Madhya Pradesh High Court
Suzlon Energy Limited Through Mr. ... vs State Of M.P. Through on 13 July, 2021
Author: Sujoy Paul
1
The High Court of Madhya Pradesh Bench at Indore
Case Number W.P.No. 540/2021
Parties Name Suzlon Energy Limited & another
Vs.
State of M.P.
Date of Order 13/07/2021
Bench Division Bench:
Justice Sujoy Paul
Justice Anil Verma
Judgment delivered Justice Sujoy Paul
by
Whether approved YES
for reporting
Name of counsel for Shri. Amit Agrawal, learned Sr. Counsel with
parties Shri Manu Maheshwari, learned counsel for
petitioners.
Shri Pushyamitra Bhargava, learnd A.A.G for
respondent/ State.
Law laid down *Constitution of India - Article 226 of the
Constitution - Delay in filing the petition -
The physical running of time or mechanical
measurement is not the sole reason on the
strength of which writ petition can be
dismissed. Whether delay is properly
explained or not and whether during the period
when delay is caused, any third party right was
created are relevant considerations.
*Section 3(1A) of the Building and Other
Construction Workers Welfare Cess Act,
1996 - If the aim and object of inserted
provision and text is examined carefully, it will
be clear that two kinds of costs are covered in
the enabling provision: -
i) Cost incurred on purchase and
transportation of plant and machinery
meant to be used in factory.
ii) Such other costs meant to be
used in factory.
*Interpretation of Statute-Not only the
2
words, but the context in which the words are
used are relevant for interpretation of a statute.
Any interpretation unaware of the living aims
and legal anatomy of an act will miss its soul
and substance. The Court expressed its
inability to accept the expression "any such
other costs" used in Section 3(1A) if
independent and separate and so wide to
include any other cost whether or not such cost
is incurred in relation to a factory.
*Article 226 of the Constitution-Alternative
Remedy-The impugned order has not become
vulnerable because benefit of exclusion of
certain costs are based on the Notification
dated 24/06/2016 are not made available to the
Petitioners. Thus, order cannot be said to be an
order passed without jurisdiction. If order is
otherwise erroneous, it can be corrected in
appeal. Normally, High Court should not
entertain writ petition unless it is shown that
there is something more in a case which goes
to the root of jurisdiction of the officer,
something which shows that a palpable
injustice will be caused to the Petitioner if he
is forced to adopt the alternative remedy.
*Section 11 of Cess Act, 1996 - Appeal -
Pre-requisite of deposit of 25% of disputed
amount before filing appeal - Neither
oppressive nor can be said to be causing
palpable injustice to the Petitioners.
Significant 12 to 29
paragraph numbers
ORDER
(Passed on 13th July, 2021)
Sujoy Paul,J:-
In this petition filed under Article 226 of the Constitution, the
petitioners have challenged the legality, validity and propriety of order
dated 12/12/2019 passed by the competent authority in exercise of
power u/S.3(1) of The Building and Other Construction Workers'
Welfare Cess Act, 1996 (for short "Cess Act").
2. The stand of petitioners is that although The Building and Other
Construction Workers (Regulations of Employment and Conditions of
Service) Act, 1996 (for short "Building Act") and Cess Act are
applicable to the petitioners establishment, the competent authority
has assessed the Cess beyond the scope of charging Section. Thus, he
not only acted beyond the touch stone of charging Section, authority
has completely failed to see the legislative changes and provision
relating to exclusion while passing the impugned order. The authority
was under a solemn obligation to examine the legislative changes and
scope of charging Section while passing the impugned order. Since he
has failed to take into account both the aforesaid aspects, the
impugned order can be termed as arbitrary and without jurisdiction.
3. To elaborate, Shri Amit Agrawal, learned Sr.Counsel submits
that the petitioner No.1 is engaged in the business of manufacturing
and supplying of various parts of wind mills to its customers including
but not limited to blade, tower, transformer, nacelle etc. The
petitioner No.2 company is engaged in the business of procurement of
land and development of wind park projects. To the extent, petitioners
have undertaken the civil construction work, the petitioners are liable
to pay the cess as per the Cess Act and the Rules made thereunder.
