WP/26813/2003 of M/S DALMIA MAGNESITE CORPN Vs THE STATE OF TAMILNADU REP BY on 31 December 2019

COMMON ORDER

In W.P.No.26813 of 2003, the petitioner challengedparagraphs 5 and 7 of G.O.Ms.No.73, Revenue [Ni.Mu.2(2)]Department, dated 09.02.2002, whereby, the first respondentGovernment, while extending the lease of Government land to theextent of 6.67 acres had fixed the lease amount as well as thelocal cess and local cess surcharge payable by the petitioner.

2. In W.P.No.26814 of 2003, the petitioner challenged theconsequential demand order, dated 29.08.2003 made inNa.Ka.706/97 (E), where under, the third respondent made ademand to the petitioner to pay the lease amount as well as thelocal cess and surcharge due payable by the petitioner.

3. Since in both writ petitions, the petitioner as well asthe respondents are one and the same and the issue raised inboth the writ petitions are interconnected, both writ petitionsare disposed of by this common order.

4. The necessary facts which are required to be noticed forthe disposal of these writ petitions are as follows :

(i) In the year 1958, a rotary kiln was set up at Salem formanufacturing dead burnt magnesite, originally by the MagnesiteCorporation of India and Dalmia Cement (Bharat) Ltd., whomanufactured dead burnt magnesite, jointly. However later on in1966 Magnesite Corporation of India got merged with DalmiaCement (Bharat) Ltd., and the magnesite manufacturing businesswas named as "Dalmia Magnesite Corporation", and the same isowned by Dalmia Cement (Bharat) Ltd. The said M/s. DalmiaMagnesite Corporation, in short, "the petitioner Corporation",is located at a village called Vellakkalpatti, which is situated7 Kms away from Salem town. It engaged in excavating magnesitemineral and production of dead burnt magnesite, monoliths andmagnesia carbon bricks.

(ii) In order to have access to the open cast mine of thepetitioner corporation which is situated at 7 kms from Salemtown to reach the said place from National Highways, i.e.,Salem-Bangalore National Highways No.7, an approach road wasrequired branching near the side of Arabic college inS.F.No.46 of Vellakkalpatti.

(iii) Therefore the petitioner corporation, in the year1969 seems to have made an application or request for givinglease hold right of the Government lands to the extent of 9acres at Vellakkalpatti, Chettichavadi as well as Karuppurvillages in Salem District. The said request of the petitionerhad been engaging the consideration of the Government for someyears. In the meanwhile, in view of the urgency, since themining operation was to be undertaken, for which the approachroad was necessary, an enter upon permission was given by theDistrict Collector of Salem to the petitioner corporation toenter upon the said lands to make an access road towards themining site. Accordingly a blacktop road was laid and the samewas utilised by the petitioner corporation from 21.12.1977.

(iv) Thereafter the said request of the petitionercorporation, having been considered at various level, hadreached the Government for consideration and for necessaryorders. Accordingly, the Government, after having considered therequest of the petitioner as well as the enter upon permissionalready given by the second respondent, District Collector andthe land of the Government, which was proposed to be leased outto the petitioner corporation, had been put into use, had comeforward to issue Government Order in G.O.Ms.No.1471, Revenue(D1) Department, dated 08.09.1989.

(v) As per the said G.O.Ms.No.1471, Government lands atvarious survey numbers in Vellakkalpatti village and Karuppurvillage, Omalar Taluk and Chettichavadi village in Salem Talukto the extent of 9.41 acres had been leased out to thepetitioner corporation with various conditions by fixing thelease amount at the rate of 7% of the market value of the landper year, which was accordingly fixed as Rs.45,547/- per acreper year.

(vi) Pursuant to the said G.O.Ms.No.1471, whereby land inquestion has been leased out to the petitioner, the petitionercorporation had been continuously enjoying the same by using itas a road and off late for some other purposes including someconstruction which had been taken place in part of the said land.

(vii) Thereafter even though some request had been made bythe petitioner corporation at various point of time to the

respondents to reduce the lease amount, that was not consideredfavourably towards the petitioner corporation and ultimatelysince the very 10 years lease period as contemplated underG.O.Ms.No.1471 was itself over at the time of issuance of thesaid Government Order on 08.09.1989 as the 10 years periodstarted from 21.12.1977, the date on which enter upon permissionwas given and ended on 20.12.1987, whereas the G.O.Ms.No.1471was issued only on 08.09.1989, therefore in the veryG.O.Ms.No.1471 itself, at para 7, the Special Commissioner andCommissioner of Land Administration was requested by theGovernment to send proposals for renewal of lease in favour ofthe petitioner corporation with effect from 21.12.1987.

(viii) Thereafter number of correspondences andcommunications had been there between the petitioner corporationand the respondents and in the meanwhile also the proposal forrenewal of lease for another period of 15 years from 21.12.1987was made to the Government, which infact had engaged theGovernment for its consideration for some years.

(ix) In the meanwhile, the Government thought it fit toissue a Government Order called G.O.Ms.No.460, Revenue [Ni.Mu(1)] Department, dated 04.06.1998. The reason for issuance ofsuch G.O was that, wherever the Government lands are leased outfor commercial purposes or any other purposes, the lease amount,hitherto which was fixed to be recovered from the lessee was14% of the land value per year in case of commercial venturesand 7% in case of others. It is to be noted that, whenever suchGovernment lands located in any village panchayat or panchayatunion or town panchayat is leased out, as per the provisions ofThe Tamil Nadu Panchayats Act 1958 and subsequently, The TamilNadu Panchayats Act, 1994, Local Cess (LC) and Local CessSurcharge (LCS) have to be collected. Under the provisions ofthe said two Acts, the local cess leviable on these kind oftransactions was 100% of the amount fixed by the Government aslease amount and 500% of local cess surcharge also to be levied.Therefore if the said provisions are implemented, the leaseamount totally to be collected from the lessees in respect ofcommercial transactions would come as, lease amount 14% pluscess 14% plus surcharge 70%, which is equal to 98% of the landvalue. In case of non-commercial transactions, the said fixationwould be lease amount 7% plus cess 7% plus surcharge 35%,totally 49%.

