TaxTMI 
TaxTMI 
2026 (7) TMI 831
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....RIEF OVERVIEW OF THE FACTS 10 C. PLEADINGS AND CONTENTIONS 15 i. PETITIONERS' CASE 15 ii. RESPONSE OF THE UNION OF INDIA 28 D. QUESTION FOR CONSIDERATION 43 E. ANALYSIS AND DISCUSSION 44 F. MAINTAINABILITY AND ESTOPPEL 44 G. CERTAIN FUNDAMENTAL PRINCIPLES 45 H. PRESUMPTION OF CONSTITUTIONALITY 46 I. LIBERAL CONSTRUCTION OF LEGISLATIVE ENTRIES 47 J. NATURE OF ROYALTY 49 K. CONSIDERATION OF THE LEGAL PROVISIONS IN ISSUE HEREIN 50 L. MEASURE OF LEVY AND NATURE OF LEVY 53 M. MEASURE OF LEVY - AS AN ANTIDOTE TO CHECK EVASION 60 N. APPLICATION OF LAW TO THE FACTS 71 O. CONCLUSION 81 1. The petitioners in the present writ petition are challenging the constitutional validity of the Explanation appended to Rule 38 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016 (hereinafter "the 2016 Rules") as being ultra vires Articles 14, 19(1)(g) of the Constitution of India and Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 (for short "the MMDR Act") to the extent that the rule provides....
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.... as may be prescribed; (iii) the change will be applicable for all the MLs, whether auctioned/ granted before or after the commencement of the proposed MMDR Amendment Act, for the minerals removed or consumed from the leased area after the commencement of the said Act; and (iv) adoption of new formula only for the future dues for existing MLs arising after the amendment" Since no action was thereafter taken, the matter was argued on merits. 4. This Court further observed that exclusion of payments made towards royalty and contribution towards DMF and NMET for coal but not for other minerals cannot be termed as arbitrary and unreasonable, merely because the computation for one differs from the other in certain aspects. This Court also observed that deference needs to be shown to the law-making authorities in deciding how royalty must be computed in respect of different mineral grades/concentrates. 5. Thereafter, what this Court observed is very crucial. This Court observed that while different treatment of the two minerals may not be in excess of the powers or domain of the respondents or the differential treatment may not be in breach of any statutory provision, the court ....
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.... By an order of 03.02.2025, this Court directed the respondents to file a report or an appropriate affidavit within two weeks pointing out the progress in the matter subsequent to the pronouncement of the judgment. 8. According to the petitioners, an affidavit was filed on 21.02.2025 stating that the Department of Legal Affairs had concurred with the proposal and the file was pending consideration before the Cabinet Secretariat. A further order was made by this Court on 28.02.2025 granting one month's time to the respondents to file an appropriate report or decision taken on this aspect. Since no decision was taken, on 05.04.2025, the petitioners filed an affidavit highlighting the state of affairs. Pursuant thereto, a last opportunity was given to the respondents by an order of 08.04.2025. 9. The Union of India filed an application seeking modification of order dated 08.04.2025 stating that the Cabinet Secretariat would no longer be preparing any proposal since it would be the concerned Ministry itself which would be taking a decision and ultimately, on 17.05.2025, the Union of India filed an affidavit intimating its final decision of not amending the rules as it would serio....
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....he sale transaction is on an arms' length basis and the price is the sole consideration for the sale, excluding taxes, if any. Explanation- For the purpose of computing sale value no deduction from the gross amount will be made in respect of royalty, payments to the District Mineral Foundation and payments to the National Mineral Exploration Trust. 45. Monthly and annual returns-(2017 Rules) (8) In case of mining of minerals by the holder of a mining lease, the - (a) sale value is the gross amount payable by the purchaser as indicated in the sale invoice, where the sale transaction is on an arms' length basis and the price is the sole consideration for the sale, excluding taxes, if any. Explanation.- For the purpose of computing sale value, no deduction from the gross amount shall be made in respect of royalty, payments to the District Mineral Foundation and payments to the National Mineral Exploration Trust." 13. The relevant sections and the Rules, which have a bearing in deciding the controversy, are extracted hereunder:- Section 9 of the MMDR Act "9. Royalties in respect of mining leases.- (1) The ho....
