Md, M/S. Keerthi Estates P Ltd., ... vs Prl Secy, Mines, Hyderabad And 2 Others

Telangana High Court

Md, M/S. Keerthi Estates P Ltd., ... vs Prl Secy, Mines, Hyderabad And 2 Others on 3 May, 2024

Author: Nagesh Bheemapaka

Bench: Nagesh Bheemapaka

        HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

                 WRIT PETITION No.11553 of 2014

O R D E R:

This Writ Petition is filed questioning the legal validity of the final orders passed vide Memo No. 15873/M.II (1)/2013-3, Industries & Commerce (Mines-II) Department, dated 19.02.2014 by the 1st respondent - State in the statutory Revision Application dated 02.08.2013 preferred by the petitioner company challenging the original demand notice dated 27.06.2013 of the 3rd respondent as illegal, arbitrary, violative of the provisions of the Mines and Minerals (Development & Regulation) Act, 1957 and the Rules made thereunder apart from being violative of the law laid down by the Hon'ble High Court of A.P. in Writ Petition No. 3813 of 2012 and batch and G.O.Ms.No.139, Industries and Commerce (M-1) Department dated 12.11.2013.

2. Brief facts of the case are as follows:

Petitioner is a Company incorporated under the Companies Act, 1956 and involved in the business of constructing multi-storeyed flats and independent houses and selling the same to various customers. In recent times, petitioner Company has built independent group houses in Survey Nos. 114 (P), 115(P), 116(P) etc., of Hyderguda Village, 2 Rajendernagar Mandal, Ranga Reddy District. In the process of implementation of the above said project, petitioner has consumed minerals Road Metal, Sand and Bricks. While so, to the utter shock and surprise, petitioner was put on notice dated 16.12.2011 by the Regional Vigilance and Enforcement Officer, Hyderabad City-II to furnish certain information with regard to consumption of various minerals and materials in implementation of the above said project. In response, vide letter dated 29.02.2012, petitioner submitted the required information to the O/o Regional Vigilance and Enforcement Officer, Hyderabad City-II. Thereafter, the 3rd respondent -

Assistant Director of Mines and Geology issued show cause notice, dated 13.12.2012 as to why action should not be taken for realisation of normal seigniorage fee in addition to penalty amounting to Rs.2,33,27,550/- under Rules 26(2) and 26(3)(ii) of the A.P. Minor Mineral Concession Rules, 1966 as the petitioner failed to produce the required documentary evidence for having paid the seigniorage fee to the State of A.P. with regard to the quantities of minor minerals excavated, transported, consumed and procured in the construction work in the subject area. Petitioner company in response to the above said show cause notice, submitted a detailed reply dated 07.03.2013 duly enclosing the details of various transit permits 3 issued by its suppliers with regard to consumption of stone and metal as well as artificial sand supplied by M/s Robo Silicon (P) Limited. It is stated that unfortunately, the 3rd respondent instead of closing the case, issued original demand notice dated 27.06.2013 for payment of Rs.2,27,87,550/- towards normal seigniorage fee plus ten times penalty. Challenging the same as illegal and arbitrary, petitioner preferred statutory Revision Application dated 02.08.2013 under Rule 35/35-A of the A.P. Minor Mineral Concession Rules, 1966 before the 1st respondent which waived off a part of the penalty and further directed petitioner to pay normal seigniorage fee plus one time penalty.

It is stated that thereafter, petitioner immediately complied with part of the above said order by paying the seigniorage fee plus one time penalty in so far as Metal, Sand and Bricks are concerned vide Challan Nos. 145462 and 144881 dated 19.03.2014 amounting to Rs.5,45,830/- and Rs.5,45,830/- respectively. In so far as mineral - Earth is concerned, petitioner has not purchased any Earth from outside nor consumed it in the implementation of its project except removing the locally-available material for the purpose of levelling the land and laying internal roads. Therefore, as of now, he is challenging levy of normal seigniorage fee plus one time penalty on mineral Earth as the said levy is contrary to the 4 judgment rendered by this Court in Writ Petition No. 3813 of 2012 and batch dated 22.02.2013 wherein it was categorically held that levy of seigniorage fee on Earth / Mineral/ Gravel / Soil which is being excavated for the purpose of levelling wherein there is no winning over the mineral for the purpose of sale does not attract the concept of mining as stated in the Mines and Minerals (Development & Regulation) Act, 1957 and the Rules made thereunder.

