High CourtConstitution Bench2011-03-30Matter referred to a larger Bench (nine-judge) ...

MINERAL AREA DEVELOPMENT AUTHORITY ETC. v. STEEL AUTHORITY OF INDIA AND ORS.

Case / Petition Number:Civil Appeal Nos. 4056-4064 of 1999

Neutral Citation:[2011] 4 S.C.R. 19

Case Details & Bench

Court: High Court
Hon'ble Judges: S. H. Kapadia
K. S. Radhakrishnan
Swatanter Kumar
Judgment Date: 2011-03-30
Court Decision / Holding: Matter referred to a larger Bench of nine Judges to decide the questions framed, including the true nature of royalty, the scope of Entry 50 read with Entry 54, and related constitutional issues.
Final Disposition: Matter referred to a larger Bench (nine-judge) for authoritative decision on the listed constitutional and fiscal questions.

Parties to the Case

Appellants / Petitioners

Mineral Area Development Authority

Respondents

Steel Authority of India Ltd. and others

Case Synopsis & Summary

The dispute concerns the nature of royalty determined under the Mines and Minerals (Regulation & Development) Act, 1957 (MMDRA) and whether it can be treated as a tax under Entry 50, List II of the Seventh Schedule to the Constitution or as a charge linked to mineral rights. The appeal arises from a Patna High Court order in several CWJC petitions involving revenue/taxable levies on lands and mineral production, prompting the Supreme Court to examine the true character of royalties/dead rents in mining. The Court recognizes a potential conflict between a five‑judge bench decision in State of West Bengal v. Kesoram Industries Ltd. and the seven‑judge bench decision in India Cement Ltd. v. Tamil Nadu, and accordingly directs a reference to a nine‑judge bench to resolve fundamental questions at the intersection of taxation and mineral development. The core issues framed for the larger bench include: whether royalties under Sections 9/15(3) of the MMDRA are taxes; whether the State can levy land taxes based on the value of mineral production; the meaning of "taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development" (Entry 50, List II) and whether the MMDRA constrains Entry 50; the true character of royalty/dead rent; and whether the interpretation of Entry 50 read with Entry 54 (List I) yields an exception to the general tax framework. The Court references seminal precedents, including M.P. Sundararamier and Co. and India Cement, as it contemplates a constitutional resolution by a larger Bench.

Provisions of Law Cited

Mines and Minerals (Regulation and Development) Act, 1957 — Sections 2, 9, 15(3)Constitution of India, 1950 — Seventh Schedule: List I, Entry 54; List II, Entries 49, 50Mines and Minerals (Development & Regulation) Act, 1957 — Section 2F

Legal Doctrines & Maxims

Three-lists doctrine: taxation powers lie in List I/II/III with distinct entries; taxation under Entry 50 List II is subject to Parliament's power under Entry 54 List I (mineral development).
Parliamentary limitation on State taxation in Entry 50 List II by virtue of mineral development (constitutional scheme).
M.P. Sundararamier & Co. v. State of Andhra Pradesh (1958) 1 SCR 1422 – foundational framework for taxation within enumerated lists.
Central Board of Dawoodi Bohra Community v. State of Maharashtra & Anr. (2005) 2 SCC 673 – procedural precedent for referring matters to a Larger Bench.

Submissions & Arguments

Contentions of Appellants / Petitioners

:null

Contentions of Respondents

:null

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
State of West Bengal v. Kesoram Industries Ltd. and Ors.	(2004) 10 SCC 201	Mentioned Only	Cited to illustrate conflict between five-judge and seven-judge decisions; not itself relied upon as settled law in the present order.
India Cement Ltd. and Ors. v. State of Tamil Nadu and Ors.	(1990) 1 SCC 12	Mentioned Only	Cited as controlling authority on certain constitutional questions but its definitive interpretation to be resolved by the nine-judge bench.
M.P. Sundararamier & Co. v. State of Andhra Pradesh	(1958) 1 SCR 1422	Positive	Foundational case establishing framework for taxation under enumerated lists and the relation between Entry 50 and Entry 54 in the constitutional scheme.
Central Board of Dawoodi Bohra Community & Anr. v. State of Maharashtra & Anr.	(2005) 2 SCC 673	Positive	Cited to support the principle of referring to a larger bench when there is prima facie conflict; used to justify the nine-judge reference.

