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,

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

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

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

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:

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

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

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

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/-

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

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