TaxTMI 
TaxTMI 
2017 (10) TMI 1519
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....Adv., Mr. Aseem Chaturvedi,Adv., Mr. Sarangan Arvindkasan, Adv., Mr. Abhijeet Swaroop, Adv., For M/s. Khaitan & Co., Mr. Sushmit Pushkar, Adv., Mr. Akshay Sapre,Adv., Mr. Abhijeet Swaroop, Adv., for M/s. Khaitan & Co., Mr. Baij Nath Patel, Adv., Ms. Sweta, Adv., Ms. Romila, Adv., Mr. Sachin Mittal,AOR For the Respondent : Mr. Vibhu Shankar Mishra,Adv., Mr. Gurmeet Singh Makker,AOR, Mr. M.K. Maroria,AOR, Mr. R.K. Rathore,Adv., Mr. Deepak Goel, Adv., Mr. Abhishek Tandon, Adv., Mr. Harish Tandon, Adv., Mr. Jagdeep Dhankar, Sr. Adv., Gp. Cpt. Karan Singh Bhati, Adv., Mr. Hemendra Sharma, Adv., Ms. Priyanka Parida, Adv., Mr. Parijat Kishore, Adv., Mr. Kunal A. Cheema,Adv., Mr. Nishant R. Katneshwarkar, AOR, Ms. Hemantika Wahi,AOR, Ms. Puja Singh,Adv., Mr. Dharmendra Kumar Sinha, AOR, Mr. C.D. Singh,AOR, Mr. Mishra Saurabh,AOR, Mr. Anupam Lal Das,AOR, Mr. Prashanto Chandra Sen, Sr.Adv., Mr. P.S. Sudheer,AOR, Mr. Rishi Maheshwari, Adv., Mr. Udayan Verma, Adv., Ms. Sanah Batta, Adv., Mr. Pallav Mongia, Adv., Mr. Abhinav Goyal,Adv., Mr. Kaushik Poddar,AOR, Mr. Anip Sachthey,AOR, Ms. Anjali Chauhan, Adv., Ms. Ria Sachthey,Adv., Mr. U.A. Rana,Adv., Mr. Himanshu Mehta,Adv., M/s. Gagrat & Co....
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.... be such as may be prescribed by the State Government. (4) The holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government." (ii) Section 14 of the Ordinance inserted sub-clause (qqa) in Section 13(2) of the MMDR Act relating to the power of the Central Government to make rules in respect of minerals. Clause (qqa) as inserted in the MMDR Act reads as follows: "(qqa) the amount of payment to be made to the District Mineral Foundation under sub-section (4) of section 9B;" (iii) Section 15 of the Ordinance inserted sub-section (4) in Section 15 of the MMDR Act relating to the power of the State Governments to make rules in respect of minor minerals. Sub-section (4) as inserted in Section 15 of the MMDR Act reads as follows: "15. Amendment of section 15. - In section 15 of the principal Act, after sub-section (3),....
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.... the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. (5) The holder of a mining lease or a prospecting licence-cum-mining lease granted on or after the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government. (6) The holder of a mining lease granted before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount not exceeding the royalty paid in terms of the Second Schedule in such manner and subject to the categorisation of the mining leases and the amounts payable by the various catego....
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.... Goa 15.1.2016 12.1.2015 4 Haryana 17.11.2016 12.1.2015 5 Jharkhand 22.3.2016 12.1.2015 6 Karnataka 11.1.2016 12.1.2015 7 Madhya Pradesh 15.5.2015 15.5.2015 8 Maharashtra 1.9.2016 16.9.2015 9 Odisha 18.8.2015 18.8.2015 10 Rajasthan 31.5.2016 12.1.2015 11 Tamil Nadu 19.5.2017 19.5.2017 12 Telangana 21.8.2015 21.8.2015 13 Uttar Pradesh 25.4.2017 12.1.2015 14 West Bengal 3.3.2016 3.3.2016 7. On 17th September, 2015 the Ministry of Mines issued a notification promulgating the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015. The administration of the MMDR Act is with the Ministry of Mines for minerals other than coal, lignite and sand for stowing In terms of the notification, the Contribution Rules were deemed to have come into force on 12th January, 2015. Paragraph 2 of the notification provides, inter alia, for payment to the DMF an amount of 10% of the royalty payable by the holder of a mining lease or prospecting licence-cum-mining lease granted on or after 12th January, 2015 and 30% of the royalty payable in resp....
