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TMI Blog1972 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, persons engaged in mining of manganese and iron ore with the help of machinery had to pay ₹ 500/-per area and under Entry 63 persons engaged in mining of manganese and iron ore without the help of machinery had to pay ₹ 200 per area. On the basis of the above notification imposing licence fee, the petitioner in Writ Petition No. 1934 of 1967 was called upon by the Chief Executive Officer of the Taluk Development Board Sandur (respondent 2) by his notice bearing F. No. 30/67 L. I.. dated 18-7-1967 to pay ₹ 3,000/- being the arrears of licence fee from 1963-64 to 1967-68 in respect of three areas, namely, an area of 640 acres in Karadikolla, another area of 175-63 Hectares in Karadikolla and Bhavihalli area. The petitioner in Writ Petition No. 2131 of 1967 was similarly called upon by the respondents by notice similarly bearing F. No. 13/67 dated 22-7-1967 to pay in all ₹ 10,500/-by way of licence fee in respect of the areas in which the petitioner was engaged in mining within Sandur Taluk. Aggrieved by the notices of demand and the notification issued under Sections 143 and 144 of the State Act referred to above, the petitioners have filed the above pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A combined reading of Entries 23 and 50 in List II and Entry 54 in List I, establishes that as long as the Parliament does not make any law in exercise of its power in Entry 54, the powers of the State Legislature in Entry 23 and in Entry 50 would be exercisable by the State Legislature. But when once the Parliament makes a declaration by law that it is expedient in the public interest to make regulation of mines and mineral development under the control of the Union, to the extent to which such regulation and development is undertaken by the law made by the Parliament, the power of the State Legislature under Entries 23 and 50 of List II would get denuded. 6. It is necessary at this stage to refer to the provisions of the Central Act. The preamble of the Central Act shows that it was enacted with a view to provide for the regulation of mines and development of minerals under the control of the Union. Section 2 of that Act reads, it is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided . Sections 4 to 8 of the Central Act deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an arrear of land revenue. It is unnecessary to refer to other provisions of the Act for the purpose of this case. In exercise of the power conferred by Section 13 of the Central Act, the Central Government has framed Rules known as The Mineral Concession Rules, 1960 which deal with the procedure for the grant of a prospecting licence or the mining lease and conditions subject to which it can be issued. It is manifest from the provisions of the Central Act extracted above that the Parliament has made the necessary declaration as provided in Entry 54 of List I of the Seventh Schedule to the Constitution and has assumed Legislative control over matters dealt with in the Central Act. It is, therefore, clear that to the extent the' Central Act makes provision regarding the regulation and development of minerals, the powers of the State Legislatures under Entry 23 of List II stand curtailed. 7. The State Act was passed in the year 1959. Its object was to consolidate and amend the laws relating to Panchayats and to provide for the constitution of Taluk Development Boards and District Development Councils in the State of Mysore. Section 143 of the State Act on which reliance i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 of the Mysore Village Panchayats and Local Boards Act. 1959. be used without licence. Rate of licence fees fixed. XX XX XX XX XX XX 62. Mining in manganese, iron ore, read-oxide, barytes, asbestos, steatite, mica, etc.. with the help of machinery per area. 500-00 63. Mining in manganese, iron ore, red-oxide, barytes, asbestos steatite, mica, etc., without the help of machinery per area. 200-00 XX XX XX XX XX xx 8. The respondents claim in the counter-af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the recovery of any rent, royalty, tax, fee or other sum due to the Government under the Central Act or the rules made thereunder. It was urged that the provisions of the Central Act referred to above made it very clear that the Parliament had assumed Legislative control with regard to the levy of fee or any other tax in respect of mining operations carried out under the lease and licence issued under the Central Act. 10. The effect of the passing of the Central Act has been explained by the Supreme Court in more than one case. The first case in which the above question came up for consideration was Hingir Rampur Coal Co. Ltd. v. State of Orissa. [1961]2SCR537 . In that case the validity of the Orissa Mining Areas Development Fund Act (27 of 1952) was Questioned on the ground that the Orissa State Legislature had no power to pass the said Act in view of the provisions of the Mines and Minerals (Regulation and Development) Act. 1948 (53 of 1948) passed by the Central Legislature. By the time the above case came up for decision before the Supreme Court, the Central Act which was passed in 1957 had come into force. While dealing with the contentions urged before it, the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leases have to be executed. This part of [he Act has no relevance to our present purpose. Section 6 of the Act, however, empowers, the Central Government to make rules by notification in the official gazette for the conservation and development of minerals. Section 6 (2) lays down several matters in respect of powers conferred on the Central Government by Section 6 (1). Amongst the matters covered by Section 6 (2) is the levy and collection of royalties, fees or taxes in respect of minerals mined, quarried, excavated or collected. It is true that no rules have in fact been framed by the Central Government in regard to the levy and collection of any fees; but. in our opinion, that would not make any difference. If it is held that this Act contains the declaration referred to in Entry 23 there would be no difficulty in holding that the declaration covers the field of conservation and development of minerals, and the said field is indistinguishable from the field covered by the impugned Act. What Entry 23 provides is that the legislative competence of the State Legislature is subject to the provisions of List I with respect to regulation and development under the control of the Union, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave no scope for the argument that until rules were framed, there was no inconsistency and no supersession, of the State Act . Having observed so, the Supreme Court came to the conclusion that the levy of the cess under the Orissa Act in respect of the period prior to June 1. 