State of West Bengal Vs. Kesoram Industries Ltd. and Ors.
V.N.Khare CJI , R.C.Lahoti , B.N.Agarwal , S.B.Sinha , A.R.Lakshmanan
2005 AIR 1646, 2004(1 )SCR564 , 2004(10 )SCC201 , 2004(1 )SCALE425 , 2004(1 )JT375
Disposing of the matters, the Court, HELD: Per Lahoti, J. (for himself and for V.N. Khare, CJI, B.N. Agrawal and Dr. AR. Lakshmanan,JJ) 1.1. It is well settled that it is for the Legislature to draft a piece of legislation by making the choicest selection of words so as to give expression to its intention. The ordinary rule of interpretation is that the words used by the Legislature shall be given such meaning as the Legislature has chosen to assign them by coining definitions contained in the interpretation clause and in absence thereof the words would be given such meaning as they are susceptible of in the ordinary parlance, may be by having recourse to dictionaries. However, still, the interpretation is the exclusive privilege of the Constitutional Courts and the Court embarking upon the task of interpretation would place such meaning on the words as would effectuate the purpose of legislation avoiding absurdity, unreasonableness, incongruity and conflict. [678-H; 679-A-B] 1.2. As is with the words used, so is with the language employed in drafting a piece of legislation. That interpretation would be preferred which would avoid conflict between two fields of legislation and would rather import homogeneity. It follows, as a corollary of the abovesaid statement, that while interpreting tax laws the Courts would be guided by the gist of the legislation instead of by the apparent meaning of the words used and the language employed. The Courts shall have regard to the object and the scheme of the tax law under consideration and the purpose for which the cess is levied, collected and intended to be used. The Courts shall make endeavor to search where the impact of the cess falls. The subject matter of levy is not to be confused with the method and manner of assessment or realisation. Legislation in the field of taxation and economic activities need special consideration and are to be viewed with larger flexibility in approach. [679-B-D; 625-C] R.K. Garg v. Union of India and Ors.,  4 SCC 675, relied on S.R. Bommai and Ors. v. Union of India,  3 SCC 1, referred to. Morey v. Doud, (1957) 354 US 457, referred to. M.C. Setalvad, Tagore Law Lectures "Union and State relations under the Indian Constitution"(Eastern Law House, Calcutta, 1974); referred to. 1.3 The Entries in List I and List II of the Seventh Schedule to the Constitution must be so construed as to avoid any conflict. If there is no conflict, an occasion for deriving assistance from non-obstante clause "subject to" does not arise. If there is a conflict, the correct approach is to find an answer to three questions step by step as under: One -- Is it still possible to effect reconciliation between two Entries so as to avoid conflict and overlapping? Two - In which Entry the impugned legislation falls by finding out the pith and substance of the legislation? and Three - Having determined the field of legislation wherein the impugned legislation falls by applying the doctrine of pith and substance, can an incidental trenching upon another field of legislation be ignored? [672-B-E] M.P, V. Sundararamier and Co. v. The State of Andhra Pradesh and Anr.,  SCR 1422 and D.G. Gouse v. Kerala,  2 SCC 410, relied on. Governor General in Council v. Province of Madras, AIR (1945) PC 98 - referred to. H.M. Seervai: Constitutional Law of India (Fourth/Silver Jubilee Edition, Vol.3), referred to. 2.1, In the scheme of the Lists in the Seventh Schedule, there exists a clear distinction between the general subjects of legislation and heads of taxation. They are separately enumerated. [671-B-C] Synthetics and Chemicals Ltd and Ors. v. State of U.P. and Ors..  1 SCC 109, relied on. 2.2. Article 265 mandates - no tax shall be levied or collected except by authority of law. The scheme of the Seventh Schedule reveals an exhaustive enumeration of legislative subjects, considerably enlarged over the predecessor Government of India Act. Entry 97 in List I confers residuary powers on Parliament. Article 248 of the Constitution, which speaks of residuary powers of legislation, confers exclusive power on Parliament to make any law with respect to any matter not enumerated . in the Concurrent List or the State List. At the same time, it provides that such residuary power shall include the power of making any law imposing a tax not mentioned in either of those Lists. It is, thus, clear that if any power to tax is clearly mentioned in List - II, the same would not be available to be exercised by Parliament based on the assumption of residuary power. [656-F-H; 657-A] Union of India v. Harbhajan Singh Dhillon,  2 SCC 779 and M/s. Hoechst Pharmaceuticals Ltd. and Ors. v. State of Bihar and Ors.,  4 SCC 45, relied on. H.M. Seervai: Constitutional Law of India, Fourth/Silver Jubilee Edn. Vol.3 para 22.191, referred to. 2.3. It is well-settled that the power to tax cannot be inferred by implication; there must be a charging section specifically empowering the State to levy tax. There is nothing like an implied power to tax. The source of power which does not specifically speak of taxation cannot be so interpreted by expanding its width as to include therein the power to tax by implication or by necessary inference. Power to tax is not an incidental power. [655-F; 658-D; 659-E] Taxation, by Cooley (Vol. I, Fourth Edn.); Constitutional Law of India, H.M. Seervai, Fourth/Silver Jubilee Edn. Vol. 3 para 22.20, referred to. 2.4. The judicial opinion of binding authority flowing from several pronouncements of this Court has settled these principles: (i) in interpreting a taxing statute, equitable considerations are entirely out of place. Taxing statutes cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; (ii) before taxing any person it must be shown that he falls within the ambit of the charging section by clear words used in the Section; and (iii) if the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject. [659-B-D] "Principles of Statutory Interpretation, Justice G.P. Singh (Eighth Edition, 2001), referred to. 3.1. Power of `regulation and control' is separate and distinct from the power of taxation and so are the two fields for purposes of legislation. Taxation may be capable of being comprised in the main subject of a general legislative head by placing an extended construction, but that is not the rule for deciding the appropriate legislative field for taxation between List I and List II. As the fields of taxation are to be found clearly enumerated in Lists I and II, there can be no overlapping. There may be overlapping in fact but there would be no overlapping in law. The subject matter of two taxes by reference to the two Lists is different. Simply because the methodology or mechanism adopted for assessment and quantification is similar, the two taxes cannot be said to be overlapping. This is the distinction between the subject of a tax and the measure of a tax. [671-C-E] 3.2. A power to regulate, develop or control would not include within its ken a power to levy tax or fee, except when it is only regulatory. Power to tax or levy for augmenting revenue shall continue to be exercisable by the Legislature in whom it vests i.e. the State Legislature in spite of regulation or control having been assumed by another legislature i.e. the Union. [661-E-F] Synthetics and Chemicals Ltd. and Ors v. State of U.P. and Ors.,  1 SCC 109, referred to. M/s Laxminarayana Mining Co., Bangalore and Anr. v. Taluk Development Board and Anr., AIR (1972) Mysore 299, explained and disapproved. State v. Tucker, 56 U.S. 516, referred to. Taxation, by Cooley (Vol. I, Fourth Edn. Paras 26-27), referred to. 3.3. Entries 52, 53 and 54 in List I are not heads of taxation. They are general entries. Fields of taxation covered by Entries 49 and 50 in List II continue to remain with State Legislatures, in spite of Union having enacted laws by reference to Entries 52, 53, 54 in List I. It is for the Union to legislate and impose limitations on the States' otherwise plenary power to levy taxes on mineral rights or taxes on lands (including mineral bearing lands) by reference to Entries 50 and 49 in List II and lay down the limitations on State's power, if it chooses to do so, and also to define the extent and sweep of such limitations.[671-G-H; 672-A-B] 3.4. The heads of taxation are clearly enumerated in Entries 83 to 92B in List I and Entries 45 to 63 in List II. List III, the Concurrent List, does not provide for any head of taxation. Entry 96 in List I, Entry 66 in List II and Entry 47 in List HI deal with fees. The residuary power of legislation in the field of taxation spelled out by Article 248 (2) and Entry 97 in List I can be applied only to such subjects as are not included in Entries 45 to 63 of List II. It follows that taxes on lands and buildings in Entry 49 of List II cannot be levied by the Union. Taxes on mineral rights, a subject in Entry 50 of List II, can also not be levied by the Union though, as stated in Entry 50 itself, the Union may impose limitations on the power of the State and such limitations, if any, imposed by the Parliament by law relating to mineral development, to that extent, shall circumscribe the States' power to legislate. [674-B-D] 3.5. Power to tax mineral rights is with the States; the power to lay down limitations on exercise of such power, in the interest of regulation, development or control, as the case may be, is with the Union. This is the result achieved by homogeneous reading of Entry 50 in List II and Entries 52 and 54 in List I. So long as a tax or fee on mineral rights remains in pith and substance a tax for augmenting the revenue resources of the State or a fee for rendering services by the State and it does not impinge upon regulation of mines and mineral development or upon control of industry by the Central Government, it is not unconstitutional. A reasonable tax or fee levied by State Legislation cannot be construed as trenching upon Union's power and freedom to regulate and control mines and minerals. [674-D-F; 663-H; 664-A] 3.6. Power to tax is not outside constitutional limitations. It is for Parliament to exercise power in the field made available to it by Entries 52 and 54 in List I. It is also for Parliament to state by law the limitations , - and the sweep thereof - which it may choose to impose on the field available to the State for taxation, by reference to Entry 50 in List II. It may not be for Courts to venture into enquiry in just an individual case to find and hold what tax would hamper mineral development if Parliament has chosen to observe silence by not legislating or failed to say something explicit. [663-F-G] 4.1. In the field occupied by the Centre for regulation and control, power to levy tax and fee is available to the State, so long as it does not interfere with the regulation - the power assumed and occupied by the Union. [662-E-F] , Baijnath Kadio v. The State of Bihar and Ors.,  3 SCC 838 and Western Coalfields Ltd. v. Special Area Development Authority, Korba and Am.,  1 SCC 125, referred to. Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors.,  Supp. 1 SCC 707, upheld. State of Haryana and Anr. v. Chanan Mal,  1 SCC 340 and H.R.S. Murthy v. The Collector of Chittoor and Anr.,  6 SCR 666, relied on. 4.2. As Section 2 of the Mines and Minerals (Development and Regulation) Act, 1957 itself provides and indicates, the assumption of control in public interest by the Central Government is on (i) the regulation of mines, (ii) the development of minerals, and (iii) to the extent `hereinafter' provided. The scope and extent of declaration cannot and could not have been enlarged by the Court nor has it been done. The effect is that no State Legislature shall have power to enact any legislation touching (i) the regulation of mines, (ii) the development of minerals, and (iii) to the extent provided by 1957 Act. Tax and fee is not a subject dealt with by 1957Act nor can a power to levy tax or fee be spelled out from sections 13, 18 and 25 therof. [653-D-E; 655-E] Synthetics and Chemicals Ltd. and Ors v. State of U.P. and Ors.,  1 SCC 109 and The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan and Ors.,  1 SCR 491, relied on. State of Orissa v. M.A. Tulloch and Co.,  4 SCR 461, explained. 4.3. The primary object and the essential purpose of legislation must be distinguished from its ultimate or incidental results or consequences for determining the character of the levy. A levy essentially in the nature; of a tax and within the power of State Legislature cannot be annulled as unconstitutional merely because it may have an effect on the price of the commodity. A State legislation, which makes provisions for levying a cess, whether by way of tax to augment the revenue resources of the State or by way of fee to render services as quid pro quo but without any intention of regulating and controlling the subject of the levy, cannot be said to have encroached upon the field of `regulation and control' belonging to the Central Government by reason of the incidence of levy being permissible to be passed on to the buyer or consumer, and thereby affecting the price of the commodity or goods. [673-B-D] 4.4. Entry 23 in List II speaks of regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union. Entries 52 and 54 of List I are both qualified by the expression "declared by Parliament by law to be expedient in the public interest". A reading in juxtaposition shows that the declaration by Parliament must be for the `control of industries' in Entry 52 and `for regulation of mines or for mineral development' in Entry 54. Such control, regulation or development must be `expedient in the public interest'. Legislation by the Union in the field covered by Entries 52 and 54 would not denude the entire field forming subject matter of declaration to the State Legislatures. Denial to the State would extend only to the extent of the declaration so made by Parliament. In spite of declaration made by reference to Entry 52 or 54, the State would be free to act in the field left out from the declaration. The legislative power to tax by reference to Entries in List II is plenary unless the entry itself makes the field `subject to' any other entry or abstracts the field by any limitations imposable and permissible. [673-D-G] State of Orissa v. M.A. Tulloch and Co.,  4 SCR 461 and The Hingir- Rampur Coal Co. Ltd v. State of Orissa,  2 SCR 537, referred to. 5.1. The nature of tax levied is different from the measure of tax. While the subject of tax is clear and well defined, the amount of tax is capable of being measured in many ways for the purpose of quantification. Defining the subject of tax is a simple task; devising the measure of taxation is a far more complex exercise and, therefore, the Legislature has to be given much more flexibility in the latter field. The mechanism and method chosen by Legislature for quantification of tax is not decisive of the nature of tax though it may constitute one relevant factor out of many for throwing light on determining the general character of the tax. [671-E-G] Union of India and Ors. v. Bombay Tyre International Ltd., [19831 4 SCC 210 and The Hingir-Rampur Coal Co. Ltd v. State of Orissa,  2 SCR 537, relied on. Ralla Ram v. Province of East Punjab, (1948) FCR 207; Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr.,  3 SCR 77 and Ajoy Kumar Mukherjee v. Local Board of Barpeta,  3 SCR 47, referred to. Morey v. Doud,  354 US 457, referred to. M/s. Sainik Motors, Jodhpur v. State of Rajasthan,  1 SCR 517 and D.G. Gouse and Co. v. State of Kerala;  2 SCC 410, referred to. Re.: A reference under the Government of Ireland Act 1920 and Section 3 of the Finance Act (Northern Ireland) 1934, (1936) A.C. 352, referred to. 5.2. The method of quantifying the cess by reference to the quantum of mineral produced would not alter the character of the levy. There are myriad methods of calculating the value of the land for the purpose of quantifying the tax. It does not become excise duty on manufacture and production of goods merely on account of having relation with the quantity of product yielded of the land. Rather it is a safe, sound and scientific method of determining the value of the land to which the product relates. The levy of cess in the instant matters considered as a tax is constitutionally valid. [681-F-H; 682-A] Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr.,  3 SCR 77, Ajoy Kumar Mukherjee v. Local Board of Barpeta,  3 SCR 47; Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr.,  1 SCC 125 and Ralla Ram v. Province of East Punjab, 1948 FCR 207, relied on. 6.1. `Land', the term as occurring in Entry 49 of List II, has a wide connotation. Land remains land though it may be subjected to different user. The nature of user of the land would not enable a piece of land being taken out of the meaning of land itself. Different uses to which the land is subjected or is capable of being subjected provide the basis for classifying land into different identifiable groups for the purpose of taxation. The nature of user of one piece of land would enable that piece of land being classified separately from another piece of land which is being subjected to another kind of user, though the two pieces of land are identically situated except for the difference in the nature of user. The tax would remain a tax on land and would not become a tax on the nature of its user. [672-E-G] Anant Mills v. State of Gujarat,  2 SCC 175;Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr.,  3 SCR 77 and Ajoy Kumar Mukherjee v. Local Board of Barpeta,  3 SCR 47, relied on. Vivian Joseph Ferreira and Anr. v. The Municipal Corporation of Greater Bombay and Ors.,  1 SCC 70 and The Government of Andhra Pradesh and Anr. v. Hindustan Machine Tools Ltd.,  2 SCC 274, referred to. 6.2. To be a tax on land, the levy must have some direct and definite relationship with the land. So long as the tax is a tax on land by bearing such relationship with the land, it is open for the legislature for the purpose of levying tax to adopt any one of the well-known modes of determining the value of the land such as annual or capital value of the land or its productivity. The methodology adopted, having an indirect relationship with the land, would not alter the nature of the tax as being one on land- [672-G-H; 673-A] 6.3. It is open for the Legislature to ignore the nature of the user and tax the land. At the same time it is also permissible to identify, for the purpose of classification, the land by reference to its user. While taxing the land it is open for the Legislature to consider the land which produces. a particular growth or is useful for a particular utility and to classify it separately and tax the same. Different pieces of land identically situated otherwise, but being subjected to different uses, or having different potential, are capable of being classified separately without incurring the wrath of Article 14 of the Constitution. [628-A-C] Anant Mills v. State of Gujarat,  2 SCC 175;Kunnathat Thatkunni Moopil Nair etc. v. State of Kerala and Anr.,  3 SCR 77, Ajoy Kumar Mukherjee v. Local Board of Barpeta, [1965| 3 SCR 47; Assistant Commissioner of Urban Land Tax Madras and Ors. etc. v. Buckingham and Carnatic Co. Ltd. etc.,  2 SCC 55; Ralia Ram v. The Province of East Punjab, (1948) FCR 207; Sir Byramjee Jeejeebhoy v. Province of Bombay and Ors., AIR (1940) Bom 65); Vivian Joseph Ferreira and Anr. v. The Municipal Corporation of Greater Bombay and Ors.,  1 SCC 70; The Government of Andhra Pradesh and Anr. v. Hindustan Machine Tools Ltd.,  2 SCC 274; M/s. R.R. Engineering Co., etc. v. Zila Parishad, Bareilly and Anr. etc.,  3 SCC 330; District Board of Farrukhabad v. Prag Dutt and Ors., AIR (1948) Allahabad 382 (F.B.) and The State of Punjab v. The Union of India through the Secretary to Government Finance Department, Government of India, New Delhi, AIR (1971) Punjab and Haryana 155 (F.B.), relied on. 7.1. A cess may be a tax or a fee and is generally used when the levy is for some special administrative expense, suggested by the name of the cess, such as, health cess, education cess, road cess etc. [633-F-G; 681-B] 7.2. Royalty is not a tax. Royalty is paid to the owner of land who may be a private person and may not necessarily be State. A private person owning the land is entitled to charge royalty but not tax. The lessor receives royalty as his income and for the lessee the royalty paid is an expenditure incurred. It is clarified that even in India Cement it was not the finding of the Court that royalty is a tax. In that case what was impugned was a levy of cess on royalty and the question was whether such cess on royalty was within the competence of the State Legislature. In the majority judgment the word `royalty' occurring in the expression - `royalty is a tax' is clearly an error attributable either to a stenographer's devil or to sheer inadvertence. What the majority wished to say and has in fact said is `cess on royalty is a tax'. A statement caused by an apparent typographical or inadvertent error in a judgment of the Court should not be misunderstood as declaration of such law by the Court. [642-B-C; 633-D-E; 635-E; 636-A-B] India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12; clarified and distinguished Orissa Cement Ltd. v. State of Orissa and Ors.,  Supp. 1 SCC 430 and Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors.,  3 SCC 211, distinguished. State of M.P. v. Mahalaxmi Fabric Mills Ltd. and Ors.,  Supp. 1 SCC 642 and Saurashtra Cement and Chemicals Industries and Anr. etc. etc. v. Union of India and Ors.,  1 SCC 91, overruled to the extent they held royalty to be a tax. H.R.S. Murthy v. Collector of Chittor,  6 SCR 666, relied on. O.K. Trivedi and Sons, and Ors. v. State of Gujarat and Ors.,  (Supp) SCC 20; Laxmi Narayan Agarwalla and Ors. v. State of Orissa and Ors., AIR (1983) Orissa 210; Surajdin Laxmanlal v. State of M.P., Nagpur and Ors., AIR (1960) M.P. 129; Dr. Shanti Saroop Sharma and Anr. v. State of Punjab and Ors., AIR (1969) Punjab and Haryana 79; Saurashtra Cement and Chemical Industries Ltd., Ranavav v. Union of India and Anr., AIR (1979) Gujarat 180; Inderjeet Singh Sial and Anr. v. Karam Chand Thapar and Ors.,  6 SCC 166; Ajit Singh v. Union of India and Ors.,  Supp. 4 SCC 224 and Quarry Owners' Association v. State of Bihar and Ors.,  8 SCC 655, referred to. Words and Phrases Permanent Edition (Vol.37A, page 597); Stroud's Judicial Dictionary of Words and Phrases (Sixth Edition, 2000, Vol.3, page 2341); Words and Phrases, Legally Defined (Third Edition, 1990, Vol.4, page 112); Wharton's Law Lexicon (Fourteenth Edition, page 893); Mozley and Whiteley's Law Dictionary (Eleventh Edition, 1993, page 243); Prem's Judicial Dictionary (1992, Vol. 2, page 1458) and Black's Law Dictionary (Seventh Edition, p.1330), referred to. Coal Matters 8.1. The West Bengal Taxation Laws (Amendment) Act, 1992 is intra vires the Constitution. The amendments incorporated by the said Act w.e.f. 1.4.1992 into the provisions of the West Bengal Primary Education Act 1973 and the West Bengal Rural Employment and Production Act 1976 classify the land into three categories: (i) coal-bearing land, (ii) mineral bearing land (other than coal-bearing land) or quarry and (iii) land other than the preceding two categories. These three are well-defined classifications by reference to the user or quality and the nature of product which it is capable of yielding. The cess is levied on the land. The method of quantifying the tax is by reference to the annual value thereof. It is well known that one of the major factors contributing to the value of the land is what it produces or is capable of producing. Merely because the quantum of coal produced and dispatched or the quantum of mineral produced and dispatched from the land is the factor taken into consideration for determining the value of the land, it does not become a tax on coal or minerals. Being a tax on land it is fully covered by Entry 49 in List II. [674-G-H; 675-A-F] 8.2. Assuming the impugned levy of cess to be a tax on mineral rights, it would be covered by Entry 50 in List II. Taxes on mineral rights lie within the legislative competence of the State Legislature "subject to" any limitation imposed by Parliament by law relating to mineral development. Entry 23 in List II speaks of regulation of mines and mineral developments, subject to the provisions of List I with respect to regulation and development under the control of the Union. The Central Legislation has taken over regulation and development of mines and mineral development in public interest. By reference to Entry 50 in List II and Entry 54 in List I, the Central legislation has not cast any limitations on the State Legislature's power to tax mineral rights, or land for the matter of that. Simply because incidence of tax is capable of being passed on to buyers or consumers by the mine owners with an escalating effect on the price of the coal, it cannot be inferred that the tax has an adverse effect on mineral development. The impugned cess is a tax on coal-bearing and mineral-bearing land. It can at the most be construed to be a tax on mineral rights. In either case, the impugned cess is covered by Entries 49 and 50 of List II. [675-B-F] 8.3. Mahanadi Coalfields* was not correctly decided in as much as India Cement Ltd. and Orissa Cement Ltd.** were applied to the levy of a cess to which they did not apply. In Mahanadi Coalfields Ltd. it was not rightly opined that the cess was levied on minerals and mineral rights and not on land. Hence the conclusion reached therein that the State Legislature did not have the legislative competence and that the State legislation trenched upon a field already occupied by Mines and Minerals (Development and Regulation) Act 1957, a Central Legislation, is incorrect. [675-G-H; 676-A] Kesoram Industries Ltd. (Textile Division) v. Coal India Ltd., AIR (1993) Calcutta 78, reversed. *State of Orissa v. Mahanadi Coal Fields Limited.  Suppl. 2 SCC 686, overruled. **India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors.,  Supp. 1 SCC 430 , distinguished. Brick-Earth Matters 9.1. Brick-earth is a minor mineral. The verdict in this judgment with regard to the impugned cess by reference to coal applies to brick-earth as well. The field as to taxation cannot be said to have been covered by Central Legislation, i.e., the 1957 Act, by reference to Entry 54 in List I. [676-F-G] 9.2. Quantification of levy by reference to quantity of brick-earth dispatched is a methodology adopted for the purpose of finding out the quantity of brick-earth removed from the land. It has a definite and direct co-relation with the land. The gist and substance of what the Legislature is taking into account is the brick-earth actually removed. "Dispatched" has the effect of taking into account the brick-earth "removed" and not simply "moved" and left behind. The average quantity of brick-earth utilized in making bricks, whether on the brick field itself or on a place nearby, does involve removal - and consequently, dispatch - of the brick- earth from the place where it was to the place where it is captively consumed in making bricks. The fact that the methodology for working out the royalty payable and the cess payable is the same, does not have any detrimental effect on the constitutional validity of the cess whether it be treated as one on the land - classified by reference to its production, i.e., the brick-earth or as one on mineral rights in brick-earth. In either case it would be covered by Entries 49 or 50 in List II. [676-G-H; 677-A-C] Minor Mineral Matters 10.1. The High Court has rightly held that as a tax the impugned levy of cess is clearly covered by Entry 5 of List II, and it is added, read with Entries 49 and 50 of List II. The High Court has upheld the validity of the U.P. Special Area Development Authorities Act, 1986 by relating it to Entry 5 in List II which is `local government'. Any local government exercising the power of governance over a local area shall have to administer, manage and develop the area lying within its territory which cannot be done without raising funds. [681-C-D; 680-A-B] Ram Dhani Singh v. Collector, Sonbhadra and Ors., AIR (2001) All 5, affirmed. 10.2. The constitutional validity of the enactment as a whole and the rules framed thereunder is not put in issue. What is under challenge is only the levy of cess. There is nothing wrong in the State legislation levying cess by way of tax so as to generate its funds. Although it is termed as a `cess on mineral right', the impact thereof falls on the land delivering the minerals. Thus, the levy of cess also falls within the scope of Entry 49 of List II. Inasmuch as the levy on mineral rights does not contravene any of the limitations imposed by the Parliament by law relating to mineral development, it is also covered by Entry 50 of List II. [681-D-F] 10.3. The levy of the impugned cess can equally be upheld as a fee by reference to Entry 66 read with Entry 5 of List II. The imposition of cess envisaged through the SADA Act and the Rules was a step towards developing the special area wherein mining activities on the land are carried on. The impugned cess can, therefore, be justified as a fee for rendering such services as would improve the infrastructure and general development of the area the benefits whereof would be availed even by the stone crushers. It is not necessary that the services rendered from out of the fee collected should be directly in proportion with the amount of fee collected. It is equally not necessary that the services rendered by the fee collected should remain confined to the persons from whom the fee has been collected. Availability of indirect benefit and a general nexus between the persons bearing the burden of levy of fee and the services rendered out of the fee collected is enough to uphold the validity of the fee charged. [680-E-G; 683-D-E] 10.4. The impugned levy does not have the effect of increasing the royalty. Simply because the royalty is levied by reference to the quantity of the minerals produced and the impugned cess too is quantified by taking into consideration the same quantity of the mineral produced, the latter does not become royalty. The former is the rent of the land on which the mine is situated or the price of the privilege of winning the minerals from the land parted by the Government in favour of the mining lessee. The cess is a levy on mineral rights with impact on the land and quantified by reference to the quantum of minerals produced. The distinction, though fine, yet exists and is perceptible. [683-E-F] Tea Matters 11.1. The impugned levy of cess on tea estates as levied by the West Bengal Taxation Laws (Second Amendment) Act, 1989 is intra vires the Constitution. Levy of the cess has already been upheld in Goodricke Groups Ltd. That case has correctly been decided and the law laid down therein is correct and supported by authority in abundance. India Cement and Orissa Cement were rightly distinguished. The logic and reasoning assigned and conclusions drawn by this Court in Goodricke on all the counts are upheld. [670-G-H; 671-A; 676-B-F] Goodricke Group Ltd and Ors. v. State of West Bengal and Ors., [ 1995] Supp. 1 SCC 707, upheld. India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12; Orissa Cement Ltd. v. State of Orissa and Ors.,  Supp. 1 SCC 430 and Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors.,  3 SCC 211, distinguished . 