State of West Bengal Vs. Kesoram Industries Ltd. and Ors.

Coram

V.N.Khare CJI , R.C.Lahoti , B.N.Agarwal , S.B.Sinha , A.R.Lakshmanan

Citation

2005 AIR 1646, 2004(1 )SCR564 , 2004(10 )SCC201 , 2004(1 )SCALE425 , 2004(1 )JT375

Head Notes

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., [1981] 4 SCC 675, relied on S.R. Bommai and Ors. v. Union of India, [1994] 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., [1958] SCR 1422 and D.G. Gouse v. Kerala, [1980] 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.. [1990] 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, [1971] 2 SCC 779 and M/s. Hoechst Pharmaceuticals Ltd. and Ors. v. State of Bihar and Ors., [1983] 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., [1990] 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., [1969] 3 SCC 838 and Western Coalfields Ltd. v. Special Area Development Authority, Korba and Am., [1982] 1 SCC 125, referred to. Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors., [1995] Supp. 1 SCC 707, upheld. State of Haryana and Anr. v. Chanan Mal, [1977] 1 SCC 340 and H.R.S. Murthy v. The Collector of Chittoor and Anr., [1964] 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., [1990] 1 SCC 109 and The Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan and Ors., [1963] 1 SCR 491, relied on. State of Orissa v. M.A. Tulloch and Co., [1964] 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., [1964] 4 SCR 461 and The Hingir- Rampur Coal Co. Ltd v. State of Orissa, [1961] 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, [1961] 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., [1961] 3 SCR 77 and Ajoy Kumar Mukherjee v. Local Board of Barpeta, [1965] 3 SCR 47, referred to. Morey v. Doud, [1957] 354 US 457, referred to. M/s. Sainik Motors, Jodhpur v. State of Rajasthan, [1962] 1 SCR 517 and D.G. Gouse and Co. v. State of Kerala; [1980] 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., [1961] 3 SCR 77, Ajoy Kumar Mukherjee v. Local Board of Barpeta, [1965] 3 SCR 47; Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr., [1982] 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, [1975] 2 SCC 175;Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr., [1961] 3 SCR 77 and Ajoy Kumar Mukherjee v. Local Board of Barpeta, [1965] 3 SCR 47, relied on. Vivian Joseph Ferreira and Anr. v. The Municipal Corporation of Greater Bombay and Ors., [1972] 1 SCC 70 and The Government of Andhra Pradesh and Anr. v. Hindustan Machine Tools Ltd., [1975] 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, [1975] 2 SCC 175;Kunnathat Thatkunni Moopil Nair etc. v. State of Kerala and Anr., [1961] 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., [1969] 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., [1972] 1 SCC 70; The Government of Andhra Pradesh and Anr. v. Hindustan Machine Tools Ltd., [1975] 2 SCC 274; M/s. R.R. Engineering Co., etc. v. Zila Parishad, Bareilly and Anr. etc., [1980] 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., [1990] 1 SCC 12; clarified and distinguished Orissa Cement Ltd. v. State of Orissa and Ors., [1991] Supp. 1 SCC 430 and Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors., [1989] 3 SCC 211, distinguished. State of M.P. v. Mahalaxmi Fabric Mills Ltd. and Ors., [1995] Supp. 1 SCC 642 and Saurashtra Cement and Chemicals Industries and Anr. etc. etc. v. Union of India and Ors., [2001] 1 SCC 91, overruled to the extent they held royalty to be a tax. H.R.S. Murthy v. Collector of Chittor, [1964] 6 SCR 666, relied on. O.K. Trivedi and Sons, and Ors. v. State of Gujarat and Ors., [1986] (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., [1995] 6 SCC 166; Ajit Singh v. Union of India and Ors., [1995] Supp. 4 SCC 224 and Quarry Owners' Association v. State of Bihar and Ors., [2000] 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. [1995] Suppl. 2 SCC 686, overruled. **India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., [1990] 1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors., [1991] 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., [1990] 1 SCC 12; Orissa Cement Ltd. v. State of Orissa and Ors., [1991] Supp. 1 SCC 430 and Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors., [1989] 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., [2002] 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, [1994] 5 SCC 54, relied on. S.R. Choudhuri v. State of Punjab, [2001] 7 SCC 126; Union of India v. Shri Harbhajan Singh Dhillon, [1971] 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., [1991] SCC 109, referred to. M.P. Sundararamier and Co. v. State of Andhra Pradesh and Anr., [1958] 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, [1971] 2 SCC 779 and Union of India and Anr. v. Delhi High Court Bar Assn. and Ors., [2002] 4 SCC 275, relied on. His Holiness Kesavananda Bharati Sripadagalbvaru etc. v. State of Kerala and Anr., [1973] 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., [1997] 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, [2003] 6 SCC 1; Islamic Academy of Edn. and Anr. v. State of Karanataka and Ors. etc., [2003] 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., [1990] 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, [2001] 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., [1942] 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., [1976] 1 SCC 468; Harakchand Ratanchand Banthia and Ors. v. Union of India and Ors., [1969] 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, [1994] 3 SCC 569; Ch. Tika Ramji and Ors. v. The State of Uttar Pradesh and Ors., [1956] SCR 393; District Mining Officer and Ors. v. Tata Iron and Steel Co. and Anr., [2001] 7 SCC 358 and ITC Ltd. v. Agricultural Produce Market Committee and Ors., [2002] 9 SCC 232, referred to. The Hingir-Rampur Coal Co. Ltd. v. Stale of Orissa, [1961] 2 SCR 537, distinguished. P. Kannadasan and Ors. v. State of T.N. and Ors., [1996] 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, [2001] 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., [1990] 1 SCC 12; State of Orissa v. Mahanadi Coalfields Ltd., [1995] Supp 2 SCC 686; Orissa Cement Ltd. v. State of Orissa and Ors., [1991] Suppl. 