LexSTATE OF BIHAR AND ORS. versus INDIAN ALUMINIUM COMPANY AND ORS.
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A B STATE OF BIHAR AND ORS. v. INDIAN ALUMINIUM COMPANY AND ORS. SEPTEMBER 24, 1997 [J.S. VERMA, CJ., B.N. KIRPAL AND S.P. KURDUKAR, JJ.] Constitution of India-Arts. 254, 245 & 246 and Schedule Vll List // Entry 49-Bihar Forest Restoration and Improvement of Degraded Forest C Land Taxation Act, 1992-Section 3-Legislative Competence-Tax is on the excavation and use of forest land and not on forest land as such and taxing is for non-forest activity in a forest land-Held, it is not a tax on land but tax on absence of land or forest by reason of activity of excavation or mining-It is a Field covered by Forest (Conservation) Act, 1980-Hence, the-State legislature was lacking the Legislative Competence-Forest D (Conservation) Act, 1980. The respondents had been granted leases for different areas under the provisions of Mines and Minerals Regulation Act, 1957. The said leases relate to lands in the forest areas. E Later, in February, 1992 the State promulgated the Bihar Forest Restoration and Improvement of Degraded Forest Land Taxation Ordinance, which was subsequently replaced by the Act. The Ordinance and the rules were challenged in several writ petitions on the ground that it was beyond the legislative competence of the State. The Entry 54 of List-i provided for F regulation of mines and mineral development, the field being occupied by Parliament alone. The State placed its reliance on the provision of the Entry 49 List-II and contended the Tax sought to be levied by the impugned Act was tax on land and was not on or in relation to any mining activity. The High Court quashed the aforesaid Act on the ground that in pith and substance it was not a tax on the land and building within the meaning of Entry 49 List II G and as such the same was beyond the legislative competence of the State Legislature. Hence, the State filed this appeal by way of Special Leave. The appellant-State contended that the purpose of enacting this piece of legislation was to provide adequate resources for restoration and improvement H of degraded unproductive forest land, compensate losses caused by the use of 222 j - .. STATE v. INDIAN ALUMINIUM COMPANY 223 forest for non-forest purpose and to improve life support system. As such the A Act was clearly relatable to Entry 49 of List II and did not suffer from any infirmity as held by the High Court. Dismissing the appeals, this Court HELD : 1.1. The land ha~ been regarded as meaning the land on surface and also below the surface. Therefore, in order that a tax could be levied under B Entry 49 of List II it is essential that 'land' as a unit must exist on which the tax is imp Jsed. In the instant c~se the tax is, in effect, being levied not on land but on the absence of land. The levy is on the void, which has been created. The forest land, which is bei'lg used, is not subjected to tax. The schedule to the Act itself shows that the assessment of tax is on excavation and use of C forest land for non-forest purpose. Section 3 read with the Schedule [and clauses (a), (b) and (c)] of the Act says that the tax is not on the surface of the land but is on the extent to which the destruction has taken place. The existing land or trees are not taxed; the tax is leviable only when non-forest activity takes place and the land is not rehabilitated. Therefore, in pith and substance it is a tax on activity on land and not on land itself. Hence, it is outside the D . ambit of Entry 49 of List-II. (234-A-D] Sudhir Chandra Nawn v. Wealth Tax Officer, Calcutta and Ors., (1961] 1 SCR 108; Second Gift Tax Officer, Mangalore etc v. D.H. Nazareth etc., (1971]1 SCR 195; Indian Cement Ltd and Ors. v. State of Tamil Nadu and Ors., [1990] l SCC 12; Union of India v. H.S. Dhillon, (1972] 2 SCR 33; Orissa E Cement Ltd. v. State of Orissa, (1991] supp 1 SCC 430 and State of Orissa v. · Mahanadi Coalfields Ltd, [1995] Supp 2 SCC 686, relied on. Hiralal Rameshwar Prasad v. State of Madhya Pradesh, (1986) MPLJ 514, approved. F Goodricke Group Ltd. v. State of West Bengal, (1995] Supp. 1SCC707, distinguished. 1.2. The provisions of clauses (d), (e) and (t) of the Schedule to the Act, in effect and substance, amount to levy of tax on the use of forest land for non-forest purposes and for rehabilitating the forest land. The Forest G Conservation Act, 1980 and the rules and guidelines made thereunder contain complete provisions for reclamation and rehabilitation
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