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....ess the actual expenditure incurred beyond the mining lease area towards transportation charges by road, loading and unloading charges, railway freight (if applicable), port handling charges/export duty, charges for sampling and analysis, rent for the plot at the Stocking yard, handling charges in port, charges for stevedoring and trimming, any other incidental charges incurred outside the mining lease area as notified by the Indian Bureau of Mines from time-to-time, divided by the total quantity exported. (b) where domestic sale has occurred, sale value of the mineral less the actual expenditure incurred towards transportation, loading, unloading, rent for the plot at the stocking yard, charges for sampling and analysis and any other charges beyond mining lease area as notified by the Indian Bureau of Mines from time-to-time, divided by the total quantity sold. (c) where sale has occurred, between related parties and/or where the sale is not on arms' length basis, then such sale shall not be recognized as a sale for the purpose of this rule and in such case, sub-clause (d) shall be applicable. (d) where sale has not occurred, the average sale price p....
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....suant to the amendment notified on 27.03.2015 to the Mines and Minerals (Development and Regulation) Act, 2015, auction was made the basis of allotment of mines. The Mineral (Auction) Rules, 2015 (hereinafter "the Auction Rules 2015) were also notified. Petitioner No. 1 secured a mining lease after successfully participating in the auction. 21. Rules 8, 9 and 13 of the Auction Rules 2015, read as under:- "8. Bidding parameters:- (1) The State Government shall specify in the tender document the minimum percentage of the value of mineral despatched, which shall be known as the "reserve price." (2) The value of mineral despatched shall be an amount equal to the product of,- (i) Mineral despatched in a month; and (ii) Sale price of the mineral (grade-wise and State-wise) as published by Indian Bureau of Mines for such month of despatch. (3) The bidders shall quote, as per the bidding parameter, for the purpose of payment to the State Government, a percentage of value of mineral despatched equal to or above the reserve price and the successful bidder shall pay to the State Government, an amount equal to the product of,- (i) percen....
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....e electronic auction platform; (iii) the qualified bidder who submits the highest final price offer shall be declared as the "preferred bidder" immediately on conclusion of the auction. 13. Payments under mining lease.-(1) The lessee shall pay royalties and dead rent to the State Government as specified in the Act and the rules made thereunder. (2) The lessee shall pay the applicable amount quoted under rule 8 to the State Government on a monthly basis. (3) The lessee shall contribute such amounts as may be required under the Act to- (a) the designated account of the National Mineral Exploration Trust; and (b) the designated account of the District Mineral Foundation. (4) The lessee shall also pay such other amounts as may be required under any law for the time being in force to the concerned authorities." 22. In exercise of powers under Sections 9C(2), (3), (4) and Section 13 of the MMDR Act, the Union of India notified the National Mineral Exploration Trust Rules, 2015 ("the NMET Rules") which dealt with the manner of deposit and disbursal of the funds collected under the NMET. Under Rule 7 of the NMET Rules, the h....
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....mineral grade/concentrate relevant to each ex-mine price. 28. Rule 43 of the 2016 Rules reads as under:- "43. Publication of average sale price.- The Indian Bureau of Mines shall publish the average sale price of each mineral grade/concentrate removed from the mining leases in a month in a State within 45 days from the due date for filing the monthly returns as required under the Mineral Concession Development Rules, 1988." Under Rule 43 of the 2016 Rules, the Indian Bureau of Mines was to publish the ASP of each mineral grade/concentrate removed from the mining leases in a month in a State within 45 days from the due date for filing the monthly returns as required under the Mineral Concession Development Rules, 1988. Hence, post the filing of the return and within 45 days, the Indian Bureau of Mines notifies the ASP. It is while computing the ASP that the sale value factor comes in and as a component of the sale value, payments made towards royalty, DMF and NMET are not deducted which has resulted in the petitioners being aggrieved. 29. Under Rule 45 of the 2017 Rules, monthly and annual returns are obliged to be filed by the lessee. The monthly return was to be ....
