JUDGMENT

B. P. JEEVAN REDDY, J. - Leave granted in the special leave petitions.

2. The appellants-writ petitioners are challenging the validity of the Cess and Other Taxes on Minerals (Validation) Act, 1992 (being Act 16 of 1992) enacted by Parliament. The High Courts have repelled the attack. It is renewed here.

FACTUAL CONSPECTUS

3. Section 115 of the Tamil Nadu Panchayats Act, 1958 levied in every Panchayat Development Block a local cess @ 0.45p on every rupee of land revenue payable to the Government in respect of any land for every Fasli. The explanation to the section defined "land revenue" to include inter alia royalty and lease amount payable in respect of the land. The validity of the levy was challenged in the Madras High Court. A learned Single Judge dismissed the writ petition holding that being a tax on land, it is within the legislative competence of the State Legislature. The learned Judge followed the decision of this Court in H. R. S. Murthy v. Collector of Chittoor [(1964) 6 SCR 666 : AIR 1965 SC 177]. A writ appeal against the decision of the learned Single Judge was dismissed, again following the decision in H. R. S. Murthy [(1964) 6 SCR 666 : AIR 1965 SC 177]. The matter was brought to this Court. It was heard ultimately by a seven-judge Bench (India Cement Ltd. v. State of T.N [(1990) 1 SCC 12 : 1989 Supp (1) SCR 692] which held the said levy to be outside the legislative competence of the Tamil Nadu Legislature. This Court held that (1) the levy cannot be sustained under and with reference to Entry 49 of List II of the Seventh Schedule to the Constitution of India as a tax on land; (2) the levy is a levy on minerals and is relatable to Entries 23 and 50 of List II; (3) that on account of the declaration made by parliament contained in Section 2 of the Mines and Minerals (Regulation and Development) Act, 1957, (MMRD Act), the State Legislatures have been denuded of the power to levy tax on minerals. Regulation of mines and mineral development takes within its purview the levy of tax on minerals. Section 9 of the MMRD Act, this Court held, provides for levy of royalty/dead rent on minerals. The State Legislatures cannot, therefore, impose any tax on minerals. H. R. S. Murthy [(1964) 6 SCR 666 : AIR 1965 SC 177] was wrongly decided. Having so declared, this Court, however, directed that the said decision shall only have prospective effect. This was for the reason that the States have been levying and collecting the said cess on the basis of the decision of this Court in H. R. S. Murthy [(1964) 6 SCR 666 : AIR 1965 SC 177]. The decision in India Cement was rendered on 25-10-1989.

4. Following the decision in India Cement [(1990) 1 SCC 12 : 1989 Supp (1) SCR 692] a three-Judge Bench declared identical levies imposed by the States of Orissa, Bihar and Madhya Pradesh as incompetent and void (Orissa Cement Ltd. v. State of Orissa [1991 Supp (1) SCC 430 : (1991) 2 SCR 105]). Having regard to the fact that decisions of the High Courts in Orissa, Bihar and Madhya Pradesh (which were the subject-matter of appeals before this Court) were rendered on different dates, the Bench directed that the said decision shall be operative prospectively with effect from the date of the said judgment, i.e., 4-4-1991 in the case of State of Bihar, with effect from 22-12-1989 in the case of Orissa and with effect from 28-3-1989 in the case of Madhya Pradesh.

5. The aforesaid decisions of this Court had a serious impact on the revenues of several State Governments. Not only were they barred from collecting the said cess, quite a few of them were obliged to refund substantial amounts which had already been collected. It is well known that the State Governments in this country are perpetually strapped for funds. The decisions made their situation more acute. Parliament then came to their rescue and promulgated the Cess and other Taxes on Minerals (Validation) Ordinance, 1992 on 15-2-1992. The Ordinance has been replaced by Act 16 of 1992