1990 Supreme(AP) 184

Andhra Pradesh High Court
Judges : M.JAGANADHA RAO, YOGESHWAR DAYAL
K.C.P.Ltd - Appellant
Versus
Government Of A.P. - Respondent
Decided On : 04-12-90

Headnote:

The Andhra Pradesh (Mineral Rights) Tax Act, 1975 (State Act) is ultra vires of the powers of the State Legislature. The entire field of levy of tax on mineral rights is covered by Section 9 of the Mines and Minerals (Regulation and Development) Act, 1957 (Central Act) and nothing more than what is mentioned in Section 9 can be levied by the State Legislature under the head of "tax on mineral rights" by merely stating that it will be other than royalty.

Fact of the Case:

The petitioners, holders of mining leases in the State of Andhra Pradesh, challenged the constitutional validity of the Andhra Pradesh (Mineral Rights) Tax Act, 1975 (State Act), which imposed a tax on mineral rights of holders of mining leases in respect of certain minerals in the State. The petitioners contended that the levy and collection of mineral rights tax under the State Act was ultra vires of the powers of the State Legislature and that the State should be restrained in future from levying and collecting the said tax and also that the tax already collected should be directed to be refunded.

Finding of the Court:

The Court held that the State Act was ultra vires of the powers of the State Legislature and that the entire field of levy of tax on mineral rights was covered by Section 9 of the Central Act. The Court further held that the amounts already collected need not be refunded by the State, but that the State shall not levy and collect any mineral rights tax in future under the provisions of the State Act, 1975.

Issues: 1. Whether the levy and collection of mineral rights tax under the State Act was ultra vires of the powers of the State Legislature? 2. Whether the State should be restrained in future from levying and collecting the said tax? 3. Whether the tax already collected should be directed to be refunded?

Ratio Decidendi: 1. The Court held that the State Act was ultra vires of the powers of the State Legislature because: - Entry 50 of List II of the Seventh Schedule to the Constitution of India, which permits the State Legislature to levy a tax on mineral rights, is subject to any limitations imposed by Parliament by law relating to mineral development. - Section 9 of the Central Act, which is a law made by Parliament relating to mineral development, imposes limitations on the levy of tax on mineral rights. - The State Act, by imposing a tax on mineral rights in addition to the royalty payable by the leaseholder, exceeds the limitations imposed by Section 9 of the Central Act. 2. The Court held that the State should be restrained in future from levying and collecting the mineral rights tax under the State Act because: - The entire field of levy of tax on mineral rights is covered by Section 9 of the Central Act. - The State Legislature is denuded of its power to levy a tax on mineral rights by virtue of the provisions of the Central Act.

Final Decision: The Court declared that the State Act was ultra vires of the powers of the State Legislature and that the entire State Act, 1975 was declared ultra vires. However, the Court held that the amounts already collected need not be refunded by the State. The Court also directed the State not to levy and collect any mineral rights tax in future under the provisions of the State Act, 1975.