1 SCC 430; State of Bihar and Ors. v. Indian Aluminium Company and Ors., [1997] 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., [2003] 7 SCC 151, relied on. Goodricke Group Ltd. v. State of W.B., [1995] 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., [1969] 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., [2002] 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., [1989] 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., [2003] 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, [1980] 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, [1980] 2 SCC 410; State of Rajasthan v. Vatan Medical and General Store, [2001] 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, [1967] 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, [1997] 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., [1995] 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. [1995] 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., [1983] 4 SCC 45; S.C. Nawn v. W.T.O., Calcutta, [1969] SCR 108 and Bhagwan Das Jain v. Union of India, [1981] 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., [1980] 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., [1990] 1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors., [1991] 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., [1961] 2 SCR 537; State of Orissa v. M.A. Tulloch and Co., [1964] 4 SCR 461; India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., [1990] 1 SCC 12 and Orissa Cement Ltd. v. State of Orissa and Ors., [1991] Supp. 1 SCC 430, relied on. State of M.P. v. Mahalaxmi Fabric Mills Ltd., [1995] 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, [1990] 4 SCC 557; K.C.G. Narayan Deo v. State of Orissa, [1954] 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, [2000] 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., [1990] 1 SCC 12, relied on. Inderjeet Singh Sial and Another v. Karam Chand Thapar and Ors., [1995] 6 SCC 166; Ajit Singh v. Union of India and Ors., [1995] Supp. 4 SCC 224; State of Tamil Nadu v. Hind Stone, [1981] 2 SCC 205 and O.K. Trivedi and Sons and Ors. v. State of Gujarat and Ors., [1986] 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., [1989] 3 SCC 211, relied on. India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., [1990] 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., [1961] 2 SCR 537; India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., [1990] 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. [1982] 1 SCC 125, overruled. Jindal Stripe Ltd. And Another v. State of Haryana and Ors., [2003] 8 SCC 60; Bhagatram Rajeev Kumar v. CST, [1995] Supp 1 SCC 673 and State of Bihar v. Bihar Chamber of Commerce, [1996] 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., [1961] 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., [1989] 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, [1996] 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., [1979] 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, [1986] 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.. [1961] 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., [1995] Supp. 1 SCC 707, overruled. Kunnathat Thathunni Moopil Nair etc. v. State of Kerala and Anr., [1961] 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.

Subject

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 [2001] 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, [1989] 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., [1995] 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, [1995] 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.

Judgment

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.

We would first set out the facts in brief and so far as relevant for appreciating the Issues arising for decision and thereafter deal with the same. (A) Coal Matters A Division Bench of the Calcutta High Court has, vide its judgment dated 25.11.92 reported as Kesoram Industries Ltd. (Textiles Division) v. Coal India Ltd.., struck down certain levies by way of cess on coal as unconstitutional for want of legislative competence in the State Legislature. Feeling aggrieved, the State of West Bengal has come up in appeal by special leave The levies which are the subject matter of challenge are as under: This Cess Act, 1980 "Section 5 All immovable property to be liable liable to a read case and public works cess... From and after the commencement of this Act in any district or part of a district, all immovable property situate therein except as otherwise in (Section 2) provided, shall be liable to the payment of a road cess and a public works cess." "Section 6 Cesses how to be assessed. The road cess and the public works cess [shall be assessed-- (a) in respect of lands on the annual value thereof, (b) in respect of all mines and quarries, on the annual dispatches therefrom, and, (c) in respect of tramways, railways and other immovable property, on the annual net profit thereof, ascertained respectively as in this Act prescribed) and the rates at which such cesses respectively shall be levied for each year shall be determined for such year in the manner in this Act prescribed: Provided that-- (1) the rates of such road cess and public works cess shall not exceed six paise and twenty-five paise respectively on each rupee of such annual value; (2) the rates of each of such road cess and public works cess shall not exceed-- (i) fifty paise on each tonne of coal, minerals or sand of such annual dispatches, and (ii) six paise on each rupee of such annual net profits, Explanation. For the purposes of this proviso, one tonne of coke shall be counted as one and a quarter tonne of coal." 2. West Bengal Primary Education Act, 1973 "78. Education cess. -- (1) All immovable properties on which road and public works cesses are assessed, [or all such properties which are liable to such assessment] according to the provisions of the Cess Act, 1880, shall be liable to the payment, of education cess. (2) The rate of the education cess shall be determined by the state Government by notification and shall not exceed-- (a)[in respect of lands, other than a tea estate] ten paise on each rupee of the annual value thereof; (aa) xxx xxx xxx (b) in respect of coal mines [five per centum of the value of coal] on the dispatches therefrom; (c) in respect of quarries and mines other than coal mines, [one rupee on each tonne of materials or minerals other than coal on the annual dispatches therefrom] Explanation. -- For the purpose of Clause (b) the expression 'value of coal' shall mean-- (i) in the case of dispatches of coal as a result of