The State Legislature does not have the legislative competence to levy a local cess on royalty and seigniorage fee under Entry 49 of List II of the Seventh Schedule to the Constitution of India.

A. LAKHMANA RAO, J.

( 1 ) THIS batch of Seven writ petitions has been filed challenging the Andhra pradesh Ordinance No. 13 of 1988 and the amending Act, known as the Andhra pradesh (Telangaca Area) District Boards (Amendment) Act, 1989 (Act No. 8 of 1959 ). By the aforesaid Ordinance No. 13 of 1988 as replaced by the aforesaid amending Act, Section 2 thereof sought to amend Section 135 of the Andhra Pradesh (Telangana Area) District Boards act (hereinafter referred to as the Act ). The relevant part of Section 135 of the act reads, as follows :-" Local Cess : (1) Notwithstanding anything contained in sub-section (2) of section 1 the Government shall, subject to the provisions of Sub-Section (2), levy a local cess of twelve naye paisa on every rupee of land revenue payable to Government. "by virtue of the Ordinance and the amending Act, Section 2 thereof, it was provided as follows :" In the Andhra Pradesh (Telangana Area) District Boards Act, 1955, in section 135, in sub-section (1), after the words "land revenue" wherever it occurs the words "royalty and seigniorage fee" shall be deemed always to have been inserted. "

( 2 ) THE effect of the amendment was that a cess was being levied on royalty and seigniorage fee. In the writ petitions, the validity of the Ordinance and the validity of the Amending Act No. 8 of 1989 was challenged on the ground that it was beyond the legislative competence of the Andhra Pradesh State Legislature.

( 3 ) IN support of the contention the petitioners have relied on the decision of the Supreme Court in the case of India cement Ltd. Vs. State of Tamil Nadu (1) judgements Today 1989 (4) SC 190. In the aforesaid case, the Supreme Court was concerned with Sections 115 and 116 of the Madras Village Panchayats Act (Act no. XXXV of 1988) which provided for levy of cess on royalty on mineral rights. The Supreme Court took the view that it was not within the legislative competence of the State Legislature under Entry 49 of list II of the Seventh Schedule to the constitution. The Supreme Court in paragraphs 41 and 42 of the Judgment observed as follows :" It is not in dispute that the cess which the Madras Village Panchayat Act purposes to levy is nothing but an additional tax and originally it was levied only on land revenue, apparently land revenue would fall within the scope of Entry 49 but it could not be doubted that royalty which is a levy or tax on the extracted mineral is not a tax or a levy on land alone and if cess is charged on the royalty it could not be said to be a levy or tax on land and therefore it could not be upheld as imposed in exercise of jurisdiction under Entry 49 List II by the State legislature. Thus it is clear that by introducing this explanation to Section 115 clause (1) widening the meaning of word land revenue for the purpose of Section 115 and 116. When the Legislature included royalty, it went beyond its jurisdiction under Entry 45 List II and therefore clearly is without the authority of law. But this also may lead to an interesting situation. This cess levied under Sec. 115 of the medras village Panchayat Act is levied for purposes indicated in the schedule of the act and it was intended to be levied on all the lands falling within the area but as this cess on royalty is without the authority the result will be that cess is levied so far as lands other than the lands in which mines are situated are concerned but lands where mines are situated this levy of cess is not in accordance with that law. This anomaly could have been averted if the legislature in this explanation had used words surface rent in place of royalty. Even if, the lands where mines are situated and which are subject to licence and mining leases even for these lands there is charge on the basis of the surface of the land which is sometime described as surface of the land which is sometimes described as surface rent or sometimes also as dead rent . It could not be doubted that if such a surface rent

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