TaxTMI 
TaxTMI 
TaxTMI 
2000 (3) TMI 1107
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....ering authorities for attempting to collect the said Cess from each of the petitioners. 3. In all the writ petitions, the petitioners are firm, company or individuals, as the case may be, When these petitions were filed, notice was issued to the respondents to show cause as to why the writ petitions be not allowed while calling for counter-affidavits from them and recovery proceedings against each of the petitioners had been stayed which was extended from time to time. Four opposite parties. Collector Sonbhadra, Tahsildar. Tahsil Robertsganj, district Sonbhadra, State of U. P. through Principal Secretary Avas Anubhag-1. Government of Uttar Pradesh, and Secretary, Shakti Nagar, Special Area Development Authority, Turra (Pipary) district Sonbhadra, have put in appearance and have filed counter-affidavits to which the rejoinder-affidavits have also been filed. 4. Sarvashri Satya Prakash Singh (S.P. Singh) Amrash Singh and M.L. Srivastava, learned counsel have been heard on behalf of the petitioners at great length. Shri Ashok Mehta, Chief Standing Counsel assisted by Shri Vishnu Pratap Singh and Sri R.K. Saxena, standing counsel have espoused the cause of the State of U. P. and its ....
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....ng, mining operations and other construction activity ; (vi) to execute works in connection with the supply of water and electricity and to provide such utilities and amenities as water, electricity, drainage and the like ; (vii) to dispose of sewage and to provide and maintain other services and amenities ; (viii) to provide for the Municipal management of the special development area in the same manner as is done by Nagar Mahapalika under the Uttar Pradesh Nagar Mahapalika Adhiniyam. 1959 : (ix) to otherwise perform all such functions as are necessary or expedient for the purpose of the planned development of the special development area and for purposes incidental thereto : Provided that the functions specified in clauses (viii) and (ix) shall not be performed unless so required by the State Government : "7. Powers of the Authority.--The Special Area Development Authority shall : (a) for the purpose of Municipal administration have the powers which a Nagar Mahapalika has under the Uttar Pradesh Nagar Mahapalika Adhiniyam. 1959 ; (b) for the purpose of taxation have the powers which a Nagar Mahapalika has in relation to a city under the Uttar Pradesh Nagar M....
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....red to require the local authority to assume responsibility in certain cases. All the provisions under Sections 32 to 34 relate to the manner of betterment charge and its payment, Additional Stamp duty on certain transfers of property. Section 35, thereafter, provides Cess on mineral rights, which for ready reference is quoted below : "35. Cess on mineral rights.- (1) Subject to any limitations imposed by Parliament by law relating to mineral development, the Authority may impose a Cess on mineral rights at such rate as may be prescribed. (2) Any Cess imposed under this section shall be subject to confirmation by the State Government and shall be leviable with effect from such date as may be appointed by the State Government in this behalf." Section 36 permits levying charge on the consumption or sale of electricity. Section 37 says that any money certified by the Authority as due be recoverable as arrears of land revenue and no suit shall lie in the Civil Court for recovery of such money. Sections 38 and 39 deals with the manner in which the State Government has its control over the Authority and filing of returns and inspection etc. Section 40 empowers the State ....
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.... Minerals (Regulation and Development) Act, 1957 (Act No. 67 of 1957). 3. (1) The Authority, subject to sub-rules (2) and (3) impose a Cess on mineral rights on such minerals and minor minerals and at such rates as are specified below : Mineral/ Minor Mineral Minimum Rate Rate Cess on Coal ₹ 5.00 (Per ton) ₹ 10.00 (Per ton) Cess on Stone. Coarse Sind/ Sand ₹ 2.00 (Per Cubic metre) ₹ 5.00 (Per Cubic metre) (2) The rates shall not be less than the minimum rates or more than the maximum rates specified in sub-rule (1) and shall be determined by the Authority by a special resolution which shall be subject to confirmation by the State Government. (3) The cess shall be leviable with effect from the date notified by the State Government in the Gazette in this behalf." 11. The learned counsel for the petitioners have attacked not only the Cess Rules for various reasons which may be discussed later, they have also challenged the competence of the State Legislature which has formulated the provisions in shape of Section 35 referred to above. The arguments proceeded that Section 35 which refers to the limitations imposed by the Parliament by law relating t....
