INTRODUCTION:
The
case mentioned in the project deals with some important Constitutional matters
dealt in the aforementioned case. It deals with matters relating to some
entries in the Union and State lists under the seventh schedule of the
constitution of India, namely Entries 52, 54 and 97 in List 1 and Entries 23,
49, 50 and 66 in List 2, which relate to some matters of taxation and also the
levy of cess. It explains the separation of taxation powers of Union and States
under Article 246. It also shows the extent and purport of the residuary powers
of the legislation. In addition it also comments on the primary purpose of
taxation and deals with the provisions provided in the constitution for the
same and also explains a few aspects in the treatment of royalty received.
TABLE
CONTENT:
1. Heading
of the case.
a. Name
of the case
b. Name
of the court
c. Date
of the decision
2. Statement
of facts
a. Status
of parties
b. Legally
relevant facts
3. Procedural
History
a. Decision
of lower court
b. Who
appealed and why?
4. Issues
raised
a. Substantive
issues
b. Procedural
issues
5. Judgment
6. Holding
7. Rule
of law
a. Articles
under the Constitution of India.
b. Rules
8. Ratio
of the case
1.
Heading
of the case
1.
Name of the case- State of West Bengal v
Kesoram Industries Ltd. And Ors
2.
Name of the court- The
Hon’ble Supreme Court of India
3.
Date of the decision-
15th January, 2004
4.
Citation- (2004) 1 SCC 10
2.
Statement
of facts
a. Status
of parties- Initially, the proceedings were between Kesoram Industries Ltd. And
Coal India ltd. The case came to the Calcutta High Court via writ petition. The
State of West Bengal became a party after it felt aggrieved by the decision of
the divisional bench which had struck down some of the levies as ultra-vires to
the constitution. The Calcutta High Court by reason of the impugned judgment in
coal matters declared the cess imposed on coal to be unconstitutional inter
alia having regard to the decisions of the Supreme Court in India Cement Ltd. and Ors. v. State of
Tamil Nadu and Ors. And Orissa Cement Ltd. etc. v. State of Orissa and Ors.
Along with the cess on coal bearing land, there were
cesses on tea plantation land as well, which were of a similar nature as the
cess on coal-bearing land and were brought into the court via writ petitions.
Along with them, the Bengal Brickfields Association’s petition under Article 32
of the constitution, regarding cess on removal of brick earth and civil appeals
under Article 136 of the constitution regarding the decision of the Allahabad
High Court about the constitutionality of the cess levied on minor minerals,
have also been heard since all raised questions of constitutional significance.
Initially this matter was before a three
judge bench of the Supreme Court.
Out of the above stated four matters,
the first two i.e. cess on coal bearing land and tree plantation land raised
common issues and were taken up for hearing together. But a conflict of several
earlier decisions of the Supreme Court itself led the three-judge bench to
refer the matters to a constitutional bench for appropriate directions. Along
with them, the other remaining matters were also placed before the
constitutional bench.
3.
Procedural
history
A
Division Bench of the Calcutta High Court had, vide its judgment dated 25.11.92
reported as Kesoram Industries Ltd.
(Textiles Division) v. Coal India Ltd, struck down certain levies by way of
cess on coal as unconstitutional for want of legislative competence in the
State Legislature.
The State of West Bengal came up in appeal by
special leave under Article 136 of the constitution since it felt that there
was great injustice done by striking down the levy of the impugned cess as
unconstitutional.
4. Issues raised-
a. Substantive
issues-
·
Whether the levy of
cess by the state of West Bengal unconstitutional or not.
·
Whether taxation falls
within the residuary powers of the parliament or not.
·
Whether the impugned
cess within the subject matter of the state list affects any entry of the
Central list.
·
Whether there exists a
distinction between a general subject of legislation and taxation
b. Procedural
issues-
·
Whether the amendments
made by the West Bengal Taxation laws (1992) intra-vires to the Constitution of
India.
·
Whether the impugned
Cess Act, 1980 is constitutional.
·
Whether the impugned
statutes imposing cess are in pari materia with the statutes which have been
held ultra vires by this Court in India Cement (supra) and Orissa Cement
(supra)
5.
Judgment-
a. Rights
of parties
Leave granted in the Special
Leave Petitions.
6.
Holding-
Cess
levied is intra-vires the constitution. Entry 49 in List II. Assuming cess to
be a tax on mineral rights, it would be covered by Entry 50 in List II. Incidence
of tax is capable of being passed on to buyers or consumers by the mine owners
with an escalating affect on the price of the coal, it cannot be inferred that
the tax has an adverse effect on mineral development. Entry 23 in List II
speaks of regulation of mines and mineral developments, subject to the
provisions of List I with respect to regulation and development under the
control of the Union. The Central Legislation has taken over regulation and development
of mines, and mineral development in public interest. By reference to Entry 50
of List II and Entry 54 in List I, the Central legislation has not cast any
limitations on the State Legislature's power to tax mineral rights, or land for
the matter of that. The impugned cess is a tax on coal-bearing and
mineral-bearing land. It can at the most be construed to be a tax on mineral
rights. In either case, the impugned cess is covered by Entries 49 and 50 of
List II. State of Orissa and Ors. V Mahanadi
Coalfields Ltd. and Ors., 1995 Supp. (2) SCC 686, is overruled.
7.
Rule
of law-
Entry
54 in List I
Entry
49 in List II.
Entry
50 in List II
Entry
23 in List II
Article
51 of the Constitution of India
Article
253 of the Constitution of India
Article
276 of the Constitution of India
Article
246 of the Constitution of India
8. Ratio-
Entries
in the three lists are not powers of legislation but fields. There is a
distinction between the general subject of legislation and heads of taxation.
Power to tax cannot be deduced from a general legislative entry as an ancillary
power.The primary power to tax may be used for regulating an industry,
commodity or any other activity. Power to regulate will not include the power
to tax. Union’s legislative power does not deprive state’s power to tax. State
legislative provision for levying a cess whether by tax or fee, but without any
intention of regulation and control of the subject of levy does not encroach
regulation and control or development functions belonging to Central government
due to the levy passed on to the buyer. The method of quantifying the tax is by
reference to the annual value thereof. It is well-known that one of the major
factors contributing to the value of the land is what it produces or is capable
of producing. Merely because the quantum of coal produced and dispatched or
the, quantum of mineral produced and dispatched from the land is the factor
taken into consideration for determining the value of the land, it does not
become a tax on coal or minerals.
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