TMI Blog2000 (10) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat High Court, dismissed the same, following the decision of the Supreme Court in the case of India Cement Ltd. and Ors. vs. State of Tamil Nadu and Ors., 1990 (1) SCC 12, and following an earlier decision of the said High Court in Special Civil Application No. 6226/94. Subsequent to the decision of this Court in India Cement, all the questions raised in these appeals have been considered by a three Judge Bench in the case of State of Madhya Pradesh vs. Mahalaxmi Fabric Mills Ltd. and Ors., 1995 Supp. (1) SCC 642, and this Court in Mahalaxmis case, rejecting the contentions raised by the consumers of minerals, upheld the validity of the Act and set aside the order of the High Court. Since the judgment of this Court in Mahalaxmi, deals directly on all issues raised in this batch of appeals, Mr. Chidambaram, the learned senior counsel, submitted with force that this batch of appeals should be referred to a larger Bench, as the Bench while disposing of Mahalaxmis case, had assumed some legal position erroneously, to be the law laid down by this Court in India Cement. Mr. Shanti Bhushan, the learned senior counsel, appearing for the appellants in some other appeals, however con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Legislature is excluded. In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupied by the impugned Act, the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. In the case of State of Orissa vs. M.A. Tulloch and Co., 1964(4) S.C.R. 461, the question for consideration before this Court was whether the continued operation of the Orissa Mining Areas Development Fund Act, 1952 and the continued exigibility of the fees leviable from mine-owners under the said enactment, is legally and constitutionally permissible. The contention raised was that the Mines and Minerals (Regulation and Development) Act, 1957 called the Central Act was brought into force from June 1, 1953 and the Orissa Act which had been enacted by virtue of the legislative power conferred by Entry 23 of the State Legislative List would ceased to be operative, once the Parliament made a declaration and enacted the law. The High Court of Orissa had upheld the contention and came to hold that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms states that royalties payable under the Second Schedule of the Act shall not be enhanced more than once during a period of four years. It is, therefore, a clear bar on the State legislature taxing royalty so as to in effect amend Second Schedule of the Central Act. In the premises, it cannot be right to say that tax on royalty can be a tax on land, and even if it is a tax, if it falls within Entry 50 will be ultra vires the State legislative power in view of Section 9(3) of the Central Act. The Court also rejected the contention on behalf of the State that under Entry 50 of List II, there is no limitation to the taxing power of the State and held that in view of express provisions of Section 9(2) of the Mines and Minerals (Regulation and Development) Act, 1957, the submission cannot be accepted and the field is fully covered by the Central Legislation. In paragraph 34 of the judgment, the Court concluded: We are of the opinion that royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State legislature because Section 9 of the Central Act covers the field and the State legislature is denuded of its competence under Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessees contend, in this case, that the legislation in question is beyond the purview of the State legislature by reason of the enactment of the MMRD Act. It would appear, prima facie that the contention has to be upheld on the basis of the trilogy of decisions referred to at the outset viz. Hinger-Rampur, Tulloch and India Cement. They seem to provide a complete answer to this question. In State of Orissa and Ors. Vs. Mahanadi Coalfields Ltd. and Ors. , 1995 Supp.(2) S.C.C., 686, the validity of the Orissa Rural Employment, Education and Production Act, 1992 was under challenge and the Orissa High Court had struck down the Act on the ground that the levy is a tax on minerals and mineral rights and the subject is fully covered by the Central Legislation by enacting Mines and Minerals (Regulation and Development) Act. This Court examined the different relevant entries in List I and List II, more particularly, Entry 54 of List I and Entry 23 and Entry 50 of List II and came to hold : It appears to us that Entry 49 of List II is the general entry which enables the State Legislature to impose taxes on lands and buildings. A particular category or specie is taken out of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construing the different legislative entries and the competence of the Union Legislature as well as the State Legislature. In Mahalaxmis case 1995 Supp.