1. Establishment of District Mineral Foundation under MMDR Act — Contribution of royalty percentage by mining lease holders — Dispute over retrospective effect of establishment and payment. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 9 , 10 , 11 , 12 )
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2017 Supreme(SC) 1019
SUPREME COURT OF INDIA
Madan B. Lokur, Sanjay Kishan Kaul, Deepak Gupta, JJ.
Federation of Indian Mineral Industries & ors. – Petitioners
Versus
Union of India & Anr. – Respondents
TRANSFERRED CASE (CIVIL) NO. 43 OF 2016 WITH W.P. (C) No. 989/2016, W.P. (C) No. 1003/2016, T.C. (C) No. 51/2016, W.P. (C) No. 1014/2016, W.P. (C) No.1028/2016, T.C. (C) Nos. 273-275/2017 (arising out of T.P. (C) Nos. 74-76/2017), W.P. (C) No. 67/2017, W.P. (C) No. 205/2017, W.P. (C) No. 201/2017, S.L.P. (C) No. 12099/2017, S.L.P. (C) Nos. 12184-12185/2017, S.L.P. (C) No.14693/2017, S.L.P. (C) No.16685/2017, W.P. (C) No. 886/2016, W.P. (C) No. 912/2016, W.P. (C) No. 27/2017, W.P. (C) No. 112/2017 and W.P.(C) No. 69/2017.
Decided On : 13-10-2017
Important Points
IMPORTANT POINT
Merely because the DMFs have been established or deemed to have been established from a date prior to the issuance of the relevant notifications does not make their operation retrospective.
DMFs are not given retrospectivity.
Rates of taxes must be certain.
Subordinate legislation cannot be made retrospectively.
Section 9B not a conditional legislation.
Merely because the DMFs have been established or deemed to have been established from a date prior to the issuance of the relevant notifications does not make their operation retrospective.
DMFs are not given retrospectivity.
Rates of taxes must be certain.
Subordinate legislation cannot be made retrospectively.
Section 9B not a conditional legislation.
Subject
MINING - DISTRICT MINERAL FOUNDATION
Act Referred
Headnote
(a) Mines and Minerals (Development and Regulation) Act, 1957 – Sections 9B and 13(2)(qqa) r/w Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 – Parliament intending establishment of DMF wef the day of its passing, i.e., 12th January, 2015 – Notifications issued subsequently but making DMF functional from 12th January, 2015 – Establishment of DMF from that date not adversely affecting anybody‘s vested rights – Held, DMFs are not given retrospectivity. (Para 18, 19, 26)
(1955) 2 SCR 1196; (1972) 2 SCC 601; (2006) 3 SCC 620; (2009) 2 SCC 589; (1992) 3 SCC 285; (2013) 15 SCC 1; (2015) 1 SCC 1 – Relied upon
(b) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9B – Contribution to DMF – From 12th January, 2015 – At a rate not exceeding one-third of the royalty – Vague – Could mean one-fourth or one-fifth or some other fraction – Rates of taxes must be certain – Notification not sustainable – Held, petitioners not liable to pay contribution from 12th January, 2015. (Para 33)
1985 (Supp) SCC 205; (2015) 1 SCC 1 – Relied upon
(c) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9B – Liability of contribution to DMF – Notification issued on 17th September, 2015 – Held, in the case of holders of a mining lease or a prospecting licence-cum-mining lease for minerals other than coal, lignite and sand for stowing would be 17th September, 2015. (Para 41)
(2016) 1 SCC 600 – Relied upon
(d) Subordinate legislation – Retrospective effect – Many State notifications, issued later, providing for date of establishment as 12th January, 2015 – Act not permitting retrospective operation of such subordinate legislation – Not permissible – Subordinate legislation cannot be made retrospectively. (Para 43, 44)
(e) Mines and Minerals (Development and Regulation) Act, 1957 – Section 9B – Held, Section 9B not a conditional legislation. (Para 45)
Facts of the case:
This batch of petitions relate to the establishment of the District Mineral Foundation under the Mines and Minerals (Development and Regulation) Act, 1957 and the contribution required to be made to the District Mineral Foundation by the holder of a mining lease or a prospecting licence-cum-mining lease in addition to the payment of royalty.
Finding of the Court:
DMFs are not given retrospectivity.
Petitioners not liable to pay contribution from 12th January, 2015.
In the case of holders of a mining lease or a prospecting licence-cum-mining lease for minerals other than coal, lignite and sand for stowing would be 17th September, 2015.
Section 9B is not a conditional legislation.
Result: Cases disposed of.
