R. C. JAL & ANR. versus UNION OF INDIA

Citation: [1972] 3 S.C.R. 561 · Decided: 23-02-1972 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
R. C. JAL & ANR. 
v. 
UNION OF INDIA 
February 23, 1972 
561 
[S. M. SIICRI, C.J., A. N. GROVER, A. N. RAY, D. G. PALEKAR 
AND M. H. BEG, JI.] 
Coal Production Fund Ordinance (39 of 1944)-Coal despatched from 
colliery in British India to consignee in Princely State-L1'ability of ct>n--
signee to P'i.'Y the cess. 
Coal was despatched from collreries within British India in December 
1946 and fanu:uy and February 1947, to the appellant in Indore. The 
respondent filed a suit in 1953 tor recovery of coal production cess· levied 
under the Coal Production Fund Ordinance, 1944, and r. 3(1) of the 
Coal Production Fund Rules, 1944. 
On the question whether the Ordinance had no territorial operation to 
reach· the appellant, because, he was a resident of a Princely State at tho 
time of despatch of the coal. 
HELD : In R. C. Jal! v. Union of India, U962] Supp. 3 S.C.R. 436, 
it was held that the cess was an excise duty Qn the manufacture or pro-
duction of coal and that the method of collection did not affect the e.,.,nce 
of the duty. The coal production cess was ~n the production of coal and 
was levied on coal des1>3tched from collieries in the then British India, -
that is, the taxable eYent happened within the theD British India. Under 
the Rules, the duty was to be collected by the railway administcatfon as 
a surcharge on freight and was to. be recovered from the con·signee if 
the freight charges were to be collected at the destination. The appel-
lant was the tonsignec and the freight charges were to be collected from 
him at the destination, namely, Indore. llie cess_ thus became a part of 
the freight for purposes of collection but in 'essence remained a tax on 
goods. 
Once the duty attaches 
to the goods they 
became impressed 
with the liability and the consignee was liable to pay. The 'tiit was filed 
in 1953 when Indore was within India and the right of the Union to 
claim, as well the liability of the appellant to pay, the cess, was valid and 
subsisting. 
It was not a case of the Union sueing or enforcing any re-
venue law in a foreign court. 
Therefore, the Union was entitled to a 
decree against the appellant. [5650-H; 566B-DJ 
Govt. of India, Ministry of Finance v. Taylor, :[1955] A.C. 491; 27 
J.T.R. 356, distinguished . 
. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1920 of 
1968. 
Appeal from the judgment and decree dated April 15, 1968 of 
the Madhya Pradesh High Court in Letters Patent Appeal No. 21 
H 
of 1962. 
M. C. Chag/a, A. K. Verma, 
B. Datta, J. B. Dadachan;i, 
O. C. Md/Jiur and Ravinder Narain, for the appellants. 
562 
SUPREME COURT REPORTS 
[1972] 3 S.C.R. 
Jagdish Swarup, Solicitor-General of India, S. N. Prasad and 
B. D. Sharma, for the respondent. 
The Judgment of the Court was delivered by 
Ray, J. This is an appeal by certificate from the judgment 
dated 15 April, 1968 of the High Court of Madhya Pradesh up-
holding the judgment and decree passed by Nevaskar, J. of that 
High Court. 
The Union filed a suit against the appellant in the Court of 
Small Causes J]ldge at Indore in the year 1953 and claimed a 
decree for Rs. 83-12-0. 
The claim in the suit represented coal 
production cess levied under Ordinance No. XXXIX of 1944 on 
coal and coke despatched from collieries in the then British India 
to the appellant. 
The. only question which falls for consideration in this appeal 
is whether the Union could make a valid claim for the amount. 
Counsel on behalf of the appellant contended that the appellant 
was at the material time a resident at Indore in the then Holkar 
State and· the Ordinance passed in the then British India would 
have no territorial operation to reach him. 
A 
B 
c 
D 
The Ordinance was called the Coal Production Fund Ordi-
nance of 1944. It extended to the whole of the then British 
India. 
Section 2 of the Ordinance provided inter alia as · E 
· follows:-
(1 ) With effect from such date as the Central 
Government may, by notification in the Official Gazette, 
appoint in this behalf, there shall be levied and collect-
ed as a cess. for the purposes of this Ordinan~. on all 
coal and coke despatched from collieries in British India 
a duty of excise at such rate not . exceeding one rupee 
and four annas for ton, as may from time to time be 
fixed by the Central Government by notification in the 
official gazette; 
F 
Provided that the Central Government may, by noti-
G 
fication in the official Gaiette, exempt from liability to 
the duty

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