The petitioners in fact calculated and paid the cess arising out of the
construction work. In the impugned order, the competent authority
has included the cost of wind turbine, generator and electronic
apparatus while calculating/determining the cess. This runs contrary
to the provisions of the Cess Act and the Rules.
4. Section 3 of Cess Act permits levy and collection of cess on the
cost of construction incurred by an employer. Rule 3 of The Building
and other Construction Workers' Welfare Cess Rules, 1998 (for short
"Cess Rules") provides for the purpose of levy of cess, cost of
construction shall include all expenditure incurred by an employer in
connection with building or other construction work excluding - (i)
cost of land (ii) any compensation paid or payable to a worker or his
kin under the Workmens' Compensation Act, 1923. The government
of Madhya Pradesh introduced the M.P. Labour Laws (Amendment)
and Miscellaneous Provisions Act, 2015 by publishing it in the official
gazettee on 27/11/2015. The Cess Act was amended by inserting
Sec.3(1A). It is strenuously contended that a bare perusal of this
enabling provision makes it clear that (i) cost incurred on purchase
and transportation of plant and machinery and (ii) such other cost
which are specified by notification issued by the State government
shall stand excluded from the cost of construction incurred by an
employer. In furtherance of this enabling provision, the State
Government by notification dated 24th June, 2016 excluded certain
items from the cost of construction which includes - "electric and
electronic appliances not covered under the category of furnitures and
fixtures". An explanation is also appended to the entries relating to
exclusion of certain items. The bone of contention of learned
Sr.Counsel is that in view of Entry (xii) mentioned in the notification
dated 24th June, 2016, the authority should have excluded the cost of
electric and electronic appliances for the purpose of determining the
cess. The authority has acted beyond jurisdiction by ignoring the said
notification dated 24th June, 2016 and by including costs of excluded
items, therefore, despite availability of statutory alternate remedy, this
petition can be entertained.
5. Rule 14(2)(b) of the Rules makes it imperative for the appellant
to deposit the entire amount of cess assessed by the competent
authority and enclose a certificate of such deposit with the appeal
memo. It is urged that this condition which requires deposit of entire
amount is arbitrary and bad in law. By placing reliance on
Mahendra Arora & another Vs. The Transport Commissioner, M.P.
Gwalior & Ors. AIR 1993 MP 29, it is urged that this Court is
required to determine whether the competent authority has exercised
due jurisdiction as contemplated under the Building Act. The High
Court has "special jurisdiction" under Article 226 of Constitution
which empowers it to determine how far the provision of the statute
have or have not been complied with. Learned Sr.Counsel further
contended that the judgments filed with the return passed in WP
No.3432/2018 (Annexure R/1) and passed in WA No.686/2017
(Annexure R/1) are distinguishable and are of no help to the
respondents in the facts and circumstances of this case. The amount
of cess is determined by competent authority on the basis of unknown
guidelines which method is unknown to law. In the instant case, no
dispute of fact is involved and hence despite availability of remedy of
appeal, this petition deserves to be entertained. The levy of tax on the
cost of entire project is bad in law.
6. Dealing with the objection of respondents regarding delay in
filing this petition, Shri Agrawal submits that the delay occurred
because of corona pandemic related restrictions. The impugned order
is passed on 12/12/2019 and present petition was filed on 2/1/2021.
During this period, the petitioner felt handicapped in taking legal
recourse because of lock down and other restrictions. During this
period, no third party right is created in favour of anybody. There is
no limitation prescribed in the Constitution for exercise of power
under Article 226 of the Constitution. The real test to determine delay
is that the petitioner should come to the writ court before a parallel
right is created and that the lapse of time is not attributed to any
latches or negligence. The test is not as to physical running of time.
