1 2025:CGHC:56143-DB The date when the judgment is reserved The date when the judgment is pronounced The date when the judgment is uploaded on the website Operative Full - 18-11-2025 - 20-11-2025 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WA No. 830 of 2025 Municipal Commissioner Raigarh, District - Raigarh (C.G.) Through Its Commissioner ... Appellant (Respondent No.2 in WP) versus 1 - M/s Jindal Steel And Power Limited A Company incorporated under the Companies Act, 1956, having its registered Office at O.P. Jindal Marg, Hisar 125005, Haryana, Through Mr. Kamal Agrawal, S/o Late Shri Nathu Lal Agrawal, Aged About 47 Years, R/o Opposite - Collector Bungalow, Civil Lines, Raigarh, Having Its Office At Post Box No. 16, Kharsia Road, Raigarh, District Raigarh (C.G.) (Petitioner No.1) 2 - Mr. Rajat Saha S/o Late Shri Rajendra Saha Aged About 47 Years Shareholder Of M/s. Jindal Steel And Power Limited, R/o D-5, Jindalgarh, Raigarh, District - Raigarh (C.G.) (Petitioner No.2) 3 - State Of Chhattisgarh Through Secretary, Local Self Government Department, Mantralaya, Mahanadi Bhawan, Raipur, District Raipur (C.G.) (Respondent No.1) ... Respondents 2 For Appellant : Mr. HB Agrawal, Sr. Advocate with Dr. Sudeep Agrawal, Advocate. For Respondents : Mr. Indrajit Mahanty, Sr. Adv., Mr. Ashish Shrivastava, Sr. Adv. with Ms. Neha Gulati, Ms. Shubhangi Arora, Mr. Rahul Ambast, Mr. Ashutosh Shrivastava and Mr. Abhishek Choudhary, Advocates. Hon'ble Smt. Justice Rajani Dubey Hon’ble Shri Justice Amitendra Kishore Prasad, JJ Judgment On Board (18th November, 2025) Per Rajani Dubey, J Heard on admission as also on IA No.01, application for grant of stay. 02. Challenge in this appeal is to the order dated 19.9.2025 passed by learned Single Judge of this Court in WPT No.49/2014 whereby the learned Single Judge allowed the writ petition, quashed the resolution dated 15.4.2013 (P/1), letter dated 29.11.2013 (P/2), letter dated 3.12.2013 (P/3), letter and demand notices dated 13.12.2013 (P/4) and demand notice dated 1.2.2014 (P/5) although refund of deposited terminal tax were refused on the ground of estopples and the same was not claimed within reasonable time. 03. Case of the appellant, in brief, is that the appellant had passed resolution dated 15.04.2013 (Annexure P/1), issued letter dated 29.11.2013 (Annexure P/2 ), letter dated 03.12.2013 (Annexure P/3 ), letter and demand notices dated 13.12.2013 (Annexure P/4) and demand notice dated 01.02.2014 (Annexure P/5 ) imposing terminal tax on Respondent No. 1 and 2. It is not in dispute that earlier M/s. Jindal Steel and Power Limited which is 3 registered company under Company's Act, 1956 having office at Post Box No. 16, Kharsia Road, Raigarh, Distt. Raigarh (C.G.) started its factory in the limits of Municipal Corporation, Raigarh and subsequently, expanded the same by purchasing land in Chiraipani Gram Panchayat and Kirodimal Nagar Panchayat and put a boundary of the factory by raising wall and opening a gate called as MLSM Security Gate as per its convenience. The whole area of Kirodimal Nagar Panchayat, Chiraipani Gram Panchayat and Raigarh Municipal Corporation where the main plant situated and manufacturing process is going on are not in dispute and all the area covered by boundary is called factory premises for the purposes of imposing terminal tax by the appellant. The only objection of Respondent No. 1 and 2 is that they transport the finished goods manufactured by main factory through Chiraipali Gram Panchayat Gate called as MLSM Security Gate, therefore, they want to escape out from payment of terminal tax to the Kirodimal Nagar Panchayat governed by Municipalities Act, 1961 and Municipal Corporation, Raigarh governed by Municipal Corporation Act, 1956. The Single Judge has failed to see the word manufacturing process occurring in Section 2(k) of Factories Act, 1948, wherein the word “premises” has been explained and clarified in judgment of Apex Court reported in 1999 (1) SCC 596 between Lal Mohammad and Others Vs. Indian Railway Constructions Company Limited and Others, where it was held that all the part of factory will form one premises being part and parcel of the factory, therefore, outlet of MLSM Security Gate in this case will not absolve the factory i.e. Respondent No. 1 and 2 from escaping to pay terminal tax. Therefore, reasoning and grounds assigned by the Single Judge are wrong, illegal and liable to be set-aside because factory where the finished goods is manufactured is the reason for imposing terminal tax, therefore, if outlet has been opened in a place which is 4 not an area falling within Municipalities Act or Municipal Corporation Act it is of no consequence because it is for factory owner to open one gate or several gates from the areas which is falling or not falling in Municipalities or Municipal Corporation Act because it ought to have been seen that the goods manufactured by the factory is whether amenable to terminal tax or not? It is the only decisive criteria in the present case. Admittedly, there is Steel Plant at Raigarh with a capacity of 3 MTPA and a captive power plant of about 350 MW by engaging over 9000 employees manufactures steel goods in Raigarh area is not in dispute as is clear from Para-3 of the order of learned Single Judge. The factory is subsequently, increased by purchasing lands in Kirodimal Nagar Panchayat Area and Chiraipani Gram Panchayat and all the area covered with a boundary wall by opening a gate in Chiraipani Gram Panchayat Area will fall in premises of factory situated at Raigarh Municipal Corporation area, therefore, opening of outlet or supply of goods manufactured in factory situated at Raigarh will amount escaping terminal tax payable to the appellant and therefore, the order of learned Single Judge quashing letters, demand notices of Appellant as mentioned in Para-30 of the order (Annexure P/1 to Annexure P/5) are liable to be set-aside. 