sale thereof, the prices charged by the owner of a coal mine for such coal, but excluding any sum separately charged as tax, cess, duty, fee or royalty for payment of such sum to Government to a local body, or any other sum as may be prescribed or (ii) in the case of dispatches other than those referred to in item(i), the prices chargeable by the owner of a coal mine for such coal if they were dispatched as a result of sale thereof, but excluding any sum separately chargeable as tax, cess, duty, fee or--royalty for payment of such sum to Government or a local body or any other sum as may be prescribed: Provided that if more than one price is chargeable for the same variety of Coal, the maximum price chargeable for that variety of coal shall be taken as the basis of valuation for the purpose of this item." 3. West Bengal Rural Employment and Production Act, 1976. "Section 4. Rural employment cess, -- (1) On and from the commencement of this Act, all immovable properties on which road and public work cesses [are assessed or liable to be assessed] according to the provisions of the Cess Act, 1880, shall be liable to the payment of rural employment cess; Provided that on raiyat who is exempted from paying revenue in respect of his holding under Clause (a) of Sub-section (1) of Section 23B of the West Bengal Land Reforms Act, 1955 shall be liable to pay rural employment cess. (2) The rural employment cess shall be levied annually (a) [in respect of lands, other than a tea estate,] at the rate of six paise on each rupee of development value thereof; (aa) xxx xxx xxx (b) in respect of coal mines, at the rate of [thirty-five paise per centum] on each tonne of coal on the xxx dispatches therefrom; (c) in respect of mines other than coal mines and quarries, [at the rate of fifty paise on each tonne of materials other than coal on the annual dispatches therefrom] Explanation. -- For the purpose of Clause (b) the expression Value of coal shall mean (i) in the case of dispatches of coal as a result of sale thereof, the prices charged by the owner of a coal mine for such coal but excluding any sum separately charged as tax, cess, duty, fee or royalty for payment of such sum to Government or a local body, or any other sum as may be prescribed, or (ii) in the case of dispatches, other than those referred to in item (i), the prices chargeable by the owner of a coal mine for such coal if they were dispatched as a result of sale thereof, but excluding any sum separately chargeable as tax, cess, duty, fee or royalty for payment of such sum to Government or a local body, or any other sum as may be prescribed: Provided that if more than one price is chargeable for the same variety of coal, the maximum price chargeable for that variety of coal shall be taken as the basis of valuation for the purpose of this item." All the three legislations above-referred to are State enactments. The provisions of the West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976, which levied cess were amended by the West Bengal Taxation Laws (Amendment) Act, 1992 with effect from 1-4-1992. The text of the said Amendment Act is as follows: "West Bengal Act II of 1092 THE WEST BENGAL TAXATION LAWS (AMENDMENT) ACT, 1992. [Passed by the West Bengal Legislature] [Assent of the Governor was first published in the Calcutta Gazette, Extraordinary, of the 27th March, 1992.] An Act to amend the West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976. WHERAS it is expedient to amend the West Bengal Primary Education Act, 1973 and the West Bengal Rural" Employment and Production Act, 1976, for the purposes and in the manner hereinafter appearing: It is hereby enacted in the Forty-third Year of the Republic of India, by the Legislature of West Bengal, as follows:- 1. (1) This Act may be called the West Bengal Taxation Laws (Amendment) Act, 1992. (2) It shall come into force on the 1st day of April, 1992, (Section 2.) 2. In the West Bengal Primary Education Act, 1973,-- (1) in Section 78 for Sub-section (2), the following sub-section shall be substituted: (2) The education cess shall be levied annually-- (a) in respect of land, except when a cess is leviable and payable under Clause (b) or Clause (c) of Sub-section (2A), at the rate of ten paise on each rupee of annual value thereof as assessed under the Cess Act, 1880; (b) in respect of a coal-bearing land, at the rate of five per centum of the annual value of the coal-bearing land as defined in Clause (1) of Section 2 of the West Bengal Rural Employment and Production Act, 1976; (c) in respect of a Mineral-bearing land (other than coal-bearing land) or quarry, at the rate of one rupee on each tonne of minerals (other than coal) or materials despatched within the meaning of Clause (1b) of Section 2 of the West Bengal Rural Employment and Production Act, 1976, from such' mineral bearing land or quarry; Provided that when in the coal-bearing land referred to in Clause (b) there is no production of coal for more than two consecutive years, such land shall be liable for levy of cess in respect of any year immediately succeeding the said two consecutive years in accordance with Clause (a): Provided further that where no despatch of minerals or materials is made during a period of more than two consecutive years from the mineral-bearing land or quarry as referred to in Clause (c), such land or quarry shall be liable for levy of cess In respect of any year immediately succeeding the said two consecutive years in accordance with Clause (a). Explanation. -- For the purposes of this chapter, "coal-bearing land' shall have the same meaning as in Clause (la) of Section 2 of the West Bengal Rural Employment and Production Act, 1976. (2) In Section 78A,-- (a) for Clause (a), the following clause shall be substituted :- "(a) the education cess payable for a year under Sub-section (1) of Section 78 in respect of coal-bearing land referred to in Clause (b) of Sub-section (2) of that section shall be paid by the owner of such coal-bearing land in such manner, at such intervals and by such dates as may be prescribed;"; (b) for Clause (b), the following Clause shall be substituted :- (b) every owner of a coal-bearing land shall furnish a declaration relating to a year showing the amount of education cess payable by him under Clause (a) in such form and by such date as may be prescribed and to such authority as may be notified by the