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.... for the said product was rectified by introducing the following clause. "Notes: Explanation:- For the purposes of this sub-entry.- (i)........... (ii) Actual price means the sale invoice value of coal, net of statutory dues including taxes, levies, royalty, contribution to National Mineral Exploration Trust and District Mineral Foundation." 33. According to the petitioners, the anomaly was rectified, vis-à-vis Coal with effect from 14.07.2020. The petitioners refer to the notice for public consultation issued on 25.05.2022 where the anomaly of cascading effect was highlighted and how a proposed clause excluding the components was suggested. Thereafter, the petitioners point to the writ petition filed being Writ Petition No. 715 of 2024 which has already been discussed hereinabove. The petitioners also adverted to the judgment of this Court dated 07.11.2024. The petitioners contend that based on the judgment of 07.11.2024, they filed a representation on 12.11.2024 and consequential proceedings in this Court. 34. The petitioners contend that the explanations appended to Rule 38 of the 2016 Rules and Rule 45(8)(a) of the 2017 Rules are....
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....ended that fixation of rates of royalty is covered within the scope of "regulation of mines and mineral development". It is submitted that the object of empowering the Central Government to specify rates of royalty for major minerals was to ensure a certain level of uniformity in mineral prices in view of the domestic and international market. 39. The judgment in Writ Petition (C) No. 715 of 2024 was cited by the Union of India in their support. It is contended that pursuant to the judgment of this Court dated 07.11.2024 in Writ Petition (C) No. 715 of 2024, extensive consultation process was undertaken and for good and valid grounds, it was decided not to amend the Act and the Rules as they now stand. It is submitted that there is nothing capricious or irrational about the impugned rules warranting judicial review under the doctrine of manifest arbitrariness. 40. According to the Union of India, the impugned rules simply explain the mechanism under which the sale value is to be calculated by taking into account all the payments that a leaseholder has to make to the government. It is submitted that comparison of methodologies of calculation of royalty for different minerals a....
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....SP of each month is separately compiled and there is no impact of ASP of previous month in the ASP of the following month. 45. Disputing the chart handed over by the petitioners, the learned Attorney General, in turn, relied on the following chart: "1..... The correct representation of computation of ASP will be as follows: Scenario/Month Basis for calculating royalty (ASP) Total levies payable [16.95% of the ASP, i.e., royalty 15% of ASP + DMF (10% of 15%) = 1.5% + NMET (3% of 15%) = 0.45%] Effective rate of royalty, DMF and NMET payment on the Mineral Value Excess Payment Jan. 2026 Rs. 100.00 (Actual/ex mine price) Rs.16.95 16.95% No Feb. 2026 Rs. 105.00 (Actual ex mine price) Rs.17.80 16.95% No Mar. 2026 Rs. 98.00 (Actual ex mine price) Rs.16.61 16.95% No Mar. 2027 Rs. 110.00 (Actual ex mine price) Rs.18.65 16.95% No 2. ASP for each month is determined based on returns for the said month. Previous month ASP is not carried forward. Thus, in the above scenarios, ASP of Month of Feb., 2026 is different from ASP for month of Jan., 2026 and depends on market price on which the min....
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....d despatches by some of the lease holders during last 6 months. This may be probably due to some malpractices adopted by some unscrupulous miners. Miners who have reported higher ex-mine price in the previous month has made no despatches in the subsequent months that distorted/lowered the monthly ASP as published by IBM. Based on the analysis following has been observed: A. Odisha 1. ASP for Grade 51% to 55% Fe lumps The ASP of grade 51% to 55% Fe lumps was lowered by 43% in the month of September-22 against August-22; ASP was again slightly increased in the month of October-22 and November-22 and again falls down in the month of December-22 resulting about 50% fall in ASP from August 22. On analysing the despatches and EMP data, it was observed that the two mines those have reported the highest ex-mine price in the month of August-22 with about 25% of despatch (each mine) are not despatching or despatching very less quantity in the subsequent months; at the same time the mine which have reported lowest EMP in the month of August-22 increased its despatches from less than 50% in August-22 to almost 100% in December-22, which distorted and decreased the AS....
