2016 (6) TMI 1152 - HC - Indian Laws

Recovery of conversion tax and special cess for using the lands for non-agricultural purpose - Held that - When the land was allotted to the petitioner by the competent Authority under the Gujarat Mines and Mineral Rules 1966 for specific purpose of removing black trap stones there was no question of the petitioner applying to the Collector for using the land for non-agricultural purpose which would entail payment of conversion tax under Section 67A of the Code. The learned AGP has fairly submitted that as such there was no condition imposed in the lease deed for the payment of conversion tax at the time of allotment of land in the year 1996 and even while renewing the said lease in the year 2001. Under the circumstances the impugned order passed by the Collector for the recovery of the conversion tax under Section 67A of the Code on the lease deed executed under the provisions contained in Gujarat Mines and Mineral Rules 1966 being illegal deserves to be quashed and set aside. The impugned order passed by the respondent No.1 mechanically confirming the said order of the respondent No.2 Collector also deserves to be quashed and set aside.

Summary

Issues:
Challenge to orders dated 30th September, 2006 and 20th June, 2014 regarding conversion tax on land allotted for excavation of black trap stone.

Detailed Analysis:

1. Land Allotment and Renewal:
The petitioner was allotted land for excavation of black trap stone for five years, renewed for ten years in 2001. The Collector issued show-cause notices in 2006 for conversion tax and special cess for non-agricultural use. The petitioner challenged these orders.

2. Arguments of Petitioner:
Petitioner's counsel argued that the lease deed did not mention conversion tax, and sudden demand was due to government revenue concerns. It was contended that under the Gujarat Mines and Mineral Rules, the petitioner was not liable to pay conversion tax.

3. Respondent's Submission:
The AGP argued that as the land was used for non-agricultural purposes without paying conversion tax, the petitioner was liable. The Collector's order was based on Section 67A of the Gujarat Land Revenue Code.

4. Legal Analysis:
The lease deeds in 1996 and 2001 did not impose a condition for conversion tax payment. The Collector's demand lacked legal basis under Section 67A as the land was allotted for specific mining purposes, not for general non-agricultural use. The AGP admitted the absence of a tax payment condition in the lease deeds.

5. Judgment:
The Court found the Collector's order for conversion tax on land allotted under mining rules to be illegal. Both impugned orders were quashed as they lacked legal standing. The petition challenging the orders was allowed, and the rule was made absolute.

This detailed analysis highlights the legal arguments, lack of legal basis for the tax demand, and the Court's decision to quash the orders.