Andhra Pradesh High Court – Amravati
Siva Sai Constructions vs Gopalakrishna Dwivedi on 13 March, 2025
APHC010410172024
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI [3310]
(Special Original Jurisdiction)
THURSDAY, THE THIRTEENTH DAY OF MARCH
TWO THOUSAND AND TWENTY FIVE
PRESENT
THE HONOURABLE DR JUSTICE K MANMADHA RAO
WRIT PETITION Nos : 20857, 25080, 25109 of 2024 &
CONTEMPT CASE Nos : 3883, 3889 of 2024
W.P.No.20857 of 2024:
Between:
M/s. Siva Sai Constructions ...PETITIONER
AND
The State Of Andhra Pradesh and Others ...RESPONDENT(S)
Counsel for the Petitioner:
1. B.ABHAY SIDDHANTH MOOTHA
Counsel for the Respondent(S):
1. GP FOR MINES AND GEOLOGY
The Court made the following Common Order:
The Writ Petition No.20857 of 2024 is filed under Article 226 of the
Constitution of India, seeking the following relief:
".....to pass an appropriate Writ more particularly
one in the nature of Writ of Mandamus declaring the
Demand Notice No.1681/QL/RM/2019, dated 13.09.2024
issued by the respondent No.5 herein levying
Rs.12,89,99,926/- (Rupees Twelve Crores Eighty Nine Lakhs
Ninety Nine Thousand Nine Hundred and Twenty Six)
towards Seignorage Fee, Penalty, DMF, MERIT
2
Consideration Amount and IT under Rules 26(1) and 34(1)
of Andhra Pradesh Minor Mineral Rules, 1966 and the
consequential Seizure Notice in Form-I in Notice
No.1681/QL/RM/2019, dated 16.09.2024 seizing the Stone
Crushing Unit of the petitioner, without considering the
explanation submitted by the petitioner as arbitrary, illegal,
abuse of process of law, as one without jurisdiction,
contrary to the principles of natural justice and Rules 26(1)
and 34(1) of Andhra Pradesh Minor Mineral Rules, 1966
apart from being violative of the Fundamental and
Constitutional Rights guaranteed to the petitioner under
Articles 14, 19, 21 and 300-A of the Constitution of India
and consequently set aside the Demand Notice
No.1681/QL/RM/2019, dated 13.09.2024 issued by the
respondent No.5 herein levying Rs.12,89,99,926/- (Rupees
Twelve Crores Eighty Nine Lakhs Ninety Nine Thousand
Nine Hundred and Twenty Six) towards Seignorage Fee,
Penalty, DMF, MERIT, Consideration Amount and IT under
Rules 26(1) and 34(1) of Andhra Pradesh Minor Mineral
Rules, 1966 and the Seizure Notice in Form-I in Notice
No.1681/QL/RM/2019, dated 16.09.2024 seizing the Stone
Crushing Unit of the petitioner...."
2. Brief facts of the case are that the petitioner was granted a quarry
lease for excavation of Road Metal and Building Stone in the land in an extent
of Ac.3.843 Hectare in Survey Nos.908/1, 908/2 & 908/4, 913/1, 913/2 & 449
of Kutagulla Village, Kadiri Mandal, Ananthapuramu district (for short "quarry
lease") for a period of ten years by the 3rd respondent vide proceedings
No.637,QL-ATP/2020, dated 20.01.2021. Thereafter, a quarry lease deed was
entered with effect from 17.04.2021 to 16.04.2031 on payment of yearly dead
rent of Rs.65,000/- per hectare and a seigniorage fee @ Rs.90/- per Cubic
meter (for short "Cum") or Rs.60/- per Metric Ton for Road Metal and Building
Stone vide proceedings No.1681/QL/RM/2019, dated 17.04.2021. While so,
the 1st respondent promulgated vide G.O.Ms.No.94, Irrigation and CAD (PW-
COD) Department, dated 01.07.2003, wherein it has given modalities for
issuance of tender and registration of contractors in connection with deduction
3
of Seigniorage fee and other charges. Further, an amendment was carried out
in Mines and Mineral (Development and Regulation) Act, 1957 (for short "the
Act") in the year 2015, wherein District Mineral Foundations were directed to
be set up. Further, Andhra Pradesh District Mineral Foundation Rules, 2016
(for short "the Rules") were issued vide G.O.Ms.No.36, Industries and
Commerce (M-III) Department, dated 14.03.2016. Similarly, G.O.Ms.No.42,
Industries and Commerce, dated 07.06.2021 ordered for levy of consideration
in-addition to Seigniorage fee, DMF and MERIT on all minor mineral other
than Granite. Therefore, the petitioner is liable to pay Seigniorage fee, DMF,
MERIT, Consideration Amount and Income Tax for the mineral excavated by
it. Whereas, the Government of Andhra Pradesh vide G.O.Ms.No.63,
