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Central Coal Fields Ltd. v. State Of Bihar And Ors.
Structured Summary of the Judgment (N.P. Singh, J.)
Factual and Procedural Background
The petitioner filed an application (writ) seeking quashment of a notice issued by the Certificate Officer which required the petitioner to deposit amounts payable as cess under the Bihar Cess Act, 1880. The demand related to cess for coal consumed in March, April and June 1977 by workmen engaged by the petitioner-company. The petitioner contended that no royalty was payable under the Mines and Minerals (Regulation and Development) Act, 1957 (Mines and Minerals Act) in respect of such coal consumed by workmen, and therefore no cess could be demanded under the Cess Act. The matter was heard and a judgment delivered by N.P. Singh, J.; N. Pandey, J. concurred. The writ application was dismissed with no order as to costs.
Legal Issues Presented
- Whether the expression "royalty" in Section 6 of the Bihar Cess Act (as amended) must be read strictly in accordance with the interpretation clause in Section 4 of that Act to mean only amounts actually paid or likely to be paid, thereby excluding coal consumed by workmen (exempt under Section 9(2A) of the Mines and Minerals Act) from the basis of cess assessment.
- Whether Section 6 of the Cess Act, which prescribes the mode of assessment, should be interpreted in a manner that permits calculation of cess on the notional or statutory amount of royalty (i.e., the amount payable under the Second Schedule of the Mines and Minerals Act) even where, under the Mines and Minerals Act, the lessee is exempted from actually paying such royalty in certain circumstances.
- Whether an exemption from royalty under the Central Mines and Minerals Act (e.g., Section 9(2A)) can operate to defeat or override the State's power under the Bihar Cess Act (a State enactment) to levy cess on immovable property, and in particular whether an exemption from royalty under the Central Act exempts the land from cess liability under the State Act.
Arguments of the Parties
Petitioner (as summarized in the opinion)
- There was no liability to pay royalty in respect of coal consumed by the workmen (relying on Sub-section (2A) of Section 9 of the Mines and Minerals Act), and therefore no cess could be charged on such consumption under the Cess Act.
- Because the Cess Act's definition of "royalty" (in Section 4) describes it as a payment "made or likely to be made," the expression "royalty" in Section 6 must be read to refer only to amounts actually paid or likely to be paid; notional or theoretical amounts (which would never be paid due to statutory exemption) cannot be used as a base for cess.
- Revenue statutes (taxing provisions) require strict and literal construction; the Court must not speculate about legislative intent or expand statutory language. The petitioner relied on established authority to support strict construction in revenue matters (e.g., Inland Revenue Commr. v. Duke of Westminster and other authorities).
Respondent / Advocate General (as summarized in the opinion)
- The definition of "royalty" in Section 4 of the Cess Act is subject to the opening qualification "unless there be something repugnant in the subject or context"; consequently, the expression "royalty" in Section 6 must be read in the context of Section 5 (the charging section) to avoid defeating the object of the statute.