(x) By virtue of this exorbitant amount under the head oflease amount as well as the local cess and local cess surchargeare to be fixed on the lessee to be collected, hence, it seemsto have been reported by the authorities concerned to theGovernment, that it is very difficult to collect 98% of theland value as lease amount, therefore it seems to have been suggested to the Government either to amend certain provisionsof the Panchayat Act, otherwise to reduce the lease amounteither to 1% or 2% instead of 14%. The said situation triggeredthe Government to come out with the said G.O.Ms.No.460, dated04.06.1998 under which the lease amount including local cess andsurcharge in total has been fixed only as 14% for commercialtransactions and 7% for non-commercial transactions.

(xi) In order to appreciate the same, the relevant portionof G.O.Ms.No.460, dated 04.06.1998, Revenue [Ni.Mu.2(1)]Department is extracted hereunder :

gad;ghLFj;jifjythpjynky;thpbkhj;jk;fz;lzk;tzpfkw;w1%1%5%7%nehf;fk;(MSehpd; Mizg;go)Mh;/bry;yKj;JmuRr; brayh; "

This G.O.Ms.No.460 had come into effect from 04.06.1998.

(xii) Therefore after having considered the request of thepetitioner corporation for extending the lease for another 15years from 1987, as the said proposal was pending at the timebefore the Government, the Government ultimately has comeforward to issue a Government Order in G.O.Ms.No.73, Revenue[Ni.Mu.2(2)] Department, dated 09.02.2002. Under the saidG.O.Ms.No.73, the lease period was extended 30 years instead of15 years as the 15 years period sought for was almost about tobe over even at the time of issuance of G.O.Ms.No.73, hence theGovernment thought it fit to extend the lease for 30 years,i.e., from 21.12.1987 up to 20.12.2017. In the veryG.O.Ms.No.73, as per the request of the petitioner corporation,some of the lands at Karuppur village and Vellakkalpatti villagein various survey numbers to the extent of 2.79 acres had beenassigned for the value of the land to the petitioner corporationitself by the Government and in respect of the remaining land of6.67 acres out of the total 9.41 acres originally leased outunder G.O.Ms.No.73, Government made an extension of lease for 30years period as stated above.

(xiii) In this regard the issue as come up now is only withregard to two paragraphs, i.e., paragraphs 5 and 7 ofG.O.Ms.No.73, dated 09.02.2002. For easy understanding, therelevant paras i.e., paragraphs 5 and 7 of G.O.Ms.No.73 isextracted hereunder :

"5/ lhy;kpah nkf;idrl; epWtdj;jpd; nfhhpf;if. khtl;l tUtha;mYtyh; mwpf;if kw;Wk; rpwg;g[ Mizah; ghpe;Jiu Mfpaitmurhy; Ma;t[ bra;ag;gl;lJ/ Fj;jifia bghWj;jtiu 20/12/87Kjy; 15 Mz;LfSf;F Fj;jif ePl;og;g[r; bra;ayhk; vd;Wghpe;Jiu bra;ag;gl;Ls;sJ/ gjpide;J Mz;LfSf;F Fj;jifePl;og;g[ bra;jhy; ,f; Fj;jiff; fhyk; 20/12/2002 cld; Kotila[k;/ cj;njr Fj;jiff; fhyk; 15 Mz;Lfs; Kotila ,d;Dk;Fiwe;j fhynk cs;sJ/ vdnt nfl;g[ epWtdj;jpd; nfhhpf;ifiaVw;f cj;njr Fj;jif fhyj;ij 15 Mz;LfSf;F gjpyhf 21/12/87Kjy; 20/12/2017 tiu 30 Mz;LfSf;F tH';fyhk; vd;WfUjg;gl;lJ/ Fj;jiff;F tH';fg;gl;l epy';fSf;F murhiz (epiy)

vz;/1471. tUtha;j;Jiw. ehs; 08/9/89y; epykjpg;gpy; 7% Fj;jifahfeph;zapf;fg;gl;l bjhifapid 3/6/98 tiu epYtpapd;wp tR{ypf;fg;glntz;Lk; vd;Wk; 4/6/98 Kjy; murhiz (epiy) vz;/460.tUtha;j;Jiw. ehs; 4/6/98y; btspaplg;gl;l Mizf;fpz';fFj;jifj; bjhif tR{ypf;fg;gl ntz;Lk; vd;Wk; fUjg;gl;lJ/nkYk;. jw;nghJs;s murhizfspd;go K:d;whz;LfSf; bfhUKiwmt;tg;nghJ epyt[k; epykjpg;gpd; mog;gilapy; Fj;jifj; bjhifjpUj;jpaikj;J Fj;jifj; bjhif tR{ypf;fg;gl ntz;Lk; vd;Wk;muR fUJfpwJ/////////////////////////////////7/ Fj;jiff;F nfhug;gl;Ls;s 6/67 Vf;fh; epyk; lhy;kpahnkf;dirl; epWtdj;jpd; bjhHpw;rhiyf;Fk; Ru';fj;jpw;Fk;bry;Yk; ghijahf gad;gl;L tUfpwJ/ ,e;j ghijia bghJkf;fSk; muR nghf;Ftuj;J ngUe;Jf;fSk; bry;ygad;gLj;jg;gl;L tUtijf; fUj;jpy; bfhz;L. nryk; khtl;lk;.XkY}h; tl;lk;. bts;sf;fy;gl;o kw;Wk; nryk; tl;lk;brl;or;rhto fpuhk';fspy; lhy;kpah nkf;dirl; epWtdj;jpd;mDgtj;jpy; cs;s fPnH Fwpg;gplg;gl;Ls;s 6/67 Vf;fh; epy';fisVw;fdnt ,e;epWtdj;jpw;F murhiz (epiy) vz;/1471. tUtha;.ehs; 8/9/89y; eph;zapf;fgl;lthW epy kjpg;g[ 7% Fj;jifj;bjhifia 3/6/98 tiu epYitapd;wp tR{ypj;Jf; bfhz;Lk;. 4/6/98Kjy; murhiz (epiy) vz;/460. tUtha; ehs;. 4/6/98y;btspaplg;gl;l MizfSf;fpz';f. epy kjpg;gpy; 2% Fj;jif. 2%jythp. 10% jynky;thp Mf bkhj;jk;; 14% vd eph;zak; bra;JtUtha; epiy Miz vz;/24V d; fPH; cs;s tHf;fkhdepge;jidfSlDk; fPH; Fwpg;gplg;gl;Ls;s jdp epge;jidfSlDk;21/12/1987 Kjy; 30 (Kg;gJ) Mz;LfSf;F lhy;kpah nkf;dirl;epWtdj;jpw;F Fj;jif ePl;og;g[ tH';fp muR MizapLfpwJ/bts;sf;fy;gl;o fpuhkk; (XkY}h; tl;lk;)r/vz; tp!;jPh;zk; tifghL69-1V0/28/0jhpR69-30/09/5Xilg; g[wk;nghf;F70-40/25/0ghijg; g[wk;nghf;F75-20/14/0ghijg; g[wk;nghf;F83-20/30/0ghijg; g[wk;nghf;F83-40/13/5jhpR83-50/03/0ghijg; g[wk;nghf;F////////////////bkhj;jk;1/23/0 bcwf;nlh;/////////////////(my;yJ) 3/04 Vf;fh; brl;or;rhto fpuhkk; (nryk; khtl;lk;)r/vz;tp!;jPh;zk; tifghL2-20/22/5rhiyg;g[wk;nghf;F2-30/24/5rhiyg;g[wk;nghf;F2-40/19/0rhiyg;g[wk;nghf;F5-20/81/0rhiyg;g[wk;nfhf;F//////////////////////////