State Government in this behalf in the Official Gazette (hereinafter referred to as the notified authority);"; (c) in Clause (c),-- (i) for the words "coal mine", wherever they occur, the words "coal-bearing land" shall be substituted; (ii) for the word "return", wherever it occurs, the word "declaration" shall be substituted; (iii) for the Word "period", wherever it occurs, the word "year" shall be substituted; : (d) for Clause (d), the following clause shall be substituted:- "(d) the education cess under Clause (b) of Sub-section (2) of Section 78 shall be assessed by the notified authority In the manner prescribed, and if the declaration under Clause (b) is not accepted, the owner of the coal-bearing land shall be given a reasonable opportunity of being heard before making such assessment;"; (e) in Clause (g), for the words "coal mine" in the two places where they occur, the words "coal-bearing land" shall be substituted; (f) for Clause (ga), the following clause shall be substituted:- "(ga) where an owner of a coal-bearing land furnishes a declaration referred to in Clause (b) in respect of any year by the prescribed date or thereafter, but fails to make full payment of education cess payable in respect of such period by such date, as may be prescribed under Clause (a), he shall pay a simple interest at the rate of two per centum for each English calendar month of default in payment under Clause (a) from the first day of such month next following the prescribed date up to the month preceding the month of full payment of such cess or up to the month prior to the month of assessment under Clause (d) in respect of such period, whichever is earlier, upon so much of the amount of education cess payable by him according to Clause (a) as remains unpaid at the end of each such month of default;" (g) for Clause (gb), the following clause shall be substituted:- "(gb) where an owner of a coal-bearing land fails to furnish a declaration referred to in Clause (b) in respect of any year by the prescribed date or thereafter before the assessment under Clause (d) in respect of such year and, on such assessment, full amount of education cess payable for such year is found not to have been paid in the manner and by the date prescribed under Clause (a), he shall pay a simple Interest at the rate of two per centum for each English caiendar month of default in payment under Clause (a) from the first day of the month next following the prescribed date for such payment up to the month preceding the month of full payment of education cess under Clause (a) or up to tha month prior to the month of such assessment under Clause (d), whichever is earlier, upon so much of the amount of education cess payable by him according to Clause (a) as remains unpaid at the end of each such month of default: Provided that where the education cess payable under Clause (a) is not paid in the manner prescribed under that clause by the owner of a coal-bearing land, the notified authority shall, while making the assessment under Clause (d) in respect of a year, apportion on the basis of such assessment the education cess payable in accordance with Clause (a);"; (h) in Clause (gc), for the words "coal mine", the words "coal-bearing land" shall be substituted; (i) in Clause (ge), for the words "coal mine", the words "coal-bearing land" shall be substituted; (j) for Clause (gf), the following clause shall be substituted:- "(gf) interest under Clause (ga) or Clause (gb) shall be payable in respect of payment of education cess which falls due on any day after the 30th day of April, 1992, and interest under Clause (gc) shall be payable in respect of assessment for which notices of demand of education cess under Clause (d) are issued on or after the date of commencement of the West Bengal Taxation Laws (Amendment) Act, 1992: Provided that interest under Clause (ga) or Clause (gb) in respect of any period ended on or before the 31st day of March, 1992, or interest under Clause (gc) in respect of assessment, for which notices of demand of education cess under, Clause (d) are issued before the date of commencement of the West Bengal Taxation Laws (Amendment) Act, 1932, shall continue to be payable in accordance with the provisions of this Act as they stood immediately before the coming into force of the-aforesaid Act as if the aforesaid Act had not come into force;"; (k) in Clause (gh), for the words "coal mine", the words "coal-bearing land" shall be substituted; (l) in Clause (gi), for the words "coal mine", the words "coal-bearing land" shall be substituted; (m) in Clause (gj), for the words "coal mine", the words "coal-bearing land" shall be substituted; "3. In the West Bengal Rural Employment and Production Act, 1976,-- (1) in Section 2, -- (a) for Clause (1), the following Clauses shall be substituted-- (1) "annual value of coal-bearing land", in relation to a financial year, means one-half of the value of coal, produced from such coal-bearing land during the two years immediately preceding that financial year, the value of coal being that as could have been fetched by the entire production of coal during the said two immediately preceding years, had the owner of such coal-bearing land sold such coal at the price or prices excluding the amount of tax cess, fee, duty, royalty, crushing charge, washing charge, transport charge or any other amount as may be prescribed, that prevailed on the date immediately preceding the first day of that financial year. Explanation. -- Where different prices are prevailing on the date immediately preceding the first date of that financial year for different grades or qualities of coal, the value of coal of each grade or quality produced during the two years immediately preceding that financial year shall be determined accordingly; (1a) "coal-bearing land" means holding or holdings of land having one or more seams of coal comprising the area of a coal mine; (1b) 'despatched', for a financial year, shall, in relation to a mineral- bearing land (other than coal-bearing land) or a quarry, mean one-half the quantity of minerals, or minerals, despatched during two years immediately preceding that financial year from such mineral-bearing land or quarry; (1c) 'development value' means a sum equivalent to five times the annual value of land as assessed under the Cess Act, 1880; ' ; (b) after Clause (3), the following clause shall be added