- If "royalty" in Section 6 were restricted to amounts actually paid or likely to be paid, the operation of the charging provision in Section 5 (which makes all immovable property liable to cess) would be frustrated; exemptions in other enactments (for example, amendments to Section 9 of the Mines and Minerals Act) should not automatically exempt land from cess under the State Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court (how the judgment used it) |
|---|---|---|
| Inland Revenue Commr. v. Duke of Westminster (1936) AC 1 | Principle that, in taxation cases, subjects are taxed only by the plain words of a statute; courts should not tax by inference or analogy and must give strict construction to taxing provisions. | The petitioner relied on this authority to urge strict literal construction of revenue provisions; the Court recorded this reliance as part of the petitioner's argument for a narrow reading of "royalty." |
| Bank of Chettinad Ltd. v. Commr. of Income Tax, Madras | Reiteration of the rule that the substance of a transaction cannot displace the strict legal position in revenue cases. | The judgment was cited by the petitioner to support the proposition that revenue statutes must be construed strictly; the Court recorded the citation as part of the petitioner's authorities. |
| State of Punjab v. [1966] 2 SCR 457 | Rule: in interpreting a fiscal statute the court must not make good deficiencies; interpret the statute as it stands and, in doubt, interpret favorably to the taxpayer; not justify straining language to hold a subject liable to tax. | Cited by the petitioner for the proposition that taxing provisions should be strictly construed; the Court summarized this principle while assessing whether it applied to Section 6 (a machinery provision) of the Cess Act. |
| Smt. Tarulata Syam v. Commr. of Income Tax, West Bengal (AIR 1977 SC ...) | Once an assessee comes within the letter of a taxing law, he must be taxed; cite to Cape Brandy Syndicate re focusing only on the clear language of taxing Acts. | Used by the petitioner to reinforce that in taxing statutes only the plain words should be looked at; the Court recorded the authority but distinguished charging provisions from machinery provisions when applying these principles. |
| Cape Brandy Syndicate v. I.R.C. (1921) 1 KB 64 | In a taxing Act one looks only at what is clearly said; no room for intendment; nothing is to be read in or implied. | Relied on by the petitioner to urge strict reading of taxing language; the Court acknowledged the principle but considered whether it should apply to a machinery provision (Section 6). |
| Commr. of Income Tax, Bangalore v. [1981] 128 ITR 294 (SC) (as cited) | Charging section principle: transactions that cannot be governed by specific computation provisions are not intended to be subject to the charging section. | Cited by the petitioner to show that specific computation rules govern the charge; the Court noted the authority while assessing whether Section 6 (a computation/machinery section) should be interpreted strictly. |
| Associated Cement Companies Ltd. v. State of Bihar (1979 Pat LJR 429) | Examination of Sections 5 and 6 of the Cess Act: Section 5 is the charging section; Section 6 (as amended) directs calculation of cess with reference to royalty; cess characterized as a land tax. | The Court relied on this bench decision to support the proposition that Section 5 imposes the liability and Section 6 provides the machinery; it was used to show that calculating cess by reference to royalty does not change the fundamental character of the land tax. |
| Laxmi Narayan Agarwalla v. (AIR 1983 Ori 210) (Full Bench) | Held that Section 6 (Orissa Cess Act) is the mode and machinery of taxation and amount of cess is to be calculated with reference to royalty payable for raising minerals; cess is not a levy on royalty. | Cited to demonstrate judicial support for reading a cess-assessment provision as machinery that looks to royalty for computation without converting the cess into a levy on royalty; the Court relied on this view in its analysis. |
| Gursahai Saigal v. [1963] 1 ITR 48 (SC) | Distinguishes charging provisions from machinery provisions: charging provisions receive strict construction; machinery provisions should be interpreted so as to make them workable and to avoid defeating the charging provision. | The Court relied significantly on this authority to justify reading Section 6 of the Cess Act in a way that makes the machinery workable (i.e., allowing computation on an amount payable under the Second Schedule), rather than applying rigid literalism that would frustrate Section 5. |
| Mahaliram Ramjida's case (Privy Council) (cited in Gursahai Saigal) | Principle: interpret machinery provisions so that they are workable ("ut res valeat potius quam pereat"). | Referred to within the Gursahai Saigal discussion and relied upon to support a workable interpretation of Section 6 rather than a literal construction that defeats the statute's purpose. |
