TMI Blog1997 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said company, like all the respondents, had been granted by the State of Bihar leases for different areas under the provisions of Mines and Minerals Regulation Act, 1957. These leases pertained to various tracts of land situated in different villages but all the said leases related to lands in the forest areas. These leases had been granted long prior to the promulgation of the ordinance which led to the passing of the aforesaid Act. The respondents, on the basis of the leases which had been granted to them, worked on the said lands and extracted the minerals for which the leases had been granted. As far as Steel Authority of India is concerned the State of Bihar became interested in setting up a steel plant in its State. Certain Government land including forest land was given to the Hindustan Steel Ltd. (later re- named Steel Authority of India) and a steel plant including a township was set up at Bokaro, The land which was made available to this plant included forest land in ten villages which was transferred to the respondent company on 24th May, 1962. According to the respondents, and this is not disputed, it had paid compensation for the trees which it had acquired on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pied field and, therefore, the State Legislature was denuded of all its power to enact the said Act; that in view of the Forest Conservation Act, 1980 it was doubtful whether the Impugned Act could impose the tax. It was also held by the High Court that the Act and the Ordinance were unconstitutional and void as they were vague and uncertain and conferred naked and arbitrary power, that no machinery was provided for the purpose of levy imposition and assessment of the tax; Section 3(4) was in any event unconstitutional and void and the Act and the Ordinance were violative of Article 301 read with Article 30 (b) of the Constitution. It was further declared by the High Court that all actions taken under the said Act, ordinance and rules framed thereunder were unconstitutional and void and writ of mandamus was issued restraining the respondents therein and its officers from giving effect to the Act or the ordinance or the rules or any order or direction or instruction or notification which may have been issued in any manner whatsoever. Mr. Kapil Sibal, learned senior counsel for the appellants, submitted that the studies which were conducted by the State indicated that mines had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the State of Bihar prior to 4th April, 1991, the date of the Orissa Cement judgment. Therefore, it is contended, the history prior to the promulgation of the impugned act clearly shows that this a colourable piece of legislation brought about in an attempt to continue to levy the tax, cess or royalty which had been declared to be void but had been validated by the Parliament only for a limited period upto 4th April, 1991. Though the law had been cast in such a fashion so as to give an environmental flavour, in effect, the only purpose of this Act was to tax the mining or the non forest activities and the Act in question has transgressed the field occupied by the Central Act and the same could not be regarded as falling under Entry 49 of List II. In order to appreciate the rival contentions of the parties, it will be appropriate to refer to the salient features of the impugned Act and the Rules framed thereunder. The relevant provisions of the said Act are as follows: 1. Short title, extent and commencement-[l] This act may be called the Bihar Restoration and Improvement of Degraded Forest Land Taxation Act, 1992. (2) It extends to the whole of the forest land in the St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land is reclaimed as far as possible and the tax shall be levied, assessed and collected at the rate specified under the schedule appended to this Act in the manner as may be prescribed : Provided that the Government shall have the power to amend the schedule by rules as and when considered necessary. 2 The tax under sub-section (1) shall be payable by (a) every user allowed by the State Government to use forest land for non-forest purpose; (b) every occupier responsible for creating void/voids by indulging in any developmental activities including mining. 3. (a) The rate of taxation given against serial numbers (a), (b) and (c) of the Schedule shall apply to forest land already voided immediately before the date of commencement of this Act, and the areas of the forest land being voided, or the area that may be voided after the date of commencement of this Act; (b) The rate of taxation given against serial numbers (d) to (f) of the Schedule shall be applicable in case of use of forest land with different vegetative density which is used for non-forest purpose; (c) An user/occupier engaged in excavational activities against serial numbers (a), (b) and (c) and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be read along with the schedule. Reading the two together, it was clear that the levy of tax is relatable to the rehabilitation of the land which had been voided, wholly or in part. In computing the amount of tax to be paid the schedule to the Act indicated that the rate is relatable to the extent to which the land has been voided. The levy, it was contended, is not with reference either to the quantum of mineral produced or the value of mineral recovered and nor is the levy related to the royalty recovered by the State at the pit-head. The tax is related to the cost of reclamation and the same is recoverable from the occupier responsible for creating voids by indulging in developmental activities including mining. The operation of the two acts, namely, the MMRD Act and the impugned Act were in entirely different fields and nor did the operation of the impugned legislation directly or indirectly deal with matters covered by the Forest Conservation Act, 1980. It was contended that even though a part of the said legislation may effect another entry in the Union List, the same will not render the State Legislature unconstitutional once in pith and substance the impugned legislation fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly levied by reason of the general ownership of lands and buildings, it cannot include the gift tax as levied by Parliament, Entry 49 of List II came up for consideration, once again, in India Cement Ltd and Ors., v. Stole of Tamil Nadu and Ors., [1990] 1 SCC 12. The Court was considering the validity of the levy of cess on royalty payable by a lessee on the extraction of minerals. In defending the validity of the levy the State Government had, inter alia, sought to rely on Entry 49 of List II and had contended that in pith and substance the cess was a tax on land. While approving the decision of a Division Bench of the Madhya Pradesh High Court in the case of Hiralal Rameshwar Prasad v. State of Madhya Pradesh, (1986) MPLJ 514 in which it had been held that the development cess levied by Section 9 of the M.P. Karadhan Adhiniyam 1982 was ultra vires, this Court held that cess on royalty could not be sustained under Entry 49 of List II as being a tax on land. In coming to this conclusion it was observed at page 26 that It appears that in the instant case also no tax can be levied or leviable under the impugned Act if no mining activities are carried on. Hence it is manifest t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyment, education and production tax only on mineral bearing land and coal bearing land. The validity of the Act having been challenged, the High Court held that the State Legislature did not have the competence to levy tax on coal bearing land. In appeal the legislative competence was sought to be derived from Entry 49 of List II. Rejecting this contention and following the ratio of the earlier decision of this Court, it was held that the levy in that case was in substance on minerals and mineral rights and not on land and was beyond the competence of the State Legislature and did not fall within Entry 49 of List II. Applying the ratio of the aforesaid decisions to the facts of the present case we find that the position is no different. Entry 49 of List II has been interpreted to mean the levy of tax directly on land as a unit. The land has been regarded as meaning the land on surface and also below the surface. Therefore, in order that a tax can be levied under Entry 49 of List II it is essential that 'land' as a unit must exist on which the tax is imposed. In the instant case the tax is, in effect, being levied not on land but on the absence of land. The levy is on the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lands was determined having regard to the development value of the same. It was held that the tax was upon land though the cess was quantified on the basis of produce of the tea estate. In the present case, however, we do not find that the tax is on land. In fact what is sought to be taxed is in the absence on land. There being this fundamental difference the decision in Goodriche's case can have no application merely because in that case the quantum of cess on the estate to be charged depended on the quantity of tea dispatched from the tea estate. The tax, in other words, was on the existing tea estate but, for the purpose of calculating the tax it was relatable to the quantum of the tea dispatched as a measure of the tax. One of the facets of tax being levied on land is that the primary responsibility of the payment of tax is on the owner of the land. In the instant case the levy is not on the general ownership of the land but is on the person who uses it and who may or may not be the owner. The primary liability is on the use by the occupier and if the occupier and the owner are two different persons the liability would be that of the occupier alone and not of the owner. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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