TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 1519
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....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., Mr. Anuj Tyagi, Adv., Ms. Sugandha K....
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....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), the following sub-section shall be inserted, namely:- "(4) Without prejudice to sub-sections (1), (2) and sub-sectio....
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....(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 categories of lease holders, as may be prescribed by the Central Government." "(qqa) the amount of payment to be made to the District Mineral Foundation under sub-sections (5) and (6) of section 9B." 4. ....
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....5 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 respect of mining leases granted before 12th January, 2015. 8. Since the administration of MMDR Act with the Ministry of Mines is limited to minerals other than coal, lignite and sand for stowing, it is assumed that the notification did not relate to these three minerals. 9. The notification dated 17th September, 2015 reads as follows: "MINISTRY OF MINES NOTIFICATION New D....
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.... 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 lease, in addition to the royalty, to the District Mineral Foundation of the district established by the concerned State Government by notification, in which the mining operation are carried on, namely:- 1. Short title and commencement.-(1) These rules may be called as the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015. (2) These rules shall be deemed to have come into force on the date of their publication in ....
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....nuary, 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 required to establish a trust as a non-profit body and that trust would be called the District Mineral Foundation. For establishing the trust the State Government is required to issue a notification. It is entirely for the State Government to decide the date from which to set up the trust. The Central Government has no role to play in this, although a direction was issued by the Central Government to the State Governments to establish a trust with effect from 12th January, 2015. But be that as it may, the State Governments di....
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....o 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. In exercise of the power conferred by this section the Government surely had the power to issue the notification bringing the Act into force on any date subsequent to the passing of the Act. There can therefore, be no objection to the notification fixing the commencement of the Act on the 22nd July, 1949 which was a date subsequent to the passing of the Act. So the Act has not been given retrospective operation, that is to say, it has not been made to commence from a date prior to the date of its passing. It is true that the date of comm....
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....ished 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 would suffice if the principles laid down by some of these decisions cited before us and relevant to our discussion are culled out. These are obviously relatable to the present set of cases and are not intended to lay down the law for all cases of retrospective operation of statutes or subordinate legislation. The relevant principles are: (i) The Central Government or the State Government (or any other authority) cannot make a subordinate legislation having retrospective effect unless the parent statute, expressly or by necessary implication, authoriz....
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....nd (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 factual position before us, the notifications issued by the State Governments must be understood to mean (assuming the DMF could not be established with effect from 12th January, 2015 by a notification issued on a later date) that the DMF was established on the date of publication of each notification. This is reflective of the further submission of the learned Attorney General in Musaliar that was not considered by the Constitution Bench. In our opinion this submission can be extrapolated to the facts of the cases before us and if we do so, we find it well taken. To the extent po....
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....mely: (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 is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal ....
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....ature.‖ 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-third could mean one-fourth or one-fifth or some other fraction. It is this uncertainty that is objectionable. 33. Therefore, our answer to the second question is that the petitioners are not liable to make any contribution to the DMF from 12th January, 2015. Crucial date for making the contribution to the DMF 34. What then is the crucial date for making the contribution? There are two categories of holders of a mining lease or a prospecting licence-cum-mining lease. We will consider the effect of the notifications on each such category. Lease holders for minerals other than coal, lignite and sand for stowing 35. On 17th S....
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.... (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 constituted and the rate of cess was notified, the State was under an obligation to collect the cess in respect of on-going projects. The fact that passing on the benefit to the workers might take some time had no impact on the liability to pay the cess. It was further held that: ―Any other interpretation would defeat the rights of the workers whose protection is the principal aim or primary concern and objective of the BOCW Act as well as the Cess Act.‖ 41. We hold, therefore, that the effective date of payment of contribution to the DMF in the case of those petitioners who are (or were) holders of a mining lease or a prospecting licence-cu....
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....oactive 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 to the DMF from 20th October, 2015 or the date of establishing the DMF, whichever is later. 45. Finally, it was submitted by one of the learned counsel that Section 9B of the MMDR Act was a conditional legislation and that it could become operative only on the fulfilment of certain conditions. We cannot agree. Section 9B of the MMDR Act delegates power to the State Governments to establish the DMF without any pre-condition. Similarly, it delegates power to the Central Government to prescribe the rate at which the contribution should be made to the DMF. This again is without any pre-condition. In view of this, we are unable to describe Section 9B of the MM....