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TMI Blog2010 (1) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... oal, mainly to the core sectors for production and generation of electrical energy. Coal is extracted from the coal bearing areas acquired under the Coal Bearing Areas (Acquisition and Development) Act, 1957. Section 11 of the Coal Bearing Areas Act empowers the Central Government to direct vesting of land or rights in Government Company. Section 9 of the Mines and Mineral (Development and Regulation) Act, 1956 (hereinafter referred to as, the MMRD Act) provides for payment of royalty. The petitioner submitted that the MMRD Act occupies the entire field and the State Legislature is denuded of legislative competence to enact any law on the subject in view of declaration made in section 2 of the MMRD Act. Union List, i.e., List I, entry 54 which provides regulation of mines and mineral development to the extent to which such regulation and development under the control of Union is declared by Parliament by law to be expedient in the public interest. Entry 97 of List I of the Seventh Schedule has also been relied upon which provides any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists. Entry 23 of List II of the State List con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorize municipalities to levy, collect and impose tax for the purpose of augmenting their revenue so that they can function as the unit of selfgovernance. Entry 56 of List II of the Seventh Schedule to the Constitution of India empowers the State Legislature to make laws with respect to imposition of export/terminal tax on goods exported from the limits of the municipal corporation. Entry 5 of List II of the Seventh Schedule empowers the State Legislature to make laws in respect of local Government, their Constitution and power, etc. Thus, the State has rightly authorized the Municipalities to impose levy and collect export/terminal tax on goods exported from the limit of the municipal corporation area. The imposition of terminal tax on goods operates in a totally different field than imposition of tax on the mining of minerals. In Associated Cement Companies Ltd. v. State of M.P. AIR 1996 MP 116, the imposition of entry tax on mineral has been upheld. Entry tax is imposed by the State Legislature by enacting laws under entry 54 of List II of the Seventh Schedule to the Constitution of India and is a sister tax to export or terminal tax which the State Legislature has power to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 of 2003 has been adopted. In the return filed by the Municipal Corporation, Singrauli, in W.P. No. 1588 of 2006, inter alia, it is contended that the tax has been imposed on different field. Reliance has been placed on the decision of the apex court in State of West Bengal v. Kesoram Industries Ltd. [2004] 10 SCC 201. With respect to coal purchased by the petitioner from collieries situated outside the local limit of the answering respondent, it is submitted that the terminal tax is leviable by the answering respondent on any coal being taken out of the municipal limits of the answering respondent. The petitioner dumps the coal on the railway siding, or in its vicinity, having unloaded the same from the railway wagons. Thereafter the coal remains dumped for a considerable length of time and is later picked up by the petitioner by getting it loaded onto trucks for its transport to its captive power plant situated at Renusagar, Sonbhadra, U.P. The petitioner cannot avoid its liability to pay terminal tax on such coal inasmuch as the same is exigible to terminal tax having been dumped inside municipal limits for a long and uncertain periods of time. Thus, submission deserves to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndra Kaurav, Deputy Advocate-General, has submitted that by virtue of entries 5, 23 and 56 of List II, the State/Corporation is to frame the rules and consequently the Corporation could have imposed the tax, the field is not covered under entry 89 of List I. The imposition of the export tax in question is not covered under any of the entry in the Union List. Reliance is also placed on article 243W and article 243X of the Constitution. The decision in State of West Bengal v. Kesoram Industries Ltd. [2004] 10 SCC 201 has been relied upon. Besides, it is submitted that under section 132(6)(n) and 132(6)(o) of the Municipal Corporation Act, the rules have been framed and the aforesaid entries 5, 23 and 56 of List II have the different field to operate. Counsel has also submitted that there is no overlapping of legislation when pith and substance of legislation is seen. Shri Anshuman Singh, learned counsel appearing on behalf of the Municipal Corporation, Singrauli, has submitted that the rules have been framed in exercise of power under section 132(6)(o) not under section 132(6)(n), on the basis of section 132(6)(n) which the petitions have been preferred. The aforesaid provision gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the control of the Union. Under entry 23 in case field is occupied by Central legislation power can be exercised in the field of regulation of mines and mineral development subject to such legislation not otherwise. In the instant case we are not concerned with regulation of mines and mineral development, but, we are concerned with the tax being levied on goods carried by road outside the municipal limit. Entry 89 of List I does not cover the situation when the goods are carried out by road. Entry 89 of List I covers the terminal tax on goods or passengers, carried by railway, sea or air. Thus, entry 56 has the different field to operate when tax is imposed on goods and passengers carried by roads. Under section 132(6)(n) of Act 1956 the Municipal Corporation has been authorized to impose terminal tax on goods or animals exported from the limits of the Corporation. Under section 132(6)(o) of the Act 1956 the corporation as authorized to impose any other tax which the State Government has power to impose under the Constitution of India, with the prior approval of the State Government. Section 132(6)(n) and 132(6)(o) of Act 1956 are quoted below: 132. Taxes to be imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Seventh