2015 (4) TMI 194 - SC - Indian Laws

Entitlement to refund of the cess paid together with interest at 12 per cent p.a. - The West Bengal Rural Employment and Production Act, 1976 and The West Bengal Primary Education Act, 1973 - whether insofar as interest is payable after the Amendment Act is concerned, such interest would only be payable after assessment orders are passed (which on facts here, we are informed, were passed on 27.07.1993 and thereafter)? - Held that - In our opinion, Mr. C. U. Singh, learned counsel appearing on behalf of the respondents, is right in saying that the interim order dated 16.06.1983 is self operative. In any case, the final order in Buxa Dooars Tea Company Ltd. s case 1989 (5) TMI 56 - SUPREME Court did not say anything to the contrary, and when both the judgment Buxa Dooars Tea Company Ltd supra and Goodricke Group Ltd. 1994 (11) TMI 353 - SUPREME COURT OF INDIA and the interim order are read together, it is clear that the refund will have to be made together with 12 per cent interest. It is clear from a reading of Section 4B of the West Bengal Rural Employment and Production Act and Section 78C of the West Bengal Primary Education Act that where any sum is paid by or collected from an owner of a tea estate during a period commencing from 01.04.1981 or 14.04.1984, as the case may be, up to the date of the Amendment Act as rural employment cess or as education cess, such portion of the said sum as may become payable under the provisions of the Amendment Act shall, notwithstanding any judgment, decree or order of any court, be deemed to have been validly levied, paid or collected under the Amendment Act. This being the case, it is clear that Section 4B and Section 78C have changed the basis of the law as it existed when Buxa Dooars Tea Company Ltd. s case was decided and consequentially, the judgment and interim order passed in Buxa Dooars Tea Company Ltd. s case will cease to have any effect. Also, what would have been payable under the Act as unamended, is now payable only under the 1989 Amendment Act which has come into force with retrospective effect. In the present case, the 1989 amendment Act expressly seeks to remove the basis of Buxa dooars s judgment by retrospectively changing the basis of the levy of the cesses mentioned above. In the present case, what is done away with by the Amending Act of 1989 is a declaratory judgment holding the above cesses to be invalid. On all these grounds also the judgment in Madan Mohan Pathak s case is distinguishable. 1978 (2) TMI 209 - SUPREME COURT However, insofar as interest is concerned, post Goodricke Group Ltd. s case supra , we are of the view that Mr. C. U. Singh is correct in supporting the impugned judgment as the case made it clear that the petitioners shall pay cesses stayed by an order of this Court along with interest at 12 per cent per annum. The expression cesses stayed has reference to the interim order dated 25.01.1990 which had stated that there would be no enforcement of demand under the Act or Rules and in the meanwhile, assessment may be made. We have been informed that assessments were made with effect from July, 1993 onwards and consequential demands have been made with effect from 1995 onwards. It is clear, therefore, that the impugned judgment is right in holding that with regard to the payment of interest by the petitioner on the amount of cess payable by virtue of the Goodricke Group Ltd. s case, interest would only be payable from the respective dates of assessment for the various relevant periods till recovery.

Summary

Issues Involved:
1. Refund of cess paid and interest thereon.
2. Validity and retrospective effect of the 1989 Amendment Act.
3. Interpretation of interim and final orders in prior cases.
4. Applicability of the Madan Mohan Pathak judgment.
5. Interest on cess post-Goodricke Group Ltd. case.

Issue-wise Detailed Analysis:

1. Refund of cess paid and interest thereon:
The High Court determined that the respondent was entitled to a refund of cess paid before the 1989 Amendment Act, along with 12% interest per annum. The court referenced the interim order in the Buxa Dooars Tea Company Ltd. case, which mandated a refund with interest if the petitioner succeeded. The final judgment in Buxa Dooars declared the charging sections of the West Bengal Acts invalid, ordering a refund but not specifically addressing interest. The appellant argued that the interim order ceased to exist independently after the final judgment, while the respondent maintained that the interim order was self-operative, ensuring interest payment upon the writ petition's success.

2. Validity and retrospective effect of the 1989 Amendment Act:
The West Bengal legislature amended the Acts in 1989, changing the levy basis from the dispatch of manufactured tea to the production of tea leaves. This amendment was upheld in Goodricke Group Ltd.'s case, which validated the retrospective effect of the Act, covering the period of the anterior provisions invalidated in Buxa Dooars. The court found that the amendments rectified the defects identified in Buxa Dooars, thus legitimizing the levy both prospectively and retrospectively.

3. Interpretation of interim and final orders in prior cases:
The appellant contended that the interim order in Buxa Dooars did not survive the final judgment, which did not separately order interest payment. The respondent argued that the interim order was self-operative, ensuring interest payment upon the writ petition's success. The court agreed with the respondent, stating that the interim order and final judgment should be read together, mandating a refund with 12% interest.

4. Applicability of the Madan Mohan Pathak judgment:
The respondent cited Madan Mohan Pathak, arguing that a legislative act cannot undo a writ of mandamus granted by a superior court. The court distinguished this case, noting that the 1989 Amendment Act did not undo a mandamus but changed the basis of the levy, rectifying the defects identified in Buxa Dooars. The court referenced Indian Aluminium Company v. State of Kerala, which clarified that a valid law could retrospectively amend the basis of a levy, making prior judgments ineffective.

5. Interest on cess post-Goodricke Group Ltd. case:
The court upheld the High Court's decision that interest on cess payable post-Goodricke Group Ltd.'s case would accrue from the date of assessment. The interim order in Goodricke Group Ltd.'s case had stayed the enforcement of demand but allowed assessments to continue. Consequently, interest would be payable from the assessment dates, starting in July 1993, until recovery. The respondent supported this interpretation, and the court ordered that any interest payments made by the respondents to the State would be adjusted against the final payable amount.

Conclusion:
The court set aside the impugned judgment regarding the refund and interest for the period before the 1989 Amendment Act, recognizing the retrospective validation of the cess levies. However, it upheld the decision on interest accrual post-Goodricke Group Ltd.'s case, confirming that interest would be payable from the respective assessment dates. The appeal was disposed of accordingly.