Back
SUPREME COURT OF INDIA
E.S. VENKATARAMIAH CJI., SABYASACHI MUKHARJI, RANGANATH MISRA, B.C. RAY, K.N. SINGH, S. NATARAJAN AND G.L. OZA, JJ.
The India Cement Ltd. etc. etc., Appellants
Versus
State of T.N. etc., Respondents
Civil Appeal No. 62(N) of 1970, (with C.A. Nos. 1905/71, 709-10/73, SLP(C) Nos. 8630-39/79 W.P. No. 5355/80 & I.A. Nos. 1-10/89 in SLP (C) Nos. 8630-39/79 C.A. Nos. 3518-19/82, 2352/80, 10796/83, 660/89) D/-25-10-1989.
- held to be beyond the competence of State Legislature, as in the case of The India Cement Ltd. v. State of Tamil Nadu, AIR 1990 SC 85.
Certainly. Based on the provided legal document, here are the key points:
The central issue concerns whether the levy of a cess on royalty is within the legislative competence of the State Legislature, particularly under the relevant entries of the Constitution's legislative lists (!) (!) .
The legislation in question attempts to impose a cess on royalty payable on mineral rights, which the appellant contends is a tax on royalty, not a tax on land, and therefore beyond the powers of the State Legislature (!) (!) .
The legislation defines "land revenue" broadly to include royalties and other sums payable to the government in respect of land, especially after amendments that include royalties within the scope of land revenue (!) (!) (!) .
The nature of royalties—whether they constitute a tax on land, mineral rights, or a separate levy—is central to determining the constitutional validity of the levy (!) (!) .
The central legislation (e.g., the Mines and Minerals Regulation and Development Act) regulates royalties and limits the power of states to impose additional taxes on mineral rights, which impacts the validity of state levies on such royalties (!) (!) (!) .
The court emphasizes the importance of interpreting the Constitution broadly, considering the nature and scope of the legislation, and recognizing that legislative powers are demarcated by the entries in the legislative lists (!) (!) .
The levy's characterization as a tax on land, royalty, or mineral rights determines whether it falls within the purview of the State's legislative competence under the relevant entries, notably Entry 49 (land revenue), Entry 50 (taxes on mineral rights), or Entry 45 (land revenue as a concept) (!) (!) (!) .
The inclusion of royalties within the definition of land revenue through legislative amendments has been a point of contention, with arguments that such inclusion exceeds the State's constitutional authority, especially when royalties are linked to mineral extraction (!) (!) .
The legislative intent, amendments, and the nature of the levy are critical in determining whether the cess is a valid tax or an unconstitutional imposition beyond the scope of State powers (!) (!) (!) .
Ultimately, the court concludes that a cess on royalty, characterized as a tax on mineral rights or royalty, is beyond the competence of the State Legislature, especially when central legislation has enacted specific controls and limits on royalties (!) (!) (!) .
The decision emphasizes that taxes or levies on mineral rights or royalties are primarily within the domain of central legislation, and state levies on such charges are likely unconstitutional unless explicitly authorized by law (!) (!) .
The court also notes that if such levies are found to be unconstitutional, they should be declared invalid prospectively, and amounts collected under such invalid laws may not be subject to refund (!) .
The court's ruling underscores the importance of constitutional interpretation that respects the division of legislative powers and the specific entries in the legislative lists, particularly concerning land, mineral rights, and royalties (!) (!) .
The judgment confirms that the levy in question, being a tax on royalties or mineral rights, is outside the legislative competence of the State and thus unconstitutional, leading to its declaration as ultra vires (!) (!) .
The court also highlights that the legislative amendments and the broad definitions introduced to include royalties as land revenue were beyond the constitutional powers of the State Legislature, especially in light of central statutes regulating mineral royalties (!) (!) .
Please let me know if you need a detailed analysis or specific legal advice based on these key points.
