D. Y. CHANDRACHUD, HRISHIKESH ROY, ABHAY S. OKA, B. V. NAGARATHNA, J. B. PARDIWALA, MANOJ MISRA, UJJAL BHUYAN, SATISH CHANDRA SHARMA, AUGUSTINE GEORGE MASIH
Mineral Area Development Authority – Appellant
Versus
Steel Authority of India & Anr Etc. – Respondent
Question 1? What is the true nature of royalty under Section 9 of MMDR Act: is it a tax or a contractual exaction? Question 2? What is the scope and meaning of Entry 50 of List II (taxes on mineral rights) in relation to Entry 54 of List I and the MMDR Act: does MMDR impose limitations on state taxing powers? Question 3? Can a State levy taxes on mineral-bearing land under Entry 49 List II using mineral value or royalty as measure, in light of Parliament’s power to regulate mineral development under Entry 54 List I?
Key Points: - (!) The MMDR Act declares Union control over regulation of mines and development of minerals; royalty is fixed under Section 9 and Second Schedule. - (!) Section 9 authorizes royalty payments; the Central Government can amend rates under Section 9(3). - (!) Petitioners argued royalty is not a tax; respondents argued any levy related to mineral development limits state taxing powers under Entry 50 List II. - (!) Nine-judge bench discusses inter-relationship between Entry 50 List II and Entry 54 List I. - (!) Entry 50 is "taxes on mineral rights" subject to "any limitations imposed by Parliament by law relating to mineral development." - (!) Parliament’s supremacy through Entry 54 List I can denude State power in areas covered by MMDR Act. - (!) Conclusions: royalty is a tax or exaction; Entry 50 is not an exception to Sundararaman; MMDR Act imposes limitations on state taxation of mineral rights. - (!) States can tax mineral-bearing lands under Entry 49 List II only to the extent not denuded by Parliament; royalties/measures under MMDR may limit that field. - (!) Holdings that Entries 49 and 50 operate in distinct fields but can coexist with nexus-based measures; need to harmonize.
JUDGMENT
Dr Dhananjaya Y Chandrachud, CJI.
Table of Contents
| A. | Background |
| B. | Issues |
| C. | Submissions |
| i. | Submissions of the petitioners |
| ii. | Submissions of the respondents |
| D. | Distribution of legislative fields relating to mines and minerals |
| E. | Underlying constitutional philosophy |
| i. | Scheme of distribution of legislative powers and constitutional limitations 29 |
| ii. | Interpretation of legislative entries |
| iii. | Fiscal Federalism |
| iv. | Natural resources and the public trust doctrine |
| F. | Whether royalty is tax |
| i. | Royalty under the MMDR Act |
| ii. | Purpose of Section 9 of the MMDR Act |
| iii. | Contours of a mining lease |
| a. | Lease and license |
| b. | The nature of a mining lease under the MMDR Act and the Mineral Concession Rules 1960 |
| iv. | Meaning of “royalty” |
| v. | Characteristics of Tax |
| vi. | Royalty is not in the nature of tax |
| a. | Prelude to India Cement |
| b. | Divergence between India Cement and Kesoram |
| c. | Royalty is not a tax |
| G. | Inter-relationship between Entry 23 of List II and Entry 54 of List I |
| i. | Meaning of “regulation of mines” a |
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