Subsequent to passing the above said judgement, G.O.Ms. No. 139, Industries and Commerce (Mines-I) Department dated 12.11.2013 was issued exempting seigniorage fee for levelling land for agriculture / civil purpose which is other than mining purpose. It is stated that petitioner has shown its bona fides by immediately complying with the provisions of law in so far as payment of challans amounting to Rs.10,91,660/- with regard to consumption of minerals Metal, Sand and Bricks is concerned. Insofar as the alleged consumption of mineral - Earth is concerned, as it has never consumed, balance of convenience is in favour of petitioner company.

3. This Court entertained the Writ Petition on 16.04.2014; and issued notice, pursuant to which, the 3rd respondent filed counter-affidavit. It is stated that officials of the 5 Regional Vigilance & Enforcement Officer, Hyderabad City-II have inspected the construction site of "Richmond" villas at P&T Colony, Near Glendale Academy, APPA junction, Hyderabad by petitioner on 09.02.2012 and recorded physical measurements of the excavations of area and constructions of buildings in the presence of petitioner's representative and site Engineer. After verification of documents pertaining to a quantity of 131 cubic meters of sand submitted by petitioner, the quantities of minor minerals consumed in the construction are as detailed below:

Built area for 22 No.of villas :         78973sft

(as per physical measurement)

Material utilized               :        Quantity in cum/Nos

Metal 78973 sqft * 0.034        :        2685 M3

Sand 78973sqft * 0.0313         :        2472 M3

Bricks                          :        1 unit




Compound wall construction:

Quantity of metal/stone used: 1001cbm

Quantity of sand used               : 245 cbm

Metal used for road formations: 4932 cbm

Robo sand used                      : 4052 MT (2441cbm)

Total quantity of minerals utilized are as under: 6

Quantity of metal used : 8618 cbm Quantity of sand used : 5027 cbm Quantity of gravel/ earth used : 80710 cbm It is stated that Regional Vigilance & Enforcement Officer, Hyderabad City-II vide Rc.No.145/HC-II/NR Wing/2012, dated 28.06.2016 while giving the quantities of minor minerals procured / consumed / excavated in the construction by petitioner, requested the 3rd respondent to realize the evaded seigniorage fee along with penalty amounting to Rs.2,64,76,560/- and send the action taken report. The details are as follows:

Mineral Quantity Quantity for Differential Rate of Normal assessed which quantity(M3) s.fee S.fee and documentary consumed evidence submitted Gravel/Earth 80710 - 80710 22 1775620 - 17756200 19531820 Metal 8618 - 8618 50 430900 2154500 - 2585400 Sand 5158 131 5027 40 201080 1005400 - 1206480 Bricks 1 unit - 1 unit 3850 3850 - - 3850 Tortal 2411450 3159900 17756200 23327550

4. It is stated that petitioner illegally excavated 80,170 M3 of Gravel in violation of Rule 5 of TSMMC Rules, 1966 which says that "No person shall undertake quarrying of any minor mineral in any area, except under and in accordance with the terms and conditions of the quarry lease or a permit granted under these Rules". Therefore, petitioner is liable to pay normal 7 seigniorage fee together with ten times penalty as per Rule 26(2) of TSMMC Rules which says that "Whenever any person raises or transports minor minerals without any lawful authority, such minerals may be seized by an officer nominated by the Director of Mines & Geology in this behalf in addition to imposition of the penalty under sub-rules (1)". Petitioner company unauthorizedly procured and consumed 8,618M³ of metal; 5,027M³ of Sand; 1 Unit bricks in violation of Rule 26(3)(ii) of TSMMC Rules, 1966 which says "if no documentary proof is produced in token of having paid mineral revenue due to the Government by any person who used or consumed or in possession of any mineral including the processed mineral, he shall not withstanding anything contained in sub-rule(1) be liable to pay five times of normal seigniorage fee as penalty in addition to the normal seigniorage fee leviable under the Rules"