and shall be deemed always to have been added ;- '(4) 'year' means a financial year as defined in Clause (15) of Section 3 of the Bengal General Clauses Act, 1899;'; (2) in Section 4, for Sub-section (2), the following sub-section shall be substituted:- "(2) The rural employment cess shall be levied annually-- (a) in respect of land, except when a cess is leviable and payable under Clause (b) or Clause (c) or Sub-section (2A), at the rate of six paise on each rupee of development value thereof; (b) in respect of a coal-bearing land, at the rate of thirty-five per centum of the annual value of coal-bearing land as defined in Clause (1) of Section 2; (c) in respect of a mineral-bearing land (other than coal-bearing land) or quarry, at the rate of fifty paise on each tonne of minerals (other than coal) or materials despatched therefrom: (g) for Clause (gb), the following clause shall be substituted:- "(gb) where an owner of a coal-bearing land fails to furnish a declaration referred to in Clause (b) in respect of any year by the prescribed data or thereafter before the assessment under Clause (d) in respect of such year and, on such assessment, full amount of rural employment cess payable for such year is found not to have been paid in the manner and by the date prescribed under Clause (a), he shall pay a simple interest, at the rate of two per centum for each English calendar month of default in payment under Clause (a) from the first day of the month next following the prescribed date for such payment up to the month preceding the month of full payment of rural employment cess under Clause (a) or up to the month prior to the month of such assessment under Clause (d), whichever is earlier, upon so much of the amount of rural employment cess payable by him according to Clause (a) as remains unpaid at the end of each such month of default: Provided that where the rural employment cess payable under Clause (a) is not paid in the manner prescribed under that clause by the owner of a coal- bearing land, the notified authority shall, while making the assessment under Clause (d) in respect of a year, apportion on the basis of such assessment the rural employment cess payable in accordance with Clause (a);"; (h) in Clause (gc), for the words "coal mine", the words "coal-bearing land" shall be substituted; (i) in Clause (ge), for the words "coal mine", the words "coal-bearing land" shall be substituted; (j) for Clause (gf), the following clause shall be substituted :- "(gf) Interest under Clause (ga) or Clause (gb) shall be payable in respect of payment of rural employment cess which falls due on any day after the 30th day of April, 1992, and Interest under Clause (gc) shall be payable in respect of assessments for which notices of demand of rural employment cess under Clause (d) are issued on or after the date of commencement of the West Bengal Taxation Laws (Amendment) Act, 1992: Provided that interest under Clause (ga) or Clause (gb) in respect of any period ended on or before the 31st day of March, 1992, or interest under Clause (gc) in respect of assessments for which, notices of demand of rural employment cess under Clause (d) are issued before the date of commencement of the WestBengal Taxation Laws (Amendment) Act, 1992, shall continue to be payable in accordance with the provisions of this Act as they stood before the coming into force of the said Act as if the said Act had not come into force;"; (k) in Clause (gh), for the words "coal mine", the words "coal-bearing land" shall be substituted; (l) in Clause (gl), for the words "coal mine", the words "coal-bearing land" shall be substituted; (m) in Clause (gj), for the words "coal mine", the words "coal-bearing land" shall be substituted; -------- By order of the Governor R. BHATTACHARYYA, Secy, to the Govt. of West Bengal," It is the constitutional validity of the amendment in the two legislations, given effect to from 1,4,92, which was successfully impugned in the High Court and Is sought to be restored in these appeals. The High Court has placed reliance mainly on two decisions of this Court, namely India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors., (Seven- Judges Bench decision) and Orissa Cement Ltd. v. State of Orissa and Ors. 1991 Supp.(1) SCC 430 (Three-Judges Bench decision). In both these decisions the levy of cess impugned therein was struck down as unconstitutional. The High Court of Calcutta has held that the levy impugned herein is similar to the one held ultra vires the legislative competence of the State twice by the Supreme Court, and hence the same was liable to be struck down. In the opinion of the High Court, the cass is assessed and computed on the basis of value of coal produced from the coal bearing land, and coal bearing land has bean defined to mean land having one or more seams of coal comprising the area of a coal mine. Therefore, it is the production of coal from a coal mine which is the basic event for the levies and the cess is to be levied at 35 per centum of the 'annual value of the coal bearing land', which, as per definition, is directly related to the value of coal produced from the coal mines. The value of the coal has been related to the price. Explanation to Clause (1) of Section (2) of the 1976 Act, as amended by the 1992 Act, makes the real nature of the levy clearer by providing that where different prices are, prevailing on the relevant date for different grades or qualities of coal, the value of coal of each grade or quality shall be relevant, The High Court has concluded that the cess cannot be said to ba on land so as to be covered by Entry 49 in Schedule II. On behalf of the writ petitioner--respondents, the judgment of the High Court has been supported on similar grounds as were successfully urged before the High Court and which we shall presently deal with. On the other hand, the learned counsel for the appellant-State of West Bengal has submitted that having regard to the real nature of the levy, it clearly falls within the legislative field of Entry 49 in List II. (B) Tea matters The writ petitions in which the validity of the levy of cesses relatable to tea estates is involved has an interesting legislative history behind it. By virtue of the West Bengal Taxation Laws (Amendment) Act, 1981, amendments were effected in the provisions of the West Bengal Primary Education Act, 1973, and the West Bengal Rural