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Judgment
Ratnam, J.—These appeals have been preferred by the Madras Aluminium Company Limited against the dismissal of W.P. Nos. 5570 and
5334 of 1991 respectively filed by it praying for the issue of a writ of mandamus or other appropriate writ directing the respondents herein to
refund the sums of Rs. 2,28,161.35 and Rs. 2,18,000 remitted by the appellant as security deposit towards levy of local cess and local cess
surcharge together with interest thereon at 12 per cent per annum from 1-1-1990. Briefly stated, the circumstances giving rise to these appeals are
as follows: The appellant company had been granted mining leases for Bauxite ore of an extent of 960 acres in Poondi village in Kodaikanal taluk,
471.57 in Puliyur, Semmaduvu and Manjakuttai village in Yercaud taluk and 596.22 acres in Selurnadu, Ariyurnadu and Valavandinadu in
Namakkal taluk in Salem District. The mining leases were granted in favour of the appellant by the Government of Tamil Nadu in G.O. Ms. No.
3459, Industries, dated 7-10-1968, G.O. Ms. No. 1012, Industries, dated 15-6-1972, G.O. Ms. 1583, Industries, dated 16-12-1976; G.O.
Ms. No. 408, Industries, dated 2-2-1967 and G.O. Ms. No. 736, Industries, dated 25-2-1967 for a period of thirty years. In respect of the
mining lease granted to the appellant in Poondi Village, under Sections 115 and 116 of the Tamil Nadu Panchayats Act, local cess and local cess
surcharge were levied on the appellant on the royalty, surface rent and dead rent and between 17-6-1976 and 11-1-1989, the appellant had paid
a sum of Rs. 2,28,161.35. Similarly, in respect of the mining leases granted to the appellant in Salem District, the appellant had paid between 3-9-
1986 and 1-9-1991 a sum of Rs. 2,18,000 towards local cess surcharge under the provisions of the Tamil Nadu Panchayats Act, referred to
earlier. Several Writ Petitions were filed before this court challenging the levy of local cess and local cess surcharge and though the levy was upheld
by this court, ultimately, the Supreme Court, in India Cement Ltd. and Others Vs. State Of Tamil Nadu and Others, held that the Tamil Nadu
Government had no power to levy local cess and local cess surcharge. Based on that, the appellant, by its letters dated 1-1-1990 and 22-1-1991
and 1-1-1990, 4-1-1990 and 22-1-1991 respectively requested the respondents to refund the sum of Rs. 2,28,161.35 and Rs. 2,18,000 paid by
it as security deposit towards levy of local cess and local surcharge. The respondents not having responded to the requests so made by the
appellant, and also not having refunded the amount paid by the appellant, the appellant filed W.P. Nos. 5570 and 5334 of 1991 praying for the
issue of a writ of mandamus as stated earlier, as, according to it, the Supreme Court had declared invalid the imposition of local cess and local cess
surcharge under Ss. 118 and 116 of the Tamil Nadu Panchayats Act and the retention of the amounts paid by the appellant as security deposit by
the respondent subsequent to the decision of the Supreme Court, was illegal. Before the learned Judge, though the appellant maintained that the
levy of local cess and local cess surcharge, had been held to be invalid by the Supreme Court in India Cement Ltd. and Others Vs. State Of Tamil
Nadu and Others, and that the amounts remitted by the appellant were only in the nature of security deposit and not payments as such towards
local cess and local cess surcharge, the learned Judge, in view of G.O. Ms. No. 662, Industries (K) Department, dated 19-6-1986, took the view
that the decision of the Supreme Court in India Cement Ltd. and Others Vs. State Of Tamil Nadu and Others, declared the levy as invalid
prospectively, i.e., on and from 25-10-1989 and that the amounts paid by the appellant, though stayed as security deposits, were in lieu of local
cess and surcharge only and, therefore, the appellant was not entitled to claim any refund. In the view so taken, the writ petitions filed by the
appellant were dismissed, the correctness of which is questioned in these appeals. In support of these appeals, learned counsel for the appellant
strenuously contended that the payments made by the appellant, as shown by the counterfoil of the challans, were only in the nature of security
deposits and not payments as such towards local cess and local cess surcharge and therefore, the appellant is entitled to a refund of the amounts
paid by it. Reference in this connection was also made to the decision of the Supreme Court in India Cement Ltd. and Others Vs. State Of Tamil
Nadu and Others, as enabling the appellant to get are fund of the local cess and local cess surcharge paid by it in respect of the mining leases
granted in its favour. On the other hand, learned Government Advocate submitted that the decisions of the Supreme Court in India Cement Ltd.