04. Learned counsel for the appellant submits that learned Single Judge failed to consider the fact that main factory of the respondent – M/s Jindal Steel and Power Ltd is situated in Raigarh Municipal Corporation area and its head office is also situated at Post Box No.16, Kharsiya Road, Raigarh and not at Chiraipani Gram Panchayat, therefore, in view of judgment of the Hon’ble Apex Court in Lal Mohammad and others Vs. Indian Railway Constructions Company Ltd. and others, (1999) 1 SCC 596, it ought to have been held that terminal tax is imposable on finished goods produced in 5 factory, situated at Raigarh area. He next submits that the power of Municipal Corporation to impose terminal tax is permissible u/s 132(n) of CG Municipal Corporation Act, 1956, therefore, the letters and demand notices of Annexures P/1 & P/2 are valid and legal, the same cannot be quashed because authority to impose terminal tax is not in dispute. The reasoning of the learned Single Judge in interpreting terminal area etc. is of no consequence because a factory owner can open one or many gates for transportation as per his convenience but the factory owner cannot escape the payment of terminal tax on the ground that the gate in this case MLSM Gate in Chiraipani Gram Panchayat area does not fall in municipality or municipal corporation. Thus the reasoning assigned by learned Single Judge is against the pronouncement of the Hon’ble Apex Court in the case of Lal Mohammad (supra) that all premises of factory area will form part and parcel of the “premises” of the factory. 05. Learned counsel for the appellant further argues that the learned Single Judge has also ignored the admitted factual aspect that licence and permission were granted to respondents No. 1 & 2 for Raigarh area, Steel Plant and Captive Power Plant which situate, admittedly, in the area of Raigarh municipal corporation and governed by the Municipal Corporation Act, 1956, therefore, quashment of Annexures P/1 to P/5 is against the admitted position in the case. For all these reasons, the appeal deserves to be admitted for hearing and the effect and operation of the impugned order dated 19.9.2025 passed in WPT No.49/2014 be stayed because as per demand notice dated 13.12.2013 a sum of Rs.1,83,34,700/- demanded as terminal tax was stayed by the learned Single Judge by directing respondents 6 No.1 & 2 to submit bank guarantee of Rs.1 crore which is continuing and the same may be renewed and continued till final disposal of this appeal. 06. On the other hand, learned counsel for the respondents appearing on advance copy supporting the impugned order, submits that the learned Single Judge after hearing both the parties, appreciating all the documents and observing the legal position, rightly passed the impugned order and quashed Annexures P/1 to P/5. The impugned order is well merited and needs no interference by this Court. Reliance has been placed on the judgment in the matter of Associated Cement Company Limited and another Vs. State of Madhya Pradesh and another, 2002 (3) MPLJ 357. 07. We have heard learned counsel for the parties, perused the impugned order and other documents appended with the writ appeal. 08. From perusal of the impugned order it transpires that the learned Single Judge has held that there is no dispute that the manufacturing plant of the respondents fall within the four municipal limits and terminal tax under the Municipalities Act can be imposed on goods that are exported from the limits of the Municipal Area only but since in the case in hand the respondent- company does not export goods from the limits of the Municipal Corporation, they have wrongly issued impugned demand notices on a fallacious assumption that the goods dispatched from the respondents’ plant are exigible to terminal tax. Learned Single Judge in paras 18 to 21 of the impugned order observing the terminal tax, municipal limit, definition of terminal and also the guidelines of the High Court of MP in the case of 7 Associated Cement Co. (supra) passed the impugned order. Para 23 reads as under: “23. This proposition is fortified by the decision of the Madhya Pradesh Court in the matter of Associated Cement Company Limited and Another v State of Madhya Pradesh and Another (supra), wherein it was held that manufacturing of goods in a Municipal area is not the acid test for levy of Terminal Tax. The real test is export of goods or transport from the manufacturing unit outside the limits of the