Employment And Production Act, 1976. Cesses were sought to be levied upon certain lands and buildings in the State for raising funds for the purpose of providing primary education throughout the State and to provide for employment in rural areas. Different rates in respect of lands, coal mines and other mines on annual basis were provided. Tea estates were carved out as a separate category and a separate rate was prescribed therefore as under. "Section 4(2) : The rural employment cess shall be levied annually - (a) in respect of lands, other than a tea estate, at the rate of six paise on each rupee of development value thereof; (aa) in respect of a tea estate-at such rate, not exceeding ruppes six on each kilogram of tea on the despatches from such tea estate of tea grown therein, as the State Government may, by notification in the Official Gazette, fix in this behalf : Provided that in calculating the despatches of tea for the purpose of levy of rural employment cess, such despatches for sale made at such tea auction centers as may be recognized by the State Government by notification in the Official Gazette shall be excluded: Provided further , that the State Government, may fix different rates on despatches of different classes of tea. Explanation. - For the purpose of this section, 'tea' means the plant Camelia Sinensis (L) O. Kuntze as well as all verities of the product known commercially as tea made from the leaves of the plant Camelia Sinensis (L) O. Kuntze, including grsen taa and green tea leaves, processed or unprocessed." Sub-section (4) was introduced in Section 4 which empowered the State Government to exempt "such categories of dispatches or such percentage of dispatches from the liability to pay the whole or any part of the rural employment cess or reduce the rate..." . By another amendment effected in 1982, the first proviso to Clause (aa) In Section 4(2) was omitted. Several notifications were-issued by the Government from time to time as contemplated by Section 4(2). The constitutional validity of the abovesaid amendment was challenged successfully in Buxa Dooars Tea Company Ltd. and Ors. v. State of West Bengal and Ors. -. The decision is by a Bench of two learned Judges. The levy of csss having been struck down, the State became liable to refund the cess already collected and the relevant schemes which were financed by the cessess so collected came under jeopardy. The West Bengal Taxation Laws (Second Amendment) Act, 1989 was enacted, which is under challenge herein. Section 2 of the impugned Act contains amendments to West Bengal Primary Education Act while Section 3 sets out the amendments to West Bengal Rural Employment and Production Act, 1976. As mentioned hereinbefore, it would be enough to notice the gist of the amendments made in one of the two Acts of 1973 or 1976, since the amendments in both are identical. Clause (aa) in Sub-section (2) of Section 4 was omitted with effect from 1.4.1981. After Sub-section (2), Sub-section (2-A) was introduced with retrospective effect from 1.4.1981. Subsection (2-A) reads : (2-A) The rural employment cess shall be levied annually, on a tea estate at the rate of twelve paise for each kilogram of green tea leaves produced in such estate. Explanation. - For the purposes of this sub-section, Sub-section (3) and Section 4-B- (i) "green tea leaves' shall mean the plucked and unprocessed green leaves of the plant Camelia Sinensis (L) O. Kuntze; (ii) "tea estate' shall mean any land used or Intended to be used for growing plant Camelia Sinensis (L) O. Kuntze and producing green tea leaves from such plant, and shall include land comprised in a factory or workshop for producing any variety of the product known commercially as 'tea' made from the leaves of such-plant and for housing the persons employed in the tea estate and other lands for purposes ancillary to the growing of such plant and producing green tea leaves from such plant." Clause (a) in Sub-section (3) was also substituted which had the effect of making the owner of the tea estate liable for the said cess. The other provisions require the owner of the tea estate to maintain a true and correct account of green tea leaves produced in the tea estate. Sub-section (4) was also substituted. The substituted Sub-section (4) empowered the State Government to exempt from the cess such categories of tea estates producing green tea leaves not exceeding two lakh fifty thousand kilograms and located in such area as may be specified in such notification. Section 4-5 contains the validation clause, it says that any cess collected for the period prior to the said Amendment Act shall be deemed to have been validly levied by it and collected under the Amended Act. Any assessment made or other proceedings taken in that behalf for assessing and collecting the said tax were also to be deemed to have been taken under the Amended Act. Goodricke Group Ltd. and Ors. filed a writ petition under Article 32 of the Constitution of India in this Court. The levy of cesses under both the State enactments as amended by the West Bengal Taxation Laws (Second Amendment) Act, 1989 was impugned. A few matters raising a similar challenge and pending in various High Courts were also withdrawn to this Court. All the matters were heard and decided by a three-Judges Bench of this Court, vide judgment dated November 25, 1994, reported as Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors. - (1995) Supp. 1 SCC 707. The decision of this Court in India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors. (1930) 1 SCC 12 (seven-judges Bench) and Orissa... Cement limited v. State of Orissa and Ors. (1991) Suppl. 