and Others Vs. State Of Tamil Nadu and Others, , clearly and in unmistakable declared the levy invalid only prospectively, i.e., on and from the
date of judgment, viz., 25-10-1989 and the payments made by the appellant being earlier in point of time, cannot be ordered to be refunded to the
appellant as prayed for by it. Referring to G.O. Ms. No. 662, Industries (K) Department, dated 19-6-1986, learned counsel pointed out that the
security deposits, under the terms of the Government Order, were in lieu of local cess and local cess surcharge payable by the appellant as a
lessee, pending the decision by the Supreme Court and such payments were only towards local cess and cess surcharge irrespective of the label
given to the payments and the appellant was, Therefore e not entitled to a refund of the amounts paid in lieu of local cess and cess local cess
surcharge. Attention was also drawn to the provisions of S. 2 (l) and (2) and item 11 in the Schedule in the Cess and other Taxes on Minerals
(Validation) Ordinance, 1992 (Ordinance No. 7 of 1992) promulgated on 15-2-1992 to contend that the appellant was not entitled to the relief of
refund of the payments made by it.
We find from the counterfoil of the challans that the payments made by the appellant between the dates mentioned earlier in respect of the
mining leases granted in its favour have been described as security deposits. However, it is not disputed that these payments had been made at a
time when the levy was held to be valid by this Court and also subsequently pursuant to G.O. Ms. No. 662, Industries (K) Department, dated 19-
6-1986. It would, therefore, be useful to notice the terms of G.O. Ms. No. 662, Industries (K) Department, dated 19-6-1986. Paragraph 4 of
that Government Order runs as follows:
Therefor in modification of the instructions issued in the Government Memorandum first and second cited, the Government direct in respect of
minor minerals, a security deposit equal to the annual lease amount shall also be collected every year. In respect of major minerals, the security
deposit shall be equal either to the annual dead rent or royalty whichever is higher, shall be collected every year. This security Deposit is in lieu of
local cess and local cess surcharge payable by the lessee, pending the decision by the Supreme Court (underlining ours) and such security deposit
should be collected along with the royalty at the time of issue of transport permit for the removal of the minor mineral or annually before 10th of
January of every year if the security deposit is levied on dead rent.''
From the Government Order referred to above, it clear that as the validity of the levy had been challenged before the Supreme Court, it become
necessary to safeguard local cess and local cess surcharge payable by the lessees and the lessees were therefore, directed to pay local cess and
local cess surcharge in respect of the leases granted in their favour in the shape of security deposit. It is significant that the Government Order has
specifically and categorically stated that the security deposit is in lieu of local cess and local cess surcharge payable by the lessees, In other words,
pending decision on the question of validity of the levy by the Supreme Court, the lessees were directed to pay local cess and local cess surcharge
payable by them in the shape of security deposit. The more description that the lessees should pay local cess and local cess surcharge as security
would not, in our view, convert it into one of security as normally understood. This is particularly so in view of the clear term of the Government
Order that the security deposit is in lieu of local cess and local cess surcharge. The security deposit payable by the lessee was, under the terms of
the Government Order referred to earlier, in substitution of and in the place of local cess and local cess surcharge payable by the lessees. We are,
therefore, unable to countenance the contention of learned counsel for the appellant that the payments made by the appellant were in the nature of
security and, therefore, refundable.