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Extracted Judgment Text

Exact text extracted from official judgment records.

[2011] 4 S.C.R. 19 MINERAL AREA DEVELOPMENT AUTHORITY ETC. A _v._ M/S. STEEL AUTHORITY OF INDIA AND ORS. (Civil Appeal Nos.4056-64 of 1999) MARCH 30, 2011 B [S.H. KAPADIA, CJI, K.S. RADHAKRISHNAN AND SWATANTER KUMAR, JJ.] ## _Reference to larger Bench:_ c - _Mines and minerals Royalty- Nature of- Tax on lands_ - _and buildings and on mineral rights Conflict between decision rendered by five judge Bench of Supreme Court and decision delivered by seven Judge Bench of Supreme Court_ - _Questions of law framed which need consideration by the_ D - _larger bench Request for reference to the Bench of nine_ - _Judge Matter directed to be placed on the administrative_ - _side before the Chief Justice for appropriate orders Mines and Minerals (Regulation and Development) Act, 1950- ss.2, 9, 15(3)_ - _Constitution of India, 1950_ - _Seventh schedule, List_ E _I, Entry 54; List II, Entries 49, 50._ _State of West Bengal v. Kesoram Industries Ltd. and_ Ors. (2004) 10 SCC 201; _India Cement Ltd. and_ Ors. _v. State of Tamil Nadu and Ors._ (1990) 1 SCC 12; _M.P. V. Sundararamier and_ Co. _v. State of Andhra Pradesh_ (1958) 1 F SCR 1422; _Central Board of Dawoodi Bohra Community and Anr. v. State of Maharashtra. and Anr._ (2005) 2 SCC 673 - referred to. ## Case Law Reference: - G - (2004) 1 o sec 201 referred to Para 5 (1990) 1 sec 12 referred to Para 5 (1958) 1 SCR 1422 referred to Para 9 19 H ## 20 SUPREME COURT REPORTS [2011) 4 S.C.R. ## A (2005) 2 sec 673 referred to Para 11 CIVIL APPELLATE/ORIGINAL JURISDICTION : Civil Appeal Nos. 4056-4064 of 1999. From the Judgment & Order 22.3.1999 of the High Court B of Judicature at Patna, Ranchi Bench Ranchi, in CWJC No, 1885, 178, 2251, 2252, 1783, 2915of1994 (R), 3113of1993 & 269 & 268 of 1994 (R). ## WITH C C.A. Nos. 4710-4721, 4722-4724of1999, 1883 of 2006, T.P. (C) No. 722 of 2006, C.A. Nos. 4745, 4990, 4991, 4992, 4993 of 2006, TP (C) No. 951 of 2006, C.A. Nos. 5649, 5599 of 2006, 378, 665, 1180 of 2007, TP (C) Nos. 481, 906 of 2007, C.A. Nos. 3400, 3401, 3402, 3403 of 2008, 2055, 2174 of D 2009, 6498, 6137 of 2008, SLP (C) No. 26160 of 2008, C.A. Nos. 6499, 6497, 7397 of 2008, 96, 97, 98 of 2009, SLP Nos. 3849 of 2006, 763, 15900 of 2007, TP (C) Nos. 613, 626 of 2009, C.A. Nos. 4478, 4479 of 2010 & SLP (C) No. 4191 of 2011. E Vivek K. Thanka Parag P. Tripathi, T.S. Doabia, ASG, Rakesh Dwivedi, K.K. Venugopal, Mahabir Singh, S.K. Bagaria, S.B. Upadhyay, Bhaskar, P. Gupta, Ajit Kumar Sinha, P. Sadasivan Nair, Dipankar Gupta, Nagendra Rai, R.F. F Nariman, A.K. Ganguli, Shambhu Prasad Singh, H. N. Salve, Dr. Abhishek Manu Singhvi, Ajit Kumar Sinha, Mahabir Singh, Shail Kumar Dwivedi, AAG, Aparesh Kumar Singh, Tapesh Kumar Singh, Preetika Dwivedi, Sansriti Pathak, Gopal Pathak, Ma. Pooja Dhar, Gopal Sankaranarayana, Radha G Shyam Jena, Gp. Capt. Karan Singh Bhati, Rashid, Aishwarya Bhati, Pawan Upadhyay, Rajesh R. Dubey, Anisha Upadhyay', Sharmila Upadhyay, Praveen Kumar, Bharat Sangal, Alka Singh, Akshat Shrivastava, P.P. Singh, lnderjeet Yadav, Anip Sachthey, Mohit Paul, Shagun Matta, Syed Shahid Hussain H Rizvi, D.K. Pradhan, Ashok Kumar