bkhj;jk; 1/23/0 bcwf;nlh;///////////////////////////

(my;yJ) 3/63 Vf;fh;xl;L bkhj;jk; 2/70/0 bcwf;nlh; (my;yJ)6/67 Vf;fh; jdp epge;jidfs;1/ Fj;jiff;F tH';ff;gl;l epy';fSf;F 1987 Kjy; mt;tg;nghJepyt[k; epykjpg;gpd; mog;gilapy; K:d;whz;LfSf;F xUKiwFj;jif bjhif jpUj;jpaikj;J jpUj;jpaikf;fg;gLk; bjhifapidlhy;kpah nkf;dirl; epWtdk; muRf;F brYj;j ntz;Lk;/2/ Fj;jiff;F tH';fg;gl;l epyj;jpy; mikf;fg;gl;Ls;s ghijiabghJ kf;fs; bjhlh;e;J gad;gLj;Jtij lhy;kpah nkf;dirl;epWtdk; jilnah my;yJ ,ila{nwh bra;af; TlhJ/"

(xiv) Aggrieved over these two paragraphs of G.O.Ms.No.73,the petitioner has filed the first writ petition, i.e.,W.P.No.26813 of 2003.

(xv) Pursuant to G.O.Ms.No.73, the petitioner corporationhas subsequently seems to have sent some communications makingrequest to the Government to reduce the lease amount and alsoraised objection with regard to the levy of local cess and localcess surcharge. However the said request made by the petitionerhave been rejected by the Government through the letter dated12.06.2003 addressed to the Special Commissioner andCommissioner for Land Administration. Pursuant to which, thethird respondent, Tahsildar has issued a communication inNa.Ka.706/97(E), dated 29.08.2003, whereby, he made a demand tothe petitioner to pay the arrears of lease amount includinglocal cess and local cess surcharge for several years, otherwiseaction would be initiated against the petitioner corporationunder Section 5 of the Revenue Recovery Act. For easyunderstanding, the said demand letter, dated 29.08.2003 isextracted hereunder :

"lhy;kpah khf;dirl; epWtdj;jpw;F XkY}h; tl;lk;. fUg;g{u; kw;Wk;bts;sf;fy;gl;o fpuhk';fs; kw;Wk; brl;orhto (nryk; khtl;lk;)fpuhk';fspy; 9/41 Vf;fh; epyj;ij muR Miz vz;/1471tJ ehs; 08/09/1989d;go Fj;jif tH';fg;gl;L 9/41 Vf;fhpy; 6/67 Vf; epyj;ij muR Mizvz;/73tJ ehs; 02/09/2002d; go Fj;jiff;F tplg;gl;Ls;sJ/ ,e;j Fj;jiffhyk; 21/12/1987 Kjy; 30 Mz;LfSf;F tH';fg;gl;L cs;sija[k; jh';fs; ed;F mwptPh;fs;/ Fj;jif brYj;jf; nfhup gy;ntW foj';fs; mDg;gpa[k;20/12/1987 tiu cs;s fhyj;jpw;F khepy fzf;fhau; mth;fspd; jzpf;ifFwpg;gpy; Rl;of;fhl;lg;gl;Ls;s tptu';fspd; go j';fs; brYj;jg;glntz;oa Fj;jif bjhif jytup kw;Wk; jynky;tup. tup ghf;fp tptu';fs;Fwpj;j gl;oay; xd;iw ,j;Jld; kPz;Lk; c';fsJ jftYf;fhf mDg;gpcs;nsd;/ ,jd;go jh';fs; brYj;j ntz;oa Fj;jif ghf;fp gpd;tUkhWcs;sJ/ nfl;g[ ,Jtiu jh';fs; epYit brYj;jpaJ epYit26.37.386/50 2.30.000 24.07.386/50 elg;g[ 1.91.970 1.91.970 bkhj;jk;28.29.356/502.30.000 25.99.356/50nkw;go bjhif rk;ge;jkhf jh';fs; muRf;F mDg;gpa foj';fspd; ngupy;j';fSila nfhupf;if Vw;f ,ayhJ vd;Wk; Fj;jif bjhifia tR{y; bra;jgpd;ng muR tpjpfspd; go Fj;jif epy';fis epWtdj;jpduplkpUe;JkPsg;bgw;W rk;ge;jg;gl;l Cuhl;rp trk; xg;gilg;gjw;F cupa eltof;ifvLf;FkhW muR jdJ fojj;jpy; rpwg;g[ Mizau; kw;Wk; epy eph;thfMizau; brd;id mtu;fis nfl;Lf; bfhz;Ls;sij j';fSf;F kPz;Lk;kPz;Lk; epidt[gLj;j tpUk;g[fpnwd;/vdnt ,e;j fojk; fpilf;fg;bgw;w 7 jpd';fSf;Fs; Fj;jid tup ghf;fpbjhif KGtija[k; muR fzf;fpy; cupa jiyg;gpy; brYj;jp me;j ryhd;brf;if cldoahf mDg;gpitf;FkhW nfl;Lf;bfhs;fpnwd;/ jtWk; gl;rj;jpy;tUtha; tR{y; rl;lk; gpupt[ 5d;go $g;jp eltof;if kw;Wk; j';fs;epWtdj;jpw;F ghj;jpag;gl;l epy';fis bghJ Vyk; tpLtjw;fhdeltof;iffis nkw;bfhs;tij jtpu;f;f ,ayhJ vd;gija[k; ,e;neuj;jpy;muRf;F KG xj;JiHg;ig ey;FkhW j';fis fdpt[ld; nfl;Lf;bfhs;fpnwd;/ xk;tl;lhl;rpau;. XkY}u;xk; 2/9/03"

5. Therefore the said demand letter, dated 29.08.2003 of thethird respondent has been put under challange, as aconsequential challenge, in the second writ petition, i.e.,W.P.No.26814 of 2003.