We may now refer to the decision of the Supreme Court in India Cement Ltd. and Others Vs. State Of Tamil Nadu and Others, . to consider
whether the appellant can secure a refund of the amounts paid by it. In that decision, the Supreme Court took the view that royalty is a tax and as
such a cess on royalty was a tax on royalty and beyond the competence of the State Legislature under Entry 23 of List If and that cess on royalty
cannot also be sustained under Entry 49 of List II as a tax on land. In that view, the Supreme Court held that levy of cess under S. 115 of the
Tamil Nadu Panchayats Act is ultra vires and the State of Tamil Nadu should be restrained from enforcing that provision any further. After so
holding, the Supreme Court accepted the argument on behalf of the State of Tamil Nadu to the effect that the declaration that the cess on royalty is
ultra vires should be prospective and amounts collected already should not be declared to be illegal retrospectively and the State made liable to
refund the same. Consistent with that, the Supreme Court further observed that the respondent (State of Tamil Nadu) will not be liable for any
refund of cess already paid or collected. On a careful consideration of the judgment of the Supreme Court, are unable to see how, relying upon it,
the appellant can seek to get a refund of the amounts paid by it. We had earlier pointed out that the Supreme Court had declared the levy of local
cess and local cess surcharge as invalid prospectively, i.e., on and from the date of the judgment of the Supreme Court, which was rendered on
25-10-1989. The Supreme Court had also declared that in respect of amounts so collected earlier, there was no liability on the part of the State of
Tamil Nadu to refund the amounts so collected. It is not in dispute that the appellant in these appeals had paid the amounts long prior to 25-10-
1989 and by reason of the clear pronouncement of the Supreme Court to the effect that the levy is declared illegal prospectively, i.e., on and from
25-10-1989, the appellant is not entitled to secure a refund of the local cess and local cess surcharge paid by it prior to 25-10-1989. We may
also point out that there is yet another obstacle in the way of the appellant securing refund of the local cess and local cess surcharge paid by it. On
15-2-1992, the President promulgated the Cess and Other Taxes on Minerals (Validation) Ordinance, 1992 (Ordinance No. 7 of 1992). Under
S.2 (l) thereof, the laws specified in the Schedule shall be deemed always to have been as valid as if the provisions contained therein relating to
cesses or other taxes on minerals had been enacted by Parliament and such provisions shall be deemed to have remained in force up to the fourth
day of April, 1991. In the Schedule, The Tamil Nadu Panchayats Act, 1958 (Tamil Nadu Act XXXV of 1958) has been'' shown as item 11. S.2
(1) of Ordinance No. 7 of 1992 has preserved the validity of the provisions contained in the Tamil Nadu Panchayats Act, 1958 relating to levy of
local cess and local cess surcharge, as if those provisions had been enacted by Parliament and have remained in force up to the 4th day of April,
1991. Besides thus validating the levy of local cess and local cess surcharge, under S.2(2) of Ordinance No. 7 of 1992, it has been provided that
notwithstanding any judgment, decree or order of any Court, cesses and other taxes on minerals realised under any such laws shall be deemed to
have been validly realised as this S.2(2) of Ordiance7 of 1992 had been in force at all material times when such taxes were realised. It is also
further provided that no proceedings shall be maintained or continued in any Court for the refund of the cesses or other taxes realised under any
such laws. From the aforesaid provision; it would follow that the levy of local cess and local cess surcharge as per the provisions of the Tamil
Nadu Panchayats Act, 1958, had been not only validated but had been validated as if the validation provision was in force and operative even at
the time when the local cess and local cess surcharge were realised. A bar has also been enacted regarding to continuation of proceedings in any
court for the refund of the local cess and local cess surcharge realised under any such law. This would mean that the appellant cannot continue
before this Court the proceedings initiated under Art.226 of the Constitution of India praying for the refund of the local cess and local cess
surcharge already paid by it and realised by the Government. It is significant that under S.2 (2) of the Ordinance No. 7 of 1992, the prohibition
extends to other proceedings and that, in our view, would include a proceeding under Art.226 of the Constitution of India. In view, therefore, of
the provisions of Ordinance No. 7 of 1992, the appellant cannot claim that it is entitled to a refund of the local cess and local cess surcharge paid
by it and it cannot also maintain the present proceedings praying for such refund. We are, therefore, of the view that no case is made out to
interfere with the order of the learned Judge. The Writ Appeals fail and are dismissed. There will be, however no order as to costs.