Industries, Commerce and Mines Department, dated 02.08.2021 amended the
provisions of Andhra Pradesh Minor Mineral Concession Rules, 1966. Transit
forms from 03.03.2023 were issued by M/s.Amigos Minerals and the requisite
amounts would be collected by it like Seigniorage fee, DMF and MERIT,
Consideration amount and IT. While things stood thus, on 30.07.2024, the
Royalty Inspector and the Surveyor of the 5th respondent office inspected the
quarry lease held by the petitioner. As per the survey report, dated 30.07.2024
of the Mines and Surveyor, a total of 2,57,068.168 Cum of mineral was
excavated and nearly 402.095 Cbm was the variation of Recorded Mineral
Quantity within the leased area another 600 Cbm of mineral was excavated
outside the leased area. Basing on the said survey report, the 5th respondent
4
issued a Show-Cause Notice vide No.1681/QL/RM/2019, dated 08.08.2024
directing the petitioner to submit its explanation and documentary evidence for
the total of 2,57,068.168 Cum of mineral was excavated within a period of 15
days from the date of receipt of notice and the same was served on the
petitioner through registered post on 20.08.2024. The petitioner has submitted
its explanation dated 02.09.2024. The 5th respondent issued Demand Notice
vide No.1681/QL/RM/2019, dated 13.09.2024 stating that as per their records,
transit forms have only been issued for 62,799.98 Cum out of 2,57,068.168
Cum and hence for remaining balance directed to pay seigniorage fee of
Rs.1,74,84,137/-, penalty of Rs.8,74,20,685/-, DMF of Rs.52,45,241/-, MERIT
of Rs.3,49,683/-, Consideration Amount of Rs.1,74,84,137/- totaling to
Rs.12,79,83,883/- apart from excavation from the leased area. Immediately,
the 5th respondent issued the Seizure Notice on 16.09.2024 seizing the Stone
Crusher. Aggrieved by the same, the present writ petition has been filed.
3. This Court, vide order, dated 24.09.2024, after hearing the both
sides, granted the interim order in I.A.No.1 of 2024 as follows:
"Heard the learned counsel appearing for the petitioner and learned
Assistant Government Pleader appearing for the respondents.
On hearing, learned Assistant Government Pleader, on instructions, would
submit that, as per the Rule 28(3) of APMMC Rules, 1966, the petitioner has
to submit e-returns in respect of the quarry in the relevant form within the time
specified. In fact the petitioner has not submitted e-returns as required under
the aforesaid rule. She would further submit that the petitioner without even
paying seigniorage fee, DMF, Merit and IT excavated minerals for a tune of
Rs.1,90,090.08 cbm and approached this Court seeking Mandamus. As per
the law laid down by this Court, the authority have no power to impose fine
amount but the State Government can recover the seigniorage fee, DMF,
Merit and IT as per the APMMCS Rules 1966 in pursuant to the demand
notice dated 13.09.2024.
5
Considering the submissions of both the learned counsels, prima facie,
this Court is inclined to grant interim direction.
Accordingly, the respondents are directed not to take any coercive steps in
pursuant to the Demand Notice No.1681/QL/RM/2019, dated 13.09.2024
th
issued by the 5 respondent, till the next date of hearing.
Post the matter on 15.10.2024."
4. This Court, vide order, dated 24.09.2024, after hearing the both
sides, granted the interim order in I.A.No.2 of 2024 as follows:
"Heard the learned counsel appearing for the petitioner and learned
Assistant Government Pleader appearing for the respondents.
Considering the submissions of both the learned counsels, the Seizure
Notice in Form-I in Notice No.1681/QL/RM/2019, dated 16.09.2024 issued by
th
the 5 respondent is hereby suspended till the next date of hearing.
Post the matter on 15.10.2024."
5. Since the respondents failed to comply with the order of this
Court dated 24.09.2024 passed in I.A.No.1 of 2024 in W.P.No.20857 of 2024,
the petitioner filed C.C.No.3883 of 2024.
6. Further, the respondents failed to comply with the order of this
Court dated 24.09.2024 passed in I.A.No.2 of 2024 in W.P.No.20857 of 2024,
hence, the petitioner filed C.C.No.3889 of 2024.