This argument is based on the judgments of Supreme Court reported
in Royal Orchid Hotels Ltd. & another Vs. G. Jayarama Reddy &
Ors (2011) 10 SCC 608 and Tukaram Kana Joshi & Ors. Vs.
Maharashtra Industrial Development Corporation & Ors. (2013) 1
SCC 353.
7. Shri Pushyamitra Bhargava, learned A.A.G contended that the
petitioner has an efficacious statutory alternate remedy. The object of
Building Act shows that it is a beneficent enactment. Sec.2(1)(d) of
Building Act is wide enough to cover the petitioner establishment.
The Scheme of Building Act and Cess Act are different. Sec.4(2) of
the Cess Act makes it obligatory for the petitioners to submit a return.
The petitioners never submitted the return and, therefore, as per the
Cess Act and Rules made thereunder cess was required to be assessed
by the competent authority. The Rules are pregnant with a prescribed
format which was required to be filled up and submitted by the
petitioner. They have not filled up the said form. It is further
submitted that previous provision requiring deposit of entire amount
levied before filing appeal stood amended/modified and now the
appellant is required to deposit only 25% of disputed amount. The
petitioners have not furnished any details of purchase and supply.
Sec.3(1A) is not applicable to the petitioners establishments. Indeed it
is applicable to a "factory". The petitioners establishment by no
stretch of imagination can fall within the ambit of 'factory'. The
definition of factory contained in the Factories Act, 1948 is relied
upon to bolster the contention that petitioners are admittedly not
undertaking any 'manufacturing process'. In absence thereof, enabling
provision and consequential notification dated 24/6/2016 (Annexure
P/15) is of no help to the petitioners. The reference is made to the
orders passed by division bench of this Court in WA No.686/2017
(State of M.P. Vs. M/s.Suvidha Services & Ors.) and order passed in
WP No.3432/2018 (M/s. Bharti Infratel Ltd. Vs. Union of India &
Ors.). After considering the judgment of Supreme Court in Mardia
Chemicals Ltd. Vs. Union of India (2004) 4 SCC 311, the division
bench opined that the statutory provision of appeal cannot be by
passed by raising an argument that the condition of pre deposit is
onerous. The petitioner therein was relegated to avail alternative
remedy of appeal as prescribed under the Act and Rules. Lastly, it is
urged that petitioner can raise all possible grounds in his appeal which
will be duly considered by the appellate authority.
8. In rejoinder submission, Shri Agrawal learned Sr.Counsel
submits that even as per "best judgment assessment theory" which is
normally made applicable to taxing statutes, the impugned order
cannot be countenanced. During the course of argument, Shri
Agrawal also placed reliance on the order passed by this Court in WP
No.3570/2016 wherein the interference was made on the ground of
discrimination. The competent authority treated two similar legal
entities in dissimilar manner. It was fairly informed that against this
order, the SLP is pending. It is further submitted that against the order
passed in WP No.3956/2009 the SLP is pending. AIR 2021 SC 2411
(U.P. Power Transmission Co. Ltd. vs. C.G. Power & Industrial
Solutions Ltd.) was relied upon to contend that merely installation
and/or erection of pipe lines, equipments for generating or
transmission or distribution of power, electric wires, transmission of
towers etc which do not involve construction work are not amenable
to cess under the Act. Hence, looking from any angle, the impugned
order is bad in law.
9. So far as delay in filing the petition is concerned, Shri Bhargava
submits that delay is not properly explained by the petitioner. Even
during lock down period, Registry of this Court was functioning.
Online filing was invogue. Thus, delay has not been properly
explained and petition deserves to be dismissed on this account alone.
10. No other point is pressed by learned counsel for parties.
11. We have heard the learned counsel for parties at length and
perused the record.
12. Before dealing with rival contentions, it is apposite to quote
relevant statutory provisions from the relevant Acts and Rules.