Gupta-I, T.G. Narayanan ## MINERAL AREA DEVELOPMENT AUTHORITY ETC. _v._ 21 STEEL AUTHORITY OF INDIA AND ORS. Nair, K.N. Madhusoodanan, Sunil Kumar Jain, Parmatma A Singh, Vanita Bhargava, Ajay Bhargava, Nitin Mishra (for Khaitan & Co.) S.K. Verma, E.C. Agrawala, Ashok Kumar Singh, Sunil Dogra (for Lawyer's Knit & Co.), P.V. Yogeswaran, U.A. Rana, Devina Sehgal (for Gagrat & Co.), Ruby Singh Ahuja, Sridhar Potarju, Gaichangpou Gangmei, Guntur B Prabhakar, Kuna! Verma, Prashant Kumar (for AP & J Chaambers), Gopal Prasad, Anupam Lal Dass, A. Bhavan Singh, Ajay Aggarwal, Kanika Gomber, Rajan Narain, Manu Nair, Kirat Singh, Tanuj Bhushan, Adit Pujari (for Suresh A. Shroff & Co.), Abhishth Kumar, Rakesh K. Sharma, Prashant C Jha, Manjula Gupta, Vaibhav, Punam Kumari, Prem Sunder Jha, Lyna Perira, Manjula Gupta, Prashant Jha, Syed Shaid Hussain Rizvi, D.K. Pradhan, Manik Karanjawala, Praveen Kumar, Sunil Kumar Jain, Aneesh Mittal Parmatma Singh, Aakansksha Munjhal, Shally Bhasin Maheshwari, E.C. 0 Agrawala, Bharat Sangal, R.R. Kumar Vernika Tomar, Alka Singh, B. Vijayalakshmi Menon, Gaurav Kejriwal, Jatinder Kumar Bhatia, Ashutosh Kumar Sharma, Gunnam Venkateswara Rao, B.S. Banthia, Vikas Upadhyay, Rishabh Sancheti, Sunita Sharma, Rekha Pandey, Asha G, Nair, D.S. Mahra, V.K. Verma, Dharmendra Kumar Sinha, Ashwarya E Sinha, Ambhoj Kumar Sinha, Satyajit A. Desai, Prashant R. Dahat, Somanath Padhan, Ashid Khan, Rajneesh Bhaskar, · Jyoti Tripathi, Atul Jha, Rajesh Srivastava, Ram Naresh Gupta, Abhishek Gupta, Milind Kumar, Kanku Gupta, Gaurav Jain, Abha Jain, G.N. Reddy, V. Pattabhiram, Nandini Sen, D.P. F Mukherjee, Anip Sachthey, Mohit Paul, Shagun Matta for the appearing parties. F The following Order of the Court was delivered ## **ORDER** G Having heard the matter(s) for considerable length of time, we are of the view that the matter needs to be considered by the Bench of Nine Judges. The questions of law to be decided H 22 SUPREME COURT REPORTS [2011] 4 S.C.R. ## A by the larger Bench are as follows: B 1. Whether 'royalty' determined under Sections 9/ 15(3) of the Mines and Minerals (Regulation & Development) Act, 1957 (Act 67 of 1957, as amended) is in the nature of tax? 2. Can the State Legislature while levying a tax on land under Entry 49 List II of the Seventh Schedule of the Constitution adopt a measure of tax based on the value of the produce of land? If yes, then would the c Constitutional position be any different insofar as the tax on land is imposed on mining land on account of Entry 50 List II and its interrelation with Entry 54 List I? - D 3. What is the meaning of the expression "Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development" within the meaning of Entry 50 of List II of the Seventh Schedule of the Constitution of India? Does the Mines and Minerals (Regulation & - E Development) Act, 1957 contain any provision which operates as a limitation on the field of legislation prescribed in Entry 50 of List II of the Seventh Schedule of the Constitution of India? In particular, whether Section 9 of the aforementioned - F Act denudes or limits the scope of Entry 50 of List II? G 4. What is the true nature of royalty _I_ dead rent payable on minerals produced _I_ mined _I_ extracted from mines? - H 5. Whether the majority decision in _State of West Bengal v. Kesoram Industries Ltd. and Ors,_ (2004) 10 sec 201, could be read as departing from the law laid down in the _seven Judge Bench_ decision ## MINERAL AREA DEVELOPMENT AUTHORITY ETC. _v._ 23 STEEL AUTHORITY OF INDIA AND ORS. in _India Cement Ltd. and Ors. v. State of Tamil_ A _Nadu and Ors.,_ (1990) 1 SCC 12? 