7. Although this Court, vide order dated 24.09.2024 in I.A.No.2 of
2024 in W.P.No.20857 of 2024, suspended the Seizure Notice in Form-I, the
respondents have not released the seized machinery of the petitioner, namely
Hitachi LNT210 with Chassis No.KMTPC282JMY731249, pursuant to the
Seizure Notice in Form-I in Notice No.1681/QL/RM/2019, dated 16.09.2024.
Therefore, the petitioner filed W.P.No.25080 of 2024.
6
8. Although this Court, vide order dated 24.09.2024 in I.A.No.1 of
2024 in W.P.No.20857 of 2024, directed the respondents not to take any
coercive steps against the petitioner, pursuant to Demand Notice
No.1681/QL/RM/2019, dated 13.09.2024, the respondents have not issued
Dispatch permits or assigned the Login ID to the petitioner in Web Portal,
stating that the same would not be assigned till the amounts are paid in
accordance with Demand Notice No.1681/QL/RM/2019, dated 13.09.2024,
issued by the 4th respondent. Therefore, the petitioner filed W.P.No.25109 of
2024.
9. Since all the writ petitions and contempt cases are interlinked,
they are being heard and disposed of together through this Common Order.
10. The 5th respondent in W.P.No.20857 of 2024 filed counter
affidavit denying the allegations made in the writ petition and mainly
contended that the writ petition itself is not maintainable, in view of the Rule 35
and 35(A) of the APMMC Rules, 1966, wherein an efficacious alternative
remedy is available to the petitioner as an appeal shall lie to the Director,
Mines and Geology within a period of two months from the date of
communication of such order to the party aggrieved and an appeal against an
order of Director shall be government in light manner. It is further contended
that the 2nd respondent received various complaints on illegal excavation and
transportation of road metal by the petitioner, the 2nd respondent issued memo
7
vide No.9116079/Vg/2024, dated 27.07.2024 directing the 5th respondent to
inspect the area and take necessary action any illegality if any. The 5th
respondent along with technical staff have inspected the mining lease area
and found irregularities. Basing on the report, the 5th respondent issued show
cause notice dated 08.08.2024 and the petitioner submitted its explanation on
02.09.2024. It is further contended that the petitioner is a lessee to the
department so that he has followed the APMMC Rules, 1966 and the
petitioner has specifically admitted that he has excavated for a tuneof
2,57,096.168 Cbm out of which he obtained dispatch permits to a tune of
62,799.98 cbm only and remaining 1,90,090.08 cbm is excavated
unauthorizedly and transported the same to the various people without
obtaining valid transit permits from the department. Hence, it is ultra violation
of Rule 34(1) of APMMC Rules, 1966. Therefore, the 5th respondent issued
demand notice to the petitioner directing him to pay an amount of
Rs.12,89,99,926/-. It is further contended that the petitioner excavated
material for a tune of 2,57,068.168 cbm of road metal from the quarry lease
area, whereas the permission of EC and CFO is for 1,53,887.17 cbm.
Therefore, the petitioner has violated of EC and CFO conditions and
excavated excess quantity of 1,03,180.99 cbm of road metal in the leased
area. Thereafter, the 5th respondent has issued Form-I notice
No.1681/QL/RM/2019, dated 16.09.2024 duly seizing the Stone Crusher
8
which is in the name of the petitioner company working at Kutagulla Village,
Kadiri Mandal, Sri Sathya Sai District, as it is a captive crusher.
11. The reply affidavit filed by the petitioner stating that the show
cause notice was issued only for calling for record documentary evidence
showing payment of Seigniorage Fee and was never issued foe either raising
Demand of for seizure of the machinery. When the 5th respondent issued
show cause notice for production of documentary evidence, the action of
issuing Demand Notice without opportunity of hearing and consequential
hearing is contrary to the principles of natural justice. As the 5th respondent
passed the impugned demand notice without considering the material placed
before him and without adverting to the specific contentions raised by the
petitioner in its explanation dated 02.09.2024, as held in Whirlpool
Corporation vs. Registrar of Trademarks1, the present writ petition is very
well maintainable. It is further stated that the Sections 21 to 23 of the Act,
1957 are criminal in nature and as held by the Hon'ble Supreme Court in the
case of Karnataka Rare Earth vs. Department of Mines 2, held that "any
determination of penalty or seizure can only be done by a Competent Criminal
Court" and the 5th respondent does not have the power to either levy penalty
or seize the equipments under Section 21(4) of the Act, 1957 and as held by
this Court in the case of GSR Stone Crushers vs. State of Andhra
1
AIR 1999 SC 22
2
AIR 2004 SC 2915
9
Pradesh 3 , wherein this Court held that "the power to levy penalty under
Section 21 of the Act, 1957 only vests with the Competent Criminal Court and
the authorities under the Act, 1957 or the Rules, 1966 do not have the power
to levy any penalty" and hence, the Demand Notice dated 13.09.2024 and
Seizure Notice dated 16.09.2024 are one without power or authority of law.