Judgment
SABYASACHI MUKHARJI, J.:- The question involved in these appeals, special leave petitions and writ petitions is, whether levy of cess on royalty is within the competence of the State Legislature. In order to appreciate the question, it is necessary to refer to certain facts. Civil Appeal No. 62 / 79 is an appeal by special leave from the judgment and order of the High Court of Madras, dated 13th October, 1969, in writ appeal No.464 / 67. The appellant is a public limited company incorporated under the Indian Companies Act, 1913. The Company at all relevant times, used to manufacture cement in its factory at Talaiyuthu in Tirunelveli district, and at Sankaridrug in Salern district of Tamil Nadu. By G.O.Ms. No. 3668 dated 19th July, 1963, the Govt. of Tamil Nadu sanctioned the grant to the appellant mining lease for limestone and kankar for a period of 20 years over an extent of 133.91 acres of land in the village of Chinnagoundanur in Sankaridrug Taluk of Salem district. Out of the extent of 133.91 acres comprised in the mining lease, an extent of 126.14 acres was patta land and only the balance extent of 7.77 acres Govt. land. The lease deed was in accordance with the Mineral Concession Rules, 1960. The rates of royalty, dead rent and surface rent, were as follow:-
"Royalty:
Limestone
Government Lands : Rs. 0.75 per tonne but subject to a rebate of Rs. 0.38 per tonne to be given on limestone beneficiated by froth flotation method.
Patta Lands: Rs. 0.38 per tonne but subject to a rebate of Rs. 0. 19 per tonne to be given on limestone beneficiated by froth flotation method.
Kankar
Government Lands : Five per cent of the sale price at the pits mouth.
Patta Lands: 2 l/ 2 of the sale price at the pits mouth
Dead rent:
Government lands: Rs. 25 (Rupees twentyfive only) per hectare per annum.
Patta lands : Rs. 12/50 (Rupees twelve & naye paise fifty only) per hectare per annum.
Surface rent and water rate,: At such rate as the land revenue and cess assessable on the land are paid."
2. The appellant started mining operations soon after the execution of the lease deed and has eversince been paying the royalties, dead rents and other amounts payable under the Deed.
3. Under S.115 of the Madras Panchayats Act (XXXV of 1958) (hereinafter called the Act), as amended by Madras Act XVIII of 1964 (hereinafter called the amended Act), as royalty the appellant was required to pay local cess @ 45 paise per rupee. It may be mentioned that the said imposition was with retrospective effect along with local cess surcharge under S. 116 of the Act. The contention of the appellant is and was, at all relevant times, that cess on royalty cannot be levied. This is the common question which falls for consideration and requires determination in these appeals and petitions.
4. To complete the narration of events, however, it has to be noted that the Collector sent a communication on 10th April, 1965, demanding cess or royalty payable under the Act on minerals carried on during the period 1 -7-1961 to 31-12-1964, and the petitioner was threatened of serious consequences in case of default of payment on receipt of that communication. Thereafter, writ petition No. 1864/65 was filed in the High Court of Madras. By the judgment delivered and order passed on 23rd February, 1967, a learned single Judge of the Madras High Court Justice Kailasam dismissed the writ petition holding that the cess levied under S. 115 of the Act is a tax on land and, as such, falls under Entry 49 of the State List of the Schedule VII of the Constitution, and was within the competence of the State legislature- Reliance was placed by the learned single Judge on the decision of this Court in H.R.S. Murthy v. Collector of Chittoor (1964) 6 SCR 666. He held that the cess levied under S. 115 was a tax on land, though fixed with reference to the land revenue. In regard to S. 116 of the Act, the learned single 88 Judge held that the maximum limit had been prescribed by the Government by rules framed u
The main legal point established in the judgment is the binding effect of the settlement between the parties, the waiver of the right to seek re-employment by the workmen, and the entitlement of the ....
A lockout is justified if it is declared in response to an illegal strike or a strike that is in breach of a settlement or award.
The combination of eyewitness testimonies, recovery of the weapon used, and forensic examination results can establish guilt in criminal cases, even based on circumstantial evidence.
The conviction of an accused person under Section 27(3) of the Arms Act is not permissible in law if the accused is also charged with committing murder under Section 302 of the Indian Penal Code.
The court can enhance compensation based on the deceased's income and family dependency, and adjust the multiplier used by the Tribunal if found unjustified.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