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....tte. These rules pertain to payment to the DMF at the same rate and on the same terms as mentioned in the notification dated 17th September, 2015. The subject notification, having been issued by the Ministry of Coal, specifically mentioned that the rules were in respect of coal, lignite and sand for stowing. 11. What is of significance in the notification dated 20th October, 2015 is paragraph 3 thereof. This provides that the amount payable to the DMF shall be paid from the date of the notification issued under Section 9B(1) of the MMDR Act by the State Government establishing the DMF or the date of coming into force of the Contribution Rules, whichever is later. The notification dated 20th October, 2015 reads as follows: "MINISTRY OF COAL NOTIFICATION New Delhi, the 20th October, 2015 G.S.R. 792(E).-In exercise of the powers conferred by sub-sections (5) and (6) of Section 9B of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957), the Central Government hereby makes the following rules in r/o of coal and lignite and sand for stowing specifying the amount to be paid by holder of a mining lease or a prospecting licence-cum-mining lea....
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....nd Minerals (Contribution to District Mineral Foundation) Rules, 2015, namely:- 1. These rules may be called as the Mines and Minerals (Contribution to District Mineral Foundation) (Amendment) Rules, 2016. In the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015, for rule 3, the following rule shall be substituted, namely:- "3. Date from which contribution to be made. - The amount calculated at the rate specified in rule 2 shall be paid with effect from the 12th January, 2015." Questions raised by the petitioners 13. On the basis of these notifications, the questions raised by learned counsel for the petitioners are: Firstly, whether the DMFs could be established with effect from 12th January, 2015? Secondly, whether contributions to the DMFs were required to be made by the petitioners at the rate mentioned in both sets of Contribution Rules with effect from 12th January, 2015? The validity of the notifications was challenged or was under challenge to this extent depending on their interpretation and their impact and effect. (i) The first question 14. In terms of sub-section (1) of Section 9B the State Government is ....
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....ion was issued on 26th July, 1949 bringing the statute into force on 22nd July, 1949 a date obviously later than 7th March, 1949. The Constitution Bench held that the notification did not prejudicially affect any vested rights and (by implication) its retrospective operation could not be looked upon with disfavour. Moreover, the operation of the statute was not from a date prior to its passing and so it could not be said to have retrospective operation. Fixing a date anterior to the date of the notification bringing the statute into force did not attract the principle of disfavouring retrospective operation. The Constitution Bench however did not consider the further submission of the learned Attorney General that the notification was good to bring the statute into operation from the date of issue of the notification. The law laid down by the Constitution Bench is quite explicit when it was held: "The reason for which the Court disfavours retroactive operation of laws is that it may prejudicially affect vested rights. No such reason is involved in this case. Section 1(3) authorises the Government to bring the Act into force on such date as it may, by notification, appoint.....
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....In any event, even assuming that since the DMFs were established from a date anterior to the date of the notification and therefore they were established with retrospective effect, their establishment did not adversely affect anybody's vested rights (as will be seen later). This is crucial. Therefore there can be no real objection to the operation of the notifications from 12th January, 2015 in view of the decision in Musaliar. The DMFs were not established from a date prior to 12th January, 2015 and to that extent cannot be said to have been established with retrospective effect. 20. Assuming the DMFs were established with retrospective effect -is that permissible in law? This question really does not arise in the view that we have taken following Musaliar but since it was vehemently argued by learned counsel by citing several decisions, we briefly give our views. 21. The power to give retrospective effect to subordinate legislation whether in the form of rules or regulations or notifications has been the subject matter of discussion in several decisions rendered by this Court and it is not necessary to deal with all of them - indeed it may not even be possible to do so. It ....