1 SCC 430 (three- Judges Bench) were cited before the three-judges Bench in Goodricke. Both the decisions were distinguished and the constitutional validity of the 1989 amendments was upheld. The writ petitions were dismissed, It appears that a similar cess was levied by a pan materia provision enacted by the State Legislature of Orissa as the Orissa Rural Employment, Education and Production Act, 1982, The cess was on land bearing coal and minerals. Challenge to the constitutional validity of such cess was successfully laid before this Court, and the Orissa Legislation was struck down as unconstitutional and ultra vires the competence of the State Legislature in State of Orissa. v. Mahanadi Coal Fields Limited (1995) Suppl.2 SCC 686 decided on April 21, 1995. On 30.3.1996 a writ petition under Article 32 of the Constitution of India has been filed in this Court laying challenge to the constitutional validity of the very same amendments which were unsuccessfully impugned in the Goodricke's case. The writ petitioners in the Tea Matters have in their petition stated a few grounds in support of the relief sought for. However, a perusal of the grounds reveals that in substance the challenges is only one, i.e., the decision in Goodricke runs counter to the view of the law taken by Seven- Judges Bench in. India Cement and three-Judges Bench in Orissa Cement; Goodricks was rightly not followed in Mahanadi Coal Fields; rather Mahanadi Coal Fields has whittled down the authority of Goodricke and that being the position of law the impugned cess is ultra vires the power of the State Legislature and deserves to be pronounced so. In short, the same challenge as was laid and turned down in Goodricke, is reiterated drawing support from the decisions of this Court previous and subsequent to and seeks the overruling of Goodricke. (C) Brick-Earth Matters The Bengal Brickfield Owners' Association, being a representative body of the persons engaged in the activity of brick manufacturing and owning brickfields as also one of the brickfield owners, have joined in filing a writ petition before this Court wherein the constitutional validity of the very same provisions as contained in the Cess Act, 1880, the West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976 ( both as amended by the Bengal Taxation Laws Amendment Act, 1992) has been put in issue, as has been subjected to challenge by the coal mine owners and the tea estate owners disputing the levy of cess ailegediy on coal and tea. The grounds of challenge, briefly stated, are three in number: firstly, that brick-earth is a minor mineral to which the Mines and Minerals Development and Regulation Act, 1957, applies and by virtue of the declaration made by Section 2 of the Act by reference to Entry 54 in Schedule I of the Constitution, the field relating to such minor minerals is entirely covered by the Centra! Legislation and hence the State Legislations are not competent to levy the impugned cess; secondly, that the levy is on tha dispatch of minor minerals fee sale, while the process of manufacturing bricks does not involve any dispatch of the brick-earth inasmuch as the brick-earth is consumed then and there, on the brickfield itself, in the process of manufacturing of bricks, and there being no dispatch of brick-earth, the cess is not leviable; and thirdly, that the State Government is not empowered to levy any cess on either the extraction of brick-earth or on the dispatch of brick-earth. In support of these three grounds, it is further submitted that the same quantity of brick-earth is subjected by Central Legislation to payment of royalty which is a tax, and the same quantity of brick-earth is sought to be levied with cess which is incompetent so far as the State Legislature is concerned. The writ petition places reliance on the decisions of this Court in India Cement Ltd. and Ors. (supra), Orissa Cement Ltd. (supra) and Buxa Dooars Tea Company Ltd. and Ors. (supra). Some of the members of the petitioner association were served with demand notices. The relief sought for in the petition is striking down of the relevant provisions of the three State Legislations as ultra vires the Constitution and quashing of the demand notices. The reason for filing the petition in this Court, as stated in the writ petition, is that the provisions sought to be impugned herein have already been declared ultra vires by the High Court of Calcutta in relation to 'tea', an appeal against which decision has been filed in this Court and by an interim order the operation of the judgment of the High Court was stayed. According to the respondents, the cess sought to be levied by the impugned State Legislation is in the nature of fee and not tax. The purpose of levying fee, as stated in the Preamble to the relevant legislation, is rendering different services to the society and for public benefit. The cesses have been levied by the State Government for securing of welfare to the people by the State as is enshrined in Part IV of the Constitution of India by providing communication facilities, removal of illiteracy and rural employment to the poor living below the poverty line. The impugned legislations levying the cess, do not encroach upon the field covered by the Central legislation, The brick-kiln owners extract the brick-earth as an item of trade. From every 100 cft of brick-earth which weighs 5 metric tones, 1382 bricks are manufactured. The dispatch of 1382 bricks means the dispatch of 100 cft or 5 metric tones of brick-earth. A brickfield owner performs dual functions: firstly, he extracts a quantum of brick-earth from the quarry, and secondly, he dispatches the same for manufacture of bricks in the some quarry-field. The brickfield owner is an extractor of brick- earth and also a manufacturer of bricks. The element of dispatch is kept hidden. That is why the cess is now assessed on annual dispatches. Dispatch, in the context of brick-earth, means removal of brick-earth from one place to another which may be within the same complex and for domestic or captive use or consumption. In any case, the removal of brick-earth involved in the process cannot escape assessment. (D) Minor Mineral Matters This batch of appeals puts in issue the judgment dated 1.3.2000 delivered by a Division Bench of the Allahabad High Court (reported as Ram Dhani Singh v. Collector, Sonbhadra and Ors. - AIR 2001 Allahabad 5), upholding the constitutional validity of a cess on mineral rights levied under Section 35 of the U.P. Special Area Development Authorities Act, 1986, read with Rule 3 of the Shakti Nagar Special Area Development Authority (Cess on Mineral Rights) Rules, 1997 (herein referred to briefly as "SADA Act' and 'SADA Cess Rules' respectively). There was a bunch of 73 writ petitions filed in the High Court which have all been dismissed. The challenge is being pursued in this Court by ten writ petitioners through these appeals by special leave. The Governor of Uttar Pradesh promulgated U.P. Ordinance No. 15 of 1985, which was repealed by U.P. Special Area Development Authorities Act, 1986 (U.P. Act No. 9 of 1986), containing identical provisions as were contained in the preceding Ordinance. The said Act received the assent of the President of India on 19.3.1986 and was published in U.P. Gazette of that day. Section 35 of the Act provides as under : "35. Cess on mineral rights.