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....h Ex-Mine Price Despatch Ex-Mine Price Despatch Ex-Mine Price Despatch Ex-Mine Price Despatch DINDADAHALLI FE ML 2658 26.35 ACRES (30KAR07034) 1198 1860 1568 8070 1314 5434 1745 2636 DONIMALAI5320H 30KAR03113 (30KAR03113) 690 4000 741 32000 HADDINAPADE (30KAR03156) 2243 3000 1179 5914 1179 6086 1121 12000 1078 16392 1078 3176 HARGINADONA (30KAR03133) 846 419 894 171 894 420 890 9097 890 49 KAREKURCHI (ML 2028) (40KAR19021) 890 890 14973 NARAYANA IRON ORE MINE (30KAR03188) 1837 226 771 42237 2215 9799 Sankalapuram 188 AC(30KAR03065) 1745 6000 Smt. Susheelamma mine(40KAR07023) &n....
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....P. It is further submitted that the Rules sought to be impugned, is considered, the same shall have wide ramifications on the mineral blocks already auctioned and would tantamount to change in the conditions of the tender(s) pursuant to which the successful miners have got the mines. Such change in measure of royalty and auction premium are as essential components of auction. Those who participated in auction and decided to quote low auction premium considering the explanation to Rule 38 of MCR 2016 would claim that auction parameters have been changed post-auction and would allege undue enrichment and unfair benefit to the preferred/successful bidder. Successful bidders for all the blocks auctioned are selected based on the existing definition of sale value. 66. Applying changes on existing non-auctioned and auctioned mining lease would result in lower royalty and auction premium payable to States. The committee that suggested changes regarding royalty on royalty calculated that for an ad valorem royalty rate of 15%, there would be reduction of State revenue to an extent of 15 to 17%. Since, 2015, more than 585 mineral blocks have been auctioned. The estimated loss to the....
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....iod of 50 years would be approximately Rs. 7 lakh crore. This amount would obviously increase with increase in operationalization of auctioned mines and increase in value of minerals and their production. Further, even other minerals are also taken into consideration, as the rules applies to all minerals, the loss would be in lakhs of crores over the lease period." 54. The petitioners, in their rejoinder affidavit dated 06.12.2025, while disputing the contentions of the Union, advert to the following chart to demonstrate how the existing method of computation of ASP under the impugned rules is resulting in a cascading impact on the payments of royalty by enhancing the rate of royalty every month:- Scenario Basis for Calculating Royalty (ASP) Total levies Payable (16.95% of the ASP) Effective Rate of royalty, DMF and NMET payment on the Mineral Value Excess Payment (occasioned due to the anomaly) Ideal Scenario (If no anomaly) Rs. 100/- (Actual ex-mine price) Rs. 16.95 16.95% Rs. 0.00 Scenario with anomaly Rs. 116.95 / (ex-mine price + levies) Rs. 19.82 19.82 % + 2.87 (Immediate Inflation) Cascading Impact (Month 2) Rs. 119.82 (V....
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.... very outset is the fundamental principle - the presumption of constitutionality. Today, it is beyond cavil that the presumption of constitutionality not just applies to plenary legislation but also to subordinate legislation. Of course, it is a rebuttable presumption and the burden will be on the petitioners to displace the presumption. 62. In State of Tamil Nadu and Another vs. P. Krishnamurthy and Others (2006) 4 SCC 517, R.V. Raveendran J., speaking for this Court, felicitously set out the aspect of presumption of constitutionality in the context of subordinate legislation thus:- "15. There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following grounds: (a) Lack of legislative competence to make the subordinate legislation. (b) Violation of fundamental rights guaranteed under the Constitution of India. (c) Violation of any provision of the Constitution of India. (d) Failure to conform to the statute under which it is made or ex....
