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TMI Blog2017 (10) TMI 1519X X X X Extracts X X X X X X X X Extracts X X X X ..... e DMF. Therefore, it must follow that under the provisions of the MMDR Act that we are concerned with, no State Government has the power to frame a rule with retrospective effect or to create a deeming fiction, either specifically or by necessary intendment - Section 13 of the MMDR Act does not confer any specific power on the Central Government to frame any rule with retrospective effect. Section 9B(5) and (6) read with clause (qqa) inserted in Section 13(2) of the MMDR Act enable the Central Government to make rules to provide for the amount of payment to be made to the DMF established by the State Government under Section 9B(1) of the MMDR Act. None of these provisions confer any power on the Central Government to require the holder of a mining lease or a prospecting licence-cum-mining lease to contribute to the DMF with retrospective effect. Therefore, even the scope and extent of the rule making power of the Central Government is limited. The notifications issued by the State Governments must be understood to mean (assuming the DMF could not be established with effect from 12th January, 2015 by a notification issued on a later date) that the DMF was established on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2017), W.P. (C) No. 67/2017, 205/2017, 201/2017, S.L.P. (C) No. 12099/2017, S.L.P. (C) Nos. 12184-12185/2017, S.L.P. (C) No.14693/2017, S.L.P. (C) No.16685/2017, W.P. (C) No. 886/2016, W.P. (C) No. 912/2016, W.P. (C) No. 27/2017, W.P. (C) No. 112/2017 and W.P.(C) No. 69/2017. For the Petitioner : Mr. Manish Kumar Saran,AOR, Mr. Sunil Dogra,Adv., Mr. Vivek Vishnoi,Adv., Mr. Abhishek Sharma,AOR, Mr. Pallav Mongia,Adv., Mr. Dhruv Mehta,Sr.Adv., Mr. Gagan Sanghi,Adv., Mr. Rameshwar Prasad Goyal,AOR, Ms. Priya Puri,AOR, Mr. Devashish Bharuka,AOR, Mrs. Vanita Bhargava, Adv., For Mr. E.C. Agrawala,AOR, Mr. Praveen Kumar,AOR, Mr. Ajay Bhargava,Adv., Ms. Vanita Bhargava,Adv., Mr. Aseem Chaturvedi,Adv., Mr. Sarangan Arvindkasan, Adv., Mr. Abhijeet Swaroop, Adv., For M/s. Khaitan Co., Mr. Sushmit Pushkar, Adv., Mr. Akshay Sapre,Adv., Mr. Abhijeet Swaroop, Adv., for M/s. Khaitan Co., Mr. Baij Nath Patel, Adv., Ms. Sweta, Adv., Ms. Romila, Adv., Mr. Sachin Mittal,AOR For the Respondent : Mr. Vibhu Shankar Mishra,Adv., Mr. Gurmeet Singh Makker,AOR, Mr. M.K. Maroria,AOR, Mr. R.K. Rathore,Adv., Mr. Deepak Goel, Adv., Mr. Abhishek Tandon, Adv., Mr. Harish Tandon, Adv., Mr. Jagdeep Dh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof, as may be prescribed by the Central Government. Section 9B of the MMDR Act, as inserted by the Ordinance, reads as follows: 9B. District Mineral Foundation - (1) In any district affected by mining related operations, the State Government shall, by notification, establish a trust, as a non-profit body, to be called the District Mineral Foundation. (2) The object of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government. (3) The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government. (4) The holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not exceeding one-third of such royalty, as may be prescribed by the Central Government. (ii) Section 14 of the Ordinance inserted sub-clause (qqa) in Section 13(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government. (3) The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government. (4) The State Government while making rules under sub-sections (2) and (3) shall be guided by the provisions contained in article 244 read with Fifth and Sixth Schedules to the Constitution relating to administration of the Scheduled Areas and Tribal Areas and the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006. (5) The holder of a mining lease or a prospecting licence-cum-mining lease granted on or after the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of the royalty paid in terms of the Second Schedule, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome into existence with effect from the 12th day of January, 2015. (R Sridharan) Additional Secretary to the Government of India‖ 6. It is not necessary for us to examine the validity of the direction except to note that pursuant thereto, several State Governments did establish a DMF as per the table below: Date of Notification and Establishment of DMF State Date of Notification Date of Establishment 1 Andhra Pradesh 14.3.2016 14.3.2016 2 Chhattisgarh 22.12.2015 12.1.2015 3 Goa 15.1.2016 12.1.2015 4 Haryana 17.11.2016 12.1.2015 5 Jharkhand 22.3.2016 12.1.2015 6 Karnataka 11.1.2016 12.1.2015 7 Madhya Pradesh 15.5.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mencement.-(1) These rules may be called as the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015. (2) These rules shall be deemed to have come into force on the 12th day of January, 2015. 2. Amount of contribution to be made to District Mineral Foundation.-Every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount at the rate of - (a) ten per cent of the royalty paid in terms of the Second Schedule to the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) (herein referred to as the said Act) in respect of mining leases or, as the case may be, prospecting licence-cum-mining lease granted on or after 12thJanuary, 2015; and (b) thirty per cent of the royalty paid in term of the Second Schedule to the said Act in respect of mining leases granted before 12th January, 2015.