5. Therefore, the 3rd respondent issued show cause notice dated 13.12.2012 to petitioner company requesting to produce documentary evidence of having paid seigniorage fee to the Government within (7) days from the date of receipt of show cause notice as to why action should not be taken for collection of normal seigniorage fee in addition to penalty amounting to Rs.2,33,27,550/- under Rules 26(2) & 26(3) (ii) of TSMMC Rules, 1966.

6. Petitioner company vide letter dated 07.03.2013 furnished certain transit passes in Form E in token of procurement of manufactured sand and stone & metal respectively. Transit passes and forms were verified with the ADM&G concerned who issued bills and considered the quantity mentioned in the transit passes and transit forms. Accordingly, the 3rd respondent issued demand notice date 27.06.2013 to petitioner directing to pay total amount of Rs.2,27,87,550/-

under the following Head of account towards evaded normal seigniorage fee together with five times and ten times penalty under Rule 26(2), 26(3)(ii) of TSMMC Rules, 1966.

7. Petitioner aggrieved by the Demand Notice issued by the 3rd respondent preferred Revision on 02.08.2013 before the 1st respondent under Rule 35-A which conducted personal hearing on 09.01.2014. as the explanation submitted by petitioner in the grounds of Revision is not fully satisfactory, the Revision authority decided that normal seigniorage fee with one time penalty shall be collected against the amount raised in Demand Notice dated 27.06.2013 of the 3rd respondent.

8. Petitioner vide letter dated 01.04.2014 submitted original challan No.144881, dated 18.03.2014 for Rs.5,45,830/- and challan No.145462, dated 19.03.2014 for Rs.5,45,830/- towards one time penalty for procurement and consumed of 9 6818M3 metal; 5027M3 sand and 1 Unit bricks. Petitioner did not remit the normal seigniorage fee with one time penalty totalling to Rs.35,51,240/- towards illegal excavation of 80710 M3 of Gravel. The Petitioner is seeking shelter of the Judgement dt:22-02-2013 of the Hon'ble High Court in W.P.Nos.3813 of 2012 and batch of other Writ Petitions.

9. This respondent highlights that Writ Petition Nos.3813 of 2012 and batch and other Writ Petitions were filed questioning the applicability of Rules 5 and 10(1) of TSMMC Rules, 1966 in "digging of trenches for laying of pipelines". In the present case petitioner illegally excavated 80710M3 of Gravel without lease or permit clearly violating the Rule 5 of TSMMC Rules, 1966. Illegal excavation of gravel by petitioner is prior to the orders of the Hon'ble High Court dated 22.02.2013. Therefore, it is submitted that the orders of the Hon'ble High Court dated 22.02-2013 may not apply to the Petitioner.

10. Petitioner clearly won the mineral by illegally excavating 80710 M3 of Gravel and enjoyed it by consuming in the course of construction. The petitioner himself accepted that the excavated gravel has been utilized in leveling of land and laying of internal roads. Hence, the contentions of petitioner that excavation of Gravel by them does not attract the concept 10 of mining as per Mines & Minerals (Development & Regulation) Act, 1957 is not correct. As far as G.O.Ms.No.139, Industries & Commerce (M-1) Department, darted 12.11.2013 "exempt the seigniorage fee for levelling of land for agriculture / civil purpose which is other than mining purpose". The orders of the 1"

respondent are prospective and they do not apply to the Petitioner whose illegal excavation of gravel is prior to issuance of orders by the 1st respondent. The demand notice by the 3rd respondent is also prior to the orders of 1st respondent. Therefore, the orders of the 1st respondent with regard to exemption of seigniorage fee for leveling of land for agriculture / civil purpose other than mining does not apply to petitioner.