6. Whether "taxes on lands and buildings" in Entry 49, List II of the Seventh Schedule to the Constitution contemplate a tax levied directly on the land as a B unit having definite relationship with the land? 7. What is the scope of the expression "taxes on mineral rights" in Entry 50, List II of the S~venth Schedule to the Constitution? c 8. Whether the expression "subject to any limitation imposed by Parliament by law relating to mineral developmenf' in Entry 50, List II refers to the subject matter in Entry 54, List I of the Seventh Schedule to the Constitution? D - ... 9. Whether Entry 50, List II read with Entry 54, List I of the Seventh Schedule to the Constitution constitute an exception to the general scheme of Entries relating to taxation being distinct from other Entries in all the three Lists of the Seventh Schedule to the Constitution as enunciated in _M.P. V. Sundararamier_ & Co. _v. State of Andhra Pradesh_ & _Anr.,_ (1958) 1 SCR 1422 at 1481 (bottom)? E 10. Whether in view of the declaration under Section 2 F of the Mines and Minerals (Development & Regulation) Act, 1957 made in terms of Entry 54 of List I of the Seventh Schedule to the Constitution and the provisions of the said Act, the State Legislature is denuded of its power under Entry 23 G of List II and/or Entry 50 of List II? - F 11. What is the effect of the expression " ... subject to any limitation imposed by Parliament by law relating to mineral development" on the taxing power of the H 24 SUPREME COURT REPORTS [2011] 4 S.C.R. ## A A State Legislature in Entry 50 of List II, particularly in view of its uniqueness in the sense that it is the only entry in all the entries in three Lists (Lists I, II and Ill) where the taxing power of the State Legislature has been subjected to "any limitation B imposed by Parliament by law relating to mineral development". Before concluding, we may clarify that normally the Bench of five learned Judges in case of doubt has to invite the C attention of the Chief Justice and request for the matter being placed for hearing before a Bench of larger coram than the Bench whose decision has come up for consideration (see: _Central Board of Dawoodi Bohra Community and Anr. v._ State - _of Maharashtra and Anr._ 2005 (2) SCC 673). However, in 0[the ][present ][case, ][since ][prima ][facie ][there ][appears ][to ][be ][some ] conflict between the decision of this Court in _State of West Bengal v. Kesoram Industries Ltd._ & Ors. (supra) which decision has been delivered by a Bench of five-Judge of this Court and the decision delivered by seven-Judge Bench of this Court in _India Cement Ltd. and_ Ors. _v. State of Tamil Nadu_ E _and Ors._ (supra) reference to the Bench of nine-Judge is requested. Office is directed to place the matter on the administrative side before the Chief Justice for appropriate orders. ## D.G. Matter referred to larger Bench.