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....find provisions under the MMDR Act pertaining to prospecting or mining operations under lease or licence, [MMDR Act, Section 4] restrictions on the grant of mineral concessions, [MMDR Act, Section 5] periods for which prospecting licences [MMDR Act, Section 7] or mining leases [MMDR Act, Section 8] may be granted or renewed, and royalties in respect of mining leases. [MMDR Act, Section 9] Chapter III deals with the procedure for obtaining mineral concessions in respect of land in which the minerals vest in the Government. Chapter IV empowers the Government to frame rules for regulating the grant of mineral concessions. Chapter V deals with the special powers of Central Government to undertake prospecting or mining operations in respect of lands in which the minerals vest in the Government of a State or any other person. [MMDR Act, Section 17] Thus, Chapters II to V of the MMDR Act invariably deal with aspects regulating the place of extraction of minerals and the process by which mines are worked. These provisions govern aspects such as conceding land to a person for carrying out mining operations (mining concession) or granting licences for working mines and winning minerals, whic....
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....gure on which the percentage of Royalty would be calculated. Payments made towards DMF, NMET are only a percentage of Royalty. Under Section 9(3) read with Entry 24 of the Second Schedule, Royalty on iron ore is levied at 15 per cent of the average sale price on ad valorem basis. Rule 42, which deals with average sale price, speaks of sale value. Rule 38 and Rule 45 of the 2016 Rules and the 2017 Rules respectively, deal with the components that would go to constitute sale value. Explanations have been appended to Rule 38 and 45(8)(a) respectively, stating that the amounts paid towards Royalty, DMF and NMET would not be excluded from the sale value. 68. Rules 8, 9 and 13 of the Auction Rules, 2015, which have been discussed hereinabove, explained how the bidder bids the auction premium as percentage of the average sale price. 69. As per Rules 8 & 9, the bidders submit a bid which is the percentage of the value of the minerals despatched or also known as reserve price. Definition of value of mineral despatched in Rule 8(2) says, value of mineral despatched = mineral despatched x sale value. 70. So, both for payment of premium and for computation of Royalty, DMF and NMET, av....
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....and character of the legislation must be determined with reference to the legislative subject matter and the charging section [Federation of Hotel & Restaurant Assn. of India v. Union of India, (1989) 3 SCC 634, para 37] The charging section levying a tax and defining the persons who are liable to pay the tax constitute the core of a taxing statute B.Shama Rao v. State (UT of Pondicherry), 1967 SCC OnLine SC 29]. The distinction between the nature of tax and measure of tax can be gathered from the decision of this Court in Sainik Motors, Jodhpur v. State of Rajasthan, [1961 SCC OnLine SC 15]. In that case, the petitioners challenged the levy of taxes on passengers and goods by the State legislature. The charging section provided that the tax was "in respect of all passengers carried and goods transported by motor vehicles at such rate not exceeding one-eight of the value of the fare or freight." This Court held that the tax was on passengers and goods which could be traced to Entry 56 of List II of the Seventh Schedule. As regards the measure of the levy, it was held that the measure was furnished by the amount of the fare and freight charged. 304. It is a settled position....
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....rue that the annual value was used as the basis, but it was very different from the annual value which may be used for getting at the true profits or income. The annual value, as has been pointed out, is at best only notional or hypothetical income and not the actual income. It is only a standard used in the Income-tax Act for getting at income, but that is not enough to bar the use of the same standard for assessing a Provincial tax. If a tax is to be levied on property, it will not be irrational to correlate it to the value of the property and to make some kind of annual value the basis of the tax without intending to tax income." This Paragraph clearly highlights the nature and measure of the tax and how the two should not be mixed up. 74. In Union of India & Ors. vs. Bombay Tyre International Ltd. and Others (1984) 1 SCC 467, explaining how Section 3 of the then prevailing Central Excise and Salt Act provided for the levy of duty of excise on goods produced or manufactured in India and how Section 4 prescribed the measure by which the charge is to be levied, this Court followed Ralla Rama (supra) and explained how while the measure of levy may indicate the nature of tax b....
