MADHYABHARAT PHOSPHATE PVT LTD Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) These writ petitions have been filed questioning the validity of Chapter VII of the Rajasthan Finance Act, 2008, hereinafter for the sake of brevity referred-to as "the Finance Act, 2008", providing for levy of cess on mineral rights and, therefore, they are being disposed-of together by this common order. Petitioners are holders of mining leases granted for extraction of major minerals or re-using major minerals. They have been called upon to pay the environment and health cess imposed under Section 16 of the Rajasthan Finance Act. In exercise of the powers conferred by Section 19 of the Finance Act, 2008, the State Government has framed the rules called Rajasthan Environment and Health Cess Rules, 2008, hereinafter for the sake of brevity referred-to as "the Rules of 2008". Rule 13 of the Rules of 2008 provides for the head under which cess collected under Section 16 of the Finance Act, 2008 is to be credited. Rule 14 of the Rules of 2008 provides for the allocation of the funds for the implementation of environmental and health projects in mining areas of the various parts of the State. Petitioners have submitted that the field is occupied by the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, hereinafter for the sake of brevity referred to as "MMDR Act, 1957" enacted by the Central Government. Thus, the field is very much occupied as per the declaration made in MMDR Act, 1957 and the State Government had no competence to enact the Finance Act, 2008 and the Rules framed thereunder. It is submitted that the MMDR Act, 1957 occupies the whole field. Section 2 of MMDR Act, 1957 deals with the declaration as to the expediency of the Union control. Section 9 of MMDR Act, 1957 provides for realization of Royalty in respect of mining leases. Section 13 deals with the power of the Central Government to make rules in respect of major minerals. It is submitted that under Section 13(i) of MMDR Act, 1957, the fixing and collection of fees for (reconnaissance permits prospecting licenses or mining leases) surface rent, security deposit, fines, other fees or charges and the time within which and the manner in which the dead rent or royalty shall be payable, have been provided. It is provided in Section 13(2)(qq) the manner in which rehabilitation of flora and other vegetation, such as trees, shrubs and the like, destroyed by reason of any prospecting or mining operations shall be made good by the person holding the prospecting licence or mining lease. Section 13(2)(r) deals with any other matter which is to be or may be prescribed under the said Act. As per Section 15(1) of MMDR Act, 1957, the State Govt. has the power to make the rules in respect of minor minerals, which is specifically provided in Section 15(1A)(g) & (i). Section 18 deals with the mineral development, Sec. 25 provides for recovery of certain sums as arrears of land revenue and II Schedule to MMDR Act, 1957 provides rates of royalty.

(2.) It is also submitted by the petitioners that Rule 3(j) of the Mineral Conservation and Development Rules, 1988, hereinafter for the sake of brevity referred-to as "the Rules of 1988, takes care of "environment" and "environmental pollution", which have the same meanings, assigned respectively to these terms in Environment (Protection) Act, 1986, hereinafter for the sake of brevity referred-to as "the Act of 1986". Other rules also provide details as to financial assurance, protection of environment against pollution etc.

(3.) Reference has also been made to the Mines Act, 1952, hereinafter for the sake of brevity referred-to as "the Act of 1952", which also provides for health and safety of the workers working in the Mines, as such, the field of health is occupied by the Central Legislation. It is also submitted that the Mines Rules, 1955, hereinafter for the sake of brevity referred-to as "the Rules of 1955", provides for health & sanitation, First Aid & Medical appliances, leave with wages and overtime, welfare amenities, fees of medical practitioner for occupational diseases & mode of payment of fees etc. Hence, the State had no competence to enact the provisions contained in Chapter VII of the Finance Act, 2008. It is also submitted that the Central Government had enacted the Act of 1986, the Water (Prevention and Control of Pollution) Act, 1974, hereinafter for the sake of brevity referred-to as "the Act of 1974" and the Air (Prevention and Control of Pollution) Act, 1981, hereinafter for the sake of brevity referred-to as "the Act of 1981", hence the State Government is not competent to enact the impugned provisions in the Finance Act, 2008. Thus, it is submitted that Chapter VII of the Finance Act, 2008 providing for levy of environment and health cess in so far as it concerns major mineral, is ultravires the powers of the State legislature. The petitioners have submitted that the parliament in exercise of powers conferred by Entry 54 & 55 of List I has enacted the Act of 1951 and MMDR Act, 1957 and the Rules framed thereunder; the power with respect to major mineral vests in the Central Government; the State legislature has power to legislate in respect of minor mineral only; thus, the Chapter VII of the Finance Act, 2008 is ultravires; the cess in question is in the nature of fee; Section 17 of the Finance Act, 2008 provides for utilization of cess for protection of environment and health and maintenance of ecological balance especially in mining areas of the State. In accordance with the Rules of 2008, the cess is to be credited under the head environment and health fee and the amount is to be utilized for the purpose of Environment and Health Care Fund, which is to be spent for implementation of Environment and Health Projects in Mining areas; the cess in question is in the nature of fee and fee on the major mineral is squarely covered by the provisions contained in Section 13 of MMDR Act, 1957 and the Act of 1952 and the Rules of 1988, It is also submitted that in case, it is held that the cess is not a fee but a tax, then too, the field is covered by MMDR Act, 1957 and power to levy tax on the mineral rights in respect of major minerals is vested in the parliament. The expression 'royalty' shall include in itself tax, the term 'taxation' has been defined in Article 366(28) of the Constitution of India. The term 'royalty' in the plain sense is a tax but it would fall within the expression 'impost' and hence, it would fall within the expression 'tax'.