‖ 10. On 20th October, 2015 the Ministry of Coal issued a notification promulgating the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015. The administration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of mining lease or, as the case may be, prospecting licence-cum-mining lease granted on or after 12thJanuary, 2015; and (b) thirty per cent of the royalty paid in term of the Second Schedule to the said Act in respect of mining lease granted before 12th January, 2015. 3. Date from which contribution to be made. The amount calculated at the rate prescribed in rule 2 shall be paid from the date of notification issued under Section 9B(1) of the Act by the State Government establishing District Mineral Foundation or the date of coming into force of these rules, whichever is later. 12. The Ministry of Coal issued another notification on 31st August, 2016 substituting paragraph 3 of the notification dated 20th October, 2015. The substituted paragraph provided that payment under the notification dated 20th October, 2015 shall be made to the DMF with effect from 12th January, 2015. The notification dated 31st August, 2016 reads as follows: MINISTRY OF COAL NOTIFICATION New Delhi, the 31st August, 2016 G.S.R. 837(E).- In exercise of the powers conferred by sub-sections (5) and (6) of section 9B of the Mines and Minerals (Development and Regulation) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not established with retrospective effect. His contention was that under Section 9B of the MMDR Act the DMF could be established with effect from 12th January, 2015 or any date thereafter. Some States chose to issue a notification establishing the DMF from an anterior date (12th January, 2015) while some others did not, notwithstanding the direction of the Central Government. According to the learned Additional Solicitor General establishing the DMF from a date anterior to the date of the notification did not mean that the DMF was established with retrospective effect. He relied on a decision of the Constitution Bench of this Court in A. Thangal Kunju Musaliar v. M. Venkitachalam Potti (1955) 2 SCR 1196 in support of his contention. 17. Musaliar advances the case of the learned Additional Solicitor General. The Constitution Bench acknowledged that the general law is that a statute comes into force on the day it received the assent of the competent authority. However that date could be postponed if so provided in the statute. In Musaliar the statute provided that it was to come into force on a date notified in the Government Gazette. Since the statute was passed by the Legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s all that the Government did. In this view of the matter, the further argument advanced by the learned Attorney-General and which found favour with the Court below, namely, that the notification was at any rate good to bring the Act into operation as on and from the date of its issue need not be considered. (Emphasis supplied by us) 18. The notifications establishing the DMF in the States mentioned in the table above were issued pursuant to the provisions of Section 9B of the MMDR Act. The intention of Parliament appears to have been for the State Governments to establish the DMF with effect from 12th January, 2015 since its object is to work for the interest and benefit of persons and areas affected by mining related operations. The object being the welfare of those adversely affected by mining operations, the DMFs ought to have been established on 12th January, 2015. However, not surprisingly, every State Government took it easy (including to a lesser extent the State Governments of Madhya Pradesh, Odisha and Telangana) compelling the Central Government to issue a direction under Section 20A of the MMDR Act on 16th September, 2015 requiring the State Governments to issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity can impose a tax or a fee. There is no scope or any room for intendment in respect of a compulsory exaction from a citizen. (Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla (1992) 3 SCC 285 and State of Rajashtan v. Basant Agrotech (India) Limited. (2013) 15 SCC 1). 22. A much more erudite, general and broad-based discussion on the subject is to be found in the Constitution Bench decision in Commissioner of Income Tax (Central) I v. Vatika Township Private Limited (2015) 1 SCC 1 and we are obviously bound by the conclusions arrived at therein. It is not at all necessary for us to repeat the discussion and the conclusions arrived at by the Constitution Bench in the view that we have taken except to say that our conclusions do not depart from the conclusions arrived at by the Constitution Bench. 23. On the facts before us, it is clear that Section 15 of the MMDR Act empowers the State Government to make rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith. This section does not specifically or by necessary implication empower the State Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m as operational from the date of their publication. In any event, no prayer was made before us for striking down the establishment of the DMF as such. 26. Therefore our answer to the first question is that the DMFs were not established retrospectively even though the notifications established them from a date anterior to the date of the notifications - but not before the date of the Ordinance. Assuming the DMFs were established with retrospective effect from 12th January, 2015 it is of no consequence since the retrospective establishment does not prejudicially affect the interests of anybody (as will be seen later). In this view of the matter, the notifications do not violate the law laid down in Musaliar and Vatika Township. Even otherwise, their validity can be saved by reading them as operational from the date of publication. (ii) The second question 27. Learned counsel for the petitioners submitted that assuming the issue of retrospective operation of the notifications and the establishment of the DMFs is decided against them, even then the petitioners cannot be compelled to make the contribution for a period prior to the date of the relevant notifications, that is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of the proviso appended to Section 113 of the Income Tax Act, 1961 inserted by the Finance Act. 113. Tax in the case of block assessment of search cases.