Telangana High Court
M/S. Ksr Granites vs The State Of Telangana on 9 January, 2024
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
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THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
W.P.Nos.2806, 2808, 2809, 2834, 2900, 2938, 2912 3072, 3082, 3093,
3098, 3103, 3509, 3514, 3518, 3522, 3558, 3560, 3562, 3636, 3712, 3720,
5070, 5071, 5082, 5091, 5134, 5854, 6134, 17331, 23216, 23371, 23866,
24262, 24603, 25252, 26009, 26013, 26202, 26284, 28904 of 2023
COMMON ORDER:
The issue raised in these writ petitions being common and the relief sought being identical, they are taken up together, heard and are being disposed of by this common order. For convenience, the averments in W.P.No.2806 of 2023 are being taken.
Invoking the jurisdiction of this Court under Article 226 of the Constitution of India, the petitioner in W.P.No.2806 of 2023 seeks to set aside both the Show Cause Notice No.1501/Vig-KNR/2013-14/OD/169/1 dated 18.04.2022, and the Demand Notice No.1501/Vig-KNR/2013- 14/OD/161/1 dated 28.12.2022, issued by 3rd respondent, by declaring them as illegal and arbitrary and against the principles of natural justice, and also direct the respondents not to collect the alleged deviated Seignorage Fee on the basis of the weight of the blocks and on the basis of the Railway Transit receipts or on the weight of the blocks which are not available and also direct the respondents not to take steps to collect the 2 Seignorage Fees on the basis of Appraisal Report No.60 (268/NR1/2013) dated 29.05.2013.
Brief facts of the case are that the petitioner-M/s Sri Balaji Granites, rep. by its Proprietor G. Vijaya Laxmi, is a proprietary unit dealing with quarrying granite in Karimnagar District. The 4th respondent has granted lease rights to the petitioner-Unit for quarrying granite in Sy.No.556/ABDE of Nagulamalyala Village of Kothapally Mandal. The licenses are subsisting for all queries and the petitioner is continuing quarrying operations as per the Rules and Regulations under Telangana State Minor Mineral Concession Rules, 1966 (for short, TSMMC Rules). The petitioner has never defaulted in payment of Seigniorage Fee and the respondents have never issued any Memo or charged penalty to the petitioner-Firm. While so, the 3rd respondent issued a Show Cause Notice No.1501/Vig-KNR/2013- 14/OD/169/1 dated 18.04.2022 to the petitioner-unit alleging that vide appraisal report No.60(268/NR-I/2013) dated 29.05.2013, the Vigilance and Enforcement Department requested the Government to issue suitable instructions to take necessary action against certain agencies including M/s Swetha Agencies, Karimnagar Railway Stock Yard, Karimnagar District for transportation of Granite blocks through Railways by recording lesser 3 measurements against the actual measurements resulting in calculation of lesser volume and less payment of Seigniorage Fee during the period 2008-2011. In turn the Government has issued Memo No.9884/M.II(1)/2013-1 dated 20.07.2013 to comply with the recommendations in appraisal report. As follow up, the 3rd respondent has been issuing Show Cause Notices and Demand Notices, and in the Show Cause Notice dated 18.04.2022, it was alleged that M/s Swetha Agencies has transported a quantity of 3,55,554 cubic meters of rough granite blocks without valid permits. It was also stated in the Show Cause Notice that a Writ Petition PIL No.183 of 2018 was filed before this Court wherein directions were issued to the Director of Mines and Geology to submit the Status/Action Taken Report No.60 (268/KNR-I/2013) dated 29.05.2013 of Vigilance & Enforcement Department. It was also alleged in the Show Cause Notice dated 18.04.2022 that the technical staff have verified the Railway consignment-wise receipts, transit forms and details submitted by M/s Swetha Agenices and noticed that they have submitted 5123 duplicate transit forms in which 154 duplicate transit forms belong to Quarry Lease held by M/s Sri Balaji Granites in Survey No.556/ABDE Nagulamalyala Village, KothapallyMandal, Karimnagar District, and found differential quantity of 469.371 CBM (as per Railways weight) without any 4 valid documentary evidence submitted by the agency and a demand notice dated 13.08.2021 was issued to the said effect. It is also alleged that after verification of remaining 46435 bills submitted by the agency was taken up, the respondents alleged to have found variation in the quantity. It was alleged that to M/s Sri Balaji Granites have transported 672 Granite blocks for a quantity of 4939.515 CBM (as per Railways weight) without any valid documents in proof of having paid Seigniorage fee as per documentary evidence submitted by the agency.
