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PATNA HIGH COURT
H.Mahapatra and A.B.N.Sinha JJ.
Laddu Mal
Versus
State Of Bihar
Miscellaneous Judicial Case No. 1608 of 1964 ; 1614 of 1964 ;
Decided On : APRIL 26, 1965
MINES AND MINERALS - Brick-earth - Whether a mineral - Whether royalty can be imposed on brick-earth - Bihar Minor Mineral Concession Rules, 1964 (Bihar Rules) - Whether ultra vires the Constitution - Whether Assistant Mining Officer authorised to demand royalty - Whether notices issued by Block Development Officer asking petitioners to take quarry permit valid.
Fact of the Case:
Petitioners, brick-layers, were served with notices from the Assistant Mining Officer, Purnea, calling upon them to pay royalty for the period from 1958 to 1964, during which time they were engaged in the manufacture and sale of bricks by using sand, earth, clay, etc., which constitute minor minerals for which no permit or mining lease had been obtained nor any royalty had been paid to the Government. Another notice from the same officer was also served on them to show cause why they should not be prosecuted under Rule 37 of the Bihar Minor Mineral (Concession Rules, 1964, as they were engaged in the manufacture and sale of bricks by using sand, clay etc. which constituted minor minerals, for which no permit or mining lease had been obtained, nor any royalty had been paid to Government. The Block Development Officer also gave a notice to each of them asking them to take permit for digging earth and taking sand for manufacture of bricks and to produce accounts in respect of such manufacture.
Finding of the Court:
1. Royalty on mines and minerals is a levy of the nature of a tax and would come under the definition given in Article 366 Clause (28) of the Constitution. 2. The Parliament had legislative competency to enact about brick-earth. 3. Brick-earth is a mineral and its inclusion in the definition of minor minerals as given in the Mines and Minerals (Regulation and Development) Act, 1957 (Act of 1957) is not ultra vires the Constitution, Seventh Schedule. 4. The Assistant Mining Officer who gave the notice demanding the payment of royalty was authorised to do so. 5. The notices by the Assistant Mining Officer calling upon the petitioners to show cause why they should not be prosecuted under Rule 37 of the Bihar Minor Mineral Concession Rules 1964, have no legal infirmity. 6. The notices issued by the Block Development Officer asking the petitioners to take quarry permit were also valid.
Issues: 1. Whether brick-earth is a mineral and whether royalty can be imposed on brick-earth. 2. Whether the Bihar Minor Mineral Concession Rules, 1964 (Bihar Rules) are ultra vires the Constitution. 3. Whether the Assistant Mining Officer was authorised to demand royalty. 4. Whether the notices issued by the Block Development Officer asking petitioners to take quarry permit were valid.
Ratio Decidendi: 1. The definition of minerals as given in the Act of 1957 is artificial. It has only divided the minerals into two sections so that their development may be regulated separately by two authorities, Union and State Government. If brick-earth or brick-clay is a mineral and I do not find any reason why it should not be, the Parliament had legislative competency to enact about it. 2. The expression used in item No. 54 of the Union list in the Constitution is not really mines and minerals; it includes two things (1) regulation of mines and (2) mineral development. Lord Macnaghtens own view was that the expression "mines and minerals" did not of itself limit the meaning of the latter word to an underground operation of mines. 3. The Bihar Minor Mineral Concession Rules, 1964 (Bihar Rules) were made under Sec.15 of the Act of 1957 and came into force from the 18th April 1964. Before that rules for regulating the licences and leases in respect of minor minerals and other connected purposes, were in force in the State of Bihar, to which I shall refer later and those rules were operative till the 18th of April, 1964, under Sub-section (2) of Sec.15 of the Mines and Minerals (Regulation and Development) Act, 1957 (to be referred hereafter as the Act). 4. The definition of "competent officer" in Section (Rule ?) 2(c) of the Bihar Rules authorised Assistant Mining Officers in the State to perform the duties of the competent officer by the State Government on the 6th of September, 1964, by a notification. The impunged notices were issued thereafter. 5. Rule 25 of the Bihar Rules deals with grant of quarrying permits in areas other than those in reserved or protected forests. It lays down that, on an application made to him, the Competent Officer may grant a quarrying permit to any person to extract and remove from any specified land within the limits of his jurisdiction any mineral not exceeding one lakh cubic feet in quantity under any one permit, on payment of royalty at the rates specified in Schedule II.