| V.F. & G. Insurance Co. v. Fraser & Ross (Supreme Court) | Interpretation clauses are subject to the qualification "unless there be something repugnant in the subject or context"; definitions may be departed from where context or subject requires. | The Court invoked this principle to support the view that the defined term "royalty" in Section 4 of the Cess Act can be read differently in Section 6 if the context requires, so as to avoid repugnancy with Section 5. |
| Meux v. Jacobs (1875) 23 WR 526 | Observation that interpretation clauses apply unless there be something repugnant in the context. | Cited to support the general rule that a definition in an interpretation clause does not rigidly substitute words in every context and that context can require a different application. |
| Shambatta v. Narayana (as cited) | Function of an interpretation clause is to declare what may be included in a term when circumstances require such interpretation (not to apply uniformly in all contexts). | Used to reinforce the Court's approach that a definition may not rigidly apply in every section if the context demands otherwise. |
| V.K. Balakrishana v. (AIR 1966 Ker 42) (Full Bench, Kerala High Court) | A definition clause does not necessarily apply to all possible contexts in which the word appears; strict adherence may lead to anomaly or repugnancy. | Invoked to support the proposition that statutory definitions may be departed from in particular contexts to avoid repugnancy or anomaly; applied in construing "royalty" in Section 6. |
| Central Inland Water Transport Corporation Ltd. v. (1986) IILLJ 171 SC | Where an interpretation clause defines a word, the definition is explanatory and prima facie restrictive, but may be departed from where the subject or context requires. | Referred to by the Court to justify the contextual reading of a definition clause; used to bolster the conclusion that "royalty" in Section 6 can be read in context of Section 5. |
| Radha Krishna v. State of Bihar (1988 Pat LJR 314) | Example where a definition in rules was read contextually to avoid repugnancy (the expression "High Court" interpreted beyond its narrow rule-definition). | Relied upon as a local example of the Court's prior treatment of interpretation clauses being applied contextually to avoid repugnancy. |
Court's Reasoning and Analysis
The Court's analysis proceeded through the following logical steps (as set out in the opinion):
-
Identify the relevant statutory provisions:
- Section 5 of the Bihar Cess Act is the charging section: it makes all immovable property within the area liable to payment of a local cess.
- Section 6 (as amended) prescribes how cess is to be assessed and, as amended, provides that cess shall be assessed on the annual value of lands and, until Parliament provides otherwise, on "the royalty of mines and quarries" (with a rate for royalty determined by Government not exceeding the amount of royalty).
- Section 4 (interpretation clause) of the Cess Act defines "royalty" in respect of mines and minerals as "a payment made or likely to be made" to the owner for the right to work the produce.
- Section 9 (sub-sections (1), (2), and notably (2A)) of the Mines and Minerals Act requires payment of royalty by leaseholders generally but Sub-section (2A) exempts payment of royalty in respect of coal consumed by a workman up to one-third of a tonne per month.
-
Examine the competing interpretive approaches:
- The petitioner urged a strict, literal construction of the definition of "royalty" in Section 4, so Section 6's reference to "royalty" would mean only amounts actually paid or likely to be paid; because Sub-section 9(2A) exempts small workmen consumption from royalty, no cess could be assessed on such consumption.
- The Court recognized well-established authorities that charging/ taxing provisions are to be strictly construed; however, the Court emphasized the distinction between charging provisions and provisions that prescribe the machinery for assessment (i.e., Section 6).
-
Apply authorities distinguishing charging sections and machinery/ computation provisions:
- The Court relied on Gursahai Saigal and related authorities to hold that machinery provisions should be interpreted so as to make them workable and to avoid defeating the charging provision (ut res valeat potius quam pereat).
- Authorities on interpretation clauses (V.F. & G. Insurance Co. v. Fraser & Ross; Meux v. Jacobs; Craies) were invoked to show that definition clauses operate "unless there be something repugnant in the subject or context" and therefore definitions may be applied contextually rather than inflexibly in every occurrence of the term.
-
Synthesize statutory context and federal dimensions:
- The Court observed that Section 5's purpose (to levy cess on immovable property generally) would be frustrated if the definition of "royalty" in Section 4 were applied mechanically in Section 6 to exclude items exempted from royalty under other enactments.
- The Court also noted the constitutional and legislative reality: the Cess Act is a State enactment (List II) and the Mines and Minerals Act is a Central enactment (List I); both independently create liabilities. The Court rejected the submission that an exemption in the Central Act (Sub-section 9(2A)) should automatically operate to exempt land from cess under the State Act.