11. Petitioner remitted Rs.10,91,660/- towards normal seigniorage fee with one time penalty procurement and consumption of 6818M3 Metal; 5027M3 sand and l Unit of Bricks. Petitioner did not remit Rs.35,51,240/- towards normal seigniorage fee with one time penalty for the quantity of 80710M3 of Gravel illegally excavated and consumed in the construction.

12. The Petitioner very much excavated and consumed gravel in leveling of land and laying of internal roads. The contention of the petitioner is liable to pay Rs.35,51,240/- 11 towards normal seigniorage fee with one time penalty on the quantity of 80710M3 of Gravel excavated and consumed in the construction as per the order of the 1" respondent Memo No.15873/M.II(1)/2013-3, dt:19-02-2014.

13. In reply to the averments made in Para No.7, 8, 9 & 10 of the affidavit, it is submitted that the orders of the 1st respondent in Memo.No.15873/M.II(1)/2013-3, dt:19-02-2014 directing the petitioner to pay normal seigniorage fee with one time penalty against the demand notice No.6250-2/VG-II/2012, dt:27-06-2013 issued by the 3rd respondent within the ambit of Act and Rules. The G.O.Ms.No.139, Industries & Commerce (M.I) Dept., dt:12-11-2013 issued by the 1" respondent are subsequent to the illegal excavation of 80,710M3 of Gravel by the Petitioner. Therefore, the G.O.Ms.NO.139, Industries & Commerce (M.I) Dept., dt:12-11-2013 does not apply to the Petitioner. Hence, the Petitioner is liable to pay Rs.35,51,240 towards normal seigniorage fee and one time penalty on 80710M3 of Gravel as per the Government Memo. No. 15873/M.II(1)/2013-3, dt:19-02-2014 issued by the 1"

respondent.

14. Having considered the respective rival contentions, and perusing the material on record, it is pertinent to note that the G.O.Ms.No.139 dated 12.11.2013 though exempts Seigniorage Fee for levelling of land for agricultural / civil purpose, it is not the case of the petitioner that such exemption is retrospective in nature, and further the petitioner has preferred Revision application (in Form-J) dated 02.08.2013 before the Government challenging the Demand Notice dated 27.06.2013. Further, in the Grounds of Revision application before the 1st respondent, at paragraph (c), the request of the petitioner is as under:

"C. The ten times penalty levied by the 1st Respondent in the impugned demand notice dt. 27-06-2013 is very harsh on the petitioner and normally such penalties are reduced to one time or two times keeping in view the bonafide conduct of the applicant. In the instant case, the petitioner was always ready and willing to comply with the provisions of law and therefore the same may be taken into consideration for waiver of ten times penalty on the normal seigniorage fee."

15. Considering the request of the petitioner, the 1st respondent has issued the impugned Memo dated 19.02.2014 after affording an opportunity of hearing to the petitioner, and taking into consideration the request of the petitioner that levying of ten times penalty is harsh on the petitioner and normally such penalties are reduced to one time or two times 13 keeping in view the bonafide conduct of the applicant. Having considered the request of petitioner, the 1st respondent, vide the impugned Memo dated 19.02.2014 has modified the Demand Notice dated 27.06.2013 and reduced the ten times penalty to one time penalty. It is also pertinent to note that it is not the case of the petitioner that the 1st respondent has passed the order without affording opportunity of hearing, or without following due process, or without considering the request of teh petitioner about the quantum of penalty imposed; and in fact, the 1st respondent has taken into consideration the prayer of the petitioner that the penalty of ten times of normal Seigniorage Fee is harsh on the petitioner, and considering the same, the 1st respondent reduced the ten times penalty to one penalty; and therefore there is no illegality or impropriety in the impugned Memo dated 19.02.2014, and the writ petition is liable to be dismissed.

16. The Writ Petition is accordingly, dismissed. No costs. Consequently, the miscellaneous Applications, if any, shall stand closed.

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NAGESH BHEEMAPAKA, J 03rd May 2024 ksld