Section 3(1) of Cess Act reads as under:-
"3. Levy and collection of cess.-- (1) There shall be
levied and collected a cess for the purposes of the Building
and Other Construction workers (Regulation of Employment
and Conditions of Service) Act, 1996 (27 of 1996), at such
rate not exceeding two per cent, but not less than one per cent
of the cost of construction incurred by an employer, as the
Central Government may, by notification in the Official
Gazette, from time to time specify."
(emphasis supplied)
13. Rule 3 of Cess Rules is also reproduced as under:-
"3. Levy of cess.-- For the purpose of levy of
cess under sub-section (1) of section 3 of the Act, cost
of construction shall include all expenditure
incurred by an employer in connection with the
building or other construction work but shall not
include--
--cost of land;
--any compensation paid or payable to a worker
or his kin under the Workmen's Compensation Act,
1923."
(emphasis supplied)
14. The amended/inserted provision namely Sec.3(1A) of Cess Act
reads thus:-
"(1A) Notwithstanding anything contained in sub-
section (1), costs incurred on purchase and transportation
of plant and machinery meant to be used in factory and
such other costs as may be specified by notification issued
by the State Government shall be excluded from the cost
of construction incurred by an employer."
(emphasis supplied)
15. The relevant provision of gazette notification dated 24th June,
2016 contains following :-
"No.F-4E-2/2015-A-XVI, in exercise of the
powers conferred by sub-section (1A) of section 3 of
the Building And Other Construction Workers Welfare
Cess Act, 1996 (28 of 1996), the State Government,
hereby, excludes the following items from the cost of
construction incurred by an employer, namely:-
(xii) Electric and electronic appliances not
covered under the category of Furnitures and Fixtures;
Explanation:- The cost of plant and machinery
used in any construction shall be included in the cost of
construction in the following manner, namely:-
(1) If plant and machinery are hired for
construction work, hiring charges during the project
period.
(2) If plant and machinery are purchased or
owned, the depreciation incurred during the project
period."
(emphasis supplied)
16. The benefit of exclusion is claimed by petitioners in the teeth of
Section 3(1A) of Cess Act and the State Govt. Notification dated
24/06/2016. Before dealing with the interpretation of Section 3(1A), it
is profitable to remind ourselves the fundamental principle of
interpretation of statute. In State of Punjab vs. Amar Singh (1974) 2
SCC 70, Supreme Court held as under:-
"5. Any interpretation unaware of the living aims,
ideology and legal anatomy of an Act will miss its soul
substance - a flaw which, we feel, must be avoided
particularly in socio-economic legislation with a dynamic
will and mission."
(emphasis supplied)
17. Similarly in Jagir Singh vs. State of Bihar (1976) 2 SCC 942,
the Supreme Court opined as under:-
"The general rule of construction is not only to look
at the words but to look at the context, the collocation and
the object of such words relating to such matter and
interpret the meaning according to what would appear to
be the meaning intended to be conveyed by the use of the
words under the circumstances."
(Emphasis Supplied)
18. Reference may be also made to the judgment of Supreme Court
in Ajay Maken vs. Adesh Kumar Gupta and Another reported in
(2013) 3 SCC 489 wherein the apex Court has taken into account the
previous judgments containing exposition of law with utmost clarity.
It reads as under:-
14. It is pointed out by this Court in Reserve Bank
of India v. Peerless General Finance and Investment
Company Limited and others [(1987) 1 SCC 424]:
"33. Interpretation must depend on the text and the
context........
Neither can be ignored. Both are important. That
interpretation is best which makes the textual interpretation
match the contextual. A statute is best interpreted when we
know why it was enacted."