-
Reach a contextual interpretation of "royalty" in Section 6:
- The Court concluded that, for the purpose of calculating cess under Section 6, "royalty" must be read to mean not only amounts already paid or likely to be paid in fact, but also the amount payable in accordance with the Second Schedule of the Mines and Minerals Act — i.e., the statutory or notional royalty amount used for computation purposes — so that Section 6 remains workable and the charging provision in Section 5 is not frustrated.
-
Conclude on the petitioner's claim:
- Given that Section 6 can legitimately be read to permit assessment of cess by reference to the statutory amount of royalty (even where actual payment is exempted in certain circumstances under the Central Act), the petitioner's contention that no cess could be demanded for coal consumed by workmen (on the ground of the royalty exemption) failed.
Holding and Implications
Holding:
DISMISSED. The writ application was dismissed. The court held that for the purpose of computing cess under Section 6 of the Bihar Cess Act, the expression "royalty" must be read in context and may include the amount payable in accordance with the Second Schedule of the Mines and Minerals Act (i.e., a statutory or notional royalty amount) so that Section 6 is workable and Section 5 (the charging section) is not frustrated. The Court further held that an exemption from royalty under the Central Mines and Minerals Act (Sub-section 9(2A)) does not automatically exempt the immovable property from cess under the State's Cess Act.
Direct consequences and implications:
- The demand notice requiring deposit of cess in respect of coal consumed by workmen (for the periods in question) was upheld; the petition seeking quashment failed.
- There will be no order as to costs (the judgment expressly records that in the circumstances no costs were ordered).
- The Court's reasoning emphasizes a contextual application of statutory definitions where necessary to give effect to charging provisions; it distinguished strict literalism applicable to charging sections from a more purposive, practical approach to machinery/ computation provisions to ensure statutes remain workable.
- The opinion does not expressly state that it creates a novel binding precedent beyond applying and synthesizing existing authorities; the decision applies established interpretive principles to the facts at hand and resolves the petition accordingly.
Disposition and Judicial Signatures
The judgment was delivered by N.P. Singh, J. The application was dismissed and N. Pandey, J. agreed with the reasoning and result.
This summary is based exclusively on the information contained in the provided opinion. No facts or authorities beyond those contained in the opinion were added.
JUDGMENT
N.P. Singh, J.
1. This application has been filed on behalf of the petitioner for quashing a notice issued by the Certificate Officer requiring the petitioner to deposit the amount mentioned in the said notice, which is payable as the cess under the Bihar Cess Act, 1880 (hereinafter referred to as 'the Cess Act'). The demand notice has been issued for realisation of cess for the period March, April and June 1977 over the coal consumed by the workmen engaged by the petitioner company for which no royalty is payable under the provisions of the Mines and Minerals (Regulation and Development) Act, 1957 (hereinafter referred to as 'the Mines and Minerals Act').
2. The stand of the petitioner is that as the petitioner is not liable to pay any royalty in respect of coal consumed by the workmen engaged by the petitioner as such there is no question of payment of cess under the provisions of the Cess Act.
3. Section 5 of the Cess Act is as follows : --
"All immovable property to be liable to a local cess:-- From and after the commencement of this Act in any district or part of a district, all immovable property situate therein except as otherwise in Section 2 provided, shall be liable to the payment of a local cess."
Section 2 which has been referred to in Section 5 is not of much importance inasmuch as the said section while saying that this Act shall take effect at once in every district, the proviso thereof exempts certain immovable property within the limit of any municipality under the Bihar and Orissa Municipal Act. Several amendments were introduced in that Act by an Ordinance issued in the year 1975. By Section 2 of the said Amendment Act definition of 'royalty' was introduced in Section 4 of the original Act.