11.2. Section 2 of the Tea Act, 1953 contains a declaration that it is expedient in the public interest that the Union should take under its control the tea industry. The declaration is in terms of Entry 52 in List I. Union's assumption of control of tea as industry and as being expedient in the public interest, does not amount to vesting the power to tax or levy fee in the Central Government by reference to tea or on tea estates. Section 25 of the Tea Act empowers the Central Government to levy and collect excise duty on tea produces, which on collection shall be credited to the Consolidated Fund of India. There is no other provision in the Tea Act empowering levy of any tax or fee on tea or tea bearing land. The impugned levy is of cesses on tea estates, i.e. the land forming part of tea estates as defined in the impugned Act. The impugned cess is a tax on tea-bearing land, a well-defined classification and is covered by Entry 49 in List II. Simply because the method for quantifying the tax is by reference to the yield of the land determinable by taking into account the quantum of tea produced and dispatched, it does not become a cess on tea or a tax on production of tea or a tax on income of land. [676-C-E] Per Sinha, J. (Dissenting): 1.1. The federalism under the Indian context points out to the supremacy of the Parliament, and the legislative entries contained in different Lists of the Seventh Schedule to the Constitution of India must be construed accordingly. Fields of legislation carved out under Chapter I of Part XI of the Constitution clearly spell out that in more important matters the Parliament will have greater control thereover. [805-B; 712-A] Govt. of A.P. v. Medwin Educational Society and Ors., JT (2003) 8 SC 567; State of Andhra Pradesh v. K. Purushotham Reddy, JT (2003) 3 SC 15 State of West Bengal v. Union of India, AIR (1963) SC 1241, Automobile Transport v. State of Rajasthan, AIR (1962) SC 1406, referred to. Ref. Under Article 143, AIR (1965) SC 745 1TC Ltd. v. Agricultural Produce Market Committee and Ors.,  9 SCC 232 and Gov.-Gen. in Council v. Madras, (1945) FCR 179, referred to. Florida Lime and Avocado Growers v. Charles Paul, 373 US 132; 10 Law. Ed. 2d 248; The State of South Australia and Another v. The Commonwealth and Anr., (1942) 65 C.L.R. 373, referred to. Dicey, Law of the Constitution, 10th Ed. P. 164, referred to. 1.2. The interpretation of the legislation will depend upon the legislative entries to which it relates and intent and purport of the makers of the Constitution, and no principle of interpretation can be introduced to the effect that the Court should lean towards a State. [805- B-C] 1.3. Tilt in favour of the Centre is required to be construed having regard to the importance of the subject matter of Parliamentary legislation and the impact and practical inroad effect of the State Laws entrenching upon the legislative field occupied by the Parliament. Though the State Legislature has exclusive power with respect to the subjects specified in List II of the Seventh Schedule to the Constitution, some of the Entries in List II specifically make the States power `subject to' any law made by Parliament under the specified Entry in List I. Union and State Relations under the Indian Constitution by M.C. Setalvad - referred to. [712-B, G-H] 2.1. Article 248 of the Constitution confers power upon the Parliament to make any law with respect to any matter not enumerated in the Concurrent List or the State List. Notwithstanding the fact that great care with which the various entries in the three lists have been framed, on some rare occasions it may be found that one or the other field is not covered by these entries. The makers of our Constitution have, in such a case, taken care by conferring power to legislate on such residuary subjects upon the Union Parliament, including taxation, by reason of Article 248 of the Constitution. Once it is found that the Parliament has exercised its superior power in terms of Article 248, question of levy of any tax on the product by a State would not arise. [714-F, 715-C-D; 729-F-G] Naga People's Movement of Human Rights v. Union of India, AIR (1998) SC 431 and Attorney General for India v. Amratlal Prajivandas,  5 SCC 54, relied on. S.R. Choudhuri v. State of Punjab,  7 SCC 126; Union of India v. Shri Harbhajan Singh Dhillon,  2 SCC 779; Synthetic and Chemicals Ltd. v. State of U.P., AIR (1990) SC 1927 and State of A.P. v. K. Purushotham Reddy and Ors., JT (2003) 3 SC 15. 2.2. Once it is found that the State lacks legislative competence for imposition of tax on any of the subject, indisputably the Parliament alone will have legislative competence therefor. [715-F] Synthetics and Chemicals v. State of U.P.,  SCC 109, referred to. M.P. Sundararamier and Co. v. State of Andhra Pradesh and Anr.,  SCR 1422, distinguished. 2.3. There is nothing in the Constitution to debar the Parliament to legislate under Entry 54 read with Entry 97 of List I of the Seventh Schedule to the Constitution. However, recourse to the residuary power must be taken as a last resort i.e. only when all the entries in the three lists are absolutely exhausted, that is to say, if the subject matter is beyond comprehension of the entries contained in the aforementioned three lists. It is trite that when two interpretations are possible resort to the residuary power may not be taken recourse to. [721-D-E] Union of India v. Shri Harbhajan Singh Dhillon,  2 SCC 779 and Union of India and Anr. v. Delhi High Court Bar Assn. and Ors.,  4 SCC 275, relied on. His Holiness Kesavananda Bharati Sripadagalbvaru etc. v. State of Kerala and Anr.,  4 SCC 225, referred to. 3.1. Article 253 of the Constitution, which starts with a non-obstante clause and operates notwithstanding anything contained in Articles 245 and 246, provides that while giving effect to an international treaty, the Parliament assumes the role of the State Legislature and once the same is done the power of the State is denuded.India is a signatory to various international treaties and covenants and being a party to WTO and GATT, it is obligated to fulfil its trans-national obligations. If for the purpose of giving effect to the international treaties, the Parliament, in exercise of its power under Article 253 of the Constitution, takes over the legislative field occupied by List II of the Seventh Schedule to the Constitution, no exception thereto can be taken. [715-A-B; 720-A] Kesavananda Bharati Sripadagalbvaru etc. v. State of Kerala and Anr., [I973] 4 SCC 225; Vishaka and Ors. v. State of Rajasthan and Ors.,  6 SCC 241 and Maganbhai Ishwarbhai Patel v. Union of India and Anr., AIR (1969) SC 783, relied on. Kapila Hingorani v. State of Bihar,  6 SCC 1; Islamic Academy of Edn. and Anr. v. State of Karanataka and Ors. etc.,  6 SCC 325; Liverpool and London S.P. Assn. Ltd v. M. V. Sea Success I and Anr., (2003) 10 SCALE 1; State of Punjab and Anr. v. Modern Breweries and Anr., (2003) 10 SCALE 202 and Reference by President of India, AIR (1960) SC 845, referred to. 3.2. Tea and coal being subjects of great importance, the Parliament has taken over the complete control of the entire field in respect thereof and other minerals in terms of the Tea Act, 1953 and Mines and Minerals (Development and Regulations) Act, 1957 respectively. The Parliament by enacting Sections 25 both in the 1957 Act and the 1953 Act reserved the authority unto itself to impose any other tax falling in List I. The Parliament may also impose a tax which otherwise would not fall in any one of the taxing entries but may fall under the residuary entry being Entry 97 in List I. [805-C-D; 735-F-G] 3.3. Power to regulate the trade and for that purpose imposition of tax is well-known in India. Mines and Minerals (Development and Regulation) Act, 1957 is a regulatory statute. Imposition of tax by way of regulatory measures is permissible while enacting a regulatory statute. [739-B-C; 740-A] Synthetics and Chemicals Ltd. and Ors. v. State of U.P. and Ors.,  I SCC 109 and State of Punjab and Anr. v. M/s. Devans Modern Brewaries Ltd and Anr., (2003) 10 SCALE 202, relied on. ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Limited and Ors., JT (2003) 10 SC 300 and South Eastern Coalfields Limited v. State of M.P. and Ors., (2003) 7 Supreme 539, referred to. 3.4. The importance as regards fixation of price of coal and tea has a direct bearing with the regulation of mines and minerals development as also the tea industry. The Central Government has also reduced the custom duty on coal taking into the aforementioned consideration in view, as would appear from the Notification dated 8.1.2004 issued under the provisions of the Customs Act As regards tea, under Section 30 of the Tea Act, the Central Government has the power to fix the market price. Fixation of a uniform market price by the Central Government would not be possible if it is held that a different rate of cess can be levied by different States, which will have a direct impact on the sale price thereof. [731-A-B; 795-A-B; 799-E-F] State of M.P. v. Mahalaxmi Fabric Mills Ltd., (19951 Supp. 1 SCC 642 and Saurashtra Cement and Chemical Industries Ltd. v. Union of India,  1 SCC 91, relied on. The King v. Barger., (1908) 6 CLR 41; Attorney-General for Alberta v. Attorney General for Canada., (1939) AC at pp. 130-132 and The State of South Australia and Anr. v. The Commonwealth and Anr.,  65 C.L.R. 373, referred to. 3.5. Having regard to the purport and object of the 1953 Act and the 1957 Act and the declarations contained in Section 2 of the two Acts, as contemplated in Entries 52 and 54 of List 1 of the Seventh Schedule, the State must be held to be denuded of its power to levy any tax on coal or tea, particularly, having regard to the provisions of Sections 10, 13, 15, 25 and 30 of the Tea Act and Sections 9, 9A, 13, 18 and 25 of the 1957 Act. Field of taxation on tea and mineral is specifically covered by Section 25 of the two Acts. Even if the doctrine of pith and substance is applied, it may not be possible to hold that the State legislature has only incidentally encroached upon the legislative field occupied by the Parliament. [805-D-H] State of U.P. and Ors. v. Vam Organic Chemicals Ltd. and Ors., AIR (2003) SC 4650 and State of Bihar and Ors. v. Industrial Corporation Pvt. Ltd. and Ors., (2003) 9 SCALE 169, relied on. Kerala State electricity Board v. Indian Aluminium Co.,  1 SCC 468; Harakchand Ratanchand Banthia and Ors. v. Union of India and Ors.,  2 SCC 166; D.C. and G.M. Co Ltd. v. Union of India, AIR (1983) SC 937; Ishwari Khetan Sugar Mills (P) Ltd. v. State of U.P., AIR (1980) SC 1955; Kartar Singh v. State of Punjab,  3 SCC 569; Ch. Tika Ramji and Ors. v. The State of Uttar Pradesh and Ors.,  SCR 393; District Mining Officer and Ors. v. Tata Iron and Steel Co. and Anr.,  7 SCC 358 and ITC Ltd. v. Agricultural Produce Market Committee and Ors.,  9 SCC 232, referred to. The Hingir-Rampur Coal Co. Ltd. v. Stale of Orissa,  2 SCR 537, distinguished. P. Kannadasan and Ors. v. State of T.N. and Ors.,  5 SCC 670, referred to as already overruled. 3.6. Once it is found that the entire field of mines and minerals as also tea, including the power to impose any tax is covered by the 1957 and 1953 Acts, the impugned tax by way of levy of cess on coal and tea must be held to be ultra vires. [738-G-H] Krishi Utpadan Mandi Samiti and Ors. v. Pitibhit Pantnagar Beej Ltd. and Anr., (2003) 10 SCALE 432, relied on. State of Rajasthan v. Vatan Medical and General Store,  4 SCC 642, held inapplicable. 