6. This is how both these writ petitions came to be filedbefore this Court with aforesaid respective relief.

7. I have heard Mr.T.Poornam, learned counsel appearing forthe petitioner and he has made submissions raising the groundsassailing paragraphs 5 and 7 of the G.O.Ms.No.73 as well as theconsequential impugned demand letter of the third respondent,dated 29.08.2003.

8. The sum and substance of the arguments as well as thegrounds urged by the learned counsel for the petitioner are asfollows :

(i) That the very lease amount fixed

even at the initial stage for the land leasedout to the petitioner was exorbitant as onlya nominal lease amount alone ought to havebeen fixed.

(ii) Since the land was leased out tothe petitioner corporation for the purpose oflaying the road and to use the road to reachthe mine site and in the said road,it is not the permission given by theGovernment to the petitioner corporation toexclusively use it, instead a condition wasimposed to the petitioner that, the generalpublic of the said three villages and nearbyvillages should not be hindered or preventedfrom using the road as a public road.Therefore since the land in question used bythe petitioner is being used majority as apublic road, such an exorbitant lease amountshould not have been levied.

(iii) In the year 1979 itself, the landsin question have been taken away from thepurview of the village panchayat by theGovernment for the purpose of leasing outthese lands to the petitioner corporation.When that being so, the lands in question areno more belongs to the concerned villagepanchayat, therefore, the levying of localcess or local cess surcharge, which is theduty or power vest under the Tamil NaduPanchayats Act only to the local authority,i.e., village panchayat to exercise,therefore the Government, which had leasedout the land to the petitioner corporation,cannot levy a local cess and local cesssurcharge, therefore, the entire levy anddemand of local cess and local cess surchargeon the lease amount fixed by the Governmenton the leased out lands are unauthorised ornot sanctioned by the legislation. Thereforethe said component of local cess and localcess surcharge levied and demanded throughthe impugned orders are liable to be setaside or quashed .

9. Mainly on these grounds, the learned counsel appearingfor the petitioner made his submissions and he further urgedthat, in view of these grounds, paragraphs 5 and 7 ofG.O.Ms.No.73 which is impugned in the first writ petition anddemand letter made by the third respondent, dated 29.08.2003

which is impugned in the second writ petition, are liable to beinterfered with and quashed, he contended.

10. Per contra, Mr.C.Manishankar, learned AdditionalAdvocate General appearing for the respondents would makesubmissions refuting the said allegations made as well as thegrounds urged by the petitioner side. The learned AdditionalAdvocate General would contend that, the 9.41 acres of landoriginally was leased out to the petitioner as per theconditions imposed in G.O.Ms.No.1471, dated 08.09.1989. Beforeissuance of the said G.O, from 21.12.1977 itself enter uponpermission was given by the second respondent Collector to thepetitioner corporation due to urgency as the mining operationhad already been commenced. Therefore while fixing the leaseamount as well as the local cess and local cess surcharge, whatwas the rule and practise, which was in vogue during that time,was taken into account and accordingly, under G.O.Ms.No.1471,the lease amount as well as the local cess and local cesssurcharge has been fixed. Though subsequently the petitioner hadmade some request to reduce the lease amount, that was found notfeasible as what has been fixed by the Government was strictlyin accordance with the prevailing condition as well as under theprovisions of the Tamil Nadu Panchayats Act 1958, therefore thesaid request had not been considered.

11. Thereafter, a further request was made by the petitionercorporation to renew the lease for next 15 years and beforefinally the said request was considered for extending the lease,almost the 15 years period was over, therefore the Governmentthought it fit to extend it for a 30 years period from 1987 to2017. Accordingly, G.O.Ms.No.73 was issued. In G.O.Ms.No.73,2.79 acres of land, as mentioned above, has been assigned to thepetitioner corporation for the value of the land then prevailingas per the statute and Government Order which was in vogue andonly in respect of the remaining portion of the land, i.e., 6.67acres at villages called Vellakkalpatti and Chettichavadiare concerned, lease was extended for a period of 30 years up to2017, of course with the conditions which were almost availableor imposed in the earlier G.O.

12. The main condition imposed in G.O.Ms.No.73 was that, thelease was extended for 30 years upto 20.12.2017 and the roadalready laid and being used by the public of some villages shallnot be disturbed as those villages also using the said road asaccess road, however the major user since is the petitionercorporation, they can continue to use the road with the movementof heavy vehicles to transport the mine ore, i.e., magnesite.

13. The learned Additional Advocate General would alsocontend that, in the 6.67 acres leased out land, the petitioner

corporation not only laid the road, but also has put up somepermanent structures or constructions including the quarters /Guest House for Managing Director and also a cattle shed and aconsiderable portion of the land had been fenced permanently andhas been put in exclusive use of the petitioner corporation. Thelearned Additional Advocate General would further contend that,in order to substantiate these factual contentions, photographshave been taken in survey number wise and had been producedbefore this Court.

14. The learned Additional Advocate General would furthercontend that, in so far as the legal issue raised by thepetitioner side, to state that, since the land in question hadalready been taken from the purview of the Village Panchayatsconcerned in 1979 by issuance of District Gazette in thisregard, those lands are no more the lands of the villagepanchayat concerned, therefore the provisions contained in TamilNadu Panchayats Act, 1958 and the Tamil Nadu Panchayats Act,1994 for levying of local cess and local cess surcharge are nomore available to the panchayats to implement or exercise and inthis regard the Government cannot usurp the power of the villagepanchayats to levy local cess and local cess surcharge isconcerned, the learned Additional Advocate General would contendthat, the said submissions as well as the grounds raised by thepetitioner side is a complete misconception of the fact as wellas law.