4. The relevant part of Section 4 is as follows : --
"4. Interpretation clause :--
In this Act, unless there be something repugnant in the subject or context -
XX XX XX XX
'Royalty' in respect of mines and minerals means a payment made or likely to be made to the owner of mines and minerals for the right of working the same on every ton or value of such produce, and includes payment which Government may demand for the appropriation of the mines and minerals belonging to the Government."
A new Section 6 was also substituted, the relevant part whereof reads : --
"6. Cess how to be assessed :--
The local cess shall be assessed on the annual value of lands and until provision to the contrary is made by the Parliament, on the royalty of mines and quarries, sale value of the other immovable properties including forest produce and annual net profits from tramways and railways ascertained respectively as prescribed in this Act and the rate at which the local cess shall be levied for each year shall be (a) in the case of royalty, the rate will be determined by Government from time to time but it will not exceed the amount of royalty,
XX XX XX XX XX''
5. It was submitted that when by amendment royalty has been defined to mean in respect of mines and minerals any payment made or likely to be made to the owners of mines and minerals for the right of working the same" and Section 6 says that local cess shall be assessed on the annual value of the land until provision to the contrary is made by the Parliament "on the royalty of mines and quarries", the expression royalty in Section 6 has to be read to mean any amount which has been paid or likely to be paid as royalty. When admittedly there has been no payment and there is no likelihood of any payment of royally to be made over the coal consumed by the workmen engaged in the colliery of the petitioner, the demand made by the impugned notice per se is not only arbitrary but without any authority of law.
6. Sub-sections (1) and (2) of Section 9 of the Mines and Minerals Act enjoin the holder of a mining lease notwithstanding anything contained in the instruments of lease or in any law in force
"to pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the leased area after such commencement, at the rate for the time being specified in the Second Schedule in respect of that mineral."Sub-section (2A) of Section 9 is as follows : --
"(2A) The holder of a mining lease, whether granted before or after the commencement of the Mines and Minerals (Regulation and Development) Amendment Act 1972 shall not be liable to pay any royalty in respect of any coal consumed by a workman engaged in a colliery provided that such consumption by the workman does not exceed one-third of a tonne per month."
7. On a plain reading it has to be held that the command of the legislature is that the holder of a mining lease either granted before or after the commencement of the Mines and Minerals Act has to pay royalty in respect of minerals removed or consumed by him at the rate specified in the Second Schedule in respect of that mineral. Sub-section (2A), however, is in the nature of a proviso to Sub-sections (1) and (2) and it exempts the holder of a mining lease from liability to pay any royalty in respect of any coal consumed by a workman engaged in a colliery within the limit prescribed in that subsection.
8. The learned counsel appearing for the petitioner, urged that in view of definition of royalty in the Cess Act and Sub-section (2A) of Section 9 of the Mines and Minerals Act there is no scope for calculating or demanding cess on the basis of any notional amount of royalty which the petitioner-company in absence of Sub-section (2A) of Section 9, would have been liable to pay. The learned counsel laid emphasis on the point that in a statute relating to revenue strict and literal construction has to be given and it is not open to Court to' speculate upon the intention, purpose, or object of the framers of the Act. Reliance in this connection was placed on the judgment in the case of Inland Revenue Commr. v. Duke of Westminster. (1936) AC 1 :-
"I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a courts view of what it considers the substance of the transaction, the Court thinks that the case tails within the contemplation or spirit of the statute. The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case. As Lord Cairns said many years ago in (1869) LR 4 HL 100 : 'As I understand the principle of all fiscal legislation, it is this : If the person sought to be taxed comes within the letter of the law he must be taxed, however, great the hardship may appear to the judicial mind to be. On the other hand if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be."
In the case of Bank of Chettinad Ltd. v. Commr. of Income Tax, Madras it was said :--
"Their Lordships think it necessary once more to protest against the suggestion that in revenue cases "the substance of the matter" may be regarded as distinguished from the strict legal position."
