2018 (9) TMI 2141 - HC - Indian Laws

Bombay HC upholds Goa Rural Improvement and Welfare Cess Act 2000 constitutional validity against mining industry challenge

The Bombay HC upheld the constitutional validity of the Goa Rural Improvement and Welfare Cess Act, 2000 and Rules, 2006. The court found no irrevocable ... Constitutional validity of the Goa Rural Improvement and Welfare Cess Act, 2000 and the Goa Rural Improvement and Welfare Cess Rules, 2006 - Validity of demand notices issued under the impugned enactments and the notification issued on 8 October 2010 - HELD THAT:- Considering substance and object of the Goa Cess Act and Rules vis-a-vis the MMDR Act and the Rules framed there under, it is found that there is no irrevocable conflict between the concerned Union Legislation and the State Legislations. The Goa Cess Act and Rules are targeted for augmentation of revenue to provide infrastructures in the State without impinging on the mineral regulation. The Act is traceable to the entries relied upon by the State. Sufficient evidence placed on record of spending the money, both on road infrastructure and welfare activities. It cannot be said that the Petitioners do not benefit at all from the services rendered and that there is not even a remote connection. The Goa Cess Act and the Rules are a device for the State to augment its resources. The services rendered by the collection of the levy benefits the Petitioner as well, and there exists a co-relationship. Therefore, the Goa Cess Act and the Rules, whether it imposes a tax or fee, cannot be said to be unconstitutional - It needs to be noted that by Notification dated 6 April 2016 the levy where royalty is paid to the Government has been reduced to 'nil'. Thus, the challenge of the Petitioner on the constitutional validity of the Goa cess Act and the Rules on the ground of legislative competence must fail. Retrospective levy of the Cess - HELD THAT:- The State has argued that when the notification dated 23 January 2006 was published, it was clear that 1 February 2006 would be the appointed date on which the Act would come into force, as well as the same would be the date on which the levy would be made applicable and collected, and it was only a typographical error that Section 3(1) was not mentioned. A corrigendum to that effect was issued. Perusal of the said notification shows that it a corrigendum to the original Notification dated 23 January 2006, by which it was clarified that under Section 1(3) and 3(1), the Goa Cess Act notified the appointed date as 1 February 2006 for the purpose of Section 1(3) and for the purpose of Section 3(1). Therefore, it cannot be held that the power to levy cess was available only after 8 October 2010. The impugned enactments cannot be struck down on the basis of the challenge levied by the Petitioner. The impugned Notification is valid and lawfully issued and the demands made under the impugned Act, Rule and Notification are valid and legal. This being the position, there is no question of refund of the cess collected. The Petitioner is not entitled to any relief in this Petition. The Writ Petition is dismissed. Issues Involved:1. Constitutional validity of the Goa Rural Improvement and Welfare Cess Act, 2000 and the Goa Rural Improvement and Welfare Cess Rules, 2006.2. Legislative competence of the State of Goa to enact the Goa Cess Act.3. Retrospective application of the Goa Cess Act and Rules.4. Nature of the levy under the Goa Cess Act: whether it constitutes a tax or a fee.5. Validity of demand notices issued under the impugned enactments and notification dated 8 October 2010.Issue-wise Detailed Analysis:1. Constitutional Validity of the Goa Cess Act and Rules:The Petitioner challenged the constitutional validity of the Goa Rural Improvement and Welfare Cess Act, 2000, and the Rules framed under it, arguing that they are ultra vires the Constitution of India. The Act was enacted to provide additional resources for infrastructure and health improvement in rural areas affected by transportation, garbage dumping, and plastic use. The Court held that the Act and Rules are constitutionally valid as they aim to promote the welfare of people in rural areas and do not impinge on the regulation of mines and minerals, which is under the purview of the Central Government.2. Legislative Competence of the State:The Petitioner argued that the State Legislature lacks the competence to enact the Goa Cess Act as the field of mines and minerals is occupied by the Mines and Minerals (Regulation and Development) Act (MMDR Act) enacted by the Parliament. The Court referred to the principles laid down in the Constitution and various Supreme Court judgments, including the Constitution Bench decision in State of W.B. vs. Kesoram Industries Ltd., which clarified that the power to regulate and control mines and minerals does not include the power to levy taxes or fees. The Court concluded that the Goa Cess Act, in pith and substance, is a legislation aimed at augmenting revenue for infrastructure and health improvement and falls within the legislative competence of the State under Entries 6, 13, 50, and 66 of List II of the Seventh Schedule.3. Retrospective Application of the Goa Cess Act and Rules:The Petitioner contended that the notification bringing Section 3(1) of the Goa Cess Act into force retrospectively from 1 February 2006 was invalid as delegated legislation cannot be retrospective unless expressly authorized by the parent statute. The Court held that the notification dated 23 January 2006, which appointed 1 February 2006 as the date for the Act to come into force, was valid. The corrigendum issued later clarified the appointed date for Section 3(1) as 1 February 2006, and there was no retrospective effect given to the Act itself.4. Nature of the Levy:The Petitioner argued that the levy under the Goa Cess Act is a tax and not a fee, as no special service is provided to the Petitioner. The Court held that the levy could be justified as both a tax and a fee. It is not necessary for the services rendered to be directly proportional to the fee collected, and a broad co-relationship between the fee and the services provided is sufficient. The Court noted that the revenue collected under the Act is used for infrastructure and health improvements in rural areas, which indirectly benefits the Petitioners as well.5. Validity of Demand Notices:The Petitioner challenged the demand notices issued under the impugned enactments and the notification dated 8 October 2010. The Court held that the demand notices were valid as the Act and Rules were constitutionally valid, and the notification bringing Section 3(1) into force was lawfully issued. The Court dismissed the Petitioner's challenge and upheld the validity of the demands made under the Act, Rules, and Notification.Conclusion:The Court dismissed the Writ Petition, upholding the constitutional validity of the Goa Rural Improvement and Welfare Cess Act, 2000, and the Rules framed under it. The Court found that the State Legislature had the competence to enact the Act and that the levy under the Act could be justified as both a tax and a fee. The demand notices issued under the impugned enactments and the notification bringing Section 3(1) into force were also held to be valid. The Petitioner's challenge on the grounds of legislative competence, retrospective application, and the nature of the levy was rejected.