INDIA CEMENT LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) (For E. S. Venkataramiah, C.J., Ranganath Misra, B. C. Ray, K N. Singh, S. Natarajan, JJ. and himself) : The question involved in these appeals, special leave petitions and writ petitions is, whether levy of cess on royalty is within the competence of the State legislature. In order to appreciate the question, it is necessary to refer to certain facts. Civil Appeal No. 62 of 1979 is an appeal by special leave from the judgment and order of the High Court of Madras, dated October 13, 1969, in Writ Appeal No. 464 of 1967. The appellant is a public limited company incorporated under the Indian Companies Act, 1913. The company at all relevant times, used to manufacture cement in its factory at Talaiyuthu in Tirunelveli district, and at Sankaridrug in Salem district of Tamil Nadu, By G.O. Ms. No. 3668 dated July 19, 1963, the Government of Tamil Nadu sanctioned the grant to the appellant mining lease for limestone and kankar for a period of 20 years over an extent of 133.91 acres of land in the village of Chinnagoundanur in Sankaridrug Taluka of Salem district. Out of the extent of 133.19 acres comprised in the mining lease, an extent of 126.14 acres was patta land and only the balance extent of 7.77 acres Government land. The lease deed was to accordance with the Mineral Concession Rules, 1960. The rates of royalty, dead rent and surface rent, were as follow :

(2.) The appellant started mining operations soon after the execution of the lease deed and has even since been paying the royalties, dead rents and other amounts payable under the deed.

(3.) Under Sec. 115 of the Madras Panchayats Act (35 of 1958) (hereinafter called 'the Act'), as amended by Madras Act 18 of 1964 (hereinafter called 'the amended Act') as royalty the appellant was required to pay local cess @ 45 paise per rupee. It may be mentioned that the said imposition was with retrospective effect along with local cess surcharge under Sec. 116 of the Act. The contention of the appellant is and was, at all relevant times, that cess on royalty cannot be levied. This is the common question which falls for consideration and requires determination in these appeals and petitions.