Same view was expressed by the Supreme Court in the case of the State of Punjab v. [1966]2SCR457 :--
"Before we advert to the rival contentions it will be convenient to clear the ground. It is a settled rule of construction that in interpreting a fiscal statute the Court cannot proceed to make good the deficiencies, if there be any in the statute; it shall interpret the statute as it stands and in case of doubt, it shall interpret it in a manner favourable to the tax payer : See C.A. Abraham v. [1961]41ITR425(SC) . In considering a taxing Act, the court is not justified in straining the language in order to hold a subject liable to tax."
In the case of Smt. Tarulata Syam v. Commr. of Income Tax, West Bengal AIR 1977 SC 5 802 it was pointed out that once it is shown that the case of the assessee comes within the letter of the law he must be taxed and reference was made to the case of Cape Brandy Syndicate v. I.R.C. (1921) 1 KB 64 where Rowlatt J. observed : --
''In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
Reliance on behalf of the petitioner was placed also on the judgment of the Supreme Court in the case of Commr. of Income Tax, Bangalore v. [1981]128ITR294(SC) where while examining Section 45 of the Income Tax Act it was pointed out (at Pp. 974-975):--
"Section 45 is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under that head. No existing principle or provision at variance with them can be applied for determining the chargeable profits and gains. All transactions encompassed by Section 45 must fall under the governance of its computation provisions. A transaction to which those provisions cannot be applied must be regarded as never intended by Section 45 to be the subject of the charge."
9. That the court has to give strict construction to a provision relating to revenue without considering the question as to whether the provision was equitable and whether the anguage and scope of such provisions can be stretched to meet the ends of justice is now well settled by series of judgments, some of which have been mentioned above. But all this has been said in respect of a charging section in a taxing statute or a provision relating to the collection of revenue. The question with which we are concerned in the present case is as to whether the same rule of construction and interpretation can be extended even in respect of a provision for assessment of cess. In the present case the controversy has arisen as to whether the expression royalty mentioned in Section 6 has to be strictly read with reference to the definition of royalty introduced in the Act or a wider and expansive meaning can be given to that expression so that the object of the Cess Act is not frustrated. There is no dispute that Section 6 is not the charging section of the Cess Act. Charging section of that Act is Section 5 which says that after the commencement of that Act in any district or part of a district any immovable property situated therein shall be liable to payment of local cess. That section does not make any exception or vest power in any authority to grant exemption from payment of cess over any immovable property. Section 6 provides the machinery and procedure for assessment of cess. The heading of Section 6 itself says "Cess how to be assessed.''
10. A Bench of this Court in the case of the Associated Cement Companies Ltd. v. State of Bihar 1979 Pat LJR 429 has examined the scope of Sections 5 and 6 while considering the question as to whether after the aforesaid amendments introduced, directing calculation of cess with reference to the royalty it will amount to imposing tax on the income of the lessee. It was held : --
"Section 5 of the Act is the charging section which says in unambiguous terms that, from and after the commencement of this Act all immovable property situate therein......... shall be liable to the payment of a local-cess."(At page 442).
"...........The provision of Section 5 which remained unaltered throughout read along with those of Section 6 as amended by the impugned ordinance merely seek to impose and levy cess on lessee's land and the remaining provisions of Section 6 as also those of Sections 72, 72A and 75 similarly provide for the machinery and the mode of assessment of such cess. That cannot change the truth and substance of the character of the land tax which the charging section in unequivocal terms has made the cess payable in respect of all immovable property situate within the area concerned to be."(At page 448)
In the case of Laxmi Narayan Agarwalla v. AIR1983Ori210 a Full Bench also held that Section 6 of the Orissa Cess Act contains the mode, the manner and the machinery of taxation and the amount of the cess has to be calculated with reference to the royalty payable for the right of raising minerals and the cess was not a levy on royalty.
