1995 (4) TMI 285 - SC - Indian Laws

Summary

Issues Involved:
1. Legislative Competence of the Orissa Act 36 of 1992.
2. Discrimination and Violation of Article 14 of the Constitution.
3. Interpretation of relevant Constitutional Entries and Provisions.
4. Impact of the Mines and Minerals (Regulation and Development) Act, 1957.

Summary:

1. Legislative Competence of the Orissa Act 36 of 1992:
The core issue was whether the Orissa Rural Employment, Education and Production Act, 1992 (Orissa Act 36 of 1992) was within the legislative competence of the State Legislature. The appellants argued that the levy of tax on coal-bearing lands fell under Entry 49, List II of the Seventh Schedule, which pertains to "Taxes on land and buildings." Alternatively, they contended that it could fall under Entry 23 or 50, List II of the Seventh Schedule, which deals with "Regulation of mines and mineral development" and "Taxes on mineral rights," respectively. The respondents contended that the levy was essentially on minerals and mineral rights, covered by the Mines and Minerals (Regulation and Development) Act, 1957 (MMRD Act), a Central legislation, thus rendering the Orissa Act ultra vires.

2. Discrimination and Violation of Article 14 of the Constitution:
The High Court held that the levy was discriminatory and violated Article 14 of the Constitution. The appellants argued that there was no material to prove that the levy was confiscatory. The respondents maintained that the levy was arbitrary and without any basis, thus violating Article 14.

3. Interpretation of Relevant Constitutional Entries and Provisions:
The Court examined the relevant Constitutional entries and provisions, including Article 246 and the Seventh Schedule. It was necessary to determine whether the Orissa Act fell under Entry 49, List II (Taxes on land and buildings) or Entries 23 and 50, List II (Regulation of mines and mineral development; Taxes on mineral rights). The Court also considered the impact of the MMRD Act, which covers the field of mineral regulation and development under Entry 54, List I of the Seventh Schedule.

4. Impact of the Mines and Minerals (Regulation and Development) Act, 1957:
The Court noted that the MMRD Act, 1957, which includes Sections 9 and 9A, provides for the regulation of mines and the development of minerals, including taxation on minerals and mineral rights. The Court held that since the MMRD Act covers the entire field of mineral regulation and taxation, the State Legislature was denuded of its power to enact any law on the subject. Consequently, the Orissa Act 36 of 1992 was beyond the legislative competence of the State Legislature and was declared ultra vires.

Conclusion:
The Supreme Court affirmed the High Court's judgment, declaring Section 3(2)(c) of the Orissa Act 36 of 1992 and the Schedule attached to it, levying a tax of Rs. 32,000 per acre on coal-bearing lands, illegal and ultra vires. The consequential notices and demand proceedings were also declared illegal. The Court provided Mahanadi Coalfields Ltd. one year to refund the amounts collected from traders and consumers, failing which they would have to pay interest at 18% per annum. The Court did not pronounce on other issues raised, leaving them open for future consideration.