Hiyona Lime Stone Mine & Others V. Union of India & Others

CWP/2454/2016

AI Insights

The case involves Hiyona Lime Stone Mine and others as petitioners challenging the constitutional validity of certain notifications and rules related to the District Mineral Foundation (DMF) contributions. The petition contested the retrospective applicability of the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015, and related amendments and notifications issued by the Union of India and the State of Himachal Pradesh. The petitioners argued that these were ultra vires the Constitution as they imposed contributions retroactively from a date prior to the notifications. The court's decision referenced a Supreme Court judgment which addressed similar issues, leading to the conclusion that contributions could not be demanded retrospectively prior to the notifications' issuance dates.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 694290 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 19-05-2023
• Assessment Year: misc
• Other Referred Cases: Federation of Indian Mineral Industries Versus Union of India, Govind Saran Ganga Saran v. CST, Vatika Township, A. Prabhakara Reddy v. State of Madhya Pradesh
• Laws Referred To: Mines and Minerals (Development and Regulation) Amendment Act, 1957, Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015, Himachal Pradesh District Mineral Foundation Trust Rules, 2016, Central Sales Tax Act, 1956, Income Tax Act, 1961, Building and Other Construction Workers Welfare Cess Act, 1996
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BALRAM SHARMA; ANUP RATTAN; I N MEHTA; SHARMILA PATIAL; PRIYANKA CHAUHAN; RAJAT CHAUHAN
• Keywords: Certiorari; Certiorari; Contribution; District Mineral Foundation; Mining lease; Retrospective Applicability; Ultra Vires; Prospecting licence-cum-mining lease
• Section: 147; 148; 143(3); 153A; 68; 9B