Schedule to the Constitution. In Monji Kalyanji v. State of Madhya Pradesh [1987] MPLJ 643 the Division Bench of this court has opined while considering pari materia section 127(1)(xvi) of the M.P. Municipalities Act which empowers a municipal council to impose terminal tax both on import and export covered by entry 56 of List II of the Seventh Schedule to the Constitution. That the terminal tax on export of goods by road from within municipal limits, imposed by the Municipal Committee, under section 127(1)(xvi) of the M.P. Municipalities Act is valid. Such tax cannot fall under entry 89 of List I inasmuch as the said entry contemplates only such goods or passengers which are carried by railway, sea or air. It does not contemplate any terminal tax on goods or passengers carried by road or on inland waterways. In State of West Bengal v. Kesoram Industries Ltd. [2004] 10 SCC 201 it has been held by the apex court that the taxes on mineral rights lie within the legislative competence of the State Legislature subject to any limitation imposed by Parliament by law relating to mineral development. The Central legislation has not placed any limitation on the power of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation be ignored. So long as a tax or fee on mineral rights remains in pith and substance a tax for augmenting the revenue resources of the State or a fee for rendering services by the State and it does not impinge upon regulation of mines and mineral development or upon control of industry by the Central Government, it is not unconstitutional. The apex court has emphasized that even if the methodology for working out the royalty payable and cess payable is the same, does not have any detrimental effect on the constitutional validity of the cess as one on mineral rights. As a tax the impugned levy of cess is clearly covered by entry 5 of List II read with entries 49 and 50 of List II. Central Legislation (MMRD Act, 1957) has not cast any limitation on the State Legislature's power to tax mineral rights, and the levy on mineral rights does not contravene any of the limitations imposed therein by the Parliament, the impugned cess is valid. Assuming the impugned cess to be a fee, it can equally be upheld by reference to List II, entry 66 read with entry 5. List II, entries 5, 23, 49, 50 and 66 provide adequate constitutional coverage to the impugned levy of cess. A tax on land w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also realizing the terminal tax on the goods which are brought from the outside and are taken out of the Municipal Corporation area immediately. He has submitted that in such event it is not permissible for the Municipal Corporation to exact terminal tax in the course of transit of goods. He has relied upon the decision of the apex court in Man Mohan Tuli v. Municipal Corporation of Delhi AIR 1981 SC 991 in which the apex court has laid down the following proposition: 14. Thus, from a consideration of the cases cited above, the following propositions emerge: (1) Terminal tax and octroi are similar kinds of levies which are closely interlinked with (1) destination of the goods, (2) the user in the local area on arrival of the goods. Where the goods merely pass through a local area without being consumed therein the mere fact that the transport carrying the goods halt within the local area for transhipment or allied purposes would not justify the levy of either the terminal tax or octroi duty. This is because the halting of the goods is only for an incidental purpose to effectuate the journey of the goods to the final destination by unloading, sorting and reloading them at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into the area of destination immediately attracts payment of terminal tax irrespective of their user. In the case of octroi, however, the tax is levied on goods for their use and consumption. The third preposition the apex court has laid down that the goods while halting at a local area should leave for their destination within a reasonable time which may depend on circumstances of each case and if the goods are kept within the area for such a long and indefinite period that the purpose of reaching the final destination lying in a different area is frustrated or defeated, they may be exigible to terminal tax. The stand of the Corporation is that the goods are dumped in the Municipal Corporation area for long/indefinite time. Thus, it is a question of fact to be gone into each transaction. However, the decision of the apex court is clear when tax can be exacted. In case there is halting for a long indefinite period, the apex court has laid down terminal tax can be exacted. In case any dispute is raised, it is the function of the concerned authority to adjudicate upon the transaction. The proposition of law has been made clear by the apex court in Man Mohan Tuli's case AIR 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable by the State Legislature on the authority of entry 52 of List and Corporation obviously cannot have any authority more extensive than the authority of the State Legislature. Since the State Legislature in view of entry of goods for consumption, use or sale into a local area, the municipality cannot under a legislation, enacted in exercise of the powers conferred by entry 52 of List II cannot have the power to levy tax in respect of goods brought into the local area for purposes other than consumption, use or sale. Section 113 of the Act has, therefore, reasonably to be read subject to the same limitation as are contained in entry 52 of List II of Schedule VII. The expression imported into the city used in section 113 of the Act, as meaning imported into the city for any purpose and without any limitation , would amount to attributing to the Legislature an intention to give a go-by to the restrictions contained in entry 52 of List II. That is not permissible. The expression imported into the city in section 113, therefore, has to be interpreted as meaning imported into the municipal limits for purpose of consumption, use or sale only. Thus construed in the limi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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