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....e impugned Act therein has adopted the method of determining the rate of levy by reference to minerals produced by the mines would not by itself make the levy a duty of excise. 77. The above precedents have been set out only to explain the distinction between the measure of levy and the nature of levy. Though there is no dispute with regard to the legislative competence and the entire argument has only been on the provisions being violative of Articles 14 and 19(1)(g), this conceptual distinction is essential while considering the argument that the sale value could not have been so defined as to encompass within it the payments made towards Royalty, DMF and NMET. The argument on Articles 14 and 19(1)(g) and the aspect of manifest arbitrariness have been independently considered hereinbelow. 78. It must be remembered that as held in Mineral Area Development Authority (supra), the measure of any levy is a matter of legislative policy. Convenience and the reasonability of the nexus between the measure and tax, no doubt, has to be determined on a case-to-case basis. Mineral Area Development Authority (supra) also reiterated that it was a fundamental principle that legislature pos....
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....it made, be unreasonable. Lastly, the section does not apply to a company in which the public are substantially interested or a subsidiary company of a public company whose shares are held by the parent company or by the nominees thereof..... ... ... When therefore in spite of there being money reasonably available for the purpose, it decides not to declare a dividend it is clear that it does so because it does not want to take the dividend. Now it may not want to take the dividend if it wants to evade payment of tax thereon. Thus by not declaring the dividend the persons constituting the group in control, could evade payment of super tax, which, of course, is a form of income Tax. They would be able to evade the super tax because super tax is payable on the dividend in the hands of the shareholders even though it may have been paid by the company on the profits out of which the dividend is paid, and because the rate at which super tax is payable by a company may be lower than the rate at which that tax is payable by other assessees. By providing that in the circumstances mentioned in it, the available assessable income of a company would be deemed to have been di....
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....thers, the means mentioned by Simon. 80. What is significant to note is that undistributed dividend was deemed to be income proportionate in the hands of the shareholders. This was to prevent devices being employed by companies to not distribute dividends and thereby prevent income accruing in the hands of shareholders. A measure in the nature of a legal fiction passed muster under the Constitution. This Court also noticed that in Sardar Baldev Singh (supra), the Section may work hardship on members who hold shares but that would not make the levy unconstitutional. 81. Similarly, in Balaji vs. ITO 1961 (43) ITR 393, this Court upheld the provision which provided that, in computing the total income of any individual there shall be included so much of the income of a minor child of such individual and as arises directly or indirectly from the membership of the wife in a firm of which her husband is a partner and further, from the admission of the minor to the benefits of the partnership in a firm of which individual is a partner. 82. This implied that the individual who was the husband or the father was taxed for the income of the wife or of the minor child respectively in t....
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....ip accounts that part of the tax referable to the share or shares of their income. It may be that a father or a husband may have to pay tax at a higher rate than ordinarily he would have to pay if the addition of the wife's or children's income to his own brings his total income to a higher slab. But it may not necessarily be so in a case where the income of the former is not appreciable; even if it is appreciable, he can debit a part of the excess payment to his wife and children. In short, the firm, though registered, would be treated as a distinct unit of assessment, with the difference that, unlike in the case of a registered firm, the entire income of the unit is added to the personal income of the father or the husband, as the case may be. This mode of taxation may be a little hard on a husband or a father in the case of genuine partnership with wife or minor children, but that is offset, to a large extent, by the beneficient results that flow therefrom to the public, namely, the prevention of evasion of income tax, and also by the fact that, by and large, the additional payment of tax made on the income of the wife or the minor children will ultimately be borne by th....
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....ion, the legislature has travelled beyond the legislative field assigned to it by Entry 82 in List I. 17. It is, however, urged by Mr. Pathak that while providing for such a fiction, the legislature should have required the Income Tax Officer to consider in each case whether the loan was genuine, or was the result of a device; and he argues that since no such provision has been made and a uniform presumption by fiction is sought to be raised, the legislature has gone beyond its legislative competence. In support of this argument, Mr. Pathak has referred to the fact that under Section 108(1) of the Commonwealth Income Tax Act it is provided that the amount paid to the shareholder by way of advance or loan can be taxed if in the opinion of the Commissioner it represents distributions of income. Such a provision would have made the impugned section valid. Mr. Pathak argues that omission of Parliament to exclude from the operation of Section 12(1-B) genuine loans or advances, and its failure to distinguish between such loans and advances and loans and advances made as device shows, that it has acted blindly and must, therefore, be held to have exceeded its legislative power. W....
