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TMI Blog2002 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... nder clause 9A was withdrawn and three after it was withdrawn. Besides the principles of unjust enrichment on equitable principles which squarely apply here, the applicants are not entitled to claim refund of amount paid into the CRA under clause 9A. It is evident that the amount so deposited was expended for the purpose under the Control Order. Under these circumstances, we direct that pursuant to declaration of invalidity of clause 9A of the Control Order, the amount of contribution already paid under clause 9A will not be liable to be refunded to the appellants. - C.A. 46 OF 1993 - - - Dated:- 17-12-2002 - Judge(s) : Y. K. SABHARWAL., H. K. SEMA JUDGMENT The judgment of the court was delivered by Y.K. SABHARWAL J.--The appellants are cement manufacturers. They challenge the legality and validity of clause 9A of the Cement Control Order 1967 (for short, "the Control Order"). Clause 9A and some other clauses were incorporated by amendments made in the Control Order in the year 1982. Clause 9A requires every producer to pay to the Cement Regulation Account (for short, the "CRA") an amount at the rate of Rs. 9 per metric tonne of production of non-levy cement. This paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to certain adjustments, had to be paid by the cement manufacturers into the Cement Regulation Account (CRA). In cases where freight actually incurred was in excess of the specified amount, the differential amount was paid to the manufacturer out of the CRA. The operation of the Control Order brought out certain serious problems affecting the cement industry. The control resulted in the fall of fresh investments in the cement industry. Further, there were consistent demands for revision of the retention prices on the basis that the cost of manufacture had increased considerably. The burden of CRA increased rapidly because of the rapid increase in fuel and transport cost. The CRA went into deficit. It was unable to meet its commitments. Considering the problems, the Government on March 23, 1981, constituted a high level committee to review the developments of the cement industry and recommend measures to accelerate its progress including incentives and fair prices. The terms of reference of that committee were: "(i) To review the present system of pricing in the cement industry (consisting of existing factories, new factories and mini cement factories), including the merit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the recommendations of the committee were accepted by the Central Government. The Central Government allowed partial decontrol. It allowed sale of non-levy cement to the extent of 33.34 per cent. and not 25 per cent. as recommended by the committee. Further, instead of recommended payment of Rs. 10 per mt., the Central Government reduced the payment to the CRA at the rate of Rs. 9 per mt. It was felt that the payment into CRA on decontrolled quantity of cement was necessary because to the extent of decontrol, there will be no contribution into the CRA of the differential amount between f.o.r. destination price and the manufacturer's retention price. It was felt that the Government's duty and obligation to pay freight subsidy on the controlled output of levy cement which accounted for 66.66 per cent. of the total production continued and it was expected that this burden would increase sharply because of substantial increases in the transport cost. The CRA would, therefore, balance in this situation of decontrol only if the said contribution of Rs. 9 per mt. was received into the CRA on the nonlevy cement. It was also contemplated that the sale price of the non-levy cement would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement shall be as specified in the Schedule, namely, the retention price. Clause 8 provides the price at which the producer can sell the cement. Clause 9 provides for payment by the producer of the cement into the CRA. Clause 9 reads as under: "9. Payment to cement regulation account.--(1) Every producer shall, in respect of each transaction by way of sale of cement effected by him or in respect of every removal of cement made by him, under clause 3 pay within one month of the close of the month in which such sales or removals take place, to the Development Commissioner for Cement Industry, an amount equivalent to the amount, if any, by which the free on rail destination price of such cement exceeds the aggregate of the following amounts, namely:-- (i) the ex-factory price of such cement calculated in accordance with the rates specified in the Schedule; (ii) selling and distribution expenses calculated at the rate of Rs. 4 per tonne; (iii) the excise duty paid thereon; and (iv) in the case of packed cement, the charges fixed by the Central Government in respect of packing under the first proviso to clause 8 and where a producer uses second hand jute bags in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remaining unspent in the Cement Regulation Account shall be disbursed in accordance with such directions as may be given by the Central Government in this behalf." The amendments made to the Control Order on February 28, 1982, that are relevant for appreciation of the respective contentions are as under: "1A. Applicability.--The provisions of the said Order except clause 9A thereof shall apply only in relation to levy cement. 2. Definitions.--In this order, unless the context otherwise requires, (a) to (cc)... (d) 'levy cement' means that part of production of cement with reference to the installed capacity of a cement plant as may be determined by the Central Government, from time to time, not being more than per cent. of the installed capacity of the cement plant; (e) 'non-levy cement' means that part of production of a cement plant which is in excess of the production mentioned in sub-clause (d). 9A. Every producer shall, in respect of the production of non-levy cement pay to the Cement Regulation Account an amount at the rate of rupees nine per metric tonne of such production, within one month of the close of the month in which such production takes place." