MAHANADI COALFIELDS LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) The constitutional validity of the Orissa Rural Employment, Education and Production Act. 1992 (Orissa Act 36 of 1992) (hereinafter referred to as the "impugned Act") has been challenged in this batch of writ applications. The petitioners are the Mahanadi Coalfields Ltd., a Government Company, with whom the land in question vests in accordance with Section 11 of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (Central Act 20 of 1957) (hereinafter referred to as the "Acquisition Act") and some Consumers of coal who purchase coal from the Mahanadi Coalfields Ltd. for their own consumption as well as some Traders in coal. While all the petitioners assail the constitutional validity of the Act, the consumers and traders, in addition, urge that even if the Act is valid, the levy in question being on land, the said burden cannot be passed on to the consumers and traders in fixation of the price of coal since price of' coal is fixed by the Government of India under the Colliery Control Order, 1945, which continues in force by virtue of Section 16 of the Essential Commodities Act, 10 of 1955. In those cases levy of tax under the Act on "coal-bearing land" is the subject-matter of dispute. The main grounds of attack are the lack of legislative competence of the State Legislature; the Act in question is ultra vires Article 285 of the Constitution; the Act is arbitrary and results in gross discrimination attracting Article 14 of the Constitution; and lastly in the absence of any provision for assessment and on account of vagueness, the Act is invalid.

(2.) The earlier history of legislation up to the decision of the Supreme Court in M/s.Orissa Cement Ltd. etc. v. State of Orissa, AIR 1991 SC 1676, as has been stated in the said judgment may be briefly reiterated. The validity of leyy of cess under the Orissa Mining Areas Development Fund Act, 1952 (Orissa Act 27 of 1952) was challenged by the coal company in the case of The Hingir Rampur Coal Co. Ltd. v. State of Orissa, AIR 1961 SC 459. Under the said Act, the State' imposed and collected 'cess' or 'fee' on the 'minerals extracted at the rate which shall not exceed 5 per cent of the valuation of the minerals at pit's mouth. The fee so collected was to be utilised to meet the expenditure incurred in connection with such development measures as the State Government might draw up for the purpose. The validity of the levy was challenged on the ground that it was not a fee, but a duty of excise of coal and, therefore, was covered by Entry 84 of List I of the Seventh Schedule and also repugnant to the Central Act 32 of 1947. It had also been attacked on the ground that it was hit by the provisions of the Mines and Minerals (Regulation and Development) Act. 1948 (Central Act 53 of 1948) which has been enacted in exercise of power under Entry 54 of List 1. The Supreme Court came to hold that the method in which the fee is recovered is a matter of convenience and by itself cannot fix upon the levy the character of a duty of excise and, therefore the cess levied by the impugned Act was neither a tax, nor a duty of excise but a fee. The Court further observed that declaration by Parliament in terms of Entry 54 of List I and the enforcement of Mines and Minerals (Regulation and Development) Act, 1948, would operate as a limitation on the power of the State Legislature to levy a fee under Entry 66, in List 11, as the field is an occupied field by the Central Act and on examining the provisions of the Central Act as well as the State Act, the Court came to the conclusion that the field covered by the impugned Act (the State Act) is covered by Central Act 53 of 1948. But since the declaration made by Section 2 of the 1948 Act does not constitutionally amount to the requisite declaration by Parliament, the limitation imposed by Entry 54 does not come into operation and in the absence of the requisite Parliamentary declaration the legislative competence of the Orissa State Legislature under Entry 23 read with Entry 66 is not impaired. The ultimate conclusion of the majority judgment is to the following effect :-

(3.) Mr. Parasaran appearing for Mahanadi Coalfields raises the following contentions in assailing the validity of the Act in question:-