11. If the charging Section 5 creates liability to pay cess and Section 6 provides the machinery for calculation of the amount of cess, then the principles laid down by courts from time to time in respect of the strict and literal construction of the charging section without entering into the question as to what is the intention and object of the framers of the Act cannot be applied in respect of the section which provides a mode to work out the amount which a lessee of mines and minerals is liable to pay as cess to the State Government. While construing and interpreting such a section the courts have to bear in mind that the main purpose of the Act as provided in the charging section should not be frustrated. In the case of Gursahai Saigal v. [1963]1ITR48(SC) , the Supreme Court pointed out what should be the approach of the Court while construing a charging section and a section laying down the machinery for calculation of tax. It was said in connection with Sub-section (8) of Section 18A of the Income Tax Act, 1922 that the said sub-section being in the nature of a charging section imposing interest it was not possible to resort to any equitable rule of construction, whereas Sub-section (6) of that section being only a provision which lays down the machinery for the calculation of the tax the rule of literal construction which applies only to a taxing provision should not be applied. In respect of a provision which can be held a machinery for calculation of tax, it was said (at Pp. 1065-1066) :--
"But obviously this provision only lays down the machinery for assessing the amount of interest for which liability was clearly created; it in substance says that in calculating the amount of interest the machinery of calculation laid down in Sub-section (6) shall be applied. The proper way to deal with such a provision is to give it an interpretation which, to use the words of the Privy Council in Mahaliram Ramjida's case , "makes the machinery workable, ut res valeat potius quam pereat." We, therefore, think that we should read Sub-section (6), according to the provisions of which interest has to be calculated as provided in Sub-section (8), in a manner which makes it workable and thereby prevent the clear intention of Sub-section (8) being defeated. Now, how is that best done? As we have earlier said Sub-section (6) deals with a case in which tax has been paid and therefore it says that interest would be calculated "from the 1st day of Jan. in the financial year in which the tax was paid." This obviously cannot literally be applied to a case where no tax has been paid. If however the portion of Sub-section (6) which we have quoted above is read as "from the 1st day of Jan. in the financial year in which the tax ought to have been paid," the provision become workable. It would not be doing too much violence to the words used to read them in this way."
In my view the expression royalty in Section 6 has to be read to mean not only the amount already paid or likely to be paid but also the amount payable in accordance with the Second Schedule of the Mines and Minerals Act for the purpose of calculating cess, so that Section 6 becomes workable.
12. Learned Advocate General also submitted that although the expression 'royalty' has been defined in Section 4 of the Cess Act to mean any amount which is paid or is likely to be paid, but Section 4 of that Act in which the definition of 'royalty' was introduced by the ordinance aforesaid opens with the expressions "In this Act, unless there be something repugnant in the subject or context." As such, the expression 'royalty' in Section 6 has to be read in the context of Section 5. It was pointed out that if expression 'royalty' in Section 6 is read strictly as defined, then the purpose and object of the charging section as contained in Section 5 shall be defeated and to that extent expression 'royalty' in Section 6 shall become repugnant in the context in which it has been used.
13. Whether an expression, which has been defined in the Act or the Rules can be interpreted to mean something different in context of a section or rule of that very Act has been examined from time to time, Craies in his book on Statute Law observes at page 216 as follows : --
"Another important rule with regard to the effect of an interpretation clause is, that an interpretation clause is not to be taken as substituting one set words for another, or as strictly defining what the meaning of a term must be under all circumstances, but rather as declaring what may be comprehended within the term where the circumstances require that it should be so comprehended. If, therefore, an interpretation, clause gives an extended meaning to a word, it does not follow as a matter of course that, if that word is used more than once in the Act, it is on each occasion used in the extended meaning, and it may be always a matter of argument whether or not the interpretation clause is to apply to the word as used in the particular clause of the Act which is under consideration. "It appears to me", said Lord Selborne in Meux v. Jacobs 1875 23 WR 526 "that the interpretation clause does no more than say that, where you find these words in the Act, they shall, unless there be something repugnant in the context.........."
