ASSOCIATED STONE INDUSTRIES KOTA Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) The petitioner has challenged the order of reassessment in respect of royalty for the period from 1-10-1974 to 30-9-1975 and 1-10-1975 to 30-9-1976 and also the validity of Rule 17(1)(c) of the Rajasthan Minor Mineral Concession Rules.

(2.) The facts of the case are that the petitioner was granted a mining lease for quarrying lime stone is building stone for an area of 4810.16 acres in Tehsil Ramganjmandi, District Kota for a period of 10 years commencing from 1-10-1959. The lease was renewed for a further period of 10 years from 1-10-1969 and an agreement was executed in which it was contemplated that the petitioner would pay Rs. 3/- per hundred sft. treating the minor mineral to be excavated i.e. lime stone as building stone. The petitioner was making the payment on the basis of the agreement entered into and even initial assessment was framed accordingly.

(3.) According to the submission of the learned counsel for the petitioner, the Rajasthan Minor Mineral Concession Rules, 1959 had provided even lesser amount of royalty in Schedule I, but the agreement is alleged to be entered into at a higher figure. It is stated that the rates were raised from 5-8-1975 and before that there was a notification dated 25-9-1972. In accordance with the provisions of Rule 17(1)(c) of the Rules, the revision in the rate of royalty could not have been more than once in the period of four years at that time and it is stated that the revision on 5-8-1975 is contrary to the provisions of Rule 17(1)(c) of the Rules as well as proviso to Section 15(3) of the Mines and Minerals (Regulation and Development) Act, 1957. Under Section 14 of the said Act, it is provided that the provisions of Sections 4 to 13 shall apply to the major minerals and minor minerals are excluded therefrom. By the amendment of 1986 these sections have been changed to Sections 5 to 13 now. Section 9 provides the royalty in respect of major minerals and under sub-section (3) of the said section, it is provided that the Central Government may by notification in the Official Gazette, amend the Second Schedule to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with Effect from such date as may be specified in the Notification. The proviso further provides that the Central Government shall not enhance the rates in respect of any mineral more than once during the period of four years. This period of four years has also been reduced to three years by the amendment of 1986. The powers which are contained in Section 15(3) in respect of minor mineral are similar to those which are under Section 9(3) of the Act. The power under Section 9 could be exercised by the Central Government while under Section 15, it could be exercised by the State Government. The validity of Section 9 was considered by the Apex Court in the case of State of Madhya Pradesh v. Mahalaxmi Fabric Mills Ltd., 1995 (Supp) (1) SCC 642 : (AIR 1995 SC 2213) and it was observed as under:- In view of the Constitution Bench it is no longer open to the writ petitioners to submit that Entry 50 of List can still be available to State Legislature. It is easy to visualise that once Parliament has occupied the field in connection with regulation of mines and minerals development in the country and when Parliament declares that it is expedient in the public interest so to do. Entry 23 of the State List regarding regulation of mines and minerals development would be of no avail to the State Legislature as Entry 23 of List is subject to the provision of List I, nor will Entry 50 of the State List be of any assistance to the State Authorities. In short, both the entries will be out of way in enacting appropriate legislation imposing the rates of royalty to be paid by those who extract minerals in the country. Once these entries are out of picture, it is Entry 54 in the Union List which will operate and the imposition of tax on minerals extracted would be squarely got covered by Entry 54 of the Union List. To recapitulate, as the entire Act has been upheld by this Court in its earlier decisions to which we have made reference in the light of Entry 54 of the Union List, Section 9 being part and parcel thereof cannot be out of the sweep of Entry 54. However, even assuming that there should be a specific taxing entry regarding taxing of royalty on mineral rights which can sustain such legislation under the said entry, being a topic of legislative power, we find that there is no such specific entry in Union List nor in State List or Concurrent List which can be of any assistance in this connection. Entry 50 in the State List is out of picture as we have seen earlier. In these circumstances, the State Legislature cannot rely on any entry in the State List or Concurrent List for imposing such a tax once a valid legislation by Parliament under Entry 54 of the Union List is holding the field. In the alternative imposition of such a hybrid tax on mines + capital+ labour would be covered by residuary Entry 97 of the Union List which empowers Parliament to enact laws on topics not covered by other specific entries in List or List III. This conclusion squarely flows from the observations made by Oza, J. in his concurring judgment in India Cement case. It must, therefore, be held that Section 9 of the Act is within the legislative competence of Parliament both under Entry 54 of the Union List as well as Entry 97 thereof. The first ground of attack on Section 9 by Shri Sanghi is thus devoid of substance and is, therefore, rejected.