SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES versus UNION OF INDIA AND ORS.

Citation: [2000] SUPP. 4 S.C.R. 44 · Decided: 17-10-2000 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Disposed off
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Judgment (excerpt)

A 
SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES 
v. 
UNION OF !NOIA AND ORS. 
OCTOBER I7, 2000 
B 
[G.B. PATTANAIK AND UMESH C. BANERJEE, JJ.] 
Constitutional law : 
Mines and Minerals (Regulation and Development) Act, 1957-Section 
C 9(3)-Constitutional validity-levy of royalty on minerals-Whether power 
of Parliament under Entry 54 of list I to enact such law denudes right of 
State legislature to levy tax on mineral rights under Entry 50 of list 11-
Held, it is constitutionally valid and Parliament is competent to enact such 
law-Constitution of India-Articles 246, 268, 269 & 270-Seventh Schedule. 
D 
Precedents-Applicability of the doctrine of stare decisis-Held, the 
doctrine is applicable to avoid confusion and uncertainty. 
The appellants challenged the constitutional validity of Section 9(3) of 
Mines and Minerals (Regulation and Development) Act, 1957 on the ground 
E that levy of royalty on minerals is not a tax and the Parliament has no power 
under Entry 54 of List I to enact such a law which takes away the right of the 
State Legislature to levy tax on mineral rights under Entry 50 of List II of 
the Seventh Schedule of the Constitution. Some of the appellants contended 
that the matter should be referred to a larger Bench in view of the three-
F Judge Bench decision of this Court in Mahalaxmi Fabric Mills case. The 
appellants further contended that Section 9(3) of the Act should be declared 
ultra vires as it violates the provisions of Artides 268, 269 and 270 of the 
Constitution. 
G 
H 
Dismissing the appeals, this Court 
HELD : (Per Pattanaik, J.) 
1. It is not appropriate to refer the appeals for the decision of a larger 
Bench. Royalty on minerals is a tax and the power of the State Legislature 
under Entry 50 in List II namely tax on minerals vis-a-vis Section 9(3) of the 
44 
SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES v. U.0.1. 
45 
Mines and Minerals (Regulation and Development) Act, 1957 made by A 
Parliament is outside the competence of the State Legislature in view of 
Sections 9 and 9(3) of the Act. [56-G-H) 
~ 
India Cement Ltd & Ors. v. State of Tamil Nadu & Ors., 11990) 1 SCC 
12; State of Madhya Pradesh v. Mahalaxmi Fabric Mills Ltd & Ors., (1995) B 
Supp. 1 SCC 642 and State of UP. & Anr. v. Synthetics and Chemicals Ltd. & 
Anr., (1991) 4 SCC 139, relied on. 
The Hingir-Rampur Coal Co. Ltd & Ors. v. The State ofOrissa & Ors., 
(1961) 2 SCR 537; State ofOrissa v. MA. Tulloch & Co., (1964) 4 SCR 461; 
H.R.S. Murthy v. Collector of Chittoor & Anr., (1964) 6 SCR 666; Orissa C 
Cement Ltd. v. State of Orissa & Ors., (1991) Supp. 1 SCC 430 and State of 
Orissa & Ors. v. Mahanadi Coalfields Ltd. & Ors., (1995) Supp. 2.SCC 686, 
referred to. 
B.A. Jayaram & Ors. v. Union of India & Ors., (1984) 1 SCC 168, 
distinguished. 
D 
2. Articles 268 to 272 in Part XII of the Constitution deal with the 
distribution of revenue between the Union and the States. In Part XII of the 
Constitution, Article 265 provides that there cannot be any levy of collection 
of tax without authority of law. The expression "authority of law" refers to a E 
valid law which means the tax proposed to be levied must be within the 
legislative competence of the legislature imposing the tax; and the law must 
be validly enacted; the law must not be a colourable use of or a fraud upon the 
legislative power to tax; the law must not violate the conditions of fundamental 
right as that in Article 19(1)(3) or 19(1)(g); it must not also contravene the 
specific provisions of the Constitution which impose limitation on legislative F 
power relating to particular matters like Articles 276 to 286 or 301 and the 
tax must be authorised by such valid law. The Constitutional prm·isions dealing 
with the distribution of revenue between the Union and the States contained 
in Articles 268, 269 and 272 depends upon the fact when a particular 
legislation is attacked on any one of these grounds and an examination of G 
those assertions. The Act of 1957 and its validity has been upheld in the anvil 
of Article 265 in as much as it has been held that the tax levied on minerals 
under section 9(3) of the Act is by virtue of a valid legislation made by the 
Parliament in exercise of its legislative competence under Entry 54 of List l 
and no question ofviolation offundamental right arises. 158-E-H) 
H 
46 
SUPREME COURT REPORTS [2000] SUPP. 4 S.C.R. 
A 
Per Banerjee; J. (supplementing) : 
B 
1.1. It is clear from a plain reading of the Mines and Mine
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