp ly of mineral ttrr rrtil zation of the same in Govemment works. Scigniorage charges 'xi I b: recovered from the contracl_or s biU ,rs per G.O.Ms.No.,)4. dared 0l 07 .2003 for the material usr:cl I o . the govemmenl \\'(,r( and will be directly paid into the ( ioverrment Accountl ,,\cr ording to it, an amount of Rs.1,83.02 766. - r / I I : I 1 i l 7 *.* "*ii,oo o"o'o recovered from the bills payable to the petitioner towards seigniorage during the period from 2017-18 to 2024-25 ' lnspec ii) tt is also not in dispute that the Regional Vigilance & Enforcement Officer' Hyderabad, along with technical staff has ted the working lease area of the petitione t on O7 '02'2024 an og,o2.2o24,A report was submitted to respondent No.4. Basing on the said repofi, respondent No'4 has issued show-cause notice dated an amount of Rs'13'72'08'846/- on the ground that the petitioner has excavated and transported quantities of more than permitted limit of 2'95'645MT in violation of Rule - 26 (3) (ii) of

03.O6.2[24demanding d the Concessions Rules' iii) lt is the specific contention of the petitioner that it has received the said show-cause notice only on 72'07 '2024 ' When the petitioner tried to submit explanation in person on 29 '0'7 '2024' respondent No.4 office faited to receive it With great difficulty' it has submitted explanation on 08 08'2024 and the office of respondent No.4 received and acknowledged the same on 08'08'2024' Without considering the same, respondent No 4 has issued demand notice dated 3O.07 -2O24 by putting back-date' I l , I I j 8 KL,J U P. {o I Ij.40 ot2024 iv) j,t is also the specific contention of the pcliti,rr er. that in respect o1 *-t 'rk lease of the petitioner, the responde,t at(hot it es have not follo$ crl scientific method in measuring the lrttrking ILrise area from rvhit.h lineral was excavated and measurcrlenlJ r.!(.rr) taken rvithout fcrllo,ling the prescribecl procedure. The rneasur:rr€nt was done in rer,ls olcubic meters (volume) and later it uas crnve rted into tones (rvei11ht . Measurements were taken in terms ot. Lluhi( | rneters (volume) as it s not possible to weigh large quantity oi rnincra . v) It is rrso the specific contention of the petitionrr thirt rvhire convertintt ;lir eral from cubic meters (volume) into nrctril tones (weight). the :uhic meters shall be multiplied rvirh 1.5. The responden!s ha ro rnulliplisd the cubic meters (volunre) \\,ith 2.64 specific gta\ it.',. 1 1ctor to arrive metric tones (weight). l.lre virhre of the mineral in rt.nls of metric tones was treated as Rs.65/_ pcr netric tone on thr quartin from 20lg onwards. The rate of lls.6:tr rari tlot there from the v:ar 201g. I.he rate was Rs.50/_ per metric ton Lp to 2022. Thus c rlculating Rs.65/_ per metric ton fionr 20 I .i and imposing penalt., is contrary to thc GOs issued hy the rer;pon,Jt:nts. Responden:s multiplied with higher multiplier of 2.64 instt:ad r.f 1.5. Therefore. lhr: san Le is also contrary to the GOs. ( t 9 KL,J W.P No.31340 of2024 vi) While issuing the impugned demand notice demanding huge amount of Rs.13.00 Crores and odd' the respondents have to strictty follow the procedure laid down under law and the Circulars issued by them. It is also the specific contention of the petitioner that vitle Cirslrat dated 23.02'2019 of respondent No'2' it was reiterated that the specific gravity of 2 64 shall not be applied for the loose boulders derived after blasting the insitu rock' as it will lead to permitting excess quantity of mineral in terms of volume and cause evasion of seigniorage fec from raw matcrial to finished product' Thus, the convesion Iaotor of 1:l:5 from volume to tonnage specified as per Rule - i0 ol the Concessiotls Rules is based on weightage only, but not on specific gravity of the material' vii) As per G.O Ms'No'18, Industries & Commerce (Mines-II) Department, dated 3l'03'2022,the rate of seigniorage fee was revised the rate of by amending the Concession Rules As per the said G O ' seigniorage fee was fixed at Rs'65/- per metric ton for building stone' rough stone/boulders, road metal' ballast and manufactured sand' Prior to 31.03.2022, the rate of seigniorage fce was Rs.65i- per metric l0 T L,J \\ P \. 31340 0f2024 riii) As per G.O.Ms.94, Inigarion & CAD (r,,M-COD) Depaftmr:nt. dated 01.07.2003, the seigniorage charpcr will be recovet'ec lior:r the contractor,s bills. i x) .t'l ough the respondents arc placing reliancc on tl re Memo, dated 05.07.:1017 i.e., operational guidelines lor co rcluct of DGPS/I:TS iluney, they have not filed copy of the sanre ,l.hus, accordi,g t,.r tre petitioner, the respondents havc not lirlLrr.yed the aforesai I Me n.Los/Circulars and not calculated thc sc;gnrcrrLge l.ee properly. x) . \s d iscussed above, vide impugned demand noti,:r dated 30.07 .2024 . r:srpondent No.4 requested the petitioner ro F ay an amount of Rrr.l 1.72,0g,g46l_ under various heads rvithin fiflr:en (t5) days. It rs the ;lecific contention of the petitioner that the sho,v-cause notice drrted ).\.06.2024 was served on the petition:r cnlv on 12.07.2024. 