12. Heard Sri O.Manohar Reddy, learned Senior Counsel appeared
on behalf of Sri B.Abhay Siddhanth, learned counsel for the petitioner and
Sri P.Rama Krishna, learned Government Pleader for Mines and Geology, for
the respondents.
13. On hearing, learned counsel for the petitioner while reiterating the
contents urged in the writ petition, submits that, the petitioner firm is a Class-I
Special State Contractor and used to execute the entrusted governmental
works by participating in the tender process. Whereas, the petitioner is
involved in numerous projects of various departments including laying of
roads, building bridges, drainage system, construction of buildings, etc., for
the State of Andhra Pradesh and therefore, the road metal and construction
material which has been excavated by the petitioner is primarily used for
carrying out construction activities undertaken by the petitioner in various
parts of the State. Therefore, the petitioner is a captive mine i.e, the mineral
which is being mined is for self consumption apart from the same also being
3
W.P.No.8390 of 2018 and batch
10
sold in the open market. Further, the Departments which are consuming the
minor minerals for execution of the said works were obligated to furnish the
monthly details in work wise and contractor wise to the Assistant Director of
Mines and Geology, without fail as per the letter dated 21.04.2023. He further
submits that since the date of granting of quarry lease, the petitioner has
excavated a total of 2,57,068.168 Cum of Road Metal and Construction
Material till date. The majority of the excavated mineral i.e., 1,90,090.08 Cum
is for self-consumption i.e., for usage of the same in the construction activities
carried out by the petitioner. Further, the petitioner has sold 62,799.98 Cum to
others and 4,570.783 Cum is also available at the Crusher Site, for which
online permits have already been granted. He further submits that at the time
of making payment of the works carried out by the petitioner, the necessary
fees/charges/levies payable to the Mines Department are deducted by the
concerned disbursing authority who has allotted the work to the petitioner. He
further submits that the 5th respondent has failed to provide reasons as to why
the explanation submitted by the petitioner dated 02.09.2024 is not
satisfactory and hence, the Demand Notice dated 13.09.2024 and
consequential seizure notice are bad in law as the same are not reasoned
orders and the impugned demand notice has been passed without giving any
opportunity of hearing or without considering the detailed explanation
submitted by the petitioner and hence the same is violative of principles of
natural justice and is liable to be set aside.
11
14. Learned Senior Counsel for the petitioner has placed reliance up
on the letter issued by the 3rd respondent vide No.502/SCC-ATP/2023-1,
dated 21.04.2023, wherein it was held as follows:
"The Government vide G.O.Ms.No.94 Irrigation & CAD (PW-COD)
Department, dated 01.07.2003 has promulgated the procedure to be adopted
for tender and registration of contractor and also given certain guidelines in
connection with deduction of Seigniorage fee etc., from the work bills of the
Civil contractors who consumed the minor minerals in their civil works.
.....
In view of the above, it is requested all Engineering Department authorities
as per the address entry who are consuming the minor minerals in their civil
works to honour the transit forms/transit coupons issued by the contractor i.e.,
M/s.Amigos Minerals, Ananthapuramu to the minor mineral lease holders who
are dispatching the minor minerals except grey Barytes held by M/s. APMDC
Ltd., YSR district and Sand in the erstwhile Ananthapuramu district. The minor
mineral consuming departments shall furnish every month w.e.f. 03.03.2023,
the details of minor minerals consumed in every month without fail directly to
the Asst. Director of Mines and Geology concerned so as to enable this office
to take further course of action in implementation of the new system
scrupulously.”
15. Learned Senior Counsel has further placed reliance on the tender
procedures as per G.O.Ms.No.94, I & CAD (PWW) Department, dated
01.07.2003, wherein it was held as follows:
“19. Seigniorage Charges: The Seigniorage charges will be recovered
from Contractors bills as per the rates prescribed in the contract documents
for the materials used on the work only. The present practice of insisting for
production of documentary evidence for having paid the seigniorage charges
in terms of G.O.Ms.No.243, Dated 8.5.1986 and in the absence of such
production of the evidence, the Imposition of five times penalty is dispensed
with.”
