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TMI Blog2024 (8) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... tain discrepancies, which have been met with. As far as the tax payable on reverse charge basis on the mining activity is concerned, it is submitted that the respondent ought not to have confirmed the demand. 4. It is submitted that the Hon'ble Supreme Court has now stayed the recovery of tax on the mining activity in M/s.Lakhwinder Singh Vs. Union of India in WP (Civil) No.1076 of 2021. 5. It is noticed that in view of the order of the Hon'ble Supreme Court, the Division Bench of this Court in its recent order dated 08.01.2024 in W.P.(MD) No.30974 of 2022 etc. batch, has laid down certain guidelines. The guidelines issued by the Division Bench have been reproduced in Paragraph 9 of the order dated 08.01.2024 in W.P.(MD)No.30974 of 2022 etc. batch, which reads as under: "9. In these circumstances, we deem it fit and appropriate to issue the following directions: (i) In the cases, where the challenge is made to the show cause notices, the writ petitioners shall submit their objections / representations within a period of four weeks from the date of receipt of a copy of this order. (ii) Upon receipt of the objections / representations from the writ petitioners, the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law laid down in M P V Sundararamier (supra). The legislative power to tax mineral rights vests with the State legislatures. Parliament does not have legislative competence to tax mineral rights under Entry 54 of List I, it being a general entry. Since the power to tax mineral rights is enumerated in Entry 50 of List II, Parliament cannot use its residuary powers with respect to that subject-matter; c. Entry 50 of List II envisages that Parliament can impose "any limitations" on the legislative field created by that entry under a law relating to mineral development. The MMDR Act as it stands has not imposed any limitations as envisaged in Entry 50 of List II; d. The scope of the expression "any limitations" under Entry 50 of List II is wide enough to include the imposition of restrictions, conditions, principles, as well as a prohibition; e. The State legislatures have legislative competence under Article 246 read with Entry 49 of List II to tax lands which comprise of mines and quarries. Mineralbearing land falls within the description of "lands" under Entry 49 of List II; f. The yield of mineral bearing land, in terms of the quantity of mineral produced or the royalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny" means the limitation could be in any form which can be imposed only by the Parliament by law relating to mineral development. In view of the use of the expression "any limitations", it must be given the widest possible meaning to include a limitation in the form of Sections 9 and 9A, 25 or any other provision of the MMDR Act, 1957 and Rules made thereunder which act as a limitation to Entry 50 - List II. c. Whether the expression "subject to any limitations imposed by Parliament by law relating to mineral development" in Entry 50 - List II pro tanto subjects the Entry to Entry 54 - List I, which is a non-taxing general Entry? Consequently, is there any departure from the general scheme of distribution of legislative powers as enunciated in MPV Sundararamier (supra)? The expression "subject to any limitations imposed by Parliament by law relating to mineral development" in Entry 50 - List II pro tanto subjects the Entry to Entry 54 - List I. The use of the expression "any limitations" would mean that the taxing Entry would be subject to a nontaxing or general Entry such as in Entry 54 - List I which could also be termed as a regulatory Entry. Consequently, there is a departur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the principle stated in MPV Sundararamier is foreign to the instant case and the ratio of the said decision does not apply to the present case. No doubt, the legislative power to tax mineral rights vests with the State legislature but Parliament, though may not have an express power to tax mineral rights under Entry 54 - List I, it being a general Entry, Parliament can, nevertheless on the strength of Entry 54 - List I read with Section 2 of the MMDR Act, 1957, impose any limitation on the power of the States to tax mineral rights under Entry 50 - List II. Sections 9 and 9A of the MMDR Act, 1957 are two such instances of limitations imposed by the Parliament on the taxing power of the State under Entry 50 - List II. This is a unique Entry and must be given its true and complete meaning and while interpreting the same one cannot be swayed by the principles laid down in MPV Sundararamier as the same do not apply in the instant case. At the cost of repetition, it is stated that Entry 50 - List II never came for consideration in the aforesaid case. c. Parliament is not using its residuary power with respect to imposing any limitation on the taxing power of the State under Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or dead rent in the context of exercise of mineral rights. Exercise of mineral rights is the basis for payment of royalty or dead rent. Consequently, value of mineral produced cannot be used as a measure to once again impose a tax on mineral bearing land under Entry 49 - List II. If so, Entry 50 - List II would be rendered redundant. i. As Entry 49 - List II does not apply to mineral bearing land, the limitations imposed by Parliament by law relating to mineral development with respect to Entry 50 - List II would restrict the power of the State legislature to impose tax on mineral rights under the latter Entry. Thus, the power of the State legislature to impose tax under Entry 50 - List II is subject to the Parliament imposing any limitation by law relating to mineral development. 42. In view of the above discussion, the eleven questions referred to this Bench are accordingly answered. In particular, I hold that: (i) Sections 9, 9A and 25 of the MMDR Act, 1957 denude or limit the scope of Entry 50 - List II; (ii) the majority decision in Kesoram is a serious departure from the law laid down by the seven-judge Bench in India Cement which was wholly unwarranted and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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