Local cess and surcharge under the Tamil Nadu Panchayats Act do not apply to mining leases, which are distinct, thus invalidating G.O.460's application to such leases.

ORDER :

N. SESHASAYEE, J.

The petitioner is a company registered under the Companies Act, and is a manufacturer of cement. For purposes associated with manufacture of cement, the petitioner had obtained a lease for mining limestone, which is a major mineral under the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter called as MMDR Act) in respect of two blocks of properties in S.F. No.103/3 of Ameenabad Village and S.F. No.4458 of Kairlabad Village, Ariyalur Taluk, vide G.O.(Ms) No.874 Industries Department dated 15.04.1970. Thereafter, there was a first renewal vide G.O.(Ms).No.2 Industries Department dated 05.01.1993 for a term of 10 years from 03.10.1990. When this lease term expired, the Government renewed the lease for the second time vide G.O.3(D) No.58 Industries (MMA1) Department dated 16.10.2006 for a period of 20 years from 03.10.2000 to 02.10.2020.

2. The petitioner concedes that a holder of the mining lease extracts the mineral, then there is a statutory liability on it to pay the occupier (the lessor of the land) surface rent and royalty, and where despite obtaining a mining lease, the lease holder does not mine then the lessee might have to pay what is called 'dead rent'. While surface rent has to be paid at all times irrespective of whether the lessee of a mining lease exploits the lease or not, royalty and the dead rent are payable alternatively, depending on whether the mining lease is worked or not worked. Accordingly, paragraph 4 of G.O.3(D) No.58, dated 16.10.2006, provides for the payment of surface rent plus water rate, and also for payment of royalty on the mineral actually mined and also dead rent in case the petitioner/lessee did not exploit the mining lease obtained by it. The petitioner has no qualms in paying what is required to be paid as stipulated in G.O. 3(D) 58, dated 16.10.2006

3. Be that as it may, the Tamilnadu PANCHAYAT ACT came into force on 22.04.1994, about midway through the lease term of the first renewal from 03.10.1990. Sec.167 and Sec.168 of the PANCHAYAT ACT provide for the levy of local cess and surcharge on the land revenue payable to the Government. And, Explanation to Sec.167 provided that “land revenue means public revenue due on land and includes water cess payable to the government..” It is in this backdrop, the Government came out with G.O.(Perm.) No.460 Revenue (N.M.2) Department, dated 04.06.1998. It reads as below:

“When the Government lands are leased out to private parties, the lease money for the government lands for non-commercial purposes are fixed at 7% of the present land value and when the lands are leased for commercial purposes the lease money is fixed at 14% of the present land value.

2. Presently, as per the Tamil Nadu PANCHAYAT ACT , 1994, the lease money is being levied with local cess at 100% of the lease money and the local cess surcharge at 500% of the lease money. As per this, for the government promoboke lands leased for commercial purposes, the lessee are subjected to pay 98% of the land value per years (i.e.14% lease money + 14% locall cess + 500% local cess surcharge). When the government poromboke lands are leased for non-commercial purposes, the lessee are subjected to pay lease money at 49% of the present land value per year (i.e.7% - lease money + 7% local cess +35% local cess surcharge). This leads to non-collection of not only local cess and local cess surcharge as well as non collection of lease money.

3. The Commissioner of Land Administration has requested in his letter that either not to collect local cess and local cess surcharge on the lease money for Government poromboke lands and to amend the Tamil Nadu PA