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TMI Blog1986 (3) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... held under a mining lease for undertaking the mining operations. The challenge is on the ground of want of legislative competence of the State Legislature to enact such a law. The petitioners in all these petitions being holders of mining lease for a major mineral are required to pay the mineral areas development cess under these provisions. Hence this challenge by them. The Madhya Pradesh Karadhan Adhiniyam, 1982, was enacted by State Legislature to provide for levy of school building cess, forest development cess and mineral areas development cess and matters incidental thereto. Part II of the Act deals with school building cess and section 3 therein requires the holder an every holding of six hectares and above to pay the school building cess as provided therein. The proceeds of the school building cess are required to be utilised for construction and furnishing of Primary School building in non-urban areas. Part III of the Act deals with the forest development cess wherein section 7 imposes forest development cess on every sale or supply of forest produce by the Forest Department and the amount specified and the proceeds thereof are to be utilised for social forestry, affore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment cess shall, subject to and in accordance with the rules made in this behalf, be collected by such agencies and in such manner as may be prescribed and shall be applied towards development of mineral bearing areas; Provided that if the mineral areas development cess is not paid within the prescribed date, there shall be charged interest at the rate of fifteen per cent, per annum on the amount of cess or part thereof which has not been paid or deposited before the said date from the date of cess or the part thereof has become due for payment and the same shall be recoverable as an arrear of land revenue along with costs of recovery. Rules have been framed under this Act called 'The Madhya Pradesh Mineral Areas Development Cess Rules, 1982 , providing for matters relating to the mineral areas development cess. Rule 10 therein is alone relevant for the purpose of these petitions and is as under: 10. Application of Cess.- The State Government shall decide from time to time the manner in which the amount collected from cess shall be utilized for the development of mineral bearing areas. Reference may now be made to certain entries in the Seventh Schedule wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claration made under Entry 54 in List I by the Parliament in the Central Act No. 67 of 1957 and the Parliament alone could make this imposition. Neither Entry 49 nor Entry 50 in List II empowers the State Legislature to enact such a law and for this reason, the Parliament alone is empowered to make such an imposition by virtue of the declaration made by it under Entry 54 read with either Entry 96 or Entry 97 of List I. In reply Shri S. S. Ray contended that the State Legislature was competent to (sic) such a law for the following reasons, namely: 1) The imposition is not a fee but tax on land which the State Legislature alone is empowered to impose under Entry 49 in List II. 2) Assuming that the imposition is not covered by Entry 49 in List II, it is covered by Entry 50 in List II since it is a tax on mineral rights which the State Legislature alone is empowered to impose. The Parliament has no power to impose any such tax. 3) Lastly, in case, it is held to be a fee, then the source of power of the State Legislature is under Entry 60 read with Entry 23 of List II. We shall now take up for consideration the first point arising out of the above contentions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case has to be examined. Section 9(4) of the Act provides that the mineral areas development cess shall be applied towards development of mineral bearing areas . Rule 10 framed under the Act lays down that the State Government shall decide from time to time the manner in which the amount collected as mineral areas development cess shall be utilized for the development of mineral bearing areas. It is, therefore, clearly provided that utilisation of the mineral areas development cess is to be made only for the development of the mineral bearing areas in the manner decided from time to time by the State Government. Utilisation of this cess is, therefore, for a specific purpose i.e. the development of the mineral bearing areas. The persons holding mining leases for major minerals are alone liable for payment of the mineral areas development cess on the land under their mining lease. This cess is not payable by any other person having any right or interest in the land which is not a right under a mining lease within the mineral bearing area or in other words, the cess is not payable by the land holders in general but only by holders of mining lease within the area. Since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature under Entry 23 being left after the Parliament's declaration under Entry 54, nothing survives under Entry 23 for the State Legislature to impose a fee in relation to that matter by exercise of its power to levy a fee under Entry 66 of List II. It is, therefore, obvious that the State Legislature was not competent to impose such a fee in exercise of its legislative power under Entry 23 read with Entry 66 of List II in the Seventh Schedule which alone is available and relied on by the respondents to support the imposition as a fee. We may also sec some provisions of the Central Act No. 67 of 1957 to indicate that there are specific provisions made therein to permit imposition of fees so as to cover specifically the field of legislation relating to imposition and realisation of fees. Section 13 deals with the power of the Central Government to make rules in respect of minerals. The general rule making power is in sub-section (1) while sub-section (2) lays down specific matters without prejudice to the generality of the foregoing power. As specified in section 13(2)(i) as the fixing and collection of dead rent, fines, fees or other charges and the collection of royalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds within the legislative competence of the State Legislature under Entry 49 in List II. But position before us is different. We are concerned with the imposition only on lands in which mineral rights have been given for major minerals under a mining lease and no other kinds of lands. It is significant that holder of the land having a right in the surface of the land is also not liable for this imposition. The quantum of cess payable has to be calculated on the basis of royalty or dead rent which is peculiar only to a mineral right and no other interest in land. It may also be mentioned that the amount of cess payable is liable to variation depending upon the variation in the amount of royalty payable and it is the Central Government which fixes the rates of royalty under section 9 of the Central Act No. 67 of 1957. In this manner, the right to regulate the quantum of cess payable would ultimately be in the Central Government and not in the State Government. Some provisions of the Madhya Pradesh Land Revenue Code, 1959, also have relevance. Section 247 therein provides for permission to be obtained by the holder of a mining lease to enter upon the surface of the land where right i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a tax and not a fee. It cannot, therefore, be accepted that it is the State Legislature alone and not the Parliament which is empowered by the Constitution to impose a tax on mineral rights. It is unnecessary for us to refer to the several decisions starting with the decision in Sundararamier Co. vs. State of Andhra Pradesh ( AIR 1958 SC 468) cited by Shri Ray to show that the power to tax must be derived from a clear and specific taxing Entry in any one of the Lists in the Seventh Schedule since it is not covered by the general Entry on the subject. The principle is well settled and it is sufficient to say that the Parliament's power to impose tax on mineral rights is evident even from Entry 50 in List II which speaks of limitations imposed by the Parliament in exercise of the power under that Entry by the State Legislature in addition to the taxing power of the Parliament under Entry 54 read with Entry 97 and residuary power of the Parliament. We are, therefore, of the opinion that even if the imposition be in the nature of a tax and not a fee, although we have earlier expressed the opinion that it is a fee, the field of legislation in this behalf is available only to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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