Adopting the principle of literal construction of the
statute alone, in all circumstances without examining the
context and scheme of the statute, may not subserve the
purpose of the statute. In the words of V.R. Krishna Iyer, J.,
such an approach would be "to see the skin and miss the
soul". Whereas, "The judicial key to construction is the
composite perception of the deha and the dehi of the
provision"(Board of Mining Examination v. Ramjee,(1977)
2 SCC 256, P.261, Para 9)
19. At the cost of repetition, it is noteworthy that Shri Agrawal
learned Sr. Counsel fairly submitted that provision of Building Act
and Cess Act are applicable to the petitioner establishments. The
petitioners raised eye brows only to the extent the competent authority
has determined the cess by including the cost of wind turbine,
generator and electric and electronic apparatus etc. The stand of Shri
Agrawal is that Sec.3(1A) talks about "such other costs" which
expression is wide enough to include the cost of aforesaid
equipments/machines whether or not the said equipments/machines
are used in a 'factory'. The argument on the first blush appears to be
attractive, but lost its complete shine on closure scrutiny. A minute
reading of Sec.3(1A) shows that it begins with a non obstante Clause
and makes it clear that the following two kinds of costs are covered in
this enabling provision namely (i) cost incurred on purchase and
transportation of plant and machinery (ii) such other costs. The text
and context in which Sec.3(1A) is inserted makes it clear that
intention of legislature was to make an enabling provision whereby
State government can exclude certain items from the cost of
construction incurred by an employer. The provision, in no uncertain
term makes it clear that both the costs are related to a factory. Putting
it differently, costs incurred in purchase and construction of plant and
machinery and such other costs meant to be used in a factory falls
within the ambit of Sec.3(1A). Thus, both the costs are related to and
meant to be used in a factory. We are unable to persuade ourselves
with the line of argument of Shri Agrawal, learned Sr.Counsel that the
words "any such other costs" used in Sec.3(1A) is independent and
separate and so wide to include any other cost whether or not such
cost is incurred in relation to a factory. This interpretation suggested
by Shri Agrawal, in our opinion is not correct and is not in consonance
with the scheme and object behind insertion of Sec.3(1A) aforesaid.
Thus, Entry 12 of Notification dated 24th June, 2016 pales into
insignificance so far petitioners are concerned.
20. The provision in hand namely Section 3(1A) of Cess Act can be
viewed from another angle. In the first portion of the provision, it was
clearly mentioned that cost incurred on purchase and transportation of
plant and machinery meant to be used in factory. Thereafter following
expression is used "and such other cost as may be specified......". The
use of word 'such' in a statute of this nature shows the intention of
legislature was to connect the later portion with the former. In Selvi
vs. State of Karnataka, (2010) 7 SCC 263, the Apex Court opined as
under:-
"In light of this discussion, there are some clear
obstructions to the dynamic interpretation of the amended
Explanation to Section 53 CrPC. Firstly, the general words
in question i.e. "and such other tests" should ordinarily be
read to include tests which are in the same genus as the
other forms of medical examination that have been
specified. Since all the explicit references are to the
examination of bodily substances, we cannot readily
construe the said phrase to include the impugned tests
because the latter seem to involve testimonial responses."
21. Similarly in Archaeological Survey of India vs. Narender
Anand (2012) 2 SCC 562, the Apex Court opined that:
"48.....The use of the expression "such other work or
project" in clause (b) of Section 20-A(3), if interpreted in
isolation, may give an impression that the Central
Government or the Director General is empowered to
allow any other work or project by any person in the
prohibited area but, in our view, the said expression has to
be interpreted keeping in view the mandate of Article 49 of
the Constitution and the objects sought to be achieved by
enacting the 1958 Act i.e. preservation of ancient and
historical monuments, archaeological sites and remains of
national importance. This would necessarily imply that
"such other work or project" must be in the larger public
interest in contrast to private interest.
49.In other words, in exercise of power under
Section 20-A(3), the Central Government or the Director
General cannot pass an order by employing the stock of
words and phrases used in that section and permit any
construction by a private person dehors public interest.
Any other interpretation of this provision would destroy
the very object of the 1958 Act and the prohibition
contained in the Notification dated 16-6-1992 and sub-
section (1) of Section 20-A would become redundant and
we do not think that this would be the correct
interpretation of the amended provision."
