2011 (9) TMI 1155 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the appellant is liable to pay ZP Cess?
2. Whether the appellant is liable to pay GP Cess?

Summary:

Re: Question No. (i) - Liability to Pay ZP Cess

The appellant, M/s Larsen & Toubro Ltd. (later M/s. Ultra Tech Cement Ltd.), obtained a mining lease for limestone from the Government of Maharashtra. The Collector demanded payment of surface rent, Zilla Parishad Cess (ZP Cess), and Gram Panchayat Cess (GP Cess). The appellant contested the liability to pay ZP Cess, citing section 151(1) of the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961, which exempts lessees from the state government from such payment. The respondents argued that the demand for ZP Cess is authorized by Rule 27(1)(d) of the Mining Concession Rules, 1960, and clause V(4) of the lease deed, stating that cesses assessable on the land are part of the surface rent.

The court noted that Rule 27(1)(d) and clause V(4) of the lease deed require the lessee to pay cesses assessable on the land if due under the Zilla Parishads Act. Section 151(1) of the Zilla Parishads Act exempts lessees from the state government from paying ZP Cess. Therefore, the state government cannot levy ZP Cess under a contract if the lessee is exempt under the Zilla Parishads Act. The court concluded that the appellant is not liable to pay ZP Cess under the lease deed.

Re: Question No. (ii) - Liability to Pay GP Cess

Section 127(1) of the Bombay Gram Panchayats Act, 1958, imposes a cess on every rupee of land revenue payable to the state government. Section 64 of the Maharashtra Land Revenue Code, 1966, exempts certain lands from land revenue. Clause VII(1) of the lease deed exempts the appellant from paying land revenue. Consequently, the appellant is not liable to pay GP Cess, as it is only payable on the amount of land revenue due. Clause V(4) of the lease deed requires payment of GP Cess only if it is payable under the Panchayats Act. The court held that the appellant is not liable to pay GP Cess under the lease deed.

Conclusion

The court clarified that clause V(4) of the lease deed requires the lessee to pay ZP Cess and GP Cess only if they are leviable under the respective enactments. The appellant is not liable to pay ZP Cess or GP Cess under the lease deed. The appeal was allowed, the High Court's judgment was set aside, and the demand notices for ZP Cess and GP Cess were quashed.