16. Learned Senior Counsel further submits that, in the survey report
dated 30.07.2024, it was mentioned that the variation of quantity occurred
within the leased area is 402.095 Cbm and quantity of mineral excavated
occurred outside the leased area is 600 Cbm. However, the 5th respondent
issued show-cause notice dated 08.08.2024 directing the petitioner to submit
12
documentary evidence as a token of Seigniorage fee paid for quantity
257068.168 Cbm within the leased area and also explain the quantity of 600
Cbm of Road Metal excavated from outside the leased area within 15 days
from the date of receipt of the notice, as to why action should not be initiated
against the petitioner as per rules, under APMMC Rules, 1966. The petitioner
submitted explanation stating that they have sold the excavated road metal
and construction material of 62,799.98 Cum out of 2,57,068.168 Cum to
various entities to which transit forms were also issued by the Department and
all the levies were paid to the Mining Department.
17. Per Contra, learned Government Pleader while reiterating the
contents made in the counter affidavit, submits that, the petitioner has
submitted explanation dated 02.09.2024 in which he has submitted
documentary evidences for a quantity of 62,799.98 Cbm in proof of
Seigniorage fee paid to the Government viz. OMEPS and M/s.Amigos
Minerals (SSC contractor) against the arrived quantity of 2,57,068.168 Cbm
by the inspecting officials and requested to consider the quantity of
1,90,090.08 Cbm consumed for Government Contract works. After due
verification of the documentary evidence, the 5th respondent has considered
the dispatched permits for a quantity of 62,799.98 Cbm obtained through
OMEPS and SSC Contractor and not considered the quantity consumed in
Government works as there is no sufficient proof of excavation and
transportation Road Metal from the quarry lease area. He further submits that
13
the petitioner did not produced any evidence i.e, Agreement copies of the
works executed, M-book, Challans and details of recovery of Seigniorage Fee
from work bills from the concerned department. Hence, the 5th respondent has
arrived the evaded quantity of Road Metal for a quantity of 1,94,268.188 Cbm
within the leased area and 600 Cbm outside the quarry lease area and issued
Demand Notice dated 13.09.2024 directing the petitioner to pay an amount of
Rs.12,89,99,926/- within fifteen days from the date of receipt of notice against
the mentioned head of accounts under rule 34(1) and 26(1) of APMMC Rules,
1966 and submit original challans to the office of 5th respondent, failing which,
necessary action will be initiated under APMMC Rules, 1966. Thereafter, the
5th respondent has issued Form-I Notice No.1681/QL/RM/2019, dated
16.09.2024 duly seizing the Stone Crusher which is in the name of the
petitioner company.
18. Learned Government Pleader further submits that, on
18.09.2024, the 5th respondent has got information regarding illegal quarrying
of Road Metal in the quarry lease by the petitioner and hence the technical
staff of the 5th respondent along with V.R.O. has conducted surprise check in
the quarry lease area and noticed that two Hitachis and some men available
at quarry site. After enquiry, it came to know that one Hitachi is not working
(under repair) and one is working for excavation of Road Metal in the
petitioner quarry leased area and hence Hitachi bearing No.LNT210 has been
seized and handed over for safe custody. This incident is evidence showing
14
that the petitioner is resorting for illegal excavation and transportation of Road
Metal from the quarry lease area. Further, the report of illegal excavation of
Road Metal has been reported in SHO, Kadiri P.S. Accordingly, FIR has been
registered against the petitioner vide FIR.No.274/2024, dated 18.09.2024. He
further submits that the quarry lease of the petitioner was not working and the
crusher was dismantled five years back. He further submits that the Surveyor
has identified the said quarry lease area on the ground as per the DGPS
sketch in presence of the lesses’s representative, verified the lease
boundaries and found that the boundary pillars are erected as per the sketch.
Further, the Surveyor has taken the whole measurements of the existing pit in
the quarry lease area with the help of DGPS Instrument and the quantity is
reported as 2,70,598.072 Cbm and as per the sketch of the survey report,
there is an encroachment in the South-eastern side of the Quarry leased area
and the Quantity of mineral excavated outside the Quarry leased area is
reported as 600 Cbm. Hence, the 5th respondent has rightly issued the
demand notice and seizure notice.
19. To support his contentions, learned Government Pleader has
placed reliance upon the Rules 26(1), 26(2) and 26(3)(ii) of APMMC Rules,
1966, reads as follows:
“26(1). If any person carries on quarrying operations or transports minor
minerals in contravention of these rules, he shall be liable to pay as penalty,
such enhanced seigniorage fee together with assessments as may be
imposed by an Officer nominated by the Director of Mines and Geology.