15. The learned Additional Advocate General, in support ofhis contention, by elaborating his arguments, would contendthat, both in 1958 Act as well as in 1994 Act, there are clearprovisions for levying of local cess and local cess surcharge.The leviability of local cess and local cess surcharge isprimarily the legislative function, in view of the clearprovision, i.e., Section 115 in the 1958 Act and Section 167 inthe 1994 Act and moreover since the local cess and local cesssurcharge are collected only as part of land revenue by theRevenue Department of the State Government and after collectingthe local cess and local cess surcharge, what shall be theapportionment of the said local cess and local cess surcharge,have also been made clear in the said legislative part of thetwo Acts, the said contention raised by the petitioner that, itis not the job of the Government to levy and collect local cessand local cess surcharge as it is the exclusive job of thepanchayat concerned, does not hold water and therefore the saidcontention is liable to be rejected, the learned AdditionalAdvocate General contended.

16. The learned Additional Advocate General would alsocontend that, though there had been number of communicationsbetween the petitioner corporation and the respondents and atone point of time, the petitioner corporation also had statedthat, they had not agreed with the terms, namely the quantum of

lease amount as well as local cess and local cess surchargefixed by the Government through G.O.Ms.No.73, the fact remainsthat, the petitioner corporation had been continuously using theland in question as admittedly there had been permanentstructures constructed by them and being utilized by them. The30 years lease period also was over by 20.12.2017, thereby thefull 30 years of extended lease period and earlier 10 years hadbeen thoroughly enjoyed by the petitioner corporation. Thereforethe petitioner corporation by virtue of filing these petitions,by challenging the two paragraphs of G.O.Ms.No.73 and subsequentdemand letter issued by the third respondent, cannot turn aroundand say at this length of time that, the condition imposed bythe Government and the rate fixed by the Government for leasingout of the land are not agreeable to the petitioner. Thereforethe learned Additional Advocate General would contend that, thesaid plea raised by the petitioner in these two writ petitionsare not worthy to be considered, as absolutely there is no scopefor considering the same, otherwise it would be a case of unjustenrichment on the part of the petitioner corporation as havingenjoyed the land in question for 40 long years, the petitionercannot escape from the clutches of law without paying the leasedue, which includes local cess and local cess surcharge. Hencethe learned Additional Advocate General would contend that, boththe writ petitions are liable to be dismissed.

17. I have given my anxious consideration to the saidsubmissions made by both the learned counsel appearing for theparties and have perused the materials placed before this Court.

18. After having analysed the materials placed before thisCourt and the arguments and counter arguments put forward by thelearned counsel appearing for the parties, this Court is of theview that, the only legal issue to be looked into in these writpetitions is, as to whether the local cess and local cesssurcharge levied by the Government or demanded by theGovernment, i.e., the respondents herein, through the impugnedG.O, under which the lease was extended to the petitioner for 30years up to 2017, is justifiable or not.

19. In order to dwell into these issues, first let me takethe relevant provisions of the Act, namely, The Tamil NaduPanchayats Act, 1958 and The Tamil Nadu Panchayats Act 1994.Under 1958 Act, Section 115 and 116 speak about local cess andlocal cess surcharge which reads thus : "Local cess - 115. (1) There shall be levied inevery panchayat development block, a local cessat the rate of 45 naye paise on every rupee ofland revenue payable to the Government inrespect of any land for every fasli.[Explanation.-In this section and in section

116, 'land revenue' means public revenue due onland and includes water cess payable to theGovernment for water supplied or used for theirrigation of land, royalty, lease amount orother sum payable to the Government in respectof land held direct from the Government onlease or licence, but does not include anyother cess or the surcharge payable undersection 116, provided that land revenueremitted shall not be deemed to be land revenuepayable for the purpose of this section.] (2) The local cess payable under sub-section(1) shall be deemed to be public revenue due onall the lands in respect of which a person isliable to pay local cess and all the saidlands, the buildings upon the said lands andtheir products shall be regarded as thesecurity for the local cess. (3) The provisions of the [Tamil Nadu] RevenueRecovery Act, 1864 ([Tamil Nadu] Act II of1864), shall apply to the payment and recoveryof the local cess payable under this Act justas they apply to the payment and, recovery ofthe revenue due upon the lands in respect ofwhich the local cess under this Act is payable.(4) (a) Out of the proceeds of the local cessso collected in every panchayat developmentblock, a sum representing four-ninths of theproceeds shall be credited to the PanchayatUnion (Education) Fund. (b) Out of the proceeds of the local cesscollected in every panchayat town in apanchayat block, a sum representing two-ninthsof the said proceeds shall be credited to thetown panchayat fund.(c) Out of the balance of the proceeds of thelocal cess collected in the panchayatdevelopment block, such percentage as thepanchayat union council may fix shall becredited to the village panchayat fund, and thepercentage shall be fixed so as to secure asnearly as may be that the total income derivedby all the village panchayats in the panchayatunion does not fall short of an amountcalculated at 20 naye Paise far each individualof the village population in the panchayatunion. (d) The balance of the proceeds of the localcess collected in the panchayat developmentblock shall be credited to the funds of the panchayat union council.

Local cess surcharge - 116. Every panchayatunion council may levy on every person liableto pay land revenue to the Government inrespect of any land in the panchayat union alocal cess surcharge at such rate as may beconsidered suitable as an addition to the localcess levied in the panchayat development blockunder section 115 provided that the rate oflocal cess surcharge so levied (shall notexceed two rupees and fifty paise on everyrupee of land revenue) payable in respect ofsuch land]."

20. Like that, under the 1994 Act, Sections 167 and 168speak about the local cess and local cess surcharge, which areextracted hereunder :

"167. (I) There shall be levied in everypanchayat development block, a local cess atthe rate of one rupee on every rupee of landrevenue payable to the Government in respectof any land for every fasli. Explanation.- Inthis section and. in section 168, 'landrevenue' means public revenue due on land andincludes water cess payable to the Governmentfor water supplied or used for the irrigationof land, royalty, lease amount or other sumpayable to the Government in respect of landheld direct from the Government on lease orlicence, but does not include any other cessor the surcharge payable under section 168,provided that land revenue remitted shall notbe deemed to be land revenue payable for thepurpose of this section.

