TATA CHEMICALS LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The Gujarat State Legislature enacted the Gujarat Mineral Rights Tax Act 1985 (Gujarat Act 19 of 1985) (hereinafter referred to as the impugned Act or the impugned Legislation) to provide for the levy and collection of tax on mineral rights of holders of mining leases in respect of certain minerals in the State of Gujarat specified in the Schedule. The Act received the assent of the Governor of Gujarat on 2/08/1985 and was first published in the Gujarat Government Gazette on 3/08/1985 By a notification dated 29/10/1985 issued under sub-sec. (3) of Sec. 1 the State Government brought the Act into force with effect from 1/11/1985

(2.) The petitioners of this group of Writ Petitions are holders of mining leases granted by the State of Gujarat under provisions of the Mines and Minerals (Regulation and Development) Act 1957 (Central Act 67 of 1957) (hereinafter called the Central Act) read with the Concession Rules 1960 Under the terms of the lease deed specimen copy whereof is produced at Annexure B in Special Civil Application No. 2298 of 1986 the petitioners have a right to mine limestone and/or calcarious sand from the leased area. The indenture of lease Annexure `B between the Governor of Gujarat and the concerned lessee is essentially in Form `K prescribed by Rule 31 of the Mineral Concession Rules 1960 except for the removal of a few existing clauses and the insertion of some new ones. The lease deed is divided into IX parts. It is a lengthy document containing several terms and conditions but it would be sufficient here to indicate the essential terms only to bring out the true nature of the contractual relationship between the State and the concerned lessees. The area of the land for which the mining lease is granted is indicated in Part I; the lease is to mine a named mineral only; if any other mineral is found the lessee is under an obligation to give intimation to the State Government and with its permission and on stated terms only the lessee can mine the said mineral. Since the lessee is allowed to work the mineral or minerals named in the lease the State Government has reserved unto itself the right to work the other minerals or to grant a lease in respect thereof. Part V of the lease d-eed deals with rents and royalties. The lessee is under an obligation to pay the surface rent and dead rent and/or royalty as prescribed within the stipulated period to the State Government failing which the State Government may collect the same as arrears of land revenue impose penalty in the case of frequent defaults or even terminate the lease as a last resort. Under the terms of the contract the lessee is required to pay dead rent or royalty whichever is higher in amount but not both. Royalty is to be computed on the mineral produced or despatched. The State Govern ment is however given the right of pre-emption of the minerals on payment of a fair market value prevailing at the time of pre-emption. In the event of the existence of a State of war or emergency the State Government is given the right to take possession and control of the works plant machinery and premises of the lessee on payment of fair compensation. It is seen from the above essential terms of the lease that the lessee has a right to mine the named mineral on payment of surface rent and dead rent or royalty as prescribed.

(3.) The petitioners who as holders of mining leases have become liable to payment of tax on mineral right challenge the constitutional validity of the impugned Legislation and the notification dated 29/10/1985 issued thereunder fixing the rate of mineral tax for each mineral on diverse grounds and seek to restrain the State of Gujarat by an appropriate writ from recovering the same from the petitioners.