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....ral Government. In this connection, the petitioner contended that the definition of mineral rights as it exists in clause(b) of Rule 2 noted above, even licence permissible under Chapter VI of U.P.M.M.C. Rules would be covered because the lease has been extended to mean including operation for raising, winning or extracting coal. The reference was made to Rule 3 of the U.P.M.M.C. Rules, which provides that no person shall undertake any mining operations in any area within the State of any minor mineral except in accordance with the terms and conditions of a mining lease or mining permit granted under these rules. The argument, therefore, was that once the petitioners obtained the lease or licence as the case may be and royalty was paid in accordance with the U.P.M.M.C. Rules, further levying of Cess by the aforesaid provisions contained under Section 35 of the Special Area Act or the Cess Rules framed thereunder are beyond the powers of the State Government. 13. The learned counsel for the petitioners, therefore principally relied on the provisions which are contained in Entry No. 54 of the List I (Union List) as it exists in VIIth Schedule of the Constitution of India and in view....
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....Special Area Development Act. It was contended that the development of the Special area will be a bounden duty of the State Government and for various reasons which need not be mentioned here, the aforesaid Special Area Development Act though passed in the year 1986, the present Government has taken up with all seriousness the steps to develop the Special area and imposition of cess envisaged through Special Area Act with regard to district Sonbhadra and promulgated the said Act and Rules. 16. Shri Ashok Mehta relied upon some of the observations of Hon'ble Supreme Court in the case of India Cement Ltd., Orissa Cement Ltd. as also P.K. Kannadasan (supra) but more sincerely he drew the attention of the Court to the decision of Hon'ble Supreme Court in Western Coal Fields Limited v. Special Area Development Authority, (1982) 1 SCC 125. Hinger-Rampur Coal Co. v. State of Orissa, AIR 1961 SC 459, Goodricke Group Ltd. and others v. State of West Bengal and others, 1995 Supp. (1) SCC 707. He also placed reliance on some of the observations in Kunwar Ram Nath v. Municipal Board, Pilibhit, AIR 1983 SC 930. 17. In order to appreciate the various arguments noted above, and the case....
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....uded within the definition of the expression "land revenue". Question, therefore, arose whether such cess levied with reference to or calculated on the basis of amount of royalty can be called a tax on land. It was held that it could not be. It was pointed out that the royally varies according to the mineral quarried in a given year and if no mineral is quarried, no royalty will be payable but this reasoning, as we shall explain a little later, is not the ratio of the judgment apart from being inapplicable in the case of land or tea estates. The basis of the judgment and the ratio of the decision in our respectful opinion is that it was a case where the tax was measured not with reference to or on the basis of the income or yield of the land but with reference to the amount of royalty payable by the lessee to his lessor. It was for this reason that the tax was held to be not upon the land. Royalty is a matter of agreement between the lessor and the lessee: it may also be determined by a statutory provision. But royalty is not the produce of the land ; royalty is not the income of the land nor is the royalty the yield of the land and that is the distinction. Now, it is sig....
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....operations in relation to any material, such percentum of the annual value as the State Government, by notification, specify from time to time in relation to such mineral." The expression "annual value" occurring in clause (a) (both prior to Amending Act 17 of 1989 and thereafter) was defined in Section 7 of the Act. Sub-section (3) of Section 7 provided that "in the case of lands held for carrying on mining operations, the annual value shall be the royalty or as the case may be, the dead rent payable by the persons carrying on mining operations (s) to the Government." It is for this reason that the Division Bench, speaking through Ranganathan, J., held that the case was squarely covered by India Cement. When it was contended by the State that the royalty payable in respect of a land on which mining activity is carried on is only a measure of the tax on land relying upon Ralla Ram and Ajay Kumar Mukharjee, Ranganathan, J., made the following perceptive observations, which are of great significance to the cases before us : (SCO p. 468, para 30) : "But here the levy is not measured by the income derived by the assessee from the land, as is the case w....
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....an be more than one law levying land revenue and all of them will be relatable to Entry 45. He submits that the impugned levy can be treated as additional land revenue. Counsel gives instances of more than one Act levying excise duty on manufacture and production of goods. He relies upon the following observations of Mukharji, J., in India Cement (SCC p. 24 para 21). "It is, however, clear that over a period of centuries, land revenue in India has acquired a connotative meaning of share in the produce of land which the king or the Government is entitled to receive." The force of the submission cannot be denied. The presumption in favour of constitutionality obliges the Court to sustain an enactment, if necessary, by relating it to an entry other than the one relied upon by the Government, if that can be reasonably done. Moreover, as pointed out by this Court in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd., It is the function and power of the Court to interpret an enactment. It is equally the function and power of the judiciary to say to which entry does an enactment relate. The opinion of the Government in this behalf is but an opinion and no more." 20. Ulti....