Judgement Text

" 1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No.2454 of 2016 Date of Decision : May 19, 2023 Hiyona Lime Stone Mine & Others …...Petitioner Versus Union of India & Others …...Respondents Coram: The Hon’ble Ms. Justice Tarlok Singh Chauhan, Acting Chief Justice The Hon’ble Mr. Justice Virender Singh, Judge. Whether approved for reporting?1 No. For the petitioner : None. For the respondents : Mr. Balram Sharma, Deputy Solicitor General of India for respondents No.1 & 2. Mr. Anup Rattan, Advocate General with Mr. I.N. Mehta, Senior Additional Advocate General & Ms. Sharmila Patial, Additional Advocates General, Ms. Priyanka Chauhan, Deputy Advocate General and Mr. Rajat Chauhan, Law Officer, for the respondents-State. Tarlok Singh Chauhan, Acting Chief Justice (Oral) The instant petition has been filed for grant of the following substantive relief:- “i) issue a writ of certiorari or any other appropriate writ or direction to the effect that the notification issued by respondent No.2 dated 26.03.2015 passing the amendment Act No.10 of 2015, amending Mines and Minerals (Development and Regulation) Amendment Act, 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 1957 to the effect that the same is come into force w.e.f. 12.01.2015 is bad in law and ultra vires of the Constitution be liable to be set aside, similarly the notification dated 17.09.2015 (Annexure P-2) is making the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 is bad in law being discretionary and violative of Constitution and thus ultra vires of Constitution of India and the Himachal Pradesh District Mineral Foundation Trust Rules, 2016 issued vide notification dated 22.08.2016 (Annexure P-3) is also ultra vires of the Constitution of India viz a viz to the effect that its retrospective applicability w.e.f. 12.01.2015 and the Rule 13 be also declared as ultra vires of the Constitution. ii) Issue a writ of mandamus be issued to the effect that the respondents be directed to not to proceed further on the basis of such amendment and rules framed by Union of India and the State of Himachal Pradesh.” 2. The issue in the instant petition is no longer res integra as it stands squarely covered by the judgment rendered by three Judge Bench of Hon’ble Supreme Court in Federation of Indian Mineral Industries Versus Union of India, (2017) 16, Supreme Court Cases, 186, wherein the Hon’ble Supreme Court firstly framed three questions as evident from paragraph 18 of the judgment, which reads thus: “18. On the basis of these notifications, the questions raised by learned counsel for the petitioners are: Firstly, 3 whether the DMFs could be established with effect from 12.1.2015? Secondly, whether contributions to the DMFs were required to be made by the petitioners at the rate mentioned in both sets of Contribution Rules with effect from 12.1.2015? The validity of the notifications was challenged or was under challenge to this extent depending on their interpretation and their impact and effect.” 3. Thereafter, while answering the second question, which is relevant for the purpose of this petition, observed as under: 32. Learned counsel for the petitioners submitted that assuming the issue of retrospective operation of the notifications and the establishment of the DMFs is decided against them, even then the petitioners cannot be compelled to make the contribution for a period prior to the date of the relevant notifications, that is, 17th September, 2015 and 20th October, 2015 (as the case may be). For this purpose, reliance was placed on M/s Govind Saran Ganga Saran v. CST and Vatika Township. 33. In Govind Saran this Court was concerned with the taxation of goods under Sections 14 and 15 of the Central Sales Tax Act, 1956 (the CST Act) and the assessment made under the Bengal Finance (Sales Tax) Act, 1941 as applied to the Union Territory of Delhi. Section 15 of the CST Act reads: ‘15. Every sales tax law of a State shall, insofar as it imposes or authorizes the imposition of a tax on the 4 sale or purchase of declared goods, be subject to the following restrictions and conditions, namely:- (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three percent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage.’ 35. This Court noted that Section 15 of the CST Act prescribed the maximum rate of tax that could be imposed and that such tax shall not be levied at more than one point. Expanding on these requirements, this Court observed in paragraph 6 of the Report as follows: 6. The components which enter into the concept of a tax are well known. The first is the character of the imposition known by its nature which prescribes the taxable event attracting the levy, the second is a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax, the third is the rate at which the tax is imposed, and the fourth is the measure or value to which the rate will be applied for computing the tax liability. If those components are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in the legislative scheme defining any of those components of the levy will be fatal to its validity. 35. After the above observations, this Court primarily dealt with the absence of specifying the single point at which the tax might be levied and held that the prerequisite of Section 15 of the CST Act that the tax 5 shall not be levied at more than one stage had not been satisfied. Therefore, it quashed the assessment complained of and allowed the appeal of the assessee. 36. In Vatika Township the Constitution Bench was concerned with the impact of the proviso appended to Section 113 of the Income Tax Act, 1961 inserted by the Finance Act. The rate of surcharge was not specified in the proviso nor the date for the levy. The consequence of this was that some assessing officers were not levying any surcharge and those who were levying surcharge adopted different dates for the levy. In this context it was held that the rate at which a tax or for that matter a surcharge is to be levied is an essential component of the tax regime. The decision in Govind Saran was referred to by the Constitution Bench, particularly the passage extracted above. It was further held: ‘39. It is clear from the above that the rate at which the tax is to be imposed is an essential component of tax and where the rate is not stipulated or it cannot be applied with precision, it would be difficult to tax a person. 37. We may also note a similar view expressed in Principles of Statutory Interpretation by Justice G.P. Singh that: There are three components of a taxing statute, viz. subject of the tax, person liable to pay the tax and the rate at which the tax is levied. If there be any real ambiguity in respect of any of these components which is not removable by reasonable 6 construction, there would be no tax in law till the defect is removed by the legislature. 38. In view of the decision of the Constitution Bench of this Court that the specification of the rate of tax (or any compulsory levy for that matter) is an essential component of the tax regime, it is difficult to agree with the learned Additional Solicitor General that specifying the maximum amount of compensation to be paid to the DMF in terms of Section 9B of the MMDR Act, being an amount not exceeding onethird of the royalty, satisfies the requirements of law. What is required by the law is certainty and not vagueness – not exceeding one-third could mean one-fourth or one-fifth or some other fraction. It is this uncertainty that is objectionable. 39. Therefore, our answer to the second question is that the petitioners are not liable to make any contribution to the DMF from 12th January, 2015. Crucial date for making the contribution to the DMF 40. What then is the crucial date for making the contribution? There are two categories of holders of a mining lease or a prospecting licence-cum-mining lease. We will consider the effect of the notifications on each such category. Lease holders for minerals other than coal, lignite and sand for stowing 41. On 17.09.2015 the Ministry of Mines in the Central Government issued a notification regarding the contribution to the DMF in respect of minerals other than coal, lignite and sand for stowing. The rate at which the 7 contribution was required to be made by the holder of a mining lease or a prospecting licence-cum-mining lease is specified in the notification. Although the notification provides that the contribution is payable from 12.1.2015 in view of our conclusion that the contribution to the DMF cannot be with retrospective effect, it would be payable only from the date of the notification, that is, 17.9.2015 even though the DMF was established or deemed to be established with effect from 12.1.2015. 42. The further question raised by learned counsel for the petitioners in this regard was: How can the contribution be made to an entity like the DMF that was established only on a date subsequent to 17.9.2015 (except for the States of Madhya Pradesh, Odisha and Telangana)? Can the contribution be paid to a non- existent trust? 43. We are afraid this line of questioning does not appeal to us. The object of the DMF is “to work for the interest and benefit of persons, and areas affected by mining related operations”. The purpose of Section 9B of the MMDR Act and the object of the DMF are in furtherance of the cause of social justice for those affected by the mining related operations – including tribals who may be dislocated or displaced from their habitat. To deny them a benefit that is rightfully theirs only because the State Government has been lax in establishing the DMF would be doing injustice to them. 44. Additionally, Section 9B of the MMDR Act creates a liability and only the quantum of the liability remained to 8 be determined. That determination came on the issuance of the notification of 17th September, 2015. The fact that it would take time (even more than a year as in the case of Tamil Nadu and Uttar Pradesh) for the benefit to reach the affected persons cannot detract from the liability of the petitioners to contribute nor does it absolve them of their liability to pay the contribution. The only criticism could be of the tardiness and lack of concern by State Governments in setting up the DMF in spite of the direction of the Central Government. 45. In A. Prabhakara Reddy v. State of Madhya Pradesh one of the questions raised was that since the Madhya Pradesh Building and Other Construction Workers Welfare Board came to be constituted only on 9th April, 2003 the recovery of cess under the Building and Other Construction Workers Welfare Cess Act, 1996 with effect from 1.4.2003 did not arise. On this basis, the requirement to pay cess was challenged. 46. This Court rejected the contention and held that after the Cess Act and the rules framed thereunder came into effect and the Workers Welfare Board was constituted and the rate of cess was notified, the State was under an obligation to collect the cess in respect of on-going projects. The fact that passing on the benefit to the workers might take some time had no impact on the liability to pay the cess. It was further held that: “…..Any other interpretation would defeat the rights of the workers whose protection is the principal aim 9 or primary concern and objective of the BOCW Act as well as the Cess Act. 47. We hold, therefore, that the effective date of payment of contribution to the DMF in the case of those petitioners who are (or were) holders of a mining lease or a prospecting licence-cum-mining lease for minerals other than coal, lignite and sand for stowing would be 17.9.2015.” 4. Accordingly, the present petition is allowed and it is held that the petitioners are not liable to make any contribution towards the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015, from 17.9.2015, onwards. 5. Pending miscellaneous application(s), if any, shall also stand disposed of. (Tarlok Singh Chauhan) Acting Chief Justice (Virender Singh) May 19, 2023 (ps) Judge "