4.1. Tax on lands and buildings in terms of Entry 49 of List II of the Seventh Schedule of the Constitution can be levied on land as a unit and not otherwise. Applying the test laid down in several decisions of this Court, it is opined that the impugned cess is not a tax directly levied upon land as a unit by reason of the general ownership of the lands and buildings. [806-E-F; 749-C-D] India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12; State of Orissa v. Mahanadi Coalfields Ltd.,  Supp 2 SCC 686; Orissa Cement Ltd. v. State of Orissa and Ors.,  Suppl. 1 SCC 430; State of Bihar and Ors. v. Indian Aluminium Company and Ors.,  8 SCC 360; Central Coalfields Ltd. v. The State of Bihar., AIR (1991) Patna 27 and Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi and Ors.,  7 SCC 151, relied on. Goodricke Group Ltd. v. State of W.B.,  Supp. 1 SCC 707, disinguished. 4.2. An impost on lands and buildings must be a tax directly imposed on lands and buildings and must have a definite relation thereto. The impugned levies, having regard to nature of impost cannot be said to be a tax on land as : (a) the impost is not directly on land; and (b) the levy does not concern itself with any aspects of land i.e. extent of land, nature, character, quality or location thereof. In the case of mineral, it is already embedded in the earth and there is no question of any yield in the sense that there would be an annual yield or annual income; in case of tea, it is also not concerned with the productive qualities of the land; and (c) the levy is not based on the land as a unit. [745-A; 746-F-H] Sudhir Chandra Nawn v. Wealth Tax Officer.,  1 SCR 108, relied on. 4.3. Entry 49 of List II, however, should be read in such a manner so that the surface land must have a direct nexus with the sub-soil right which is an inchoate right. Indisputably, sub-soil right would include mineral right. [742-E-F] 4.4. Levy of tax on coal bearing lands and mineral bearing lands where mining operations are being carried out through the process of incline or digging pits is illegal, inasmuch as the underground mining right would be larger in area than the surface right and, thus, it is not possible to uphold the validity of such statute with reference to the extent of the surface right as mineral is being extracted from a larger underground area. Different rights may belong to different persons over the same surface land and similarly different rights may belong to different persons in respect of or over underground rights. The impugned provisions do not specify who would be liable to pay in relation to different rights and who would be considered to be the owner of the land and to what extent. The impugned statutes, having not made any provision of different method of levy, are ultra vires. [806-A-C] Amrendra Pratap Singh v. Tej Bahadur Prajapati and Ors., JT (2003) 9 SC 201 and State of A.P. etc. v. National Thermal Power Corpn. Ltd. and Ors. etc.,  5 SCC 203, referred to. As mineral bearing lands cannot be treated as an independent unit in respect of which tax can be invoked, the impugned Acts must be held to be unconstitutional. Besides, minerals extracted and brought to the surface would be treated as personal property and, thus, cannot be the subject- matter of tax on land. [806-E; 781-A] Palmer v. Corwith 3 Chand (Wis) 297, referred to. Cooley Taxation Vol.2 Fourth Edition, P.558 and 564, referred to. 4.5. The definition of land and immovable property as contained in the Cess Act, 1880 play an important role insofar as in terms of Section 78 of the West Bengal Primary Education Act and Section 4 of the West Bengal Rural Employment and Production Act, 1976, cess would be levied on all immovable properties on which road and public work cesses are assessed. Section 5 of the Cess Act, 1880 provides all immovable properties would be liable to road cess and public works cess. The immovable property which is, therefore, not liable to a road cess and public works cess, a fortiori, cannot be subjected to education cess or rural employment cess. [775-C-D] Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors.,  3 SCC 211, relied on. 4.6. In view of the definitions of `land' and `immovable property' contained in the Bengal Cess Act, 1880, as no road cess or public works cess can be imposed on standing crops or any kind of structures, houses, shops or other buildings which would include factories and workshops for processing tea, no levy by way of cess can be imposed by reason of the impugned Acts either on the mining leasehold or the tea estate containing standing crops as also houses and buildings. [806-C-H; 807-A] Krishna Mohan (P) Ltd. v. Municipal Corporation of Delhi and Ors.,  7 SCC 151, referred to. The Anant Mills Co. Ltd. etc. etc. v. State of Gujarat, AIR (1975) SC 1234; Assistant Commissioner of Urban Land Tax Madras and Ors. etc. v. Buckingham and Carnatic Co. Ltd. etc., AIR (1970) SC 169 and D.G. Gose and Co. v. State of Kerala,  2 SCC 410, distinguished. 4.7. For the purposes of the Cess Act `owner' would, with reference to a tea estate, the possession of which has been transferred by lease or mortgage or otherwise, mean the transferee so long as his right to possession subsists. It will, therefore, appear that the cess is levied not on land as a unit by reason of general ownership of land which may belong to a legal owner but the cess may be levied even upon a person who is in possession of a tea estate by lease or mortgage or even by a licence or permission. [774-E-F] 4.8. The legislative competence of the State in relation to agricultural land as also imposition of tax on land and buildings as contained in Entry 49 of List II must be considered having regard to Entry 52 or Entry 54 of List I and Entry 33 of List III. The legislative competence of the State, having regard to Articles 246, 248 and 253 of the Constitution, it is trite, would be subject to the legislative competence of the Parliament [746-D-E] Mahabir Prasad Jalan and Another v. The State of Bihar and Ors., AIR (1991) Patna 40; State of Karnataka v. Vishwabarathi House Building Coop. Society and Ors., JT (2003) 1 SC 344; Shri Krishna Gyanodya Sugar Ltd. v. State of Bihar., [20031 4 SCC 378; Bheemagari Bhaskar and Ors. v. Revenue Divisional Officer, Bhongir and Ors., (2002) 1 ALT 159; Jagadish Chandra v. Kanai Lal, AIR (1951) Patna 525 and Kusum Kamini v. Jagdish Chandra, AIR (1941) Patna 13 and Purnendu Narain Singh v. Narendra Nath, AIR (1943) Patna 31, referred to. D.G. Gose and Co. v. State of Kerala,  2 SCC 410; State of Rajasthan v. Vatan Medical and General Store,  4 SCC 642; Ralla Ram v. Province of East Punjab, (1948) FCR 207 and New Manek Chowk Spinning and Weaving Mills Co. Ltd. v. Municipal Corporation of the City of Allahabad,  2 SCR 679, distinguished. 4.9. Once strict construction of a taxing statute is applied it is possible to hold that the exercise of the State's jurisdiction is really an act of fraud on the Constitution inasmuch while imposing tax on land it seeks to levy tax on mines and minerals or tea in relation whereto it has even no regulatory power. [740-D-E] 4.10. Keeping in view the doctrine of public trust, while imposing a tax on land and in particular, mineral bearing land, the legislature must exercise its power consciously. It, while imposing tax on one subject cannot indirectly levy an impost on other subject. Entry 50 of List II authorizes the State to tax mineral rights which has no correlation with the power to tax land. If both the entries are resorted simultaneously, the statutes bear out the same. From the impugned Acts, it cannot be inferred that the State intended to levy tax both on land and mineral right. [750-G-H; 751-C-E] M.C. Mehta v. Kamal Nath,  1 SCC 388; Perumatty Gram Panchayat Perumatty Vandithavalam P.O., Chettur Taluk represented by its President Sri A. Krishnan v. State of Kerala and Ors., W.P. (C) No. 342927 2003 (G) decided by Kerala High Court, referred to. 5.1. Measure of a tax although may not be determinative of the nature thereof, the same will play an important role in determining the character thereof particularly keeping in view the purpose and object the Parliamentary Acts seek to achieve. In determining the legislative competence, the taxing event also plays an important role. [807-A-B] State of Orissa v. Mahanadi Coalfields Ltd.,  Supp. 2 SCC 686; Unit Trust of India and Am: v. P.K. Unny and Ors., (2001) 249 ITR 612; State of Orissa v. Mahanadi Coalfields Ltd.  Supp. 2 SCC 686; Unit Trust of India and Anr. v. P.K. Unny and Ors., (2001) 249 ITR 612; Hoechst Pharmaceuticals Ltd. v. State of Bihar and Ors.,  4 SCC 45; S.C. Nawn v. W.T.O., Calcutta,  SCR 108 and Bhagwan Das Jain v. Union of India,  2 SCR 808 816, referred to. The London County Council and Ors. v. The Attorney General, 1901 Law Report, Appeal Cases 26; Solomon v. New South Wales Sports Club Ltd., 19 Co. L. Rep. 698 and Hylton, Plaintiff in Error v. The United States, US SCR 1 Law. Ed. Dallas 169, referred to. 5.2. Measure of tax is an indicia for determining the character and nature of tax. Subject of a tax and the measure of a tax have some relationship to determine the question as regards character of legislation. For the purpose of measure of tax only permissible methods of valuation can'be adopted. [785-A; 786-D-E] A distinction must be borne in mind as regards "use of land" and "activities on land". Use of land as a `fair' or `market' is permissible in terms of Entry 26 of List II. Imposition of tax, however, would be impermissible on `activity on land' as it does not come within the purview of any of the entries contained in List II. A tax imposed on activities on land confined to extraction of mineral is clearly beyond the power of the State Legislature. [726-B-C; 798-B] D.G. Gose and Co. v. State of Kerala.,  2 SCC 410 and Ralla Ram v. Province of East Punjab, (1948) FCR 207, referred to. 5.3. The impugned levy is entirely dependent upon the production of mineral extracted or production of tea leaves which vary from mine to mine or garden to garden or location to location and from year to year. The impugned statutes having not provided for computing the annual value of land in such different situations and, thus, the tax on land being not measurable as an independent unit of the land must be held to be not workable. [747-A, G-H] 5.4. The impugned levies are taxes on coal or other minerals raised in the mining areas and not a tax on land as contemplated under Entry 49 of List II. Irrespective of imposition of tax on the land as a unit, the impugned levies have only one