P KANNADASAN Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) Leave granted in the Special Leave Petitions.

(2.) The appellants-writ petitioners are challenging the validity of the Cess and Other Taxes on Minerals (Validation) Act, 1992 (being Act 16 of 1992) enacted by Parliament. The High Courts have repelled the attack. it is renewed here.

(3.) Section 115 of the Tamil Nadu Panchayats Act, 1958 levied in every Panchayat Development Block a local cess @ 0.45 p. on every rupees of land revenue payable to the Government in respect of any land for every fasli. The explanation to the section defined "land revenue" to include inter alia royalty and lease amount payable in respect of the land. The validity of the levy was challenged in the Madras High Court. A learned single Judge dismissed the writ petition holding that being a tax on land, it is within the legislative competence of the State Legislature. The learned Judge followed the decision of this Court in H.R.S. Murthy v. Collector of Chittoor, (1964) 6 SCR 666 : (AIR 1965 SC 177). A writ appeal against the decision of the learned single Judge was dismissed, again following the decision in H.R.S. Murthy. The matter was brought to this Court. It was heard ultimately by a seven Judge Bench (India Cements Limited v. State of Tamil Nadu, 1989 Suppl (1) SCR 692 : (AIR 1990 SC 85) which held, the said levy to be outside the legislative competence of the Tamil Nadu Legislature. This Court held that (1) the levy cannot be sustained under and with reference to Entry 49 of List-II of the Seventh Schedule to the Constitution of India as a tax on land; (2) the levy is a levy on minerals and is relatable to Entries 23 and 50 of List-II; (3) that on account of the declaration made by Parliament contained in Section 2 of the Mines and Minerals (Development and Regulation) Act, 1957,( M.M.R.D. Act), the State Legislatures have been denuded of the power to levy tax on minerals. Regulation of mines and mineral development takes within its purview the levy of tax on minerals. Section 9 of the M.M.R.D. Act, this Court held, provides for levy of royalty/dead rent on minerals. The State Legislatures cannot, therefore, impose any tax on minerals. H.R.S. Murthy (AIR 1965 SC 177) was wrongly decided. Having so declared, this Court however, directed that the said decision shall only have prospective effect. This was for the reason that the State have been levying and collecting the said cess on the basis of the decision of this Court in H.R.S. Murthy. The decision in India Cement was rendered on 25th October, 1989.