Royalty computation through inclusive sale value remains a valid regulatory measure against mineral pricing manipulation and evasion.

Subordinate legislation may be invalidated only for recognised constitutional or statutory defects, including inconsistency with the parent statute, lack of competence, fundamental-rights violations or manifest arbitrariness. The notes state that including royalty, District Mineral Foundation and National Mineral Exploration Trust payments in sale value for average sale price and royalty computation is a regulatory anti-evasion measure with a reasonable nexus to the levy. They distinguish the measure of a levy from its nature, reject comparison with coal because of its separate pricing regime, and state that the restriction on revising royalty rates does not limit the prescribed computation method. The impugned rules are described as constitutionally valid and consistent with the MMDR Act.

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Issues: Whether the Explanations to Rule 38 of the 2016 Rules and Rule 45(8)(a) of the 2017 Rules, which include royalty, District Mineral Foundation and National Mineral Exploration Trust payments in sale value for computing average sale price and royalty, are unconstitutional or ultra vires Section 9 of the MMDR Act.

Analysis: Subordinate legislation carries a presumption of constitutionality and may be invalidated only on recognised grounds such as violation of fundamental rights, inconsistency with the parent statute, lack of legislative competence or manifest arbitrariness. The measure of a levy is distinct from its nature, and the rule-making authority has broad latitude in prescribing the method of computation, provided that the measure bears a reasonable nexus to the levy. Inclusion of royalty, DMF and NMET payments in sale value operates as a regulatory measure to address manipulation and evasion in the computation of average sale price. The measure is neither capricious nor disproportionate, and comparison with coal is unjustified because coal is governed by a different pricing mechanism. The three-year restriction in Section 9(3) applies to revision of the royalty rate and does not prevent prescribing the method of computing the levy.

Conclusion: The impugned Explanations are constitutional and valid, do not violate Articles 14 or 19(1)(g) of the Constitution of India, and are not ultra vires Section 9 of the MMDR Act.

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