(2) The local cess payable under sub-section(I) shall be deemed to be public revenue dueon all the lands in respect of which a personis liable to pay local cess and all the saidlands, the buildings upon the said lands andtheir products shall be regarded as securityfor the local cess.

(3) The provisions of the Tamil Nadu RevenueRecovery Act, 1864, shall apply to thepayment and recovery of the local cesspayable under this Act just as they apply tothe payment and, recovery of the revenue dueupon the lands in respect of which the localcess under this Act is payable.

(4) Out of the proceeds of the local cess socollected in every panchayat development block, a sum representing twenty percent ofthe proceeds shall be credited to thePanchayat Union (Education) Fund. (5) Thebalance of the proceeds of the local cesscollected in the panchayat development blockshall be credited to the funds of thepanchayat union council.

168. Every panchayat union council may levyon every person liable to pay land revenue tothe Government in respect of any land in thepanchayat union, a local cess surcharge atsuch rate as may be considered suitable as anaddition to the local cess levied in thepanchayat development block under section 167provided that the rate of local cesssurcharge so levied shall not be less thanfive rupees and not more than ten rupees onevery rupee of land revenue payable inrespect of such land."

21. In fact, in so far as the lands in question, the firstlease was given to the petitioner by the Government underG.O.Ms.No.1471, dated 08.09.1989, of course with retrospectiveeffect from 21.12.1977, the date on which enter upon permissionwas given by the second respondent Collector to the petitionercorporation and pursuant to which, the petitioner corporationhad been occupying and enjoying the property in question.Therefore the lease period commences from 21.12.1977 upto20.12.1987. Subsequently, by G.O.Ms.No.73, dated 09.02.2002, thelease was extended for 30 years from 21.12.1987 to 20.12.2017.

22. Therefore in the whole lot of 40 years of lease period,up to 1994, the Tamil Nadu Panchayats Act 1958 was in force andthereafter Tamil Nadu Panchayats Act 1994 came into effect. Ifwe analyse the provisions of 115 and 116 of 1958 Act andSections 167 and 168 of 1994 Act, they are similar and there isno material change in the provisions between these two Acts.Therefore for the period up to 1994 under Sections 115 and 116of the 1958 Act, local cess and local cess surcharge can belevied and demanded. Thereafter up to 2017, local cess and localcess surcharge can be levied and demanded under 1994 Act.

23. In this context, whether under Section 115 of the 1958Act, the state Government has got power to levy local cess anddemand the same is the question. If we look at the language usedin Section 115 of 1958 Act, it makes clear with the followingwords that "there shall be levied in every panchayat developmentblock, a local cess at the rate of 45 naye paise on every rupeeof land revenue payable to the Government in respect of any landfor every fasli."

24. Therefore the legislature itself, under Section 115levied or levying local cess in respect of any land for everyfasli year at the rate fixed therein. Subsequently, the rateoriginally fixed as 45 naye paise, seems to have been modified.

25. Under Section 116 of the 1958 Act, the words employedare "every panchayat union council may levy on every personliable to pay land revenue to the Government in respect of anyland in the panchayat union a local cess surcharge at such rateas may be considered suitable as an addition to the local cesslevied in the panchayat development block under Section 115".

26. Almost similar provisions are available in 1994 Act,i.e., Sections 167 and 168 under the heading local cess andlocal cess surcharge which has already been extracted hereinabove.

27. A similar issue came to be considered before this Courtin the year 1979, where also similarly, the Government land hadbeen leased out to the lessee who raised the issue whether thelocal cess and local cess surcharge can be levied by theGovernment and can be demanded. In this context, it seems that,two fold objection had been raised in the said issue, i.e.,firstly there must be a separate levy to be made under Section115 of the Act for local cess, without which there cannot be anydemand. Secondly under Section 116 for levying local cesssurcharge, every panchayat union council has to make a specialresolution to that effect without which no local cess surchargecan be levied or imposed or demanded.

28. The said question raised before this Court wasconsidered in the case of Kwality Monuments Represented by....vs. The Tahsildar & 3 others, reported in 1980 (1) MLJ 461. Inthe said decision, this Court has considered the similar issuein the context of Sections 115 and 116 of the 1958 Act and thesaid Judgment would throw some light on this issue. Accordinglythe relevant portions of the said decision are extractedhereunder :

4. Having regard to the fact that the leaseis terminable by six months' notice byeither side, the learned Counsel for therespondents conceded that the demand forlocal cess and local cess surcharge can bemade only upto the end of the current fasli,and that for the subsequent faslis, theremust be separate levy of the local cess andlocal cess surcharge. Therefore it has to bestated at the outset itself that the demandby the impugned order could be confined onlyto the amount of local cess and local cess surcharge payable upto the end of thecurrent fasli, 1389. Thus, the only groundsurviving for consideration is, whether thelocal cess and local cess surcharge can belevied only by the Panchayat Union Councilconcerned, and not by the second respondent,the Collector of Dharmapuri.

5. In the course of the arguments, thelearned Counsel for the petitioner submittedthat there must be a separate levy of localcess by a separate resolution and that onegeneral resolution for that purpose is notsufficient.