Final Decision: 1. The notices issued by the Assistant Mining Officer calling upon the petitioners to pay royalty for the period 1958 to 1964, on account of brick-earth at the rate of Rs. 1.50. per 1,000 bricks are quashed and the opposite parties are directed not to take any action on and following those notices. 2. In the circumstances of the case, parties will bear their own costs.
Mahapatra, J.
1. In all these cases, the petitioners are brick-layers. They manufacture bricks and sell them. They were served with notices from the Assistant Mining Officer, Purnea, calling upon them to pay certain amounts of money, as royalty for the period from 1958 to 1964, during which lime they were
"engaged in manufacture and sale of bricks by using sand, earth, clay etc. which constitute minor minerals......... for which no permit or mining lease has been obtained nor any royally has been paid to Government".
Another notice from the same officer was also served on them to show cause why they should not be prosecuted under Rule 37 of the Bihar Minor Mineral (Concession Rules, 1964, as they were engaged in manufacture and sale of bricks by using sand, clay etc. which constituted minor minerals, for which no permit or mining lease had been obtained, nor any royalty had been paid to Government. The Block Development Officer also gave a notice to each of them asking them to take permit for digging earth and taking sand for manufacture of bricks and to produce accounts in respect of such manufacture.
2. The petitioners challenged all these notices, mainly on the ground that what were being used by them for manufacture of bricks were not minor minerals, and, therefore, the Bihar Minor Mineral Concession Rules, 1964 , were not applicable to them and that secondly, the Bihar State Government have no authority in law to impose any royally in respect of minor minerals and, in any case, the Assistant Mining Officer was not authorised under the Act or Rules, to assess or colled royally from the petitioners.
3. Article 366 of the Constitution of India defines taxation as follows:-
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"28. taxation includes the imposition of any tax or impost, whether general or local or special, and tax" shall he construed accordingly."
Such was the definition in item No. 17 of Sec.311(2) of the Government of India Act, 1935.
Royalty is used in secondary sense to signify that part of the reddendum which is variable and depends upon the quantity of minerals taken out. It is a payment made to the land-owner by the lessee of the mine, in return of the privilege of working it. It is different from rent and is a kind of levy, in proportion to the minerals worked. Though its origin was riveted in the concept of royal prerogative and sovereignly, in the present context of things, it is an impost by the Government. The Supreme Court, in the, case of Commissioner, Hindu Religious Endowments, Madras V/s. Sri Lakhmindra Thirtha Swamiar, AIR 1954 SC 282, referred to and adopted a neat definition of what tax means, as given by Latham, C. J. of the High Court of Australia in Matthews V/s. Chicory Marketing Board, 60 CLR 263 at p. 276: "A tax is a compulsory exaction of money by public authority for public purposes enforceable by law and is not payment for services rendered".
The essence of taxation is compulsion and it is imposed under statutory power without the lax-payers consent and the payment is enforced by law (see Lower Mainland Dairy V/s. Crystal Dairy Ltd., 1938 AC 168). The contribution payable by the employer under the Employees Insurance Act was held, in the case of Anand Kumar Bindal V/s. Employees State Insurance Corporation, (S) AIR 1957 All 136, to be of a nature of tax, because, it was a compulsory exaction, recoverable, in the event of non-payment, as it was an arrear of land revenue. Royally on minerals is also so recoverable. On a reference to the State Annual Budget, we found that all collections made on account of royalty on mines and minerals, become a part of the consolidated fund. It is, admittedly, not a payment for services rendered and therefore not fee, A demand of 12 annas, by way of toll, by Government for each passing and repassing of a motor vehicle over Frazer Bridge was held to be a tax in the case of Mrs. K.K. Wadhwani V/s. State of Rajasthan, AIR 1958 Raj 138. It is not the name of the tax but its real nature, its pith
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