consideration, i.e., production of coal which would, thus fall outside the purview of Entry 49 of List II. [748-E-F] 5.5. Despite India Cement and Orissa Cement* as also various decisions of this Court, tax has not been imposed taking the land as a unit. An endeavour has been made to levy cess only by changing the measure thereof. The State has not taken recourse to measure for removing the deficiencies in the Acts pointed out by this Court. [803-F-G] "India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors.,  Supp. 1 SCC 430, relied on. The Workmen of Mis. Firestone Tyre and Rubber Co. of India P. Ltd. and Ors. v. The Management and Ors., AIR (1973) SC 1227 and Dharam Dutt and Ors. v. Union of India and Ors., (2003) 10 SCALE 141, referred to. 5.6. A statute will not be valid unless the defects pointed out are removed. Such removal of the defects must be done keeping in view the principle of `legislative competence'. Even the Parliament could not validate an Act which was enacted without proper legislative competence. As the measure of tax levied led to the declaration of the law invalid being in pith and substance to be beyond the competence of the State Legislature by reason of the impugned Acts, the levy cannot be said to have been revalidated. They were required to be reenacted but such reenactment must also be in tune with any or other entries made in List II. [795-D-E] 6.1. The principles of reading a judgment are well-known. What is binding in terms of Article 141 of the Constitution of India is the ratio of the judgment. The ratio decidendi of a judgment is the reason assigned in support of the conclusion. If the reasons contained in a judgment do not appeal to a subsequent Bench, the matter may be referred to a larger Bench but so long the same is not done, the ratio can neither be watered down nor brushed aside. India Cement, Orissa Cement and other judgments of coordinate benches are binding. Correctness or otherwise of the said judgments has not been questioned. It would, therefore, not be proper for this Court to read something in the judgment which does not appear therefrom or to exclude from consideration reasonings on the basis whereof the conclusions of the judgment had been reached. [741-B-D] 6.2. This Court while interpreting binding judgments cannot in effect and substance overrule the same or read down the principle of law enunciated therein. Judicial discipline mandates that binding precedents be followed. Comments made by an author cannot be the basis for ignoring binding decisions of larger Benches. [805-A; 741-A] 7.1. The State being owner of the minerals and grant of mineral right being controlled by the Parliamentary statute, namely, the Mines and Minerals (Development and Regulation) Act, 1957, which is a comprehensive Act and a self-contained Code providing for regulation of mines and mineral development including the power to levy tax, the State is denuded of its power to impose any tax on mineral right in terms of Entry 50 of List II of the Seventh Schedule to the Constitution. The terms and conditions including the right to receive royalty, the mode, manner and extent thereof; the limitations in relation thereto as well as enhancement in the quantum thereof are fixed by the statutory provisions, and, thus, the State would be denuded of its power to impose any further levy, impost or tax thereupon. [805-F-G; 703-C; 752-B-F] The Hingir-Rampur Coal Co. Ltd. v. State of Orissa.,  2 SCR 537; State of Orissa v. M.A. Tulloch and Co.,  4 SCR 461; India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors.,  Supp. 1 SCC 430, relied on. State of M.P. v. Mahalaxmi Fabric Mills Ltd.,  Supp. 1 SCC 642 and Laxminarayan Mining Co. v. Taluk Dev Board, AIR (1972) MYS 299, referred to. Bank of New South Wales v. Common Wealth, 76 CLR 1, referred to. Black's Law Dictionary, referred to. 7.2. Entry 50 of List II is unique in the sense that it is the only Entry in all the Entries in the three Lists (List I, II and III) (apart from Entry 37) in the Seventh Schedule where the taxing power of State Legislature has been subjected to "any limitation imposed by Parliament by law relating to mineral development". Entry 50 of List II is subject to law enacted by Parliament in terms of Entry 54 List I. Grant of mineral rights, undoubtedly, would come within the purview of regulation of mines and minerals development in terms of the 1957 Act When a mining lease is granted, consideration for parting with the mineral right would be a part of the terms and conditions thereof. The right to receive royalty is also a mineral right. The power to tax on mineral rights, therefore, would essentially be different from a right to tax on mineral actually extracted. State indisputably receives royalty as a consideration for grant of mining lease in terms of the 1957 Act As by reason of this Parliamentary legislation in terms of Entry 54 of List I, States have been compensated for parting with the mineral rights, by necessary implication, States' power to levy tax on such rights would also stand denuded. [752-B, E-F; 753-B; 762-D-E] 7-3. Once it is found that the entire field of legislation is occupied by the Parliament in view of the 1957 Act and the declarations contained therein, evidently Entry 50 of List II would not be attracted. Under the three impugned Acts, taxes have been levied on minerals and not on mineral rights and, thus, the State Legislations cannot be supported in terms of Entry 50 of List II. The charging section is directly referable to production of coal The claim, thus, would amount to a colourable exercise of power. [755-F; 760-E-G] Bharat Coking Coal v. State of Bihar,  4 SCC 557; K.C.G. Narayan Deo v. State of Orissa,  SCR 1 and Central Coalfields Ltd. and Ors. v. The State of Bihar and Ors., AIR (1991) Patna 27, referred to. 7.4. The levy even otherwise cannot be said to be referable to Entry 50 since - (a) it is a levy only on minerals extracted or produced from the coal mines; and (b) it is on quantity of minerals produced from the mining lease. [760-F] 7.5. The taxing power of the State in terms of Entry 50, List II of the Seventh Schedule must also be viewed from the context that all the mineral rights as also the right to receive royalty by reason of the West Bengal Estates Acquisition Act, 1953 and U.P. Zamindari Abolition Act vested in the State. The State thus can not impose a tax on its own right. [764-B, F] 8.1. Royalty stricto sensu and in common parlance may not be a tax. But having regard to the definition of taxation contained in Clause (28) of Article 366 of the Constitution, there may not be any dispute that royalty being a statutory impost would come within the purview thereof. [765-F-G; 766-A] Quarry Owners' Association v. State of Bihar,  8 SCC 655, referred to. 8.2. The Second Schedule appended to the 1957 Act states that the royalty would be payable at the rates specified on each tonne of coal. It is, therefore, a levy on the extraction or produce by weight. When the cess is levied on the royalty, the levy, which remains on extraction by weight, is enhanced or incremented. It is, thus, an incremental addition to the royalty. Its nature and character is the same as that of royalty. The value of the coal or for that matter of green tea leaves has a direct nexus with the weight thereof. Thus, there may not be any significant distinction in principle between the levy in India Cement's case and levy in the present one. [766-C-E] India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12, relied on. Inderjeet Singh Sial and Another v. Karam Chand Thapar and Ors.,  6 SCC 166; Ajit Singh v. Union of India and Ors.,  Supp. 4 SCC 224; State of Tamil Nadu v. Hind Stone,  2 SCC 205 and O.K. Trivedi and Sons and Ors. v. State of Gujarat and Ors.,  Supp. SCC 20, referred to. Coal Matters 9.1. Coal was the only mineral which was subjected to nationalisaion in terms of Coking Coal Mines (Nationalisation) Act, 1972 and Coal Mines (Nationalisation) Act, 1973. Even coal mining leases granted to the lessees stood terminated by reason of s.4A of Mines and Minerals (Development and Regulation) Act, 1957 in the year 1976. Fixation of price of coal by the Central Government, regard being had to quality thereof, had all along been subjected to statutory orders. Requirement of maintenance of price of coal on an all India basis had all along been considered to be imperative in the economic and industrial development of the country. [684-G-H; 685-B-C] 9.2. Under the Nationalization Acts, except some collieries which belong to the companies engaged in the business of manufacture of steel, all other mines for all intent and purport belong to the public sector companies which are subsidiaries of Coal India Limited. It will be a matter of great concern if the price of coal becomes higher in the State of West Bengal than in other States. [803-E-F] 93. The definition of mineral is wide a Coal washing plants or coke-oven plants are collieries or coal mines and `washed coal', `slurry', sludges and cokes of different grades would also come within the definition of `coal'. Thus, the owners of the industries like coke-oven plants or coal washeries which may be set-up either within the precincts of a coal mine or outside the same, would be subject to payment of tax on their products although carrying out such operations is controlled and governed by Parliamentary regulatory statutes. Having regard to the definition of a mine vis-a-vis that of "immovable property" and "land" contained in Cess Act, 1880, reconciliation of imposition of tax on `coal' and `tea' is not possible. [795-F-H] 9.4. Coal is also an essential commodity in terms of Essential Commodities Act, 1955, and its distribution, marketing as well as price is regulated and controlled by Colliery Control Order 1945 made under the Essential Commodities Act. As the price of coal is to be determined by the Central Government or the Coal Controller under the Colliery Control Order 1945 which was continued under Essential Commodities Act, 1955 and thus being covered by Entry 33 List III of the Seventh Schedule to the Constitution, no tax on coal can be imposed which will have a direct nexus on the value thereof. The impugned Acts must be construed having regard to the other statutes operating in the field. [795-B-D] BRICK-EARTH MATTERS 10.1. In view of the fact that royalty on minor mineral is required to be paid on dispatches, any imposition of tax at the point of dispatch must be held to be bad in law. Despatches of brick-earth from the Raiyati field for manufacture of brick having regard to the process of brick manufacturing would be clearly ultra vires as what is being dispatched is not brick-earth but bricks manufactured on the raiyati lands. Bricks so manufactured cannot be