2015 Supreme(SC) 231

SUPREME COURT OF INDIA
H.L. Dattu, CJI., Madan B. Lokur, A.K. Sikri, JJ.
Tata Steel Ltd. – Appellant
Versus
Union of India & Ors. – Respondents
CIVIL APPEAL NOS. 2938-2939 OF 2015 (Arising out of S.L.P. (C) Nos.8972-8973 of 2014)
AND
Tata Steel Ltd. – Appellant
Versus
State of Jharkhand & Ors. – Respondents
CIVIL APPEAL NOS. 2940-2941 OF 2015 (Arising out of S.L.P. (C) Nos.9016-9017 of 2014)
WITH
Tata Iron & Steel Co. Ltd. – Appellant
Versus
State of Jharkhand & Ors. – Respondents
CIVIL APPEAL NO. 303 OF 2004
WITH
State of Bihar (Now Jharkhand) & Ors. - Appellants
Versus
Tata Iron & Steel Co. Ltd. – Respondent
CIVIL APPEAL NO. 307 OF 2004
Decided on: 17-03-2015

IMPORTANT POINTS
Removal of coal from the seam in the mine and extracting it through the pithead to the surface satisfies the requirements of Section 9 of the MMDR Act in order to give rise to a liability for royalty.
Under Rule 64B and Rule 64C inserted on 25th September, 2000 in the Mineral Concession Rules, the levy of royalty on coal has now been postponed from the pit-head to the stage of removal of the coal (whether unprocessed or ROM coal or whether beneficiated coal).
The entitlement of TISCO and Tata Steel to refund of royalty from 10th August, 1998 to 25th September, 2000 is recognized. For the period from 25th September, 2000 onwards, TISCO is obliged to pay royalty as per Rule 64B and Rule 64C of the Mineral Concession Rules.
Tata Steel, like TISCO is liable to pay royalty on coal with effect from 25th September, 2000 in terms of Rule 64B and Rule 64C of the Mineral Concession Rules.
Constitutionality and vires of Rule 64B and Rule 64C may be challenged separately.

Headnote:(a) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9 – Section 9 cannot be read in isolation – It has to be read and understood in conjunction with the Second Schedule. (Para 65)

       (1998) 6 SCC 476; (2004) 6 SCC 281 – Referred

       (b) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9 – Rate of royalty, its method of computation and the final levy – Vary from mineral to mineral – Therefore section 9 has to be read with the Schedule. (Para 72)

       (2004) 6 SCC 281; C.A. No.8395 of 2001 – Relied upon

       (1998) 6 SCC 476 – Distinguished

       (c) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9 r/w Schedule – Coal – ‘Removal’ – Coal can be used in its raw form and its beneficiation is not required except for specialized uses – Therefore its ‘removal from the seam’ in the mine and extracting the same through the pit’s mouth to the surface – Satisfies the requirement of Section 9 in order to give rise to liability for royalty. (Para 75)

       (1998) 6 SCC 480; C.A. No.8395 of 2001 – Relied upon

       AIR 1976 Orissa 159; C.A. No.5651 of 2005 – Referred

       (d) Mineral Concession Rules – Rule 64B and Rule 64C – General rules applicable to all minerals, coal not excluded – Rule 64B makes it clear that royalty will be payable only on removal from leased area, whether in processed or unprocessed form – Under Rule 64C royalty is payable on middlings and tailings only when they are sold or consumed after being dumped – Rules held prospective – Liberty given to challenge constitutionality of the Rules. (Para 77, 78, 79, 80, 81)

       (e) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9 – TISCO and Tata Steel held entitled to refund of royalty from 10th August, 1998 to 25th September, 2000. (Para 84, 87)

       C.A. No.8395 of 2001 – Relied upon

       Facts of the case:

       There are two sets of appeals. In the first set the grievance of TISCO is that though the application of the law laid down by Supreme Court that royalty is chargeable in accordance with Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 on the quantity of coal extracted at the pit-head, yet the refund of excess royalty paid by TISCO for the period from 10th August, 1998 (the date of the decision in SAIL) till June 2002 [about Rs.29.34 cr.] has been denied.

       On the other hand, the case in the appeals filed by the State of Bihar (Now Jharkhand) against the same judgment and order the submission is that after the decision in SAIL the Government of India issued a notification dated 25th September, 2000 inserting Rule 64B and Rule 64C in the Mineral Concession Rules, 1960 and as a result of this, Run-of-Mine minerals, after being processed in the leased area are exigible to royalty on the processed mineral. It is contended that these rules were, unfortunately, not brought to the notice of the High Court and that the decision rendered by the High Court accepting the law laid down in SAIL is incorrect.

       In the second set of appeals the grievance of Tata Steel is that despite the decision in SAIL and the decision dated 23rd July, 2002 of the Jharkhand High Court, royalty is being charged from Tata Steel on processed or beneficiated coal and not on extracted coal or Run-of-Mine (ROM) coal at the pit-head. It is submitted that this is despite the affidavit of the Ministry of Coal of the Government of India that Rule 64B and Rule 64C of the MCR “may not be particularly applicable on coal minerals.” Tata Steel is also aggrieved by the conclusion of the Jharkhand High Court that Rule 64B and Rule 64C of the MCR are constitutionally valid.

       Finding of the Court:

       TISCO and Tata Steel are entitled to refund of excess royalty paid from 10th August, 1998 to 25th September, 2000. However it would be adjusted against future royalty.

       Result: Appeals disposed of.