14. The Supreme Court in the case of V.F.& G. Insurance Co. v. Fraser & Ross had to consider whether expression 'Insurer'' defined in Section 2(9) of the Insurance Act, 1938 has to be read in different sections of the Act as defined or in some sections somewhat different meaning could be given in the context it has been used in those sections. In that connection it was pointed out as follows (at Pp. 974-975) : --
"It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore in finding out the meaning of the word "insurer" in various sections for of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything respondent in the subject or context. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances."
In the case of Shambatta v. Narayana it was observed (at p.920) :--
"The function of an interpretation clause is not, as is very often supposed, to substitute one set of words for another or to apply the meaning of the term under all circumstances, but merely to declare what may be included in the term when the circumstances required that it should be so interpreted."
A Full Bench "of Kerala High Court in the case of V.K. Balakrishana v. AIR1966Ker42 :-
"A definition clause does not necessarily apply to all possible contexts in which the word may be found in particular statute. A strict adherence to the definition may lead to an anomaly or even repugnancy."
Recently the Supreme Court has again examined in the case of Central Inland Water Transport Corporation Ltd. v. (1986)IILLJ171SC the same question and has said "where an interpretation clause defines a word to mean a particular thing, the definition is explanatory and prima facie restrictive, and wherever an interpretation clause defines a term to include something, the definition is extensive. While an explanatory and restrictive definition confines the meaning of the word defined to what is stated in the interpretation clause, so that wherever the word defined is used in the partial statute in which that interpretation clause occurs, it will bear only that meaning unless where, as is usually provided, the subject or context otherwise requires......."
15. A Bench of this Court in the case of Radha Krishna v. State of Bihar 1988 Pat LJR 314 has examined this question in connection with the definition given of High Court in the Bihar Judicial Service (Recruitment) Rules, 1955, The expression "High Court" has been defined in that Rule to mean High Court of Judicature at Patna, but it was held that reading the expression 'High Court' used in other Rules of those very Rules and in order to avoid repugnancy shall mean not only Patna High Court but any High Court.
16. As already pointed out above if the expression 'royalty' in Section6 is read only to mean an amount, which is paid or which is likely to be paid as royalty because of the definition of the expression royalty, then the mandate of the framers of the Act under Section 5 that cess shall be levied in respect of every immovable property shall be frustrated because it will be dependent on the provisions under different enactments as to whether the obligation to pay royalty has been exempted in respect of different immovable properties. For example, suppose another amendment is introduced in Section 9 saying that any coal consumed by the railway shall not be subject to payment of royalty. If the argument of the petitioner is accepted, then by mere amendment in Section 9 of the Mines and Minerals Act the liability to pay cess in respect of such land shall also be deemed to have been exempted. In my view, there is no escape from conclusion that if the expression 'royalty' in Section 6 is read strictly in accordance with the definition, it shall become repugnant in context of Section 5 of the Cess Act.
17. It need not be pointed out that the Cess Act shall be deemed to have been framed by the State legislature and the power flows from the List II of the Seventh Schedule of the Constitution, whereas the Mines and Minerals Act has been framed by the Parliament and the source of power is under List I of the aforesaid Schedule of the Constitution. As such, both Acts create liability in respect of payment of cess and royalty independently. In such a situation I fail to understand as to how any exemption regarding payment of royalty under the Central Act can affect the right of the State under the State Act to realise cess from all immovable property. By merely adding Sub-section (2A) in Section 9 of the Mines and Minerals Act the liability to pay cess in respect of such immovable property cannot be exempted. As such, for the purpose of calculation of the cess under Section 6 not only royalty actually paid or likely to be paid but what is payable in accordance with the Second Schedule of the Mines and Minerals Act has to be taken into account.
18. Accordingly, this writ application fails and is dismissed, but in the circumstances of the case, there will be no order as to costs.
N. Pandey,J.
19. I agree.
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