the subject matter of land tax. A tax imposed on the finished product would be excise duty. [768-E-F] Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors.,  3 SCC 211, relied on. India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12, referred to. 10.2. Once the quantification of tax is made by reference to quantity of brick-earth or brick dispatched, measure of tax would be based on total value of the mineral dispatched or the material dispatched. The measure of cess on brick-earth on the dispatches of bricks which is a finished product would not be on dispatches of minerals but on the materials produced from minor mineral and, thus, must be held to be bad in law being beyond the purview of Entry 49 of List II of the Seventh Schedule to the Constitution. Brick-earth and other minor minerals also being subject to Parliamentary control and regulation in terms of the 1957 Act, the State is denuded of its power to impose any tax thereupon or a product therefrom. [768-G; 769- D-E] 10.3. Furthermore, the very fact that the methodology of royalty or cess is the same is also a relevant factor for the purpose of ascertaining the nature of tax. Tax is, thus, being imposed on the activities on the land and not on the land itself. [769-C] MINOR MINERAL MATTERS: 11.1. Section 3 of the U.P. Special Area Development Authorities Act, 1986 provides for imposition of cess on mineral rights. Such a cess has been imposed subject to limitations imposed by Parliament by law relating to mineral development. The SADA Act refers to mineral development which indisputably is the subject matter of the 1957 Act Once the 19S7 Act has been made, the power of the State to grant lease on the terms and conditions which being provided under the statutes, the State, over and above the amount by way of royalty, surface rent, dead rent, fees etc., cannot realize any other sum. Such an impost would directly come in the way of mineral development. [769-E-G; 770-E] The Hingir-Rampur Coal Co. Ltd. v. State of Orissa.,  2 SCR 537; India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.,  1 SCC 12 and Central Coalfields Ltd. v. the State of Bihar, AIR (1991) Patna 27, relied on Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr.  1 SCC 125, overruled. Jindal Stripe Ltd. And Another v. State of Haryana and Ors.,  8 SCC 60; Bhagatram Rajeev Kumar v. CST,  Supp 1 SCC 673 and State of Bihar v. Bihar Chamber of Commerce,  9 SCC 136, referred to. 11.2. In terms of Entry 5 of the State List, the State cannot be held to have the legislative competence to levy tax on major mineral or minor mineral, as the case may be, as the field is covered by the 1957 Act and the rules framed thereunder and, thus, it cannot delegate the said power in favor of the statutory authority. [770-B-C] 113. A local authority has no right over the mineral or the mineral right The power to impose tax on mineral right or mine and mineral cannot be bestowed by the State upon a local authority by delegation of power or otherwise. The said power per se does not fall within the purview of Entry 5. The statutory authorities having regard to the provisions contained in Entry 5 may be delegated with the power to impose tax on land and buildings etc. which would have a direct nexus for which such authority has been constituted but not on `mineral right' which is vested in the State. Besides, even the State is denuded of its power to impose any tax on mineral right or mines and minerals having regard to the provisions of the 1957 Act. [770-F-H; 771-A-B] 11.4. Conceptually fee and tax stand on different footings; whereas the element of tax is based on the principle of compulsory exaction, the concept of fee relates to the principle of quid pro quo. No material having been brought on record that any services invoking the principles of quid pro quo are rendered to the owners of the mine, the impost cannot also be upheld on the ground that the same is a fee within the meaning of Entry 66, List II of the Seventh Schedule to the Constitution. (771-D; 772-C-D] 11.5. Keeping in view the decisions of this Court, the SADA Act cannot be held to have been validly enacted in terms of Entry 50, List II. Once levy on mineral right contravenes the limits imposed by the Parliament, the question of upholding its validity in terms of Entry 50 or for that matter in terms of Entry 49, would not arise. The cess levied under SADA Act will have a direct effect on royalty and ultimately the value of the mineral. Even otherwise, in terms of the provisions of Zamindari Abolition Act, the mineral right has vested in the State. Mineral right, therefore, cannot be subject matter of taxation as the State cannot impose a tax on itself. [771-F-H; 769-F-G] Hingir-Rampur Coal Co. Ltd. v. State of Orissa.,  2 SCR 537 and Central Coalfields Ltd. v. The Slate of Bihar, AIR 1991 Patna 27, relied on. Tea Matters: 12.1. Sections 10 and 30 of the Tea Act clearly show that not only the production of tea by way of manufacture in a factory but also cultivation thereof is under the Union control. The fields of legislation relating to agriculture and imposition of tax on land, which belong to the State legislature, have been taken away by Entry 52 List I of the Seventh Schedule to the Constitution read with Article 253 thereof. [773-B-C] Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors.,  3 SCC 211, relied on. 12.2. Tea industry is not only a controlled industry but also a declared one, and the Tea Act, having been enacted in terms of Entries 10 and 14 of List I as also Article 253, the State's power to make any law dealing with tea including levy of any tax on any types of tea which would include green tea leaves would completely be denuded, as a tax either in terms of Entries 14, 18 or 49 of List II would affect the said commodity. The expression `tea' should be given a broad meaning and Entry 52 of List I of the Seventh Schedule to the Constitution should be interpreted in relation to tea having regard to the purport and object it seeks to achieve. The definition of tea is "for the purposes of the Act" which would mean for all the purposes of the Act. [807-B-C; 773-E-F] Maganhhai Ishwarbhai Patel v. Union of India and Anr., AIR (1969) SC 783; State of Bihar v. Bihar Chamber of Commerce,  9 SCC 136 and H.L. Sud, Income Tax Officer, Companies Circle 1(1), Bombay v. Tata Engineering and Locomotive Co. Ltd., AIR 1969 SC 319, relied on. M.K. Kochu Devassy v. State of Kerala etc.,  2 SCC 117, referred to. 12.3. In the instant case, tax has been imposed not on the tea estate as a unit but on the activities on land inasmuch as growing of tea would be such activity which having regard to the provisions of the Tea Act squarely falls within the purview of Entry 52, List I. imposition of cess calculated on value of coal, tea etc. is beyond the legislative competence of the State. [796-C-D; 798-A] 12.4. If a tea estate is taken to be a unit and green tea leaves are taken as the measure of tax on land comprising the tea estate, the levy of cess can never be uniform and will have no nexus with the land as the land used for factory, workshop and the houses for persons employed in the tea estate have no contribution to the production of tea leaves which have nexus only with the land where tea plants are grown which produce green tea leaves. Apart from this, in a tea estate, there are fallow land, nursery and other areas apart from the factory, workshop, and house where cultivation of tea bushes or plant are not possible. By use of the so-called measure of production of tea leaves, such lands would remain outside the levy of cess. Nexus between the levy and the measure of the levy is lost in the present case. The impugned levy is a tax only on production of tea leaves and hence beyond the competence of the State. [785-H; 786-A-B; 787-A-B] District Council of the Jowai Autonomous Distt. v. Dwet Singh Rymbi,  4 SCC 38, referred to. 12.5. Measure of tax by way of levy of cess must also have a direct nexus with the point of taxation. In the instant case, tax is levied on green tea leaves which is produced out of an activity on land and which has no bearing with the tax on land as a unit Thus, the point at which such tax is levied may also provide for a relevant factor for the purpose of judging the legislative competence of the State. [788-E-F] Diamond Sugar Mills Ltd. and Anr. v. The State of Uttar Pradesh and Anr..  3 SCR 242, relied on. Goodyear India Ltd. v. State of Haryana, AIR (1990) SC 781 (1990| 2 SCC 71, referred to. 12.6. In "Goodricke Group" the Court assumed that `green tea leaves' was not marketable and proceeded on the basis that `green tea leaves' has no nexus with the control over production of tea. If it is held that `green tea leaves' is a raw material for production of tea or use thereof is necessary for processing it, the same would be a marketable commodity. [776-A] As `green tea leaves' is marketable, the decision in Goodricke group having mainly been rendered on the premise that `green tea leaves' was not marketable must be held to have passed sub-silentio and, thus, does not lay down correct legal position. [806-F-G] Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors.,  Supp. 1 SCC 707, overruled. Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr.,  3 SCR 77, referred to. CIVIL APPELLATE JURISDICTION : Civil Appeal Nos, 1532-1533 of 1993. From the Judgment and Order dated 25.11.92 of the Calcutta High Court in A.No. Nil of 1992 Arising out of Matter No. 1224/91 and A.No, Nil of 1992. WITH C.A. Nos. 3518-3519, 5149-54/92, 2350/93, 7614/94, 298, 299, 297/ 2004, W.P. (C) Nos. 262, 515, 641, 642/97, 347, 360/99.50, 553/2000, 207, 288, 389/2001, 81/2003, 247, 412/95, C.A. Nos. 5027, 6643-6650, 6894/ 2000, 1077 of 2001.
