G K W LTD Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) IN all these writ petitions, a challenge has been made to the Chapter VII to Rajasthan finance Act, 2006 (hereinafter referred to as 'the Act of 2006') and Rules framed thereunder, as well as consequential notification issued. It has been contended that the State of Rajasthan initially enacted Rajasthan land Tax Act, 1985 (for short, 'the Act of 1985') for imposition of tax on the mineral bearing lands. However, said enactment was held to be ultra vires by the Hon'ble Supreme court for want of competence of the State government to impose such tax. After the decision of the Hon'ble Supreme Court in regard to the enactment of Act of 1985, the state of Rajasthan has now come up with a new enactment under Chapter VII of the rajasthan Finance Act, 2006 which was then published in the Gazette on 31st march, 2006. After the enactment, the Government even framed Rules on 25-9-2006 in exercise of the powers conferred by section 61 of the Act of 2006. According to the petitioners, even the imposition of land tax pursuant to Chapter VII of Rajasthan Finance Act, 2006 and Rules framed thereunder is beyond legislative competence of the State of Rajasthan, hence it is prayed that the aforesaid Legislation may be held to be ultra vires.

(2.) LEARNED counsel Mr. Mehta appearing for the petitioners submits that the State government can legislate Act and Rules on the subject matters falling under their competence as per Schedule VII of the Indian constitution. However, State of Rajasthan came up with enactments beyond their legislative competence, inasmuch as, at the first instance, Rajasthan Land Tax Act of, 1985 was brought to impose tax on the minerals which was then struck down by the hon'ble Apex Court in a reported case of federation of Mining Association v. State of rajasthan, AIR 1992 SC 103. Referring to the aforesaid judgment, it is submitted that when imposition of tax on mineral bearing land is already held to be ultra vires, then it was not open for the State Government to bring another Legislation again for imposition of tax on the minerals with same different provisions in the Act 8 of 2006. In that regard, reference of paras 3, 4, 5 and 7 of the judgment aforesaid was made specifically and prayed that looking to the judgment of the Apex Court in the Federation of mining Association case itself, Chapter VII of the Finance Act of 2006 and Rules made thereunder deserves to be struck down.

(3.) THE further argument of the learned counsel for the petitioners is that as per entry 49 of List II of Schedule VII of the Constitution, the State Government can impose tax on lands and buildings and as per Entry 50 of the same List, the taxes on mineral rights are subject to limitation imposed by the Parliament, if any, apart from the fact that even as per Entry 23 of the same List, regulation of mining a mineral development is subject to the provisions of List I of the union. Thus, referring to the aforesaid Entries of the State List, it was submitted that though the Government may be competent to impose tax on lands and buildings as per entry 49, but imposition of tax on minerals by the State Legislation is not permissible due to limitation provided under Entry Nos. 23 and 50 of List II of Schedule VII of the constitution and in view of the Central Legislation of Mines and Mineral (Development and Regulation) Act, 1957 (for short, 'the Act of 1957' ). Referring to Entry 86 of the List I of Schedule VII of the Constitution. It was further submitted that even tax on the capital value of the assets is subject matter of competence of the Union alone, hence the finance Act of 2006, being imposition of tax on the capital value of the assets, thus, is beyond the competence of the State. For convenience and ready reference, relevant entries of List I of the Union List, as well as list II of the State List are quoted hereunder :-