(1) S.C.C. 642, the validity of the Central legislation was under challenge and the three Judge Bench upheld the legislative competence of the Union Legislature, in enacting Mines and Minerals (Regulation and Development) Act, 1957, more particularly, Section 9 thereof as well as the power of the Central Government to enhance or reduce the rate of royalty, payable in respect of minerals and it was held that the parliamentary legislation under 1957 Act, having occupied the entire field, neither Entry 23 of List II nor Entry 50 of the said List, could be attracted. The Court also in addition, came to hold that the royalty being a tax on mineral including land, labour and capital employed in extraction of the mineral, it would fall under the residuary Entry 97 of List I. In view of the aforesaid decisions of this Court, on interpreting the different legislative entries, conferring power on the Union Legislature as well as the State Legislature and the law made by the Parliament in enacting the Mines and Minerals (Regulation and Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also urged that in a federal system of governance, as in our country, the Constitution itself has clearly demarcated the legislative field for levying tax by the Union and the State and so far as, the Union is concerned, those entries are Entries 82 to 92 in List I and so far as the State is concerned, those entries are Entries 45 to 63 in List II of the Seventh Schedule. The field of levy of tax having been clearly demarcated and limitations and restrictions having also mentioned therein, the Mines and Minerals (Regulation and Development) Act, 1957, cannot be held to be an Act, authorising levy of tax on minerals, as the competence of the Union Legislature in the aforesaid legislation is referable to Entry 54 of List I and by such general enactment, the distinct taxing power of State on Minerals under Entry 50 of List II of the Seventh Schedule, cannot be obliterated and denuded and, therefore, the provisions of the 1957 Act, purporting to taking away the power of the State Legislature must be struck down. Mr. Chidambaram, being conscious of the Three Judge Bench of this Court in Mahalaxmi, submitted that it would be only appropriate to refer the matter to a larger Bench. Mr. Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival submissions, although, we find the arguments advanced by Mr. Chidambaram are attractive, but in view of the series of decisions, already referred to, we do not think it appropriate to refer these appeals for the decision of a larger Bench and in our opinion, the contentions raised have been fully covered by the Three Judge Bench Judgment of this Court in Mahalaxmi. Royalty on minerals is a tax, is concluded by the Seven Judge Judgment of this Court in India Cement. The power of State Legislature under Entry 50 in List II namely tax on minerals vis-a-vis Section 9(3) of the MMRD Act, 1957 made by Parliament under Entry 54 of List I was also considered in the case of India cement and it was held that in any event, it would be outside the competence of the State Legislature in view of Sections 9 and 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957. In fact, the Court in India Cement, did not accept the earlier judgment of this Court in H.S.R.Murthys case, on the ground that in Murthy, the attention of the Court had not been invited to MMRD Act and Section 9 thereof. In paragraph 30 of the Judgment in India Cement, the Court held: It is, therefore, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Section 9 in the Central Act, the State Legislature is denuded of its power and at the same time, the Parliaments competence to have the law made, no longer remains in doubt. The aforesaid decision, therefore is of no assistance. In B.A.Jayaram and Ors. Vs. Union of India and Ors., 1984(1) S.C.C., 168, the two entries, which were for consideration before this Court were Entry 57 of List II and Entry 35 of List III. Entry 57 is itself subject to Entry 35 of List III and, therefore, question for consideration was, what was the content and extent of power under Entry 35 of List III which reads: Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. In construing Entry 35 of List III, this Court held that it would be open to Parliament to lay down the principles on which taxes may be levied on Mechanically propelled vehicles, but Parliament, while enacting the Motor Vehicles Act, more particularly, Section 63(7) thereof, refrain from indicating any such principles, either expressly or by necessary implication and, therefore, the States power to tax on such motor vehicles under Entry 57 of List II was left un-inhabited. But in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A group of writ petitions had been disposed of by the Gujarat High Court, dismissing the same, following the judgment of the said High Court dated 22nd of June, 1994 in Special Civil Application No. 6226 of 1994. While dismissing the writ applications, though the interim orders stood vacated, the Court had not passed any order with regard to payment of interest. But in Special Civil Application No. 6226/94, while vacating the interim order and discharging the rule, the Court has specifically ordered for payment of interest @ 18% per annum. On application for clarification being filed in those group of writ petitions, where no order with regard to payment of interest had been made, the High Court directed the payment of interest @ 18% per annum, which direction had not been made while disposing of the writ petitions. Those orders of the High Court, clarifying the earlier order directing payment of interest @ 18% per annum, are also subject matter of appeals in some of these appeals including Civil Appeal No. 3119/95. We have heard the learned counsel for the parties and in our considered opinion, the direction to pay interest @ 18% per annum must be held to be unreasonable. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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