M/S Calster Steel LTD. Through Authorized Representative vs. North Eastern Railway , Through General Manager Engineering

Held

The Court acknowledged that there was a dispute regarding the extent of extra land in possession of the petitioner. It noted that the respondent's claims regarding the extra area varied over time, from 964.34 sq. meters to 4165.87 sq. meters. The Court highlighted that the joint inspection report of 04.04.2016, which found 1122.59 sq. meters of extra land, was not considered in the impugned demand. The petitioner had also been paying license fees based on this joint inspection report and had requested regularization of additional land. The respondent, through its counsel, agreed to pass a speaking order after considering the joint inspection report and other relevant material. Consequently, the Court directed the petitioner to file a fresh representation with supporting documents within two weeks, and the competent authority to pass a speaking order within four weeks thereafter. The impugned demand was made subject to the decision on the representation. The Court did not decide on the merits of the demand itself, but rather facilitated a process for its resolution.

Facts

The petitioner, M/s Calster Steel Ltd., was awarded a contract in 1998 for manufacturing BG PSC Sleepers, requiring them to set up a factory on licensed land measuring 5414.40 sq. meters. The annual license fee was subject to a 10% annual increase. The respondent, North Eastern Railway, initially informed the petitioner in 2006 that it was in possession of 964.34 sq. meters of additional land. The petitioner disputed this, claiming possession of only 144 sq. meters of additional land. Deductions were made from the petitioner's bills. A renewed contract in 2014 again specified the licensed area as 5414.40 sq. meters. A joint inspection in 2016 found the petitioner in possession of 1122.59 sq. meters of extra land, which the petitioner subsequently sought to regularize and pay license fees for, along with GST. However, an impugned communication dated 18.02.2021 demanded license fees treating the extra land as 4156.87 sq. meters since 2006-07, leading to the present petition.

Key Issues

1. Whether the impugned demand dated 18.02.2021, demanding license fee for 4156.87 sq. meters of extra land since 2006-07, is valid, considering the joint survey report and the petitioner's representations? Petitioner's arguments: The impugned demand was issued without considering the joint survey report dated 04.04.2016, which found 1122.59 sq. meters of extra land. The demand also failed to consider the petitioner's repeated representations disputing the extent of extra land and the fact that no notice or opportunity of hearing was granted before raising the demand, causing prejudice. Respondent's arguments: The petitioner admitted possession of extra land in 2007. The impugned demand was raised based on earlier communications dated 27.02.2007 and 28.10.2015.