It is submitted that in all the notices the petitioner is directed to show cause why the alleged deviated normal Seigniorage fee with 5 times penalty cannot be collected. Admittedly the alleged deviation in transported blocks said to have found when the railway weight is converted into volume but there is no deviation in the number of blocks. In all the notices there is reference of earlier demand notices dated 13.08.2021. The petitioner has challenged the earlier demand notices in separate Revision Cases before the Government. Likewise several other quarry companies from Karimnagar District have also filed Revision cases in respect of demand notices issued by the 3rd respondent against them. When the Revisions are dismissed directing the petitioner and other quarry companies to pay normal Seigniorage Fee with one time penatlty, 5 they have also paid such amounts in the interest of smooth running of the companies and to avoid disputes with the officials or the Government. The petitioner and other companies paid normal Seigniorage fee under compulsion and coercion as the respondents have stopped issuing fresh permits. Taking undue advantage of the weakness of the quarry companies, the respondents are again and again issuing Show Cause Notices on the pretext of Appraisal Report. The petitioner addressed a letter on 16.12.2022 to the 3rd respondent seeking time to file reply and also requesting to furnish information. Without conceding the request of the petitioner, the 3rd respondent has issued Demand Notice dated 28.12.2022 wherein the contents of the Show Cause notice were reproduced and normal Seigniorage Fee alleged to have arrived by converting weight into volume is charged with 5 times penalty.
Heard the learned counsel for the petitioner, and the learned Additional Advocate General for the respondents-State.
Learned counsel for the petitioner contends that converting weight of granite block into volume is not provided in TSMMC Rules, 1966 and unless the Rules are amended to collect the Seigniorage fee by converting into volume, the action of respondents to collect Seigniorage fee by 6 converting weight into volume is illegal. It is also submitted that Seigniorage Fee is paid for lesser measurements than actual measurements based on mathematical calculation is not tenable in the absence of granite block at dispute for physical verification. It is submitted that the process for determining and calculating specific gravity is incorrect and violates Rules 10 and 34 of TSMMC Rules, 1966. It is also submitted that Schedule-I of Rule 10 of TSMMC Rules, 1966 clearly provides for levying Seigniorage Fee on the basis of volume rather than weight with regard to granite appropriate for cutting and polishing, and the Schedule-I under Rule 10 deals with Seigniorage Fee. Serial No.17 of Schedule-I prescribes the rates of Seigniorage Fee on granite blocks will be levied on cubic meters only.
It is submitted that every year Mineral Revenue Assessment will be done by the Additional Director of Mines and Geology which reveals actual number of transported blocks or their volume. Further, the Joint Director also verifies the Mineral Revenue Assessment for every 4 years, and as such the illegal transportation cannot be alleged against the the transporting agencies or granite quarry companies. 7
It is submitted that the allegation in Appraisal Report that transport agencies indulged in illegal transportation of rough granite blocks is not tenable for the reason that as on the date of transportation of blocks, the granites were numbered and dimensions were checked by the technical staff of Assistant Director of Mines and Geology and also counter checked during inspection by technical staff as per guidelines issued by Director of Mines and Geology.
It is submitted by drawing attention of this Court of Para 5(v) of the Memo No.13300/M.II(1)/2011-1 of Industries & Commerce(Mines.II) Department dated 17.09.2011, that when Granite Entrepreneurs requested the Government to collect Seigniorage Fee on the weight of block, the said request was rejected by Government vide the said memo; and that the recommendations of Vigilance and Enforcement Department in the appraisal report to levy the Seigniorage Fee on the basis of weight of the granite block is not implemented by the Department of Mines and Geology.
It is submitted that the Vigilance and Enforcement Department ought not to have adopted the method of conversion of weight into volume in Appraisal Report, having observed that in memo 8 No.675/PPC2/97 dated 2.06.2000 there was condition that "no granite block shall be dispatched unless it is previously numbered an dimensions marked by technical staff of the Assistant Director of Mines and Geology", and though as per Circular Memo No.675/P1/97 dated 18.03.2006 issued by Director of Mines and Geology, the above condition was deleted, still the responsibility was imposed on the officers to verify the stock by way of test checking and block measurements on regular interval. The responsibility was placed on the officers for counter checking the measurements.
It is further submitted that reading of proviso to Rule 12(5)(h)(iii) of TSMMC Rules, 1966, makes it clear that Granite is dispatched not accompanied by transit forms, the lessee is liable to pay 5 times of Normal Seigniorage Fee as penalty. Further Rule 26(3)(ii) of the TSMMC Rules makes it clear that the said Rule is applicable only when the blocks are available and the Seignorage Fee is found to be not paid. The entire Appraisal Report shows that variation in the volume of the blocks based on weightage of the blocks only as shown by the Railways but not on the actual available blocks, and without blocks on the basis of the transit forms and on the basis of the weightage in the Railway receipts, the 9 volume cannot be decided accurately; and further it is settled law that the power under Rule 26(3)(ii) shall be exercised within a reasonable period and not after a decade of dispatching of blocks, the impugned Show Cause notices cannot be sustained.