6. I shall first consider the questionwhether, as stated earlier, there is aresolution for the levy of local cesssurcharge of at 1 1/2 times the landrevenue. There is no substance in thecontention that there should be a separateresolution for each person who is requiredto pay the local cess surcharge. I am of theopinion that a single resolution levyinglocal cess surcharge would be sufficient.The question then for consideration is,whether a levy by way of resolution isnecessary in the case of local cess. Thelocal cess is payable under Section 115 ofthe Tamil Nadu Panchayats Act, 1958. Sub-section (1) of that section lays down that:There shall be levied in every panchayatdevelopment block, a local cess at the rateof 45 naye paise on every rupee of landrevenue payable to the Government in respectof any land for every fasli.The learned Counsel for the petitionersubmitted that this sub-section is only adirection to the panchayat development blockto levy local cess at the rate of 45 nayepaise on every rupee of land revenue payableto the Government in respect of any land forevery fasli, and that a resolution forlevying local cess at the rate mentioned inthat sub-section is necessary.7. On the other hand, the learned Counselfor the respondents submitted that thesection itself levies the local cess at therate of 45 naye paise on every rupee of landrevenue payable to the Government in respectof any land for every fasli and that thereis no need for a separate resolution for

that purpose. "Levy", according to theChambers Twentieth Century Dictionary (NewEdition 1972) means "to raise, collect as anarmy or tax; to call for; to impose ; tobegin to wage". Giving the meaning "collect"to the word "levy" in Sub-section (1) ofSection 115 of the Tamil Nadu PanchayatsAct, 1958, used in the past tense, it willread that there shall be "collected" inevery panchayat development block, a localcess at the rate of 45 naya paise on everyrupee of land revenue payable to theGovernment in respect of any land for everyfasli. Therefore, I agree with the learnedCounsel for the respondents that noresolution for levying local cess underSection 115(1) of the Tamil Nadu PanchayatAct, 1958, is necessary and that Section 115(1) of that Act itself is sufficient tocollect the local cess at the rate of 45naye paise on every rupee of land revenuepayable to the Government in respect of anyland for every fasli.8. The learned Counsel for the petitionersubmitted that only the Panchayat UnionCouncil can collect the local cess and localcess surcharge, and that the secondrespondent was not entitled to demand thesame by the impugned order. Section 115(3)of the Tamil Nadu Panchayats Act, 1958, laysdown that:The provisions of the Madras RevenueRecovery Act, 1864(Madras Act II of 1864),shall apply to the payment and recovery ofthe local cess payable under this Act, justas they apply to the payment and recovery ofthe revenue due upon the lands in respect ofwhich the local cess under this Act ispayable.Sub-section (4)(a) of that section lays downthat:Out of the proceeds of the local cess socollected in every panchayat developmentblock, a sum representing four-ninths of theproceeds shall be credited to the PanchayatUnion (Education) Fund.9. G.O. Ms. No. 1615, (L.A.) RuralDevelopment and Local Administration, dated1st October, 1960, deals with the monthlyadjustment of Local Cess to the Panchayat Union (General) Fund. At page 235 of theManual on Panchayat Administration (1967Edition), it is stated that the local cessshall be collected along with the landrevenue and shall be credited to the Stateaccounts under the same head of account asthe land revenue and that it has also beenthe practice so far in respect of land cess.At page 237, it is stated that following theprinciples laid down for the collection andadjustment to Panchayat Union Funds of LocalCess, the Government have decided andaccordingly direct that the Panchayat Unionsshall be paid in advance of collection oflocal cess surcharge levied by them, andthat such advance payments will be made withreference to the resolutions of thePanchayat Union Councils concerned, decidingto levy the Local Cess Surcharge and thenotification in the District Gazette forsuch levy. It is also stated that the LocalCess Surcharge is collectable along with thekist and the local cess during thekistabandi. Thus, it is seen from the Manualof Panchayat Administration that both thelocal cess and the local cess surcharge arecollectable along with the land revenue bythe Revenue Department and that they shouldbe credited to the State accounts under thesame head of account as the land revenue inaccordance with the usual practice.Therefore it is not possible to agree withthe learned Counsel for the petitioner thatthe local cess and the local cess surchargecould be collected only by the PanchayatUnion Block concerned.

29. The said decision of this Court referred to above, i.e.,1980 (1) MLJ 461 has, in threadbare, discussed the said issuesand has given a complete answer to those issues.

30. I am in respectful agreement with the said viewexpressed by this Court in the said decision. Accordingly, thisCourt is of the view that, in so far as the levy of local cessis concerned, since it has already been levied under Section 115of the 1958 Act and 167 of 1994 Act, there need not be anyseparate levying of local cess either by the panchayat or by theGovernment.

31. In so far as the levy of local cess surcharge isconcerned, Section 116 of the 1958 Act and the 168 of the 1994Act make it clear that, local cess surcharge also in addition tolocal cess can be levied.

32. In this context, a separate resolution of the panchayatunion council was not required as has been held in 1980 (1) MLJ481 (cited supra). Therefore in respect of the said issue, whichhas already been concluded in the said decision, if theaforesaid facts is applied, the contention raised by the learnedcounsel for the petitioner cannot be appreciated, instead, thearguments in this regard made by the learned Additional AdvocateGeneral is to be accepted.

33. Merely because in 1979 by issuing District Gazette,lands in question have been taken away from the panchayat forthe purpose of leasing out the same to the petitionercorporation, that would not ipso facto take away the rights ofthe Government for levy and demand of local cess and local cesssurcharge. As has been explained in the said decision of thisCourt referred to above, it is the prime job of the Governmentto collect the local cess and local cess surcharge along withland revenue by the Department of Revenue of State Governmentand after collecting local cess and local cess surcharge amount,how it should be apportioned alone have been spelt out in thesaid provisions of the two Acts referred to above. Therefore itcannot be said that, once the land has been taken away by theGovernment for the purpose of leasing out the same for anycommercial purpose or private purpose, the power of levyinglocal cess and local cess surcharge and demanding the same hasbeen taken away or denuded by the Government. Therefore on thisground, the petitioner cannot successfully assail the import ofG.O.Ms.No.73 as well as the consequential demand letter issuedby the third respondent.

34. Accordingly, the main issue in so far as the leviabilityand capable of demand of the local cess and local cess surchargeby the State Government while leasing out the Government landfor commercial or private purposes are to be answered in favourof the Government and not in favour of the petitioner.

35. The other grounds raised by the petitioner side is that,even at the time of entrusting the land and subsequently at thetime of issuance of two Government Orders, granting the lease aswell as extending the lease, it was the condition imposed bythe Government that, the land in question shall be used forroad purposes and after laying the road, apart from the usage ofthe petitioner corporation it would be usable by the generalpublic in that villages, therefore such usage cannot beprevented by the petitioner corporation.