'Iihen the petitioner tried to submit erflaneticn in person, rlsfronCr:nt No.4 office failed to receive tt. WitJr great difficultr.. rlre rt:titioncr has served the said reply in the o1fice of respondent |Jo.,r only on 0g.0g.2024. when responde,t N,r_:1.,s .ftice failed to rcc:ir,: explanation and give acknowledgment in protl of receipt of tlre sirme, the petitioner should have sent rxpkrnrtion ( l1 KL,J W.P. No 3l340 ot2024 through registered post with acknowledgment due. Instead, the is claiming that despite making efforts to submit petitioner explanation in the offrce of respondent No'4 in person' they have not received and that they have received only on 08'08'2024' The said contention of the petitioner is not betievabte' However' respondent No.4 has received the explanation on 08'08 2024' xi) It is also relevant to note that even according to respondent No.4, the show-cause notice dated 03 '06 '2024 sent to the petitioner wasreturnedun.servedbythel,ostalAuthoritiesonlyon12.07.2024 with an endorsement 'door locked' There is specific asserlion to the said effect in paragraph No'13 of the counter affidavit' Respondent No.4 has filed copy of the said retumed postal cover' Perusal of the according to resPondent No 4' samewouldrevealthatthesamewaspostedon'13'062024and it was returned on 12.07.2024 said show-cause notice on the Therefore, theY have served the petitioner on 12.07.2024 through a Special Messenger' Mr Riyazuddin, Junior Assistant' Thus' even according to respondent No.4, the said notice was served on the petitioner only on 12'0'7 '2024 ' Fifteen (15) days time to submit explanation was expired on Mohd. l2 rLl $ P .,{( l l:t40 of2024 27 .07 .'.r-011. [Jven then, the petitioner did not subnrit cxp] arlation to the sanre tt has submitted explanation only on 0g.()g.2(,24. >:ii. ,Ac:ording to respondent No.4, it has issued ,icmr,.nd notice to the pctiti rncr dated 30.07.2024 and the same was sc nr to the petitioner thro rgh registered post with acknowlcdgnrenr tru,: and the sarne \!as ir ls o retumed un_served by the postal Authoritier. with an ondorscnt nt <1oor locked, on 09.0g.2024. Respondent l,lo :l has flled copy of the said returned postal cover. perusal o1.the sunre *,.uld reveal ttLat rht :;ame i.vas posted only on 06.0g.2024. [r,, cn a,:r:orciing to responrien I No.4, it was retumed on 09.0g.20.14 ,v Lth an enclorsentenr .loor locked,. The petitioner has submittec crp lznation b respondcnL 'rr r.4 on 0g.0g.2024 itself xu ) .,\:; discussed above, it is the specific conte,ltior, Jf the perilioner that he respondents have not calculated thc. seilrniot.a;3e i.ce properly lt has arso placed reliance on G.o.[,Is. N,r.(,r,1 dated 01.07.2003 anrl G.O.Ms.No.243, dated,0g.05.1996. tr is as,r the specific clLsc of the pctitioner that it has entered into MOIJ n,ith A{r. L. Sudarshan R ed<lr , Govemment Contractor, for suppll ot. rinr.riLl for utilizgtion o1 tht: same in Govemment works As per G.O Ms..rir.94. dated 01.07 ]003 the respondent authorities have alr,:adv rercot ered t3 KL,J WP No 31140 0f2024 an amount of Rs.1,83,02,766l- during the period from 2017-18 to 2024-25. Ithas also frled bills to the said effect' xiv) It is also relevant to note that according to the petitioner' vide Memo datect 23.02-2019, the Govenrment has issued instructions for computation of raw material an<l finishcd mineral dispatched against permits obtained to arrive at evaded seigniorage fee through revision of MRAs. In the sai<l memo, it is reiterated that the specific gra'tity of 2.64 shall not be applied for the loose boulders derived after blasting the insitu rock, as it wilt lead to permitting excess quantity of mineral in terms of volume and cause evasion of seigniorage fee from raw material to finished product The conversion factor of 1 :1:5 from volume to tonnage specified as per Rule 10 of TSMMC Rules' 1966 is based on weightage only but not on specific gravity of the material' Zide G.O.Ms.No.l8, dated 31'03'2022' the Govemment has revised the seigniorage fee. The said aspects were not considered by show-cause notice and imPugned respondent No.4 while issuing demand notice. xv) As rightly contended by leamed Senior Counsel for the demanded hugc money of petitioner that resPondent No'4 Rs. I 3,72,08,846/- under various heads Respondent No.4 should have t4 KL,J \\rP ,lo I I340 of2024 servecl n( tic,) Jlt the petitioner properly and on reccipt ()f cr p anation, should hrn,: considered the aforesaid aspects while issuin,; demand notice. F:ertl)r,ndent No.4 did not follow the said pro<:ec1ur e Thus, there is v olitron of principles of natural justice in issurn,u rrLpugned demand rrotrc,r dated 30.07.2024. Therefore, this Cou t cannot dismiss the rrrit petition and relegate the petitioner to app oach the Appellaler Rcrrional Vigilance & Enforcement Officer. lJl derabad, under R,rlt.,s - S 5 and 35A of the Concessions Rules. xvi ) 1r, ir- Kondaveeti Ravi, leamed Senior C.ounr;ei a1:rlrearing for the pet itic n er placed reliance on the principle laicl Joi.vr r by thc Llon'ble St prt.nre Court in State of U.p. v. Maharaja l)harurander Prasad Singh ctc..r to contend that respondent No.4 bein-u tl e quasi_ .judicial oflicr:. has to exercise the same strictly in acccrclirro,: with lau, by firllr^r inu principles of natural justice. As rliscrLsscc lrbove, thcre is vio ati,)rr of procedure laid under the aforesaid C-ircu at.s and G.os. b1 re:,po r(ient No.4 apart from violation of principlt:s ,rI natural -justice xvir) l.r:rrrncd Senior Counsel appearing for thc petitior: et. also placed reJianc:e on the principle laid down by the High r3t,urt ol '. ,tlR'rl8q s-.,,t; -t. l ) a 15 KL.J w P. No'lll40 of 2024 Andhra Pradesh in M/s' GSR Stone Crushers v' The State of A'P'2' to contend that respondent No'4 has no power to issue impugned demand nottce' xviii) instructlons, Whereas, leamed Additional Advocate General' on would submit that the State has already preferred lntra- als challenging the common order passed by Fligh Court of Andhra Pradesh in Mis. GSR Stone Crushers2 and a Division Bench of High Court of Andhra Pradesh reserued the matter' Court APPe