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....c power on the State Government to fictionally create the DMF deeming it to be in existence from a date earlier than the date of the notification establishing the DMF. Therefore, it must follow that under the provisions of the MMDR Act that we are concerned with, no State Government has the power to frame a rule with retrospective effect or to create a deeming fiction, either specifically or by necessary intendment. 24. Similarly, Section 13 of the MMDR Act does not confer any specific power on the Central Government to frame any rule with retrospective effect. Section 9B(5) and (6) read with clause (qqa) inserted in Section 13(2) of the MMDR Act enable the Central Government to make rules to provide for the amount of payment to be made to the DMF established by the State Government under Section 9B(1) of the MMDR Act. None of these provisions confer any power on the Central Government to require the holder of a mining lease or a prospecting licence-cum-mining lease to contribute to the DMF with retrospective effect. Therefore, even the scope and extent of the rule making power of the Central Government is limited. 25. In view of the position in law as explained above and the....
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....aced on M/s Govind Saran Ganga Saran v. Commissioner of Sales Tax-10 and Vatika Township. 28. In Govind Saran this Court was concerned with the taxation of goods under Sections 14 anvad 15 of the Central Sales Tax Act, 1956 (the CST Act) and the assessment made under the Bengal Finance (Sales Tax) Act, 1941 as applied to the Union Territory of Delhi. Section 15 of the CST Act reads: "15. Every sales tax law of a State shall, insofar as it imposes or authorizes the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three percent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage." This Court noted that Section 15 of the CST Act prescribed the maximum rate of tax that could be imposed and that such tax shall not be levied at more than one point. Expanding on these requirements, this Court observed in paragraph 6 of the Report as follows: "The components which enter into the concept of a tax are well known. The first ....
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.... cannot be applied with precision, it would be difficult to tax a person.‖ 31. We may also note a similar view expressed in Principles of Statutory Interpretation by Justice G.P. Singh 14th edition revised by Justice A.K. Patnaik, former Judge, Supreme Court of India, page 876 that: ―There are three components of a taxing statute, viz. subject of the tax, person liable to pay the tax and the rate at which the tax is levied. If there be any real ambiguity in respect of any of these components which is not removable by reasonable construction, there would be no tax in law till the defect is removed by the legislature.‖ 32. In view of the decision of the Constitution Bench of this Court that the specification of the rate of tax (or any compulsory levy for that matter) is an essential component of the tax regime, it is difficult to agree with the learned Additional Solicitor General that specifying the maximum amount of compensation to be paid to the DMF in terms of Section 9B of the MMDR Act, being an amount not exceeding one-third of the royalty, satisfies the requirements of law. What is required by the law is certainty and not vagueness - not exceeding one-t....
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....nd only the quantum of the liability remained to be determined. That determination came on the issuance of the notification of 17th September, 2015. The fact that it would take time (even more than a year as in the case of Tamil Nadu and Uttar Pradesh) for the benefit to reach the affected persons cannot detract from the liability of the petitioners to contribute nor does it absolve them of their liability to pay the contribution. The only criticism could be of the tardiness and lack of concern by State Governments in setting up the DMF in spite of the direction of the Central Government. 39. In A. Prabhakara Reddy v. State of Madhya Pradesh (2016) 1 SCC 600 one of the questions raised was that since the Madhya Pradesh Building and Other Construction Workers Welfare Board came to be constituted only on 9th April, 2003 the recovery of cess under the Building and Other Construction Workers Welfare Cess Act, 1996 with effect from 1st April, 2003 did not arise. On this basis, the requirement to pay cess was challenged. 40. This Court rejected the contention and held that after the Cess Act and the rules framed thereunder came into effect and the Workers Welfare Board was constitu....
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....e rate at which the contribution was to be paid came to be notified only on 20th October, 2015. Therefore in view of the law discussed above, it cannot be said that the contribution should be paid by the holders of a mining lease or a prospecting licence-cum-mining lease with effect from 12th January, 2015. 44. The learned Additional Solicitor General sought to rely on the subsequent notification dated 31st August, 2016 which substituted paragraph 3 in the notification of 20th October, 2015 with the requirement that the contribution ―shall be paid with effect from the 12th January, 2015.‖ For the same reasons already given by us, such a retroactive substitution is ultra vires the rule making power of the Central Government. The notification dated 31st August, 2016 is clearly beyond the rule making power of the Central Government and must be struck down and we do so. All that this means is that the notification of 20th October, 2015 remains untouched and must be read and understood on its plain language. The result is that in respect of coal, lignite and sand for stowing the holder of a mining lease or a prospecting licence-cum-mining lease shall pay the contribution ....