STATE OF ORISSA AND ORS. versus MAHANADI COALFIELDS LTD. AND ORS.

Citation: [1995] 3 S.C.R. 639 · Decided: 21-04-1995 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Disposed off
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Judgment (excerpt)

STATE OF ORISSA AND ORS. 
A 
v. 
MAHANADI COALFIELDS LTD. AND ORS. 
APRIL 21, 1995 
[A.M. AHMADI, C.J., S.P. BHARUCHA AND 
B 
K.S. PARIPOORNAN, JJ.] 
"'!"' I 
Orissa Rural Employment, Education and Production Act, 1992. 
Section 3(2)(cf-Levy of tax on-Coal bearing lands-Beyond the com- c 
petence of the State legislature-Struck down-<:onstitution of India-Seventh 
Schedule-List II-Entries 23, 32, 50. 
Mines and Minerals (Regulation & Development) Ac~ 1957. 
Levy of tax on-Coal and mineral bearing lands-Provides for all kinds D 
of taxation-State Legislature deprived of the power to impose tax. 
··""! 
The respondents assailed the validity of the Orissa Rural Employ-
ment, Education and Production Act, 1992 before the High Court. The 
main controversy in the cases was regarding the levy of tax under the Act 
on 'Coal bearing lands'. The High Court held that the State Legislature E 
did not have the competence to levy the tax on coal bearing lands and 
struck down section 3(2)(c) of the Act as well as the schedule attached to 
the Act levying tax of Rs. 32,000 per acre on coal bearing lands. Aggrieved 
by the High Court's judgment the appellants preferred the present appeal. 
On behalf of the appellants It was contended that the levy of ·tax F 
would fall under Entry 49, List II of the Seventh Schedule; and that even 
if it is not so, the levy of taxes would fall under Entry 23 or 50, List II. 
On behalf of the respondents It was contended that the levy is on 
minerals and mineral rights alone and not a tax on land covered by Entry G. 
49, List II; that since the levy Is on minerals or on mineral rights even If . 
the levy falls under Entry 23 or 50 List Il It is subject to limitation imposed 
, 
by Parliament; that Parliament bas legislated on the subject under. Entry 
/ 
54, List I and bas enacted the Mines and Minerals (Regulation and 
Development) Act, 1957 which covers the field; and that the Act is ultra 
vires and beyond legislative competence. 
H 
639 
640 
SUPREME COURT REPORTS 
[1995) 3 S.C.R. 
A 
Disposing of the appeal, this Conrt 
HELD : 1. The combined effect of section 3(1) of the Orissa Rnral 
Employment, Edncation and Prodnction Act, 1922 and the Orissa Cess Act 
of 1962, as amended, is that only mineral bearing and Coal bel\ring lands 
will be subject to the levy of tax under the Act. Thus there is no donbt that 
B the substance of the levy under the Act is really on "mineral bearing land" 
and "Coal bearing land". [662-D, 663-D] 
2. Sections 2, 3(a), 3(d), 9 and 9-Aofthe Mines and Minerals (Regula-
tion & Development) Act, 1957 clearly point out that taxation on mineral 
C and mineral rights, viz; any tax, royalty, fee or rent are provided in the said 
Act. Exhaustive provisions regarding all kinds of taxation on minerals and 
mineral rights have been made in the M.M.R.D. Act. The State Legislature 
is denuded or deprived of the power to enact any law or to impose any tax or 
other levy with reference to List II Entry 23 or Ust II Entry 50, Therefore, 
the levy of tax on mineral bearing and Coal bearing lands ls beyond the 
D competence of the State Legislatuno and is ultra vires. [664-B, D, E, F] 
Harakchand Ratanchand Banthia and Ors. v. Union of India and Ors., 
AIR (1970) SC 1453; K. C. Gajapati Narayan Deo & Ors. v. The State of 
Orissa, [1954] SCR I; A.S. Krishna & Ors. v. State of Madras, AIR (1957) 
E SC 297; K.P. Varghese v. Income Tax Officer Emakulam & Anr., AIR (1981) 
SC 1922; Divan Brothers v. Central Bank of India, Bombay and Ors., AIR 
(1976) SC 1503 and Shashikant Laxman Kale and Anr. v. Union of India 
and Anr., AIR (1990) SC 2114, relied on. 
.. 
3. The Act purports to impose a tax on Coal bearing land and 
F mineral bearing land as defined in section 2(a-1) and 2(d) of the Act, which 
is fully covered by Parliamentary legislation, the M.M.R.D. Act. [667-A) 
India Cement Ltd. v. State of Tamil Nadu, [1989) Supp. 1 SCR 692 
and Federation of Mining Associations of Rajasthan v. State of Rajasthan 
G and Anr., [1992] Supp. 2 sec 239, relied on. 
t 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 330-604 
\ 
of 1995 Etc. Etc. 
From the Judgment and Order dated 26.4.94 of the Orissa High 
H Court in O.J.C. Nos. 2015, 5382, 5814, 6061, 6760, 6550, 6338, 8801, 5641, 
' ...
STATE v. MAHANADI COALF1EWS 
641 
5642, 5877, 7148, 7149, 7113, 6226, 6491, 6493, 7003, 7040, 7101, 7106, A 
7107, 7109, 7131, 7132, 7161, 7166, 7227, 7228, 7321, 7322, 7401, 7403, 
7513, 6062, 8556, 8405, 8404, 8098,
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