LexMINERAL AREA DEVELOPMENT AUTHORITY & ANR. versus M/S STEEL AUTHORITY OF INDIA & ANR. ETC.
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[2024] 7 S.C.R. 1549 : 2024 INSC 554 Mineral Area Development Authority & Anr. v. M/s Steel Authority of India & Anr. Etc. (Civil Appeal Nos. 4056-4064 of 1999) 25 July 2024 [Dr. Dhananjaya Y. Chandrachud,* CJI, Hrishikesh Roy, Abhay S Oka, B.V. Nagarathna,* J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih, JJ.] Issue for Consideration The questions which arose for determination are as to what is the true nature of royalty determined u/s.9 r/w s.15(1) of the Mines and Minerals (Development and Regulation) Act, 1957; whether royalty is in the nature of tax; what is the scope of Entry 50 List II Seventh Schedule; what is the ambit of the limitations imposable by Parliament in exercise of its legislative powers under Entry 54 List I; does s.9, or any other provision of the MMDR Act, contain any limitation with respect to the field in Entry 50 List II; whether the expression “subject to any limitations imposed by Parliament by law relating to mineral development” in Entry 50 List II pro tanto subjects the entry to Entry 54 List I, which is a non-taxing general entry; whether there is any departure from the general scheme of distribution of legislative powers as enunciated in M P V Sundararamier’s case; what is the scope of Entry 49 List II and whether it covers a tax which involves a measure based on the value of the produce of land; would the constitutional position be any different qua mining land on account of Entry 50 List II r/w Entry 54 List I; and whether Entry 50 List II is a specific entry in relation to Entry 49 List II, and would thus, subtract mining land from the scope of Entry 49 List II. Headnotes† Mines and Minerals (Development and Regulation) Act, 1957 – s.9 read with s.15(1) – Royalties in respect of mining leases – Nature of royalty determined u/s.9/15(1) – Royalty, if in the nature of tax: * Author Ed. Note: Hon’ble Dr. Justice Dhananjaya Y. Chandrachud, Chief Justice of India pronounced the judgment on behalf of himself, Hon’ble Mr. Justice Hrishikesh Roy, Hon’ble Mr. Justice Abhay S. Oka, Hon’ble Mr. Justice J.B. Pardiwala, Hon’ble Mr. Justice Manoj Misra, Hon’ble Mr. Justice Ujjal Bhuyan, Hon’ble Mr. Justice Satish Chandra Sharma and Hon’ble Mr. Justice Augustine George Masih. Hon’ble Mrs. Justice B.V. Nagarathna pronounced a separate judgment. 1550 [2024] 7 S.C.R. Digital Supreme Court Reports Held: (per Dr Dhananjaya Y Chandrachud, CJI) (for himself and for Hrishikesh Roy, Abhay S Oka, J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih, JJ.) Royalty is not a tax – Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights – Liability to pay royalty arises out of the contractual conditions of the mining lease – Payments made to the Government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears. [Para 342a] – Held: (per B.V. Nagarathna, J.) (Dissenting) Royalty determined u/s.9 r/w s.15(1) is in the nature of a tax or an exaction coming within the scope and ambit of Art.366(28) which defines taxation to include the imposition of any tax or impost, whether general or local or special and the word “tax” is to be construed accordingly – It is not merely a contractual payment but a statutory levy u/s.9 – Liability to pay royalty does not arise purely out of the contractual conditions of a binding lease – Payment of royalty to the Government is a tax in view of Entry 50 List II being subject to any limitations imposed by Parliament by law in the context of Entry 54 List I read with s.2 of the MMDR Act – Constitution of India – Art.366(28), Entry 54 List I, Entry 50 List II. [Paras 40a, 41a] Mines and Minerals (Development and Regulation) Act, 1957 – s.9 – Royalties in respect of mining leases – Constitution of India – Entry 50 List II Seventh Schedule – Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development – Scope of Entry 50 List II – Ambit of the limitations imposable by Parliament in exercise of its legislative powers under Entry 54 List I – s.9, or any other provision of the MMDR Act, if contains any limitation with respect to the field in Entry 50 List II: Held: (per Dr Dhananjaya Y Chandrachud, CJI) (for himself and for Hrishikesh Roy, Abhay S Oka, J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish
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