ARPA FUEL PRIVATE LIMITED Vs. COAL INDIA LIMITED

JUDGEMENT

(1.) THE Council for the respective parties have debated on the issue whether the royalty is a tax or not. Two judgments rendered by the Supreme Court in case of India Cement Ltd. & Ors., -vs - State of Tamil Nadu & Ors., 1990 1 SCC 12 and State of W.B. vs - Kesoram Industries Ltd. & Ors., 2004 10 SCC 201 are relied by both the parties on the aforesaid core issue. The Seven Judge Bench in case of India Cement while considering the issue as to whether the Cess can be imposed on the royalty held that the royalty is a tax. The Five Judge Bench in case of Kesoram Industries clarifies the judgment of the India Cement that there is a typographical omission as the Seven Judge Bench intended that the Cess on royalty is a tax and because of the omission of the words "Cess On" before the word "royalty" is a tax. It has been brought to the notice of this Court that subsequently the Supreme Court in case of Mineral Area Development Authority vs - Steel Authority of India, 2011 4 SCC 450 have referred the matter to Nine Judge Bench because of the aforesaid two conflicting decisions operating in the field.

(2.) IN addition to the questions being the core issue, in the instant writ petition, the respondent nos. 1 to 5 agitates further points relating to the entertainment of the writ petition under Article 226 of the Constitution of India firstly, the issue involved is contractual in nature and the High Court should seldom interfere secondly, there is an alternative efficacious remedy by way of an arbitration provided under the contract. Before addressing the aforesaid issues, the salient admitted facts are adumbrated herein below:

(3.) IT is not in dispute that the Central Excise Duties is applicable on the transaction value as defined under Section 4 (3) (b) of the Central Excise Act, 1944 which was, in fact, charged by the Coal Companies on all component except on royalty and stowing excise duty. The Excise Authorities issued a summon under Section 14 of the Central Excise Act on the director of the respondent no.1 for non -payment of the excise duty on royalty and stowing charges. It was brought to the notice by the Excise Authorities that the excise duties is also payable on the said components and the Coal Companies are liable to pay the same. By a letter dated 5th March, 2013, the respondent no.1 informed all its subsidiaries to discharge the past Central Excise Duty liability for the period between 1st March, 2011 to 28th February, 2013 within 14 March, 2013 and to levy the Central Excise Duty on royalty and stowing excise duty component as well on and from 1st March, 2013. On the basis of the aforesaid instruction, the respondent no.3 issued instruction to its official on 8.03.2013 to take steps to raise supplementary bills on word wise and party wise basis from the period of 01.03.2011 to 28.02.2013 for payment of the excise duty on the royalty and stowing excise duty component. It was further expressed therein that the said amount might be recoverable from the parties after adjusting the quantities in the future sales. The petitioners in the aforesaid writ petitions have assailed the aforesaid memo dated March 5, 2013 and March 8, 2013 on the plea that the said respondent -authorities cannot deduct any amount in respect of the past completed transactions with the future transactions and have further took a plea that the royalty is a tax and, therefore, cannot be included within the definition of a transaction value enshrined under Section 4 (3) (b) of the Central Excise Act.