26(2). Whenever any person raises or transports minor minerals without
any lawful authority, such minerals may be seized by an Officer nominated by
15the Director of Mines and Geology in this behalf in addition to the imposition of
the penalty under sub-rule (1) :
Provided that in no case, the penalty shall exceed [ten times] the normal
seigniorage fee and the lease or permit already granted may, at the discretion
of the Deputy Director, be liable to be terminated or cancelled.
26(3)(ii) If no documentary proof is produced in token of having paid the
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 notwithstanding anything contained in sub-rule (1) be liable to pay
[five times] of the normal seigniorage fee as penalty in addition to normal
seigniorage fee leviable under the rules.”
20. Learned Government Pleader further placed reliance upon the
decision of the full bench judgment of this Court between L.Venkateswara
Rao and others vs. Singareni Collieries Company Limited and others 4,
wherein this Court held as follows:
“6. For the subsequent years when the respondent company has
deducted the seigniorage fee payable by them for the minor mineral used in
the works entrusted by the respondent company, these writ petitions have
been filed. When they came up before a Division Bench of this Court it was
contended by Mr. K. Srinivasa Murthy, learned counsel for the respondent
company, that the earlier Division Bench judgment referred to above, was
rendered without noticing the relevant provision of law contained in Rule
26(3)(ii) of the Andhra Pradesh Minor Mineral Concession Rules, 1966 and
that the respondent company having been treated as a consumer of minor
minerals, is served with a demand notice by the Department of Mines and
Geology to pay an amount of Rs. 1.56 crores towards penalty along with the
normal seigniorage fee. It was contended that the earlier judgment of the
Division Bench was not correct. In those circumstances the following order of
reference was made:
“Having regard to the facts and circumstances of the case and
the provision of law referred to above, we are of the view that the
matter requires to be considered by a Full Bench.”
32. Apart from the statutory sanction, a contractual obligation is cast
on the petitioners under Clause (7) of the agreement entered into between the
and the respondent company which stipulates that the contractor has to
produce documentary evidence for having paid the royalty charges to the
Government in respect of minor minerals used by him in the civil works
entrusted to him by the respondent company and that otherwise, the royalty
charges will be recovered from the bills and paid to the Government.
Therefore, the liability on the part of the contractor to pay the seigniorage fee
in respect of the minor minerals used by him in the civil works entrusted to him
by the respondent company, arises out of the contract entered into between
the parties, in case the contractor fails to produce documentary proof in token
of having paid the seigniorage fee in respect of the minerals used by him.
Each of the petitioners herein being a party to the agreement entered into with
the respondent company, is bound by the terms of the contract. We will
4
MANU/AP/0227/1993
16
consider about the validity of the relevant clause in the agreement at an
appropriate stage.
33. A similar question as to the liability of a contractor to pay the
royalty charges in respect of minor minerals used by him in the work entrusted
to him by the State Government under a written contract was the subject
matter of discussion before the Supreme Court in State of Karnataka v.
Subhash Rukmayya Guttender,. In that case a written agreement was entered
into by the State of Karnataka with individual contractors whereunder the
State Government had granted the right to the contractor to extract minor
minerals from the quarries owned by it. Clause 2 of the Schedule ‘D’ to the
contract provided that the unit rates quoted by the contractor were to be
considered as inclusive of royalty in respect of various materials viz.,
granite/trap/shahabad stone boulders metal mand, marum etc., supplied by
the contractor for execution of the several items of work irrespective of source
whether Government quarry or private quarry from where the materials were
obtained by him. The Government shall deduct from the bills payable to the
contractor, such royalty payable by him at the rates prescribed in the
Government Order. One of the pleas urged before the Supreme Court on
behalf of the contractors was that they were not lessess within the meaning of
Mines and Minerals (Regulation and Development) Act, 1957 and the
Karnataka Minor Mineral Concession Rules, 1969 and therefore
notwithstanding the contract entered into between them and the State
Government, they are not liable to pay the royalty charges in respect of
minerals used by them in the civil works. Rejecting the contention, the learned
Judges held that under the terms of the contract they were liable to pay
royalty and their liability arose from the contract.
54. We do not see any force in the contention of the learned Counsel.
Under the provisions of the Act and the Rules, unauthorised mining of
minerals whether they be minor minerals or other minerals, is strictly
prohibited. The object is to check illicit quarrying of minor minerals. To achieve
that object, the State Government made rules providing for the levy and
collection of penalty in addition to the normal seigniorage fee in respect of
minor minerals unauthorisedly raised. It is not correct that the provisions of the
Act and the Mineral Concession Rules, 1960 contemplate levy on and
collection of royalty from only the lessees or licence holders. As is evident
from Sub-section (5) of Section 21, royalty can be recovered from any person
who unauthorisedly carries on mining operations apart from recovering the
mineral raised by such person or where such mineral has already been
disposed of, the price thereof. There can be no doubt that the State
Government has the competence to make rules fixing the seigniorage fee in
respect minor minerals, levying fines and providing for their collection.
