G.K. Misra, C.J.@mdashThe Petitioner is a public limited company, with its registered office and place of business at Rajgangpur in the district of Sundergarh in Orissa. It possesses fireclay mines at Talabira in the District of Sambalpur. The Orissa: Mining Areas Development Fund Act, 1952 (Orissa Act 27 of 1952 hereinafter to the referred to as the Orissa Act) came into force on 23-12-1952. The object of the Act, as appears from the Preamble, was to constitute mining areas and a mining areas development fund in the State of Orissa. The Mines and Minerals (Development and Regulation Act, 1957 Central Act 67 of 1957 hereinafter to be referred to as the Central Act) came into force with effect from 1-6-1958. The validity of the Orissa Act vis-a-vis the Central Act was considered in State of Orissa v. Tulloch and Co. 1964 S.C.D. 951. Their Lordships held that with effect from 1-6-1958 the Orissa Act ceased to be in force. Opposite party No. 2 (Administrator, Orissa Mining areas Development Fund, Bhubaneswar) issued notice to the Petitioner on 5-4-1965 calling upon it to pay cess for the period 23-4-1958 to 31-5-1958 for the minerals extracted from Talabira Mines in Sambalpur mining area. The Petitioner challenged the notice asserting that its liability for the impugned period had not arisen till 1-7-1968 and as the Orissa Act ceased to operate with effect from 1.6.1958, there was no liability to pay cess. This contention was negatived by the Administrator of Orissa Mining Areas Development Fund. The writ application has been filed under Article 226 of the Constitution to quash the notice of demand issued on the Petitioner on 5-4-1965.
2. In the original writ application there was some misstatement of facts which were also not properly clarified in the original counter affidavit filed by the opposite parties. On 4-9-1969 the learned Advocate-General filed an additional counter affidavit. Mr. Das for the Petitioner accepts the statements made in the counter-affidavit and this has been noted in our order passed on 5-9-1969.
3. The facts transpiring from the additional counter affidavit may be stated in brief. On 9-11-1956 a notification u/s 3(1) of the Orissa Act was issued by the State Government declaring their intention to constitute a mining area in the district of Sambalpur. Objections were invited u/s 3(2). On 30-8-1957 a notification was issued u/s 3(3) of the Orissa Act constituting a mining area in the district of Sambalpur for the purposes of the Act. Talabira fireclay mines are situated within the limits of the mining area so constituted. The State Government issued a notification on 23.4.1958 under Sub-sections (1) and (2) of Section 4 of the Orissa Act, deciding to levy cess at the rates specified in the notification with effect from the date of the notification, on minerals extracted from the said mining area (see Annexure III to the additional counter-affidavit). Under Rule 3 of the Orissa Mining Areas Development Fund Rules, 1954, the Administrator of the Fund invited objections from the Petitioner by 31-5-1958 to the levy of cess on the Petitioner''s fireclay mines in Talabira in pursuance of the aforesaid notification. No objection was received from the Petitioner within the specified date. There after, Talabira fireclay mines of the Petitioner was finally notified, by the Administrator, under Rule 3, for assessment of cess. Both the notifications under Rule 3 have been marked Annexures 1 and 2 to the original counter. On 3-7-1958, the Petitioner furnished the quantities of fireclay raised during the period 23-4-1958 to 31-5-1958 in Form B, under Rule 8. The return so furnished, with its enclosures, have been marked Annexures IV and IV-a to the additional counter-affidavit.
4. The stand taken by the opposite parties is that the Petitioner''s liability to pay cess for the impugned period accrued prior to the coming into force of the Central Act on 1-6-1958 and the notice of demand issued on 5-4-1965 is valid.
5. Mr. Das contends that u/s 4(3) of the Orissa Act the liability for payment of cess in respect of any period falling in the second quarter, that is from 1-4-1958 to 30.6.1958 would have fallen due on 1-7-1958 and as the Orissa Act ceased to be operative from 1.6.1958 the liability for payment of cess for the second quarter never arose as, by that date, the Act itself was not in force.
This contention requires a careful scrutiny of Section 4 of the Orissa Act. Section 4 runs thus:
4(1) With effect from such date as the State Government may, by notifications appoint in this behalf, there shall be levied a cess for the purposes of this Act on an extracted minerals from any mine in any mining area.
(2) The rate of such levy shall not exceed five percentum of the value of the ore at the pit''s mouth.
(3) The cess as hereinbefore provided shall fall due in four quarters, on the 1st day of January, April, July and October of every year, on the minerals extracted during the three months immediately preceding such date and shall be payable by the owner or lessee of every mine on the said date to such officer as may be appointed by notification in this behalf.
(4) All arrears of such cess shall be recovered as if they were arrears of land revenue.
The language of this section would show that the liability to pay cess and the rate of payment shall be notified by the State Government under Sub-section (1). As already stated, the State Government issued a notification u/s 4(1) and (2) on 23-4-1958 fixing the date with effect from which the cess was assessable. The liability to pay cess therefore accrued with effect from 23-4-1958.
Sub-section (3) merely prescribes the date on which the cess is payable. For that purpose the year is divided into four quarters; and for the preceding quarters the cess shall fall due on the 1st January, April, July and October. Sub-section (3) does not, therefore, determine the liability to pay, such liability having already been fixed by Sub-section (1). Hence, if the liability to pay cess has already accrued for the period 23-4-1958 to 31-5-1958 the issue of demand notice subsequent thereto, is valid and cannot be questioned. It has been settled by a series of decisions of the Privy Council and the supreme Court that there is a fundamental distinction between liability to pay and the quantification of the dues. The liability to pay does not arise on quantification.
6. Mr. Das cited a number of Indian Bond English decisions in support of his contention but as we are of opinion that the matter is concluded by State of Orissa v. Tulloch and Co. 1964 S.C.D. 951 it is unnecessary to cover the same field again. In the Supreme Court case the State purported to recover cess from September 30-9-1956 to 31-3-1958, that is definitely for a period prior to 1-6-1958 when the Central Act came into force. The demand for the three quarters was served on the Respondents on 1-8-1960 that is subsequent to the coming into force of the Central Act. By an analysis of the provisions of Section 6 of the General Clauses Act 1897, their Lordships held that the demand was valid as the liability had accrued prior to 1-6-1958. It is unnecessary to repeat the reasons given in the aforesaid decision. The distinction between creation of liability and fixation of the date of payment cannot be overlooked.
7. In the result, writ application fails and is dismissed with costs. Hearing fee Rs. 200/- (Rupees two hundred).
R.N. Misra, J.
8. I agree.