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....able and have sufficient nexus to the objects that are sought to be achieved. The statutory provisions were intended to operate in all trades where the evasion and chances of evasion were greater than others and due to practical experience over the years, it was felt that the particular trades or businesses necessitated speedier provision for recovery or collection. It is in this perspective only, trades in particular commodities, wherein evasion was predominant and called for appropriate machinery to secure the payment of tax, the legislation was enacted. In the case of taxation laws, the legislature has got a wide discretion to pick and choose persons, objects, districts, etc. for legislating. The power of the legislature to classify or select certain objects or persons to which the law will apply is of great magnitude. The court permits a greater latitude to the discretion of the legislature. It has been invariably held by this Court that in tax matters, the State is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably. The provisions attacked in this case are reasonable, as could be seen from the legislative histo....
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....t is sale value, as mentioned in Rule 42(b) would be discernible from Rule 38, which has already been discussed. 86. It is further to be examined whether the measure has any nexus and rational connection with the nature of levy. Further, the justification offered by the Union of India for adopting such a measure also needs to be examined. 87. The justification offered by the Union of India is that unlike for coal, where the notified prices, auction prices of Coal India Limited and Singareni Collieries Company Limited or the import price form the basis of National Coal Index (NCI), there is no such mechanism for iron ore. 88. As far as the iron ore is concerned, the ASP is depended on market forces and is not decided by the Government. 89. The ASP is arrived at based on the data given by the miners themselves. Detailed instances of manipulation of ASP with regard to different grades of iron ore have been provided in the form of an appendix to the additional affidavit. For the period from August, 2022 to January, 2023, the Union of India has contended that since the successful bidders have quoted their bid price as a percentage of the ASP as far as premium for mining leas....
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....and the standard by which the amount of tax is measured, being the purchase price, will not in any way alter the nature and basis of levy viz. that the tax imposed is a tax on income. It cannot be labelled as a tax on purchase of goods." 94. We find nothing manifestly arbitrary in the process adopted. There is nothing capricious or irrational about the measure and it cannot be said that it has been adopted without any determining principle nor do we find the measure excessive or disproportionate for it to be characterized as manifestly arbitrary. 95. We also do not find any violation of Article 14 of the Constitution from the angle of discrimination. The comparison with coal is completely unjustified as there is no concept of ASP in coal and that too based on data given by the miners. Hence, comparing coal and iron ore, in this context, is akin to comparing apples and oranges which we are not prepared to do. According to the petitioners, ad valorem cannot include in the value the levy of royalty, payments made towards DMF and NMET. We are not able to countenance that submission. As a means to check evasion, a measure has been prescribed under which ad valorem will be arrived ....
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.... populi suprema lex" - regard for the public welfare is the highest law. Private rights will have to cede to public interest. A Constitutional Court called upon to pronounce on the validity of such fiscal measures should be loath to interfere, for any interference in the absence of legitimate grounds would put public interest in jeopardy. For the reasons stated above, we do not consider the measure to be unreasonable or disproportionate. 98. Much was made out of the recommendations of Shri Praveen Kumar and Dr. Aruna Sharma Committee Reports. Committee Reports are only recommendatory in nature. If it were not, judicial review will be a meaningless exercise. In the challenge to the Constitutionality of the Rules as to demonstrate how the levy is illegal, the petitioners have not been able to establish unconstitutionality. On the contrary, the Union has offered proper justification for the measure of levy adopted and it passes constitutional muster. 99. The scope of the judgment of this Court dated 07.11.2024 in Writ Petition No. 715 of 2024 is clear in black and white. There was no pronouncement made on the constitutionality of the levy. The subsequent order dated 19.05.2025 l....