Seigniorage fee is the fee chargeable on the minor minerals despatched or
consumed from any land. Rule 26 (3) (ii) of the rules prescribes the method
and manner of the levy of normal seigniorage fee and its collection from the
user or consumer together with penalty in case such user or consumer fails to
produce documentary proof in token of having paid the seigniorage fee in
respect of the minor minerals used or consumed.
56. In case the user or consumer fails to produce proof of payment of
seigniorage fee in respect of minor minerals used or consumed by him, Rule
26 (3) (ii) authorises the levy of penalty on such consumer or user. This
provision is intended to check illicit quarrying of minor minerals and to prevent
evasion of mineral revenue due to the Government. The learned counsel for
the respondent company has drawn our attention to Rule 209-A of the Central
Excise Rules which authorises levy of penalty in addition to the excise duty on
any person who acquires possession of goods, to submit that the excise duty
and penalty can be levied on and recovered from any person other than the
producer or manufacturer. It is not impermissible for the legislature to leave it
17
to the executive to determine the details of levy and collection of fees and
penalty including the selection of persons on whom it can be levied and the
rates at which it can be charged, as observed by the Supreme Court in
Gwalior Rayon Mills v. Assistant Commissioner of Sales Tax,. The Legislature
can confer power upon another authority to make subordinate or ancillary
legislation. In view of the provisions of Section 15 of the Act, it is within the
competence of the State Government to make a rule providing for the levy
and collection of penalty from an user or consumer of minor minerals in case
he fails to produce documentary proof in token of having paid the mineral
revenue due to the Government in respect of such mineral used or
consumed.”
Therefore, learned Government Pleader prays to dismiss the writ
petitions and contempt cases.
21. In reply, learned Senior Counsel for the petitioner submits that the
Mines Surveyor in the Survey Report dated 30.07.2024 has himself
acknowledged that a quantity of 1,89,295.31 Cbm has been used in
Government works, which clearly means that the said information is available
with the office of the 5th respondent and it is unclear as to how the 5th
respondent has stated that the petitioner has not submitted necessary
documents to prove usage of the mineral in self consumption in the demand
notice. At the cost of repetition, it is the specific case of the petitioner that
1,90,090.08 Cbm was used for self-consumption for execution of Government
Works and a Certificate to that effect has also been issued by various
Government Agencies. He further submits that the 5th respondent has stated
that the petitioner was involved in illegal extraction of minerals on 18.09.2024
and hence, the seizure was made. Until and unless the lease deed is in
subsistence, it cannot at all be said that the said mineral extraction is illegal.
Further, the Rule 35 of the Rules, 1966 provide sixty days time limit for filing
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an appeal and the impugned demand notice itself provides 30 days time and
till the expiry of the said period, it cannot at all be said that any extraction
made is illegal. He further submits that the 5th respondent failed to see that the
Survey Report, dated 30.07.2024 which is the basis for the Show Cause
Notice, dated 08.08.2024 clearly stated that only 402.95 Cum is excavated
with payment of seigniorage fee and hence committed gross illegality in
levying Rs.12,89,99,926/-, contrary to the Survey Report, dated 30.07.2024.
The Demand Notice dated 13.09.2024 has been passed without giving any
opportunity of hearing or without considering the detailed explanation
submitted by the petitioner. Hence, the same is violative of principles of
natural justice and is liable to be set aside. Therefore, learned Senior Counsel
requests this Court to pass appropriate orders.
22. Perused the record.
23. On a perusal of the material on record, this Court observed that,
admittedly, the 3rd respondent has granted quarry lease for excavation of
Road Metal and Building Stone in the land in an extent of Ac.3.843 Hectare of
Kutagulla Village, Kadiri Mandal, Ananthapuramu district. On 30.07.2024, the
Royalty Inspector and Surveyor of the 5th respondent office inspected the
quarry lease held by the petitioner and found that 402.095 Cbm variation of
Recorded Mineral quantity was found within the leased area and 600 Cbm of
mineral was excavated outside the leased area. However, basing on the
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survey report, dated 30.07.2024, the 5th respondent issued show cause notice
dated 08.08.2024 directing the petitioner to submit documentary evidence as
a token of Seigniorage fee paid for quantity of 2,57,068.168 Cbm within the
leased area and also explain the quantity of 600 Cbm of Road Metal
excavated from outside the leased area. The petitioner has submitted his
explanation explaining all the facts. However, the 5th respondent issued
demand notice dated 13.09.2024, without giving any opportunity of hearing or
without considering the explanation submitted by the petitioner, directed the
petitioner to pay an amount of Rs.12,89,99,926/-. Thereafter, the 5th
respondent issued Seizure notice dated 16.09.2024 and thereafter, seized the
Stone Crusher.
