Case Note & Summary
The dispute arose over the competence of the State of Andhra Pradesh to levy cess on mining leases. The respondent, a mining lessee, initially filed a writ petition challenging the levy, which was allowed by a learned Single Judge on October 1, 1986. Subsequently, the State amended the District Boards Act, 1955 by Amendment Act 8 of 1989, empowering the State to levy land revenue or royalty/seigniorage fee. The respondent challenged this amendment in another writ petition, relying on India Cement Ltd. v. State of Tamil Nadu. The High Court, by judgment dated December 21, 1989, held the amendment ultra vires the State Legislature. The legislature again amended the Act to empower levy and collection of cess on the same grounds while an appeal was pending in the Supreme Court. The respondent filed a further writ petition, which was also allowed by the High Court on December 21, 1990. The State then appealed by special leave to the Supreme Court. The Supreme Court noted that the controversy was no longer res integra, as it had already decided in P. Kannadasan v. State of Tamil Nadu that the legislature is competent to amend the law to remove the invalidity pointed out by the court. The court rejected contentions that Parliament must first create the levy and then give retrospective effect, that validation was limited to taxes already covered, that different rates in different States violated Article 14, and that Parliament was devoid of power to levy tax on mineral extraction and royalties without fresh enactment under Entry 54 of List I of the Seventh Schedule. The court held that the language of Section 2 of the validation Act achieved the purpose, that validation of levy includes validation of recoveries already made, and that all contentions were negatived. Accordingly, the Supreme Court allowed the appeal, set aside the judgments and orders of the High Court, and ordered no costs as the respondent did not appear.
Headnote
A) Constitutional Law - Legislative Competence - State Legislature can remove invalidity pointed out by court and enact law consistent with constitutional scheme - District Boards Act, 1955 - The State Legislature amended the District Boards Act to empower levy of cess on mining leases after High Court held earlier amendment ultra vires; Supreme Court following P. Kannadasan held that the legislature is competent to amend the law removing the invalidity pointed out in the judgment, thereby validating the levy. Held that the amendments validating collections of cess under State Acts are upheld. B) Constitutional Law - Validation Acts - Validation Act language need not be identical to original levy but must achieve purpose - District Boards Act, 1955, Section 2 of Validation Act - Contention that Parliament must first create levy and then give retrospective effect was negatived; Parliament is not bound to adopt identical language every time it enacts a validation Act; all that Court should see is whether language employed achieves purpose; Section 2 achieves the purpose. Held that validation Act is valid. C) Constitutional Law - Validation of Recoveries - Validation of levy includes validation of recoveries already made - District Boards Act, 1955 - Contention that validation was designed only to validate taxes and cesses already covered under relevant provisions and cannot empower recovery was negatived; unless levy is validated, recoveries already made cannot be validated; enactment came to be made for that reason. Held that recoveries are validated. D) Constitutional Law - Article 14 - Different rates of tax in different States permissible - Constitution of India, Article 14 - Contention that Parliament devoid of power to prescribe different rates of tax in different States as it violates Article 14 was considered elaborately and negatived. Held that different rates do not violate equality. E) Constitutional Law - Legislative Competence - Parliament not denuded of power to levy tax on mineral extraction and royalties - Constitution of India, Seventh Schedule, List I, Entry 54 - Contention that Parliament having denuded power of State Legislature to levy tax mineral extraction was raised and royalties is invalid unless fresh enactment under Entry 54 of List I is made was rejected. Held that Parliament retains legislative power.
Issue of Consideration
Whether the State Legislature was competent to levy cess on mining leases after validation amendments; whether the amendments validating collections of cess under State Acts were constitutionally valid.
Final Decision
Appeal allowed; judgments and orders of the High Court set aside; no costs.
Law Points
- State Legislature competent to remove invalidity pointed out by court and enact law consistent with constitutional scheme
- Validation Act language need not be identical but must achieve purpose
- Validation of levy includes validation of recoveries already made
- Different rates of tax in different States do not violate Article 14
- Parliament not devoid of power to prescribe different rates or levy tax on mineral extraction and royalties