-The total undisclosed income of the block period, determined under Section 158BC, shall be chargeable to tax at the rate of sixty per cent: Provided that the tax chargeable under this section shall be increased by a surcharge, if any, levied by any Central Act and applicable in the assessment year relevant to the previous year in which the search is initiated under section 132 or the requisition is made under section 132A. The rate of surcharge was not specified in the proviso nor the date for the levy. The consequence of this was that some assessing officers were not levying any surcharge and those who were levying surcharge adopted different dates for the levy. In this context it was held that the rate at which a tax or for that matter a surcharge is to be levied is an essential component of the tax regime. The decision in Govind Saran was referred to by the Constitution Bench, particularly the passage extracted above. It was further held: ―It is clear from the above that the rate at which the tax is to be imposed is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the contribution to the DMF cannot be with retrospective effect, it would be payable only from the date of the notification, that is, 17th September, 2015 even though the DMF was established or deemed to be established with effect from 12th January, 2015. 36. The further question raised by learned counsel for the petitioners in this regard was: How can the contribution be made to an entity like the DMF that was established only on a date subsequent to 17th September, 2015 (except for the States of Madhya Pradesh, Odisha and Telangana)? Can the contribution be paid to a non-existent trust? 37. We are afraid this line of questioning does not appeal to us. The object of the DMF is ―to work for the interest and benefit of persons, and areas affected by mining related operations‖. The purpose of Section 9B of the MMDR Act and the object of the DMF are in furtherance of the cause of social justice for those affected by the mining related operations including tribals who may be dislocated or displaced from their habitat. To deny them a benefit that is rightfully theirs only because the State Government has been lax in establishing the DMF would be doing injustice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this is to be found in the text of paragraph 3 of the notification of 20th October, 2015 which is very explicit. It provides that the contribution, though payable, shall be paid only from the date of the notification (20th October, 2015) or from the date of establishment of the DMF in the concerned State, whichever is later. Therefore, only Madhya Pradesh, Odisha and Telangana would be entitled to the contribution from holders of a mining lease or a prospecting licence-cum-mining lease from 20th October, 2015 since their DMF was established much earlier. As far as all other States are concerned, the holders of a mining lease or a prospecting licence-cum-mining lease could claim to postpone payment to the DMF till it was established, as per the notification issued by the State Government. 43. It is true that many notifications establishing the DMF provided the date of establishment as 12th January, 2015 but as mentioned earlier the rule making power of the Central Government and the State Government under the MMDR Act does not permit retrospective operation of subordinate legislation. It cannot also be said that the Contribution Rules have retrospective operation by necessary i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he establishment is retrospective) from 12th January, 2015 does not prejudicially affect any holder of a mining lease or a prospecting licence-cum-mining lease. (iii) In view of the failure of the Central Government to prescribe the rate on 12th January, 2015 at which contributions are required to be made to the DMF, the contributions to the DMF cannot be insisted upon with effect from 12th January, 2015. Fixing the maximum rate of contribution to the DMF is insufficient compliance with the law laid down by the Constitution Bench in Vatika. (iv) Contributions to the DMF are required to be made by the holder of a mining lease or a prospecting licence-cum-mining lease in the case of minerals other than coal, lignite and sand for stowing with effect from 17th September, 2015 when the rates were prescribed by the Central Government. (v) Contributions to the DMF are required to be made by the holder of a mining lease or a prospecting licence-cum-mining lease in the case of coal, lignite and sand for stowing with effect from 20th October, 2015 when the rates were prescribed by the Central Government or with effect from the date on which the DMF was established by the State Government by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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