Constitution of India, 1950: Articles 245, 246, 248,253 and 265-Seventh Schedule, List II, Entries 49 and 50, List I, Entries 52 and 54-West Bengal Taxation Laws (Amendment) Act, 1992 amending West Bengal Primary Education Act and West Bengal Rural Employment and Production Act-Levy of education cess and rural employment cess under the two Acts and the Cess Act, 1880 on coal bearing land and other mineral bearing lands-Levy of cesses challenged as regards coal bearing land and brick-earth bearing land-Held, Per majority (Sinha, J. dissenting), levy of cesses is intra vires the Constitution-The cesses on coal bearing land and brick-earth bearing land, being tax on land, are covered by Entry 49 in List II-Tax and fee not a subject dealt with by Mines and Minerals (Development and Regulation) Act, 1957 and power to levy tax and fee is available to States so long as they do not interfere with Centre's power of regulation and control of mines and minerals-Doctrine of occupied field-Doctrine of pith and substance-Doctrine of public trust-West Bengal Taxation Laws (Amendment) Act, 1992-West Bengal Primary Education Act, 1973, s. 78- West Bengal Rural Employment and Production Act, 1976, s. 4-Cess Act, 1880, ss. 5 and 6-Mines and Minerals (Development and Regulation) Act, 1957. Seventh Schedule,List II, Entries 5,23,49,50 and 66, List I, Entries 52 and 54-Uttar Pradesh Special Area Development Authorities Act, 1986 and Shakti Nagar Special Area Development Authority (Cess on Mineral Rights) Rules, 1997 levying cess on mineral rights-Levy of cess challenged by stone crushers-Held, Per majority (Sinha,J. dissenting), High Court rightly upheld levy of the cess as a tax covered by Entry 5 in List II-Besides, levy of the cess as a tax can also be upheld by reference to Entries 49 and 50 in List II- Although it is termed as "cess on mineral right", impact falls on the land delivering the mineral and thus levy of the cess falls within the scope of Entry 49 in List II-Levy of the cess can equally be upheld as a fee, by reference to Entry 66 in List II, for rendering such services as would improve infrastructure and general development of the area, benefits whereof would be availed by stone crushers also-Uttar Pradesh Special Area Development Authorities Act, 1986-s. 35-Shakti Nagar Special Area Development Authority (Cess on Mineral Rights) Rules, 1997-rr. 2 and 3. Articles 245, 246, 248 and 253-Seventh Schedule, List II, Entry 49, and List I Entries 52 and 54 - West Bengal Taxation Laws (Second Amendment) Act, 1989 amending West Bengal Education Act and West Bengal Rural Employment and Production Act and levying cesses on tea estates-Held,- Per majority (Sinha.J. dissenting), the cess levied is on tea-bearing land, a well defined classification and as such is covered by Entry 49 in List II- Declaration under s.2 of Tea Act in terms of Entry 52, List I with regard to the Union taking control of the tea industry does not amount to vesting the power to tax or levy fee in the Central Government by reference to tea or tea estates-Goodricke Group Ltd. upheld-West Bengal Taxation Laws (Second Amendment) Act, 1989-Tea Act, 1953. Article 14-Classification of lands for the purpose of tax-Held, different pieces of land identically situated but being subjected to different uses, or having different potential can be classified separately. Taxation: Measure of tax-Levy of cess on coal bearing land, other mineral bearing lands and tea estates-Assessment of cess by reference to produce dispatched from land-Held, Per majority (Sinha,J. dissenting)-Quantifying the tax by reference to annual value of the land on the basis of what it produces or is capable of producing is a well known mode-Merely because quantum of produce dispatched from the land is the factor taken into consideration for determining the value of the land, it does not become a tax on the: produce. Royalty-Nature of-Held, royalty is not a tax-it is paid to owner of land who may be a private person and may not necessarily be a State-Lessor receives royalty as his income and for lessee royalty paid is an expenditure incurred-it is clarified that in India Cement it was not the finding of the Court that royalty is a tax. ( Sinha, J, dissenting). Cess-A cess may be a tax or fee and is generally used when the levy is for special administrative expense suggested by the name of the cess itself. Interpretation of Constitution: Entries in Lists of Seventh Schedule-Construing of-Explained Interpretation of Statutes: Taxing statutes-Interpretation of-Explained Words and Phrases: Expression `Dispatches' as occurring in the statutes levying cess on minerals and tea estates-Meaning of. The West Bengal Legislature, by enacting the West Bengal Taxation Laws(Amendment) Act, 1992 amended the provisions of the West Bengal Primary Education Act,1973 and the West Bengal Rural Employment and Production Act, 1976, and levied education cess and rural employment cess on coal bearing land and other mineral bearing land. The cesses were to be assessed with reference to dispatches of minerals produced from the land. So far as levy of cesses on coal bearing land was concerned, the same was successfully challenged in writ petitions before the High Court, which held that the cess assessed and computed on the basis of value of coal produced from the coal bearing land, was directly related to the value of coal produced from the coal mines and, as such, the cess could not be said to be on land so as to be covered by Entry 49 in List II of the Seventh Schedule to the Constitution of India. The said judgment of the High Court in Kesoram Industries Ltd (Textile Division) v. Coal India Ltd, AIR (1993) Calcutta 78 was challenged by the State Government in CA No. 1532-33 of 1993. As regards levy of cess on brick-earth bearing land, Writ Petition No. 247 of 1995 was filed before the Supreme Court on behalf of the persons engaged in brick manufacturing and owning brick fields, contending that brick-earth being a minor mineral was covered under Mines and Minerals (Development and Regulation) Act, 1957 and by virtue of declaration made by s.2 thereof, by reference to Entry 54 in List I of the Seventh Schedule to the Constitution, the field was covered by the 1957 Act; that the levy was on dispatch of minor mineral whereas the process of manufacturing bricks did not involve any dispatch of brick-earth as it was captively consumed in the brick field itself and as such the cess was not leviable; and that the State Government was not empowered to levy any cess on either the extraction of brick-earth or on dispatch thereof. It was submitted that the same quantity of brick-earth was subjected by the Central Act to payment of royalty which was a tax and the same quantity was sought to be levied with cess which was incompetent so far as State Legislature was concerned. The State Government of Uttar Pradesh, in exercise of powers under Rules 2 and 3 of Shakti Nagar Special Area Development Authority (Cess on Mineral Rights) Rules, 1997 framed under s.35 of the U.P. Special Area Development Authorities Act, 1986, sought to levy cess on mineral rights and took steps for recovery thereof by issuing notices to several stone crushers who were extracting stone as mineral. Such stone crushers filed writ petitions before the High Court, which upheld the levy of cess as being within the competence of State Legislature by reference to Entry 5 in List II of Seventh Schedule to the Constitution. (Ram Dhani Singh v. Collector, Sonbhadra and Ors., AIR  All. 5. Aggrieved, the stone crushers filed Civil Appeal No. 5027 of 2000. Levy of cess on tea estates imposed by virtue of the West Bengal Taxation Laws (Amendment) Act, 1981 by amending the provisions of West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976, was struck down in Buxa, Dooars Company Ltd. v. State of West Bengal,  3 SCC 211; and as the State became liable to refund the cess already collected, the State Legislature brought the West Bengal Taxation (Second Amendment) Act, 1989 amending the West Bengal Primary Education Act and West Bengal Rural Employment and Production Act w.e.f. 1981 and levied cesses on tea estates at a given rate on the dispatch of green tea leaves produced in such tea estates. By a validation clause, it was provided that cess collected for the period prior to the Amendment Act would be deemed to have been validly levied and collected thereunder. Constitutional validity of the Amendment Act, 1989 was upheld in Goodricke Group Ltd. and Ors v. State of West Bengal and Ors.,  Supp. 1 SCC 707. But later, when a similar cess levied under the pari materia provisions of Orissa Rural Employment, Education and Production Act, 1982 was struck down in State of Orissa v. Mahanadi Coal Fields Limited,  Supp. 2 SCC 686, Writ Petition No. 262 of 1997 was filed before the Supreme Court again challenging the constitutional validity of the very same amendments which were upheld in Goodricke's case, and thus Goodricke wag sought to be overruled. Besides the above matters, some more writ petitions and civil appeals involving similar issues were filed and all such cases were clubbed together. The three-Judge Bench before which these cases came up for hearing, noticed some conflicting decisions of the Supreme Court on the issues involved and opined that the matter be referred to a Constitution Bench. Accordingly, these cases came to be heard by the present Constitution Bench.
CASE NO.: Appeal (civil) 1532 of 1993 PETITIONER: State of West Bengal RESPONDENT: Kesoram Industries Ltd. and Ors. DATE OF JUDGMENT: 15/01/2004 BENCH: V.N.Khare CJI & R.C.Lahoti & B.N.Agarwal & S.B.Sinha & A.R.Lakshmanan JUDGMENT: JUDGMENT DELIVERED BY: R.C.LAHOTI, J. S.B.SINHA, J. WITH Civil Appeal Nos. 3518-3519 and 5149-54 of 1992, 1532-1533 and 2350 of 1993 and 7614 of 1994 and C.A. Nos. 297, 298 and 299 of 2004 (Arising out of SLP (C) Nos. 3986 of 1993, 11596 and 17549 of 1994) with W.P. (C) Nos. 262, 515, 641 and 642 of 1997, 347 and 360 of 1999, 50 and 553 of 2000, 207, 288 and 389 of 2001 and 81 of 2003 and Civil Appeal Nos. 5027, 6643 to 6650 and 6894 of 2000 and 1077 of 2001 Decided On: 15.01.2004 JUDGMENT R.C. Lahoti, J. This batch of matters, some appeals by special leave under Article 136 of the Constitution and some writ petitions filed in this Court, raise a few questions of constitutional significance centering around Entries 52, 54 and 97 in List I and Entries 23, 49, 50 and 66 in List II of the Seventh Schedule to the Constitution of India as also the extent and purport of the residuary power of legislation vested in the Union of India. Cesses on coal bearing land, levied in exercise of the power conferred by State Legislation, have been struck down by a Division Bench of the Calcutta High Court. In exercise of the same power conferred by State legislation whereunder cesses were levied on coal bearing land, cesses have also been levied on tea plantation land which are the subject-matter of writ petitions filed in this Court. The Bengal Brickfield Owners' Association have also come up to this Court by filing a writ petition under Article 32 of the Constitution, laying challenge to the same cesses levied on the removal of brick earth. These three sets of matters arise from West Bengal. The High Court of Allahabad has upheld the constitutional validity of cess levied in the State of U.P. on minor minerals which decisions are the subject-matter of civil appeals filed under Article 136 of the Constitution. For the sake of convenience, we would call these matters, respectively as (A) 'Coal Matters', (B) Tea Matters', (C) 'Brick Earth Matters', and (D) 'Minor Mineral Matter'. Inasmuch as the basic constitutional questions arising for decision in all these matters are the same, all the matters have been heard analogously.