24. In view of a close scrutiny of the impugned demand notice dated
13.09.2024 shows, as rightly argued by learned Senior counsel for the
petitioner, the 5th respondent has issued the demand notice, without giving
any opportunity of hearing and without considering the explanation submitted
by the petitioner.
25. Therefore, it is needless to emphasize the order is devoid of
reasons and bereft of following the principles of natural justice. In similar
circumstances, a learned Single Judge of High Court of Andhra Pradesh at
Hyderabad, having found that no opportunity of hearing was afforded to the
petitioner therein and his explanation was not considered by the authority, set
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aside the impugned order of termination of the petitioner therein from the
service and directed the concerned authority to pass appropriate order after
affording a personal hearing to the petitioner. The said order squarely applies
to the facts of the case on hand.
26. In Whirlpool Corporation Vs. Registrar of Trade Marks,
Mumbai and others5 regarding maintainability of writ petition in the context of
availability of alternative and efficacious remedy, the Apex Court held thus:
“14. The power to issue prerogative writs under Article 226 of the
Constitution is plenary in nature and is not limited by any other provision of
the Constitution. This power can be exercised by the High Court not only
for issuing writs in the nature of Habeas Corpus, Mandamus, prohibition,
Qua Warranto and Certiorari for the enforcement of any of the
Fundamental Rights contained in Part III of the Constitution but also for
“any other purpose”.
15. Under Article 226 of the Constitution, the High Court, having regard
to the facts of the case, has discretion to entertain or not to entertain a writ
petition. But the High Court has imposed upon itself certain restrictions one
of which is that if an effective and efficacious remedy is available, the High
Court would not normally exercise its jurisdiction. But the alternative
remedy has been consistently held by this court not to operate as a bar in
atleast three contingencies, namely, where the Writ Petition has been filed
for the enforcement of any of the Fundamental rights or where there has
been a violation of the principle of natural justice or where the order or
proceedings are wholly without jurisdiction or the vires of an Act is
challenged (emphasis supplied).”
The instant case falls in one of the exceptions carved out by the Apex
Court, the principles of natural justice is a casualty here.
27. On considering the submissions of both the learned counsels and
upon perusing the entire material on record, this Court is of the opinion that,
the 5th respondent ought to have given an opportunity of hearing, while
5
AIR 1999 SC 22 = MANU/SC/0664/1998
21
passing the impugned demand notice dated 13.09.2024. Further, the Rules
26(1), 26(2) of Andhra Pradesh Minor Mineral Concession Rules, 1966 are not
applicable to the present cases. Hence, this Court is inclined to dispose of the
writ petition No.20857 of 2024 by setting aside the impugned demand notice
dated 13.09.2024.
28. Having regard to the facts and circumstances of the cases and on
submission of both the learned counsels, the impugned demand notice vide
No.1681/QL/RM/2019, dated 13.09.2024 and impugned Seizure Notice dated
16.09.2024 issued by the 5th respondent are hereby set aside. Further, the
matter is remanded back to the 5th respondent with a direction to conduct
fresh enquiry and pass appropriate reasoned orders, by giving opportunity of
personal hearing to the petitioner, in accordance with law, within a period of
three (03) months from the date of receipt of a copy of this order.
29. With the above directions, the Writ Petition No.20857 of 2024 is
disposed of.
30. In view of the disposal of Writ Petition No.20857 of 2024, no
further orders are required to be passed in the contempt cases and
accordingly, the Contempt Cases are closed.
31. In so far as Writ Petition Nos.25080 and 25109 of 2024 are
concerned, the cause of action in these writ petitions is the same as that in
Writ Petition No.20857 of 2024, no further orders are required to be passed in
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these writ petitions and accordingly, the Writ Petition Nos.25080 and 25109 of
2024 are closed.
32. There shall be no order as to costs.
33. As a sequel, miscellaneous applications pending, if any, shall
stand closed.
__________________________
Dr. K. MANMADHA RAO, J
Date : 13-03-2025
BMS