1958 on which date the Central Act came into force, alone was protected. But with regard to any fee or cess subsequent to June 1. 1958, the Supreme Court observed that it was impermissible. After referring in great detail to the observation of Gajendragadkar, J.. (as he then was) in Hingir Rampur Coal Company's case [1961]2SCR537 , the Supreme Court observed as follows:-- It is only necessary to add that the validity of this impost was affirmed, however, for the reason that whereas the Orissa Act, the Central Act of 1948 was a Pre-Constitution law and as in terms of Entry 54 'Parliament' had not made the requisite declaration, but only the previously existing Central Legislature it was held not to be within the terms of Entry 54 and the State enactment was held to continue to be operative. Since the Central Act 67 of 1957 contains the requisite declaration by the Union Parliament under E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) that Sub-section 143 and 144 of the State Act read with the schedule do not authorise the levy of any tax on land. Section 143 provides for regulation of certain trades and the relevant part of Schedule II of the State Act on the basis of which the impugned notification is issued provides for the levy of a licence fee on any purpose or the doing in the course of any industrial process anything which, in the opinion of the Taluk Board, is likely to be dangerous to human life, or health or property or is likely to create or cause a nuisance. These provisions do not amount to a delegation of the power to the Taluk Board to levy tax on land. It is no doubt true that in paragraph 10 of its decision, in H. R. S. Murthy's case the Supreme Court has observed that it WRS unnecessary for the purpose of that case to examine the question as to what is meant by 'tax on mineral rights' falling Within Entry 50 of the State List. 13. One view that may be taken about the meaning to be attached to the expression 'tax on mineral rights' appearing in Entry 50 is the one appearing in paragraph 53 of the minority judgment of Wanchoo. J., (as he then was) in Hingir Rampur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himself works the mine to value the mineral rights on the same principles on which leases of mineral rights are made and then to tax the royalty which for example, the owner might have got it instead of working the mine himself he had leased it out to somebody else. There can be no doubt therefore that taxes on mineral rights are taxes of this nature and not taxes on minerals actually produced. Therefore, the present cess is not a tax on mineral rights; it is a tax on the minerals actually produced and can be no different in pith and substance from a tax on goods produced which comes under Item 84 of List I. as duty of excise. The present levy therefore under Section 4 of the Act cannot be justified as a tax on mineral rights . 14. The views expressed by the learned Judge of the Supreme Court in minority judgment are entitled to great respect and have very high persuasive value. The Supreme Court however in the majority judgment in the above case, did not decide the question as to what meaning should be given to the expression 'tax on mineral rights' appearing in Entry 50 and again in H. R. S. Murthy's case, the said question was not decided. 15. Entry 50 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue intendment of the declaration contained in Section 2 of the Central Act and that it is so enacted in order to see that throughout the Indian Union, the rents, royalties and other taxes payable in respect of mining and minerals are uniform. It may be recalled here that in Hingir Rampur Coal Company's case [1961]2SCR537 the Supreme Court has stated that the scope of the Central Act is wider than the scope of the Central Act LIII of 1948 which by Section 6 (2) provided for making rules regarding levy and collection of royalties, fees or taxes on minerals mined, quarried or excavated (vide paragraph 24 of the judgment). We are, therefore, of the opinion that by the enactment of the Central Act, the State Legislature lost its legislative power Under Entries 23 and 50 of List II to the extent indicated in the Central Act. Hence, we cannot accept the contentions of the respondents that even after the passing of the Central Act, the State Legislature by enacting Section 143 of the State Act intended to confer power on the respondents to levy tax on the mining activities carried on by persons holding mineral concessions. It follows that levy of tax on mining by respondents as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a fee in connection with the regulation of trades falling under Schedule II of that Act and that in the absence of any service being rendered to the petitioners, the licence fee was not leviable. It may be mentioned here that the specifically case of the respondents in this case is that the impugned levy is in the nature of a tax and not a licence fee and that it was sought to be sustained on the basis of a decision of this Court in Salar Jung Sugar Mills Ltd v. Taluk Development Board-Koppal (1968) 1 Mys LJ 100. Sri V. Krishna Murthy contended that this Court while deciding the above case had not taken into account the provisions of Chapter IX of the State Act, and, therefore, the matter should be referred to a Full Bench, if necessary, for reconsidering the opinion expressed therein. We find it unnecessary to do so in this case as the petitioners are to succeed on the basis of our decision on the first point raised by them. 18. In the result, these two writ petitions succeed and the impugned notification issued by respondent 1 to the extent it levies tax on mining of manganese and iron ore carried on by the petitioners is quashed. The respondents are directed not to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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