1996 (7) TMI 554 - SC - Indian Laws

Summary

Issues Involved:

1. Validity of The Cess and Other Taxes on Minerals (Validation) Act, 1992.
2. Legislative competence of Parliament in enacting the impugned Act.
3. Retrospective effect and recovery of taxes under the impugned Act.
4. Discriminatory treatment and violation of Article 14.
5. Relationship with the Mines and Minerals (Development and Regulation) Act, 1957.
6. Temporary statute argument and applicability of Section 6 of the General Clauses Act.

Summary:

1. Validity of The Cess and Other Taxes on Minerals (Validation) Act, 1992:
The appellants challenged the validity of the Act 16 of 1992 enacted by Parliament, which was upheld by the High Courts. The Supreme Court rejected the contention that the Act was an attempt by Parliament to overturn judicial decisions. The Court held that Parliament has the power to legislate retrospectively and validated the levies previously imposed by State enactments.

2. Legislative competence of Parliament in enacting the impugned Act:
The Court affirmed that Parliament was competent to enact the impugned Act under its constitutional powers. The Act was a legislative response to the judicial invalidation of State levies on minerals, and Parliament enacted the relevant provisions of the State enactments with retrospective effect, thereby creating a valid levy.

3. Retrospective effect and recovery of taxes under the impugned Act:
The Court held that the impugned Act not only validated past collections but also authorized the recovery of uncollected taxes. The language of Section 2 of the Act was deemed adequate to create the levy with retrospective effect. The Court rejected the argument that the Act was limited to validating only the taxes already collected.

4. Discriminatory treatment and violation of Article 14:
The Court dismissed the contention that the Act resulted in discriminatory treatment by imposing different rates of tax in different States. It was held that Parliament is competent to enact laws applicable to specific parts of the country and can prescribe different rates of tax if justified by historical and contextual factors. The Court found no violation of Article 14.

5. Relationship with the Mines and Minerals (Development and Regulation) Act, 1957:
The Court clarified that the declaration in Section 2 of the M.M.R.D. Act denuded State legislatures of the power to levy taxes on minerals. The impugned Act did not require a fresh declaration under Entry 54 of List-I, as the States were already denuded of their power to levy such taxes.

6. Temporary statute argument and applicability of Section 6 of the General Clauses Act:
The Court rejected the argument that the impugned Act was a temporary statute that expired on April 4, 1991. It held that the Act continues to be in force and that the machinery for recovery and refund of taxes remains operational. The absence of a saving clause similar to Section 6 of the General Clauses Act was deemed irrelevant.

Additional Argument Specific to Madhya Pradesh:
The Court addressed the concern of double levy under the Madhya Pradesh Karadhan Adhiniyam, 1982, and the Madhya Pradesh Upkar Adhiniyam, 1981 (as amended in 1987). The State of Madhya Pradesh assured that there would be no double levy, which alleviated the appellants' apprehensions.

Conclusion:
The Supreme Court dismissed the appeals and writ petitions, upholding the validity of The Cess and Other Taxes on Minerals (Validation) Act, 1992, and affirmed the legislative competence of Parliament in enacting the impugned Act. The Court also ordered costs quantified at Rs. 2,500/- in each appeal and writ petition.