The Jharkhand High Court has come as a great relief to Bharat Coking Coal Limited (BCCL) when the court ordered the state government to pay over 113 crore as Covid cess. The ruling is a major step towards resolving the existing quarrel that has existed concerning the imposition of the levy during the pandemic.
In July 2020, the Jharkhand government had enacted an ordinance under which a Covid cess was to be collected on mineral-rich land, which would generate revenue throughout the health crisis. The cess was intended to be a short-term, three-year validity measure. Nevertheless, BCCL had to pay even after the required time had elapsed, and the company took the case to court.
When the petition was heard, the High Court noted that the ordinance made the cess obviously restricted to a three-year window. Any gathering after that, the bench observed, was unlawful. Consequently, the ongoing imposition of the cess by the government was considered as being illegal. The court had directed the refund of over 113 crore that had already been collected on BCCL, as well as to have the authorities reconsider and find out any other amounts that might have been improperly raised.
The case judgment is broader in its application beyond the case of BCCL. The ruling restates the rule that tax/cess collection should be in strict compliance with the arrangement and schedule established in the law. The decision conveys to the state government and all other mining firms that financial taxes cannot be imposed or levied at will when the legal mandate to levy any tax has lapsed.
In the case of BCCL, a major subsidiary of Coal India Limited that functions in the Dhanbad and the surrounding coalfields, the order is a great relief in terms of finances. The refund will assist in alleviating the cost pressure at a time when the coal industry is already facing the issue of demand changes and the cost of operations.
Conversely, the Jharkhand government is now confronted with the possibility of recompensing a substantial amount of money to the public-sector miner, which may lead to another pressure on state funds. This is a time-bound directive because the administration has been requested to write a review in three weeks and pay the refund in eight weeks.
The verdict is a major achievement for the BCCL and a legal precedent mark that might have a possible positive impact on other companies that might have been victimized by such cess collections outside the ordinance time. It also brings out the role of the judiciary to ascertain that the emergency fiscal measures are within the legal scope of the judiciary.