6. CONCLUS ON: t i) Therefore, without expressing any opinion on merits of the case, onry on the ground of viotation of principles of natural ]ustice' the said impugned demand notice dated 30 '07 '2024 of respondent No.4 is set aside The matter is remanded to respondent No 4 with a direction to pass orders afresh strictly in accordance with law by and contentions raised by considering the aforesaid Memos' G'Os etc ' the petitioner' Liberty is granted to the petitioner to submit additional inctuding documents and respondent No 4 shall consider the same' Liberty is also granted to the petitioner to raise arl the contentions and grounds which it has raised in the present ,. w.P. No.839o of 2022 &ba tch, decided on 30 09 2022 informatiorVexplanation I I I I t6 ( KL,J \\ P ,lo lll40 o12024 writ p(riri.. rncruding jurisdiction of respondent \o.4. ani it is for rcspon<lerrt )I,r..l to consider the same. However. responr lent No.4 shall conrplc,e the entire cxercise within four (04) u ecks froL r lhe date of reccipt ol^ c()pv of this order. The petitioner shall cc -opr riLte with respond:nl l.J I 4 in concluding the aforesaid exercise. ii.r 'l-irir rvrit petition is accordingly disposerl ,rf In the circumslancc: r,f thc case, there shall be no order as to co:its A:; a sL',lLrel thereto, miscellaneous petitions, il any.. pcrxling in this writ pc:iti,rl shall stand closed. I To, //TRUE COPY// A SD/.S. MALT.IKAR JUNA RAO ISTRAR 1STANT REG \ -_ t SECT|OI{ OFFICER \: l

1. The Principal secretary, lndustries and commerce Departmerrt secretariat Buildings. Hyde ab ad. State of Telangana.

2. The Directo' o' h4 nes and Georogy, Government of rerangana H lcrerabad. 3 The Deputy Di.e: or of Mines and Geology, Hyderabad 4. The Assistant l,r:ctor of Mines and Geology, Vikarabad vikarab;r<l District 5. One CC to S;R K:tRTH| TEJA KONDAVEETT, Advocate tOpLCl 6. Two CCs t, ADIL ADVOCATE GENERAL, High Court for the State of Telangana at l1y,j -.rabad [OUT]

7. Two CD Coprie; BSR BS HIGH COURT DATED:091061:2A25 ORDER WP.No.31340r of 2024 1llE S14 \ 6o 7 13 JlrN 2ttrt o .) t o '+ * (' >z a I / DISPOSING CIF THE WRIT PETITION, WITHOUT COS]-S I ) ).,c