municipal area. In the facts of the present case, transit of goods takes place from Chiraipani Gram Panchayat premises, not from the municipal area of the Respondents, which would entail levy of Terminal Tax. Relevant portion of thereof reads as under- "25. On a conspectus reading of the aforesaid decisions and understanding the ratio in proper perspective there remains no trace of doubt that transport by rail is not liable to terminal/export tax. Submission of Mr. V.K.Tankha is that as goods are manufactured in the municipal area at Kymore and the goods are transported by vehicle to the railway station they are liable to terminal tax and would be covered under Entries 52 and 56 of the List-II is not acceptable as such a submission is not in consonance with the law laid down by the Apex Court as well as by this Court. It is noteworthy to mention here that the manufacturing of goods within the Municipal area is not the acid test. The real test is export of goods or transport from the manufacturing unit outside the limits of municipal area. The submission of Mr. Tankha is acceptable inasmuch as if the goods are to be exported by the Rail or carried by the Railways they have to be carried to the Railway Station. By no stretch of imagination it can be said that because they are carried by some vehicle from the manufacturing unit to the Railway Station terminal tax would be leviable. If such an interpretation is given acceptance, in my considered view Entry 89 would be frustrated and Entry 56 would be given the meaning beyond its 8 comprehensive connotation. Entry 56 deals with goods 'carried by road'. In the case at hand, as has been stated above goods are taken out from the Municipal area by Rail. Hence, the terminal tax by the Municipality cannot be imposed." 09. Learned Single Judge minutely appreciated the provisions of the Municipal Corporation Act, Municipal Rules and the guidelines of the Hon’ble Apex Court in the case of Central India Spinning and Weaving and Manufacturing Co. Ltd, the Empress Mills Nagpur Vs. Municipal Committee, Wardha, 1958 SCR 1102 and held in paras 27, 28 & 30 as under: “27. Having thus considered the arguments advanced at length by counsel for the rival parties and gone through the documents annexed with the petitions, there is no dispute that the manufacturing plant of the petitioners fall within the four municipal limits (1) Municipal Corporation, Raigarh (respondent No.2 in WPT No. 49/2014), Kirodimal Nagar Panchayat (Respondent No.2 in WPT No. 118/2014), Chiraipani Gram Panchayat and Khairpur Gram Panchayat (not a party in the present petitions). It is also evident from the record that the Terminal Tax under the Municipalities Act can be imposed on the goods that are exported from the limits of the Municipal Area only, but since in the cases in hand the petitioner-Company does not export goods from the limits of respondent No. 2 in both the cases, the respondents have wrongly issued impugned Demand Notices on a fallacious assumption that the goods dispatched from the petitioner's plant are exigible to terminal tax. The conclusion drawn by respondent No. 2 that the steel products manufactured by the petitioner-Company are exported by the petitioner No.1 from within the limits of respondent No.2 is not in conformity with the documents on record in both the cases because there is nothing to demonstrate on behalf of the respondents that the petitioner-Company is either engaged in the export of the scheduled goods or does it sell any of the scheduled goods for the purpose of export from the said limits. 9 28. In aforesaid view of the matter, this Court is of the considered opinion that the demand notices issued by respondent No.2 acting upon the document of Annexure P-1 in WPT No. 118/2014 and resolution dated 31.12.2010 and 15.04.2013, are liable to be set aside. 30. Thus in view of the observations made above, the petitions are allowed. Demand notices dated 19.04.2011, 30.05.2011, 30.06.2011, 05.08.11, 17.07.2012, 27.07.2013, 06.11.2013 and 22.04.2014 (Annexure P-3) issued in pursuance of the letter dated 23.03.2001 (Annexure P-1) and resolution dated 31.12.2010 (Annexure P-2) in WPT No. 118/2014 AND resolution dated 15.04.2013 (Annexure P-1); letter dated 29.11.2013 (Annexure P-2), letter dated 03.12.2013 (Annexure P-3), letter and demand notices dated 13.12.2013 (Annexure P-4) and 01.02.2014 (Annexure P-5) in WPT No. 49/2014, are hereby quashed.” 10. Having considered the submissions advanced by learned counsel for the parties, perused the pleadings made in the writ appeal and also considering the findings recorded by learned Single Judge while allowing the writ petition filed by the respondents, we do not find any illegality, irregularity or jurisdictional error warranting any interference by this Court. Accordingly, no case for grant of any interim relief/stay is made out and IA No.01 is thus rejected. The writ appeal itself being devoid of any substance is liable to be dismissed at the admission stage and is hereby dismissed. No order as to cost(s). Sd/ Sd/ (Rajani Dubey) (Amitendra Kishore Prasad) Judge Judge Khan MOHD AKHTAR KHAN Digitally signed by MOHD AKHTAR KHAN Date: 2025.11.20 13:32:56 +0530