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they should pay him a sum of two pence per gallon for this privilege. The defendant-company which was required to make this payment, refused to do so and to the information laid against it raised the contention that the charge amounted in effect to a tax levied in an unconstitutional manner. The company succeeded in the Court of Appeal and the Attorney-General brought the matter in appeal before the House of Lords. In dismissing the appeal, Lord Buckmaster after accepting the argument based upon the extreme difficulty of the situation in which the country found itself owing to the war, and the importance of securing and maintaining vital supplies essential for the life of the community, proceeded to consider the question whether a power to make such a levy was granted. The statute had confined the duties of the Food Controller to regulating the supply and consumption of food and taking the necessary steps for maintaining proper supplies. It was observed that: "The question before this House is not whether or not that was a wise and necessary step to take having regard to the difficulties by which the whole question of the milk supply was surrounded; the only question which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans." In Attorney-General for New South Wales v. Homebush Flour Mills Ltd. 56 CLR 390, at 400, the High Court of Australia held that when the exaction of money by a Government is in obedience to what is really a compulsive demand, the money paid is paid as a tax. Reliance was also placed on the decision of the Privy Council in Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy Ltd. [1933] AC 168. The case was concerned with the legality of certain adjustment levies imposed on farmers by an adjustment committee created by an enactment of British Columbia by which the disparity in the production of fluid milk as compared with milk products was sought to be countered. It was contended on behalf of the State that the levies were not taxes but merely a scheme for pooling profits in a provincial trade. Lord Thankerton speaking for the Board said: "The main issue of this appeal is whether the adjustment levies are taxes....In the opinion of their Lordships, the adjustment levies are taxes. They are compulsorily imposed by a statutory committee...They are enforceable by law. Compulsion is an essential feature of taxation. The Committee is a public authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , entitled to it or the money, in fact, belongs to them? In support of the contention that the money, in fact, does not belong to the appellants and they are merely holders thereof, learned counsel for the respondents, besides placing reliance on two decisions, one of the Calcutta High Court upholding the validity of clauses 4A and 4B of the Aluminium Control Order, 1970, and the other of the Delhi High Court upholding validity of clause 9 of the Control Order, has placed, rather emphatically, strong reliance on the background, scheme and the circumstances under which clause 9A was inserted in the Control Order by 1982 amendment. We have already noticed that clause 9A was inserted while simultaneously introducing partial decontrol of cement. No fault can be found with the object behind the levy in question. As a result of partial decontrol, the cement manufacturers were expected to earn huge profits by sale of non-levy cement in the open market. There was no limitation or restriction on sale price. The effect of clause 9A was to make them contribute, out of those profits, Rs. 9 per metric tonne into the CRA. Howsoever laudable the object behind the levy and collection of any sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by the cement manufacturers and was wholly recovered from their customers. This factual position was made abundantly clear by the letter dated March 12, 1982, addressed to the Government of India by the Cement Manufacturers Association which showed that the contribution to the Cement Regulation Account at Rs. 9 per mt. of non-levy cement was built into the price of non-levy cement and recovered from the customers." The decisions relied upon by learned counsel for the respondents have no relevance. In Union of India v. Hindustan Aluminium Corporation Ltd., AIR 1983 Cal 307, while examining the validity of the aforenoticed provisions of the Aluminium Control Order, 1970, it was held that the person challenging the validity of the clause which related to the fixation of retention price of indigenous aluminium (clause 4A) and fair price of aluminium (clause 4B) is merely the holder of the money. In that case, the Government had fixed the sale price of indigenous aluminium which was considered to be fair and within the pecuniary limits of the consumers. The Government, finding that mere fixation of sale price would serve no purpose of the consumers and consequently the objectives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or retention price is valid, it would follow that the balance of the f.o.r. destination price that remains after deducting the said retention price and the other items allowed to be deducted by the producer under clause 9 of the Control Order, does not belong to the producer and, therefore, he cannot be said to be deprived of the same when he pays the same to the Controller under clause 9. In that view, the payment of the balance to the Controller cannot be described as levy of tax qua the producer. Nor can it be a tax qua the consumer, as the amount of freight is paid by the consumer as part of the f.o.r. destination price." The High Court, therefore, held that the balance of f.o.r. destination price does not belong to the purchaser under the scheme of the Control Order and cannot, therefore, be regarded as tax qua the producer. The factual matrix of the two cases relied upon by learned counsel for the respondents and of the present case is entirely different. As already noticed, there is no control on price of sale of the non-levy cement. Except clause 9A, no other clause of the Control Order is applicable to non-levy cement. There is no sale price, there is no retention p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is retained by the State, i.e., by the people. The doctrine of unjust enrichment is a just and salutary doctrine. The power of the court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State for the State represents the people of the country. No one can speak of the people being unjustly enriched. In the present case, it is clear that the burden of payment under clause 9A was passed on to the customers. The President of the Cement Manufacturer Association, soon after the insertion of the amendment in February, 1982, in a communication dated March 12, 1982, sent to the Secretary of Ministry of Commerce, Department of Industrial Development, Government of India, while giving break-up of the price of non-levy cement added in the said price, a sum of Rs. 9 per mt. payable under clause 9A on production of the non-levy cement. Further, it appears that the levy under clause 9A was accepted by the entire cement industry except the challenge made by the four appellants by filing the writ petitions; one just before the contribution under clause 9A was withdrawn and three after it was withdrawn. Besides the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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