Learned counsel has also drawn attention to Government Memo No.2548/M.I(2)/2011 dated 21.07.2011 regarding the guidelines issued to prevent illegal Mining and Transportation of minerals, wherein as per Condition(h) and (i) of Guideline-4, the Assistant Director of Mines and Geology shall maintain a register of details of Minerals transported. It is also contended that memo dated 21.07.2011 makes it clear that mineral shall be measured in MT/M3 for the purpose of collection of Railway freight charges.
Learned counsel further contends that in PIL No.183/2018, the Director of Mines and Geology has filed an Affidavit on 09.11.2018 stating that Appraisal Report of the Vigilance and Enforcement Department is based on the presumption only; and this Court passed Docket Order on 29.11.2018 "let further action taken by the Department be placed on record by next date of hearing"; and then the Director of Mines & Geology has filed a report in the form of Affidavit dated 13.01.2020 narrating that 10 several Show Cause notices and Demand notices were issued to 22 Quarry Lease Holders and also reiterated that the report of Vigilance & Enforcement Department is based on presumption.
It is finally contended that the impugned notices are barred by limitation and that though it is appropriate to file reply to the Show Cause notice and Revision Case against the Demand notice, the exercise is futile and further the availability of an alternative remedy is not a bar to file the present writ petition.
Sri T. RajanikanthReddy, learned Additional Advocate General, while justifying the action of the respondent authorities, submits that the High Court cannot entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person. Learned Additional Advocate General draws attention to the judgment of the Hon' ble Supreme Court in M/S. South Indian Bank Ltd. & Ors. V Naveen Mathew Philip 1 "43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the 1 2023 SCC Online SC 435 11 aggrievd person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fes, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by the Parliament and State Legislatures enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery fo the dues but also envisage constitution of quasi judicial ..............." It is further contended that the Hon'ble Supreme Court, while dealing with an appeal filed under Section 17 of the SARFAESI Act, made the following observations:
"16. When a statute prescribes a particular mode, anttempt to circumvent shall not be encouraged by a writ court. A litigant cannot avoid the noncompliance of approaching the Tribunal which requires the prescription of fees and use the constitutional remedy as an alternative.
17. We shall reiterate the position of law regarding the interference of the High Courts in matters pertaining to the SARFAESI Act by quoting a few of the earlier decisions of this Court wherein the said 12 practice has been deprecated while requesting the High Courts not to entertain cases.
18. While doing so, we are conscious of the fact that the powers conferred under Article 226 of the Constitution of India are rather wide but are required to be exercised only in extraordinary circumstances in matters pertaining to proceedings and adjudicatory scheme qua a statute, more so in commercial matters involving a lender and a borrower, when the legislature has provided for a specific mechanism for appropriate redressal.
45. It is true that rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that petitioner can avail effective alternative remedy by filing application, appeal, revision etc., and the particular legislation contains a detailed mechanism for redressal of his grievance."
55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 13
Having considered the contentions of learned counsel for the petitioner, and the learned Additional Advocate General, this Court is of the view that even according to the learned counsel for the petitioner, there are internal remedies against the impugned action by the respondents, and they are not availed by the petitioner before this Court.
Further, the dictum of the Hon'ble Supreme Court in the judgments supra lay down that the powers of the High Court under Article 226 of the Constitution of India, though wide in nature, cannot be exercised when an effective alternative remedy is available to the aggrieved person, and when the legislature has provided for a specific mechanism for appropriate redressal of the grievance.
Having regard to the same, this Court deems it appropriate to dispose of the writ petition by relegating the petitioner to the respondent authorities for availing the alternative remedies available under law.
At this juncture, learned counsel for the petitioner requests this Court may be pleased to protect the interest of the petitioner as regards the limitation aspect.
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In view of the said request regarding limitation, this Court directs that if the petitioner files appropriate application/s against the impugned Show Cause notices and Demand notices, within a period of 3 weeks from the date of receipt of a copy of this order, the period occasioned before this Court in pursuing this writ petition shall be discounted while calculating the limitation.
Accordingly, these writ petitions are disposed of. No costs. Interlocutory applications, if any pending in these writ petitions, shall also stand disposed of in consequence.
Before parting with this case, this Court must place on record its appreciation for the perseverance and hard work put in by the learned Additional Advocate General Sri T. Rajanikanth Reddy, in his endeavor to protect the interest of the State.
____________________________ (JUSTICE NAGESH BHEEMAPAKA) 09th January, 2024 ksm 15 THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA W.P.Nos.2806, 2808, 2809, 2834, 2900, 2938, 2912 3072, 3082, 3093, 3098, 3103, 3509, 3514, 3518, 3522, 3558, 3560, 3562, 3636, 3712, 3720, 5070, 5071, 5082, 5091, 5134, 5854, 6134, 17331, 23216, 23371, 23866, 24262, 24603, 25252, 26009, 26013, 26202, 26284, 28904 of 2023 09th January, 2024 ksm