22. The judgments of Supreme Court in Selvi and Narender Anand
(supra) clearly shows that text and context both are relevant. Both are
important i.e. legislative intent behind inserting a provision, as well as
the language employed in the statute/Text. If we read the statute in the
manner suggested by Shri Agrawal, learned Senior Counsel, it will
defeat the very object of the insertion of Sec. 3(1A). The clear and
unambiguous language employed in Section 3(1A), in our opinion,
does not permit the exclusion of the other costs which are not meant
to be used in 'factory'.
23. Indisputably, notification dated 24th June, 2016 is issued on the
basis of enabling provision namely Sec.3(1A). Since the enabling
provision itself is not applicable to the petitioners and is meant to be
used for a 'factory', the consequential entries in the notification dated
24th June, 2016 can be made applicable if the cost based on such
entries is incurred on (I) purchase and transportation of plant and
machinery meant to be used in a factory (ii) other costs meant to be
used in a factory. In view of this analysis, even if no reference is
made to the legislative change and notification dated 24 th June, 2016
in the impugned order, impugned order will not become vulnerable.
The impugned order cannot be jettisoned by treating it to be a without
jurisdiction order for not extending the benefit of exclusion of costs
incurred by the petitioners by taking aid of notification of State Govt.
dated 24/06/2016.
24. The judgment of UP Power Transmission Corporation Ltd.
(supra) shows that cess is not leviable in respect of certain activities,
which do not involve construction work. It is not a case of the
petitioners that their activities do not involve any construction work.
Interestingly, the petitioners themselves paid the cess on construction
work as per their own calculation.
25. The impugned order is admittedly appellable u/S.11 of the Cess
Act. So far argument of Shri Agrawal that the competent authority
has determined the amount of cess on some unknown basis is
concerned, suffice it to say that this aspect can very well be examined
by the appellate authority.
26. In the case of Whirlpool Corporation Vs. Registrar of Trade
Marks, Mumbai & Ors. (1998) 8 SCC 1, the Apex Court opined that
despite availability of alternative remedy, the writ petition can be
entertained in certain situations. This judgment was again considered
by Supreme Court in U.P. State Spinning Co. Ltd. Vs. R.S. Pandey &
another (2005) 8 SCC 264. the relevant para reads as under:-
"17. Where under a statute there is an allegation of
infringement of fundamental rights or when on the
undisputed facts the taxing authorities are shown to have
assumed jurisdiction which they do not possess can be
the grounds on which the writ petitions can be
entertained. But normally, the High Court should not
entertain writ petitions unless it is shown that there is
something more in a case, something going to the root of
the jurisdiction of the officer, something which would
show that it would be a case of palpable injustice to the
writ petitioner to force him to adopt the remedies
provided by the statute."
(emphasis supplied)
27. In the instant case, the competence of the authority who has
passed the impugned order is not under doubt. If order impugned is
erroneous, it can be corrected in appeal. The appellate authority is
best suited to minutely examine whether cess is properly levied or not.
Merely because appellant is required to deposit 25% of disputed
amount before filing appeal, it cannot be said that it would cause
palpable injustice to the writ petitioner. The Division Bench of this
Court has already taken this view in M/s. Bharti Infratel Ltd.
(supra).
28. In view of foregoing analysis, we find no reason to permit the
petitioners to bypass statutory remedy of appeal. Since no third party
right is created in favour of anybody because of belated approach to
this Court by petitioners, we are not inclined to dismiss the petition on
the ground of delay. While not entertaining this petition, in the
interest of justice, we deem it proper to direct that if petitioners prefer
an appeal in accordance with Cess Act and Rules made there under
within three weeks from today before competent appellate authority,
the said authority shall decide the appeal on merits and shall not throw
it over board on the ground of delay.
29. With aforesaid observations, the writ petition is disposed of.
(Sujoy Paul) (Anil Verma)
Judge Judge
vm/soumya
Digitally signed by
SOUMYA RANJAN DALAI
Date: 2021.07.13 15:30:58
+05'30'