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....eed with the conclusion of the majority. Nonetheless, the judgment delivered by Hon'ble P.B. Gajendragadkar, as Hon'ble Chief Justice of India, then was, on behalf of himself and Hon'ble A.K. Sarkar, Hon'ble K. Subba Rao and Hon'ble J.R. Mudholkar, J. made very significant observations in para 18 of the decided case which is quoted here : "Thus the scheme of the Act shows that the cess is levied against the class of persons owning mines in the notified area and it is levied to enable the State Government to render specific services to the said class by developing the notified mineral area. There is an element of quid pro quo in the scheme, the cess collected is constituted into a specific fund and it has not become a part of the consolidated fund, its application is regulated by a statute and is confined to its purposes, and there is a definite co-relation between the impost and the purpose of the Act which is to render service to the notified area. These features of the Act impress upon the levy the character of a fee as distinct from a tax." 23. In paragraph 22, after quoting the decision of the Privy Council in Governor General in Council v. Prov....
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....a Cement Limited (supra). The decision of the Hon'ble Supreme Court in the case of India Cement and Orissa Cement Ltd. had been considered by the Hon'ble Supreme Court itself in the subsequent case of Goodricks Group Ltd. v. State of W. B. (supra) and the Hon'ble Supreme Court while distinguishing the aforesaid two decisions had held that the cess is upon the land measured on the basis of the quantum of its produce and is levied upon the land under the West Bengal Enactment, Similar is the position in the present case also. Thus, the reliance by the learned counsel for the petitioners in P. Kannadasan v. State of Tamil Nadu is misplaced. 26. The provisions of Special Area Act is more or less similar to the provisions of M.P. Nagar Tatha Gram Nivesh Adhiniyam enacted by the State of M. P. That Act was passed by the M.P. Legislature in order "to make provision for planning and development and use of land to make better provision for the preparation of development plans and zoning plans with a view to ensuring that town planning schemes are made in proper manner and their execution is made effective : to constitute Town and Country Planning Authority for proper imple....
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....hus, the Special Area Act as has been enacted by the State Legislature is relatable to Entry No. 5 of List II of the Seventh Schedule of the Constitution. 29. Coming now to the argument as to whether the provision contained in Section 35 of the Special Area Act is encroaching upon the rights of the Central Government as kept apart by the provisions contained in item 54 of Schedule I, it may be pointed out that Section 35 itself says that subject to any limitations imposed by Parliament by law relating to mineral development, the Authority may impose a cess on mineral rights at such rate as may be prescribed. The contention of Shri S.P. Singh learned counsel for the petitioners to equate "cess on mineral rights" to regulation of mines and "mineral development" as is mentioned in Entry No. 54 of List I is totally misconceived. The mineral rights can and should be regulated by the Union of India under the M.M.R.D. Act as the law stands today and if it is the case of minor mineral, then the State Government has right under Section 15 of M.M.R.D. Act to deal with the minor mineral for which the State of U. P. has already framed U.P.M.M.C. Rules. Consequently, when t....
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....t of Shri Singh is not acceptable. It may be pointed out that there is no other method to find out the extent of mineral rights exercisable by a lessee except by reference to the measurement of the mineral which the lessee is going to excavate or transport. The provisions contained in the Cess Rule, therefore, are more or less similar to the type of tax. which was imposed by the State of West Bengal on land in the case of Goodricke Group Ltd. v. State of W. B. (supra). The method of measurement to the extent of determining the mineral rights should not be confused with that of payability of the royalty on mineral excavated by the lessee. If this distinction is borne in mind, it is clear that the State Government through the Cess Rules has only permitted scientific basis for determining the cess on mining rights of individual or corporation, which is the lessee under the U.P.M.M.C. Rules and M.M.R.D. Act. Other arguments of Shri S.P. Singh that no legislation or subordinate legislation may be passed about coal because it is a major mineral and is exclusively covered by the provisions of M.M.R.D. Act could not detain any longer for the simple reason as already held above, cess on coa....
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....which are Annexures-3 and 4. These two annexures indicate that the petitioner Ramdhani Singh has obtained licence for the years 1996-97 and 1997-98 from the Zila Panchayat, Sonbhadra as envisaged by Annexure-3 and further that he has paid ₹ 855 as licence fee and ₹ 20 per truck loading per trip as fee to the Zila Panchayat. Sonbhadra. It was, therefore, argued that for the same act of carrying mineral excavated from the special area, the Special Area Authority alone should take tax or cess and not Zila Panchayat. 35. Shri R.P. Pradhan learned counsel for the Special Authority has said that there is no material to indicate as to whether the said amount was or has been charged from the petitioner by the Zila Panchayat after promulgation of the Cess Rules and in absence of any pleading to that effect, the aforesaid argument should not be accepted. Similarly, Shri Vishnu Pratap Singh, learned standing counsel has stated that Zila Panchayat has not been impleaded as opposite party and if any grievance is raised, the petitioners had to implead the said Zila Panchayat as opposite party. There is force in the objection raised on behalf of the respondents that the aforesaid iss....