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SUPREME COURT OF INDIA
DHANANJAYA Y. CHANDRACHUD, CJI., J.B. PARDIWALA, MANOJ MISRA, JJ.
South Eastern Coalfields Ltd - Appellant
Versus
State of Madhya Pradesh & Ors. - Respondents
Civil Appeal Nos. 84-85 of 2016 With Civil Appeal Nos. 91-92 of 2016, Civil Appeal Nos. 89-90 of 2016, Civil Appeal No. 86 of 2016, Civil Appeal Nos. 87-88 of 2016, Civil Appeal No. 93 of 2016
Decided On : 21-09-2023
Terminal Tax - Municipal Corporation Act - Madhya Pradesh Municipal Corporation Act 1956, Madhya Pradesh Municipalities Act 1961 - Section 132, Section 127 - Summary: The court discussed the provisions of Section 132 of the Madhya Pradesh Municipal Corporation Act 1956 and Section 127 of the Madhya Pradesh Municipalities Act 1961, along with the Terminal Tax (Assessment and Collection) on the Goods Exported from Madhya Pradesh Municipal Limits Rules 1996. The court also considered the applicability of Part IXA of the Constitution of India to Scheduled Areas and the power of the Governor to direct the application of laws to Scheduled Areas under the Fifth Schedule. The court concluded that the levy of a terminal tax was valid within the limits of the Municipal Council.
Fact of the Case:
The appellant, a company owning coal mines, challenged the levy of terminal tax within the limits of the Municipal Council under Article 226 of the Constitution. The High Court rejected the plea, holding that the power of imposing tax was granted by a State statute enacted with due legislative competence.
Finding of the Court:
The court found that the power of imposing tax was granted by a State statute enacted with due legislative competence, and the levy of a terminal tax was valid within the limits of the Municipal Council.
Issues: The issues raised in the appeals lacked substance.
Ratio Decidendi: The court concluded that the power of imposing tax was granted by a State statute enacted with due legislative competence, and the levy of a terminal tax was valid within the limits of the Municipal Council. The court also found that the issues raised in the appeals lacked substance.
Final Decision: The appeals were dismissed, and pending applications, if any, were disposed of.
Key Points: - The court established the validity of the levy of a terminal tax within the limits of the Municipal Council under a State statute (!) . - The issues raised in the appeals were found to lack substance (!) . - The Madhya Pradesh Municipal Corporation Act 1956, Section 132, and the Madhya Pradesh Municipalities Act 1961, Section 127, empower the respective bodies to levy a terminal tax on goods exported from their limits (!) . - The Terminal Tax (Assessment and Collection) on the Goods Exported from Madhya Pradesh Municipal Limits Rules 1996 were framed in exercise of these statutory powers (!) . - The appellant challenged the levy of terminal tax under Article 226 of the Constitution, but the High Court rejected the plea, holding the State statute was enacted with due legislative competence (!) . - Part IXA of the Constitution, dealing with Municipalities, does not apply to Scheduled Areas as per Article 243-ZC (!) (!) . - The Fifth Schedule of the Constitution, particularly Paragraph 5, empowers the Governor to direct that any Act of Parliament or the State Legislature shall not apply to a Scheduled Area or shall apply with exceptions and modifications (!) (!) (!) . - No notification from the Governor was produced to indicate that the municipal laws in question did not apply to the Scheduled Areas or applied with exceptions that would disable the levy of tax (!) (!) . - The inapplicability of Article 243-X to Scheduled Areas did not denude the state legislature of its power to enact legislation for the State (!) . - The appeals were dismissed (!) .
ORDER :
1. This batch of appeals arises from a judgment dated 21 July 2010 by a Division Bench of the High Court of Madhya Pradesh in a set of petitions under Article 226 of the Constitution.
2. Section 132 of the Madhya Pradesh Municipal Corporation Act 1956 provides for “taxes to be imposed under this Act”. Sub-section 6(n) empowers the Corporation to levy “a terminal tax” on goods and animals exported from the limits of the Corporation. A corresponding provision is contained in the Madhya Pradesh Municipalities Act 1961; Section 127(6)(n) empowers the Municipal Council to imposed “a terminal tax on goods or animals exported from the limits of the Council”. In exercise of the statutory powers conferred by the two statutes, the Terminal Tax (Assessment and Collection) on the Goods Exported from Madhya Pradesh Municipal Limits Rules 1996 have been framed. Section 2(c) defines the expression “terminal tax” in the following terms :
“(c) "Terminal tax" means the terminal tax on goods exported from the Municipal limit in accordance with the sanction of State Government under clause (o) of sub-section (2) of Section 132 of the Madhya Pradesh Municipal Corporation Act, 1956 and the tax described in clause (xvi) of sub-section (1) of Section 127 of the Madhya Pradesh Municipalities Act, 1961.”
3. The appellant is a company registered under the Companies Act, 1956 and owns the coal mines of Jamuna & Kotma Colliery. The appellant moved the High Court under Article 226 of the Constitution seeking to challenge the levy of terminal tax within the limits of the Municipal Council. The plea was rejected by the High Court on the ground that the land from where the appellant was carrying out its coal mining operations fell within the limits of the Municipal Council which has levied the terminal tax. The High Court held that the power of imposing tax was granted by a State statute which was enacted with due legislative competence. It was observed that no exceptions have been notified to the powers of the Municipal Council under any provision of the Constitution. The judgment has been carried in appeal.
4. Article 244 of the Constitution provides that the provisions of the Fifth Schedule shall apply to the administration and control of Scheduled Areas and Scheduled Tribes. A notification was issued on 29 February 2003 by the Union Ministry of Law and Justice, in exercise of the powers conferred by Paragraph 6(2) of the Fifth Schedule to the Constitution of India, by which the Scheduled Areas (States of Chhattisgarh, Jharkhand and Madhya Pradesh) Order, 2003 was promulgated. The areas specified in the notification were redefined to be the Scheduled Areas within the States of Chhattisgarh, Jharkhand and Madhya Pradesh.
5. Part IXA of the Constitution of India which was inserted by the 74th amendment provides for the Municipalities. Article 243-ZC stipulates that nothing contained in the Part shall apply to the Scheduled Areas referred to in clause (1), and the tribal areas referred to in clause (2) of Article 244.
6. Mr. N. Venkataraman, Additional Solicitor General, appears on behalf of the appellant in support of the appeals. The first submission which has been urged is that Article 243X empowers the Legislature of a State by law to authorise the Municipalities to levy, collect and appropriate taxes, duties, tolls and fees. Since Part IXA does not apply to Scheduled Areas, it was urged that power under Article 243X is not available in relation to a Scheduled Area. As regards Scheduled Areas, it was urged that by virtue of Paragraph 5 of the Fifth Schedule to the Constitution of India, the Governor is entrusted with the power to direct that any particular Act of Parliament or the Legislature of the State shall not apply to a Scheduled Area or shall apply subject to such exceptions and modifications as may be specified. On this foundation, it was urged that the provisions of the two municipal laws which have been noticed above, would have no application
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