36. In this context, it is the point urged by the learned

counsel for the petitioner that, since the land in question,even though was put in use for laying the road for thepetitioner to reach the mining site, it has not been entrustedto the petitioner corporation for its exclusive usage, instead,it has been entrusted for the use of petitioner corporation aswell as the general public and therefore the amount of leasefixed by the Government to be imposed and demanded from thepetitioner is not in commensurate to the usage, therefore in sofar as the quid pro quo, is concerned, there has been noproportionality between the Government and the petitionercorporation and on that ground the plea raised by the petitionerto reduce the lease amount ought to have been accepted orallowed by the Government, without which since the impugnedG.O.Ms.No.73 was issued, extending the lease for 30 years, ofcourse with the same conditions fixing 14% in a whole for bothlease amount as well as local cess and local cess surchargewhich are not in commensurate with the usage of the petitioner,it is liable to be interfered with, is concerned, this Courtfeels that, the said plea cannot be raised by the petitioner forthe reason that, it is an admitted case that, the land inquestion not only is used for road purpose but also for veryexclusive use of the petitioner corporation as dwellingbuildings have been constructed by the petitioner corporationlong back and has been put in use. That apart, vast extent ofland out of the subject land had been fenced with pucca fenceand has been put in exclusive use of the petitioner corporation.

37. These factors, normally this Court would not want todwell into, as it is the writ jurisdiction, thereforecomplicated factual aspects cannot be gone into and empiricaldata cannot be looked into, however, prima facie it was provedby the respondent Government side by filing documents andphotographs to the extent to establish that, considerableportion of the land in question have been put in exclusive useof the petitioner corporation not only as road but also forprivate use as set out above.

38. These factual aspects have not been denied by thepetitioner with any contra documents as the photographs showsthe building have been constructed in some of the portion of theland in question by the petitioner corporation and some of thelands have been fenced on permanent basis and those aspects havenot been denied by the petitioner side and in fact they admittedthe same.

39. Therefore the proportionality theory in respect of quidpro quo as has been projected by the learned counsel for thepetitioner, in view of the factual matrix of this case, cannotbe accepted, as that theory would not in any way enhance thewinability of the petitioner side in these two writ petitions.

40. In so far as the other ground, namely that, thepetitioner had not agreed upon the conditions imposed by theGovernment in the impugned Government Order, i.e., at paragraphs5 and 7 of G.O.Ms.No.73 is concerned, it is not a unilateraldecision on the part of the Government, as the earlier leasealso does contain the same clauses. The said Government Orderwhich has given the earlier lease from 1977 to 1987, i.e.,G.O.Ms.No.1471 has not been admittedly challenged or assailed bythe petitioner.

41. More over, during the pendency of the issue between 1989and 2002, the Government has come forward with G.O.Ms.No.460,Revenue Department, dated 04.06.1998. Under the said G.O, therigorousness of the quantum of lease amount and correspondinglocal cess and local cess surcharge which amount to claim 98% ofthe value of the property as lease amount from the lessee wasconsidered and accordingly, considering that rigorousness, theGovernment thought it fit to reduce the same as 2% lease amount,instead of 14% for commercial transactions and 1% instead of 7%for non-commercial transactions. However in G.O.Ms.No.460 alsothe Government has carefully dealt with the issue as to whetherthe local cess and local cess surcharge can be tinkered with ornot.

42. In this context, since it is the wisdom of thelegislature to fix 1% local cess and 5% local cess surcharge onthe lease amount, the same cannot be reduced by the Governmentby issuing Government Orders.43. It is also an admitted fact that, the G.O.Ms.No.460,dated 04.06.1998, Revenue Department has not been put intochallenge by the petitioner, thereby the import of G.O.Ms.No.460can very well be made applicable to the petitioner also.

44. When such being the position, the petitioner, afterhaving enjoyed the lease for 40 long years, cannot come now tomake a hue and cry and say that, the lease amount was exorbitantand correspondingly the local cess and local cess surcharge wasalso exorbitant and therefore the same cannot be imposed, leviedor demanded from the petitioner and in this context, thepetitioner is ready to surrender the lease hold rights or leasedout lands and accordingly, the issue can be decided and theimpugned orders can be interfered.

45. The said stand now taken by the petitioner isabsolutely unjustifiable and untenable, because, full enjoymenthave been made by the petitioner, as admittedly, even till date,the private occupation of the petitioner corporation in thesubject land by constructing the building and other usage hasnot been changed or those buildings have not been vacated andthe vacant possession have not been surrendered to theGovernment.

46. Assuming that, if the petitioner now surrender vacantpossession, till such time, the petitioner is liable to pay thelease amount as well as the corresponding local cess and localcess surcharge amount as the lease amount is just 2% because itis certainly a commercial transaction and the local cess andlocal cess surcharge is levied and demanded based on thelegislative intend, earlier, under the provisions of Tamil NaduPanchayats Act, 1958 and later under the provisions of TamilNadu Panchayats Act, 1994. Therefore these fixation, levy anddemand made on the part of the respondents to the petitioner forthe leasehold lands, which had been admittedly in complete andthorough usage of the petitioner, cannot be said to be eitherunlawful or unjustifiable and therefore all these grounds raisedby the petitioner side towards assailing these impugned ordersare not sustainable and hence all these grounds urged by thepetitioner side are liable to be rejected.

47. In the result, both the writ petitions fail andtherefore they are liable to be dismissed. In fine, thefollowing orders are passed :Both the writ petitions are dismissed. Sincethe lease period, even according to theextended period of 30 years as perG.O.Ms.No.73, Revenue Department, dated09.02.2002 expired on 20.12.2017, for thesubsequent period, it is for the petitionerto approach the Government to get furtherextension of lease, if it desired to do so.However till such time, the petitionerenjoying the property in question of theGovernment, it is liable to pay the leaseamount as well as local cess and local cesssurcharge to be fixed, levied and demandedfrom time to time as per the provisions inthe said two legislation and other relevantGovernment Orders which are in force. Howeverthere shall be no order as to costs.Consequently,connectedmiscellaneouspetitions are closed.

Sd/- Assistant Registrar(CS)

//True Copy//

Sub Assistant Registrar

tsvn

To

1. The Secretary to Government State of Tamil Nadu Revenue Department, Fort St. George, Chennai - 600 009.2. The District Collector Salem - 636 001.

3. The Tahsildar Omalur - 636 455, Salem District.+1cc to M/s.T.Poornam , Advocate SR.No. 106900 106901 W.P.Nos.26813 and26814 of 2003rgnA.SK(10/02/2020)