- (1) Subject to any limitations imposed by Parliament by law relating to mineral development, the Authority may impose a cess on mineral rights at such rate as may be prescribed. (2) Any Cess imposed under this section shall be subject to confirmation by the State Government and shall be leviable with effect from such data as may be appointed by the State Government in this behalf." On 24.2.1997, in exercise of the power conferred by Section 35 of the Act, the Governor made the Shakti Nagar Special Area Development Authority (Cess on Mineral Rights) Rules, 1997, which were published on the same day in the U.P. Gazette and came into force. Rule 2(b) and Rule 3(1) and (2), relevant for our purpose, are extracted and reproduced hereunder : "2. In these rules, unless there is anything repugnant in the subject or context-- (a) xxx xxx xxx (b) "Mineral Rights" means rights conferred on a lessee under a mining lease granted or renewed for mining operations in relation to Minerals (providing operation for raising, winning or extracting coal) as defined in the Mines and Minerals (Regulation and Development) Act, 1957 (Act No. 67 of 1957" "3.(1) The Authority may, subject to Sub-rules (2) and (3) impose a cess on mineral rights on such minerals and minor minerals and at such rates are specified below : MINERAL/MINOR MINERAL MINIMUM RATE MAXIMUM RATE (1) Cess on Coal Rs.5.00 (per ton) Rs.10.00 (per ton) (2) Cess on Stone, Coarse Sind/Sand Rs.2.00 (Per Cubic metre) Rs.5.00 (Per Cubic metre) (2) The rates shall not be less than the minimum rates or more than the maximum rates specified in Sub-rule (1) and shall be determined by the Authority by a special resolution which shall be subject to confirmation by the State Government." In exercise of the power conferred by the Act and the Rules, the State Government proceeded to levy cess and take steps for recovery thereof by serving notices and issuing citations on the several stone crushers (which the appellants are), who extract stone as mineral and convert the same into metal by a process of crushing. They filed the writ petitions disputing the levy and the demand by the State Government. On behalf of the writ-petitioners, the SADA Cess Rules as also the legislative competence of the State Legislature to enact Section 35 of the SADA Act were challenged on the ground that the MMDR Act, 1957, having been enacted containing a declaration under Section 2 as contemplated by Entry 54 of List-I and the Act being applicable to Sonbhadra failing within the State of U.P. as well, the State Legislature was denuded of its power to enact the impugned law and levy the impugned cess. It was also submitted that the impugned cess would have the effect of adding to the royalty already being paid and thereby increasing the same, which was ultra vires the power of the State Government as that power was exercisable only by the Central Government. The High Court has held the SADA Act, the SADA Cess Rules and the levy of cess thereunder within the competence of State Legislature by reference to Entry 5 in List II. Reference to Constitution Bench Since the appeals referable to coal matters and the writ petition referable to tea matters raised common issues, the cases were taken up for hearing together. On 12.10.1999, the conflict amongst several decisions of this Court was brought to the notice of the three-judges Bench hearing the matter which passed the following order : "Great emphasis has been placed by learned counsel for the State of West Bengal upon the judgment of a Bench of three learned Judges in Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors. [1995 Suppl. (1) SCC 707]. Quite apart from the fact that there are pending proceedings in this Court seeking to reconcile the judgment in Goodricke with that in State of Orissa and Ors. v. Mahanadi Coalfields Ltd. and Ors. [1995 Suppl.(2) SCC 686], we find some difficulty in accepting as correct the view taken by Goodricke, particularly having regard to the earlier decision (of a Bench of two learned Judges) in Buxa Dooars Tea Co. Ltd. v. State of West Bengal. We think, therefore, that these matters should be heard by a Constitution bench. The papers and proceedings may, accordingly, be placed before the Hon'ble Chief Justice for appropriate directions." The brick-earth matters were also clubbed with the abovesaid matters for hearing. The impugned judgment of the High Court of Allahabad in Minor Mineral Matters has placed reliance on the decision of this Court in Goodricke Group Ltd. and Ors. v. State of West Bengal and Ors. - (1995) Supp. 1 SCC 707. The correctness of the said decision was in issue in Civil Appeal Nos. 1532-33 of 1993 and batch matters and hence these appeals were also directed to be placed before the Constitution Bench for hearing. This is how the four sets of matters have been listed before and heard by the Constitution Bench. Relevant Entries and principles of interpretation Before we proceed to examine the merits of the submissions and counter submissions made on behalf the parties, it will be useful to recapitulate and summarise a few principles relevant for interpreting entries classified and grouped into the three Lists of the Seventh Schedule of the Constitution. The law is legion on the point and the principles which are being briefly stated hereinafter are more than settled. These principles are referred to in the several decisions which we shall be referring to hereinafter. So far as the principles are concerned they have been followed invariably in all the decisions, however diverse results have followed based on facts of individual cases end manner of application of such principles to the facts of those cases. The relevant entries to which reference would be required to be made during the course of this judgment are extracted and reproduced herein:- "SEVENTH SCHEDULE (Article 246) List I - Union List 52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest. 54. Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest. 96. Fees in respect of any of the matters in this List, but not including fees taken in any court. 97. Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists.