2000 (10) TMI 954 - SC - Indian Laws

Issues Involved:
1. Constitutional validity of Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957.
2. Competence of the Union Legislature under Entry 54 of List I versus State Legislature under Entry 50 of List II.
3. Violation of Articles 268, 269, and 270 of the Constitution.
4. Interpretation of legislative entries and the competence of Union and State Legislatures.
5. Levy of royalty on minerals as a tax.
6. Validity of interest rates imposed by the Gujarat High Court.

Detailed Analysis:

1. Constitutional Validity of Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957:
The appeals questioned the constitutional validity of Section 9(3) of the Act, arguing that the levy of royalty on minerals is not a tax and that the Union Legislature lacks the power under Entry 54 of List I to enact such a law, which infringes on the State Legislature's right to levy tax on mineral rights under Entry 50 of List II. The Supreme Court upheld the validity of the Act, referencing the judgment in State of Madhya Pradesh vs. Mahalaxmi Fabric Mills Ltd. and Ors., which had already addressed these issues.

2. Competence of the Union Legislature under Entry 54 of List I versus State Legislature under Entry 50 of List II:
The Court analyzed previous decisions, including The Hingir-Rampur Coal Co. Ltd. vs. State of Orissa and Ors., State of Orissa vs. M.A. Tulloch and Co., and India Cement Ltd. vs. State of Tamil Nadu and Ors., which clarified that the Union Legislature's power under Entry 54 of List I to regulate mines and minerals development supersedes the State Legislature's power under Entry 23 of List II. The Court reaffirmed that the Mines and Minerals (Regulation and Development) Act, 1957, is a valid exercise of the Union's legislative power, thus denuding the State Legislature's competence under Entry 50 of List II.

3. Violation of Articles 268, 269, and 270 of the Constitution:
Mr. Shanti Bhushan contended that the constitutional validity of Section 9(3) had not been tested against Articles 268, 269, and 270 of the Constitution. The Court held that the Act's validity had been upheld in previous judgments, and the tax levied on minerals under Section 9(3) was by virtue of a valid law enacted by the Parliament under Entry 54 of List I, with no violation of fundamental rights or specific constitutional provisions.

4. Interpretation of Legislative Entries and the Competence of Union and State Legislatures:
The Court discussed the interpretation of legislative entries, citing multiple cases. It concluded that the Union Legislature had the competence under Entry 54 of List I to enact the MMRD Act, 1957, and that the State Legislature's power under Entry 50 of List II was subject to limitations imposed by Parliament. The Court reiterated that the Union's legislation occupied the entire field, thus precluding the State from levying taxes on minerals.

5. Levy of Royalty on Minerals as a Tax:
The Court referenced the decision in India Cement Ltd. vs. State of Tamil Nadu and Ors., which concluded that royalty is a tax. The Court upheld that the levy of royalty on minerals is within the Union Legislature's competence under Entry 54 of List I, and the State Legislature is denuded of its power under Entry 50 of List II.

6. Validity of Interest Rates Imposed by the Gujarat High Court:
The Gujarat High Court had directed the payment of interest at 18% per annum, which was challenged. The Supreme Court found this rate unreasonable and modified it to 9% per annum.

Conclusion:
The Supreme Court dismissed the appeals, upholding the constitutional validity of Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957, and affirming the Union Legislature's competence under Entry 54 of List I. It also modified the interest rate imposed by the Gujarat High Court from 18% to 9% per annum.

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