Case Summary: M/s. Orissa Cement Ltd. & Others vs State of Orissa & Others (1991)
Citation Stats: (1991) 04 SC CK 0012 | AIR 1991 SC 1676 | (1991) 2 JT 439 | (1991) 1 SCALE 617 | (1991) 1 SCC 430 Supp | (1991) 2 SCR 105
Court: Supreme Court of India
Bench: Full Bench – S. Ranganathan, J; S. C. Agrawal, J; N. M. Kasliwal, J
Date of Decision: 04-04-1991
Final Decision: Disposed Of
[Judgment Source]
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Facts of the Case
These connected civil appeals and special leave petitions challenged the validity of cess levies based on mining royalties imposed by the States of Bihar, Orissa, and Madhya Pradesh. The assessees argued that the issue was covered by the earlier seven-Judge Bench ruling in India Cement Ltd. vs State of Tamil Nadu, which struck down a similar levy as beyond the legislative competence of the State Legislature. The States contended their levies were distinct and within their constitutional powers.
Law Points Raised
1. Whether cess on mining royalties falls within the legislative competence of State Legislatures.
2. Interpretation of relevant Union and State List entries under the Seventh Schedule.
3. Impact of the Mines and Minerals (Development and Regulation) Act, 1957, on State taxing powers.
4. Whether such levies constitute a fee or a tax.
5. Applicability of India Cement judgment to Bihar, Orissa, and Madhya Pradesh enactments.
Acts / Provisions / Articles Referred
• Constitution of India – Articles 19(1)(f), 136, 141, 226, 245, 246, 265, 277, 301, 301(a), 304(b).
• Orissa Mining Areas Development Fund Act, 1952 – Sections 2, 3, 4, 5, 5(5), 13, 18(1), 18(2), 25.
• Orissa Cess Act, 1962 – Sections 4, 10.
• Mines and Minerals (Development and Regulation) Act, 1957 – Sections 2, 16, 17, 25.
• Various related State taxation and municipal statutes.
Judgements Referred
• Hingir Rampur Coal Co. Ltd. vs State of Orissa (1961) 2 SCR 537.
• India Cement Ltd. vs State of Tamil Nadu (1990) 1 SCC 12.
Obiter Dicta
Parliament’s declaration under Entry 54 of List I limits State legislative competence. The method of levy collection does not necessarily alter its character from a fee to a tax, but the correlation between levy and services rendered must be genuine.
Ratio Decidendi
The cess on mining royalties, when linked to mineral development, falls within the Union’s control under the MMRD Act. States lack legislative competence to impose such levies post the Parliamentary declaration in the Act.
Final Ruling
The Supreme Court disposed of the appeals, holding that the India Cement decision applied. State enactments imposing cess on mining royalties were beyond their legislative competence and thus invalid.
Relevant Paragraph Numbers
Paras: 3, 4, 5, 6, 7.
Summary
This judgment reaffirmed the principle in India Cement that cess on mining royalties falls within Union legislative control and is beyond State competence. It clarified the interplay between Union and State powers under the Seventh Schedule and strengthened the constitutional interpretation of Entries 23 and 54 relating to mineral development.
[Judgment Source]
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