Legal Category Hierarchy
Table of Contents
2. Validity of retrospective establishment of District Mineral Foundations — Liability to make contributions prior to the notification of specific payment rates. (Para 13 , 27 )
3. Retrospective establishment of trusts not affecting vested rights is permissible — Compulsory levies require certain rates — Subordinate legislation cannot be retrospective without express statutory authorization. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 28 , 29 , 30 , 31 , 32 , 36 , 37 , 38 , 39 , 40 , 43 , 45 )
4. A compulsory levy cannot be imposed retrospectively if the rate was not stipulated with precision at the time the liability was purportedly created. (Para 30 , 31 , 32 )
5. DMF establishment upheld — Contributions payable from date of rate notification — Retrospective payment notification for coal minerals struck down as ultra vires. (Para 41 , 42 , 44 , 46 , 48 )
6. Can a District Mineral Foundation be established from a date anterior to its notification?
Yes, provided it does not prejudicially affect vested rights. Fixing a commencement date anterior to the notification date does not necessarily attract the principle disfavouring retrospective operation of statutes. (Para 17 , 19 , 26 )
7. Can contributions to the DMF be demanded retrospectively from a date prior to the notification of the payment rate?
No. The rate is an essential component of a tax or compulsory levy. If the rate is not stipulated or cannot be applied with precision, the levy cannot be imposed retrospectively. (Para 30 , 31 , 32 , 33 )
8. When can subordinate legislation, such as rules or notifications, be given retrospective effect?
Subordinate legislation cannot have retrospective effect unless the parent statute expressly or by necessary implication authorizes it. Delegated legislation is ordinarily prospective, and new liabilities cannot be created retrospectively. (Para 21 , 23 , 24 )
9. Is the liability to contribute to the DMF dependent on the actual existence of the trust at the time the liability accrued?
No. Once the liability is created by statute and the rate is determined, the liability exists regardless of whether the State Government has been lax in formally establishing the trust. (Para 37 , 38 , 40 )
JUDGMENT
Madan B. Lokur, J.
1. This batch of petitions (including transfer cases/petitions) relate to the establishment of the District Mineral Foundation under the Mines and Minerals (Development and Regulation) Act, 1957 and the contribution required to be made to the District Mineral Foundation by the holder of a mining lease or a prospecting licence-cum-mining lease in addition to the payment of royalty.
Ordinance of 12th January, 2015
2. On 12th January, 2015 the President promulgated an Ordinance making several amendments to the Mines and Minerals (Development and Regulation) Act, 1957 (for short ‘the MMDR Act’). We are concerned with only a few of these amendments which are detailed below:
(i) Section 9 of the Ordinance inserted Section 9B in the MMDR Act. This section provides that the State Government shall establish a non-profit trust called the District Mineral Foundation (for short ‘the DMF’) in any district affected by mining operations. The DMF shall have the object of working for the interest and benefit of persons and areas affected by mining related operations.
What is of significance is that this provision requires the holder of a mining lease or a prospecting licence-cum-mining lease, in addition to payment of royalty, to pay to the DMF concerned an amount equivalent to a percentage of royalty not exceeding one-third thereof, as may be prescribed by the Central Government. Section 9B of the MMDR Act, as inserted by the Ordinance, reads as follows:
“9B. District Mineral Foundation - (1) In any district affected by mining related operations, the State Government shall, by notification, establish a trust, as a non-profit body, to be called the District Mineral Foundation.
(2) The object of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government.
(3) The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government.
(4) The holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government.”
(ii) Section 14 of the Ordinance inserted sub-clause (qqa) in Section 13(2) of the MMDR Act relating to the power of the Central Government to make rules in respect of minerals. Clause (qqa) as inserted in the MMDR Act reads as follows:
“(qqa) the amount of payment to be made to the District Mineral Foundation under sub-section (4) of section 9B;”
(iii) Section 15 of the Ordinance inserted sub-section (4) in Section 15 of the MMDR Act relating to the power of the State Governments to make rules in respect of minor minerals. Sub-section (4) as inserted in Section 15 of the MMDR Act reads as follows:
“15. Amendment of section 15. – In section 15 of the principal Act, after sub-section (3), the following sub-section shall be inserted, namely:-
“(4) Without prejudice to sub-sections (1), (2) and sub-section (3), the State Government may, by notification, make rules for regulating the provisions of this Act for the following, namely:?
(a) the manner in which the District Mineral Foundation shall work for the interest and benefit of persons and areas affected by mining under sub-section (2) of section 9B;
(b) the composition and functions of the District Mineral Foundation under sub-section (3) of section 9B; and
(c) the amount of payment to be made to the District Mineral Foundation by concession-holders of minor minerals under section 15A.”
(iv) Section 18 of the Ordinance inserted Section 20A in the MMDR Act relating to the power of the Central Government to issue directions. It is not necessary to reproduce the
