Madhya Pradesh High Court
M/S Ultratech Cement Limited Thr. ... vs State Of Madhya Pradesh on 29 April, 2022
Author: Vivek Rusia
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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE SUBODH ABHYANKAR
HEARD ON THE 5th OF APRIL, 2022
FINAL ORDER PASSED ON 29 APRIL, 2022
WRIT PETITION No. 9330 of 2021
Case Number W.P. (S) No.9330 OF 2021
Parties Name M/S ULTRATECH CEMENT LIMITED THR. A
COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956, HAVING ITS
REGISTERED OFFICE AT 'B'WING, AHURA
CENTRE, 2ND FLOOR,MAHAKALI CAVES
ROAD, ANDHERI (EAST0, MUMBAI-400 093
AND CEMENT MANUFACTURING UNITS
NAMELY VIKRAM CEMENT WORKS,
TEHSIL KHOR, DISTRICT NEEMUCH
MADHYA PRADESH THROUGH ITS
AUTHORIZED SIGNATORY MR. RAJ
KUMAR KHETAN S/O MR PAVAN KUMAR
KHETAN , AGED ABOUT 46 YEARS, R/O
KHOR JAWAD DISTRICT NEEMUCH
(MADHYA PRADESH)
SRI. SHAILENDRA KUMAR PANDEY, AGED
ABOUT 49 YEARS, S/O SHRI RAM SAMUJH
PANDEY RESIDING AT B-17/01 STAFF
COLONY, VIKRAM CEMENT, KHOR
PRESENTLY AT KHOR
VS.
1. STATE OF MADHYA PRADESH THR. ITS
PRINCIPAL SECRETARY VALLABH
BHAWAN, BHOPAL (MADHYA PRADESH)
2. DIRECTOR, DIRECTORATE OF GEOLOGY
AND MINING, DEPARTMENT OF MINES
AND GEOLOGY 29-A, KHANJ BHAWAN,
ARERA HILLS, BHOPAL (MADHYA
PRADESH)
3. COLLECTOR (MINING), DISTT. NEEMUCH
DISTT. NEEMUCH (MADHYA PRADESH)
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4. DISTRICT MINING OFFICER (DMO),
DISTRICT NEEMUCH M.P. (MADHYA
PRADESH)
Date of Order 29/04/22
Bench Division Bench:
Justice Vivek Rusia
Justice Subodh Abhyankar
Judgment delivered by Justice Vivek Rusia
Whether approved for Yes
reporting
Name of counsel for Shri Naman Nagrath, Senior Advocate alongwith
parties Shri Sparsh Prasad, learned Counsel for the
petitioner.
Shri Pushyamitra Bhargav, Additional Advocate
General for the respondents.
Law laid down Held-The State Government is not
competent to make Rules under Section 15
and 23C of Mines and Minerals
(Development and Regulation) Act,1957 for
regulating the minor mineral lawfully
excavated in the other State and transported
within the State of Madhya Pradesh. Under
Section 15 and 23C of Mines and Minerals
(Development and Regulation) Act,1957, the
State Government has been authorized to
make law to control on the subject of the
grant of quarry lease, license, storage and
transportation within the State, therefore,
minor mineral coming from other States
through transportation, cannot be charged
@ 25 per cubic meter as regulation fee.
Hence, the validity of notification dated
22.01.2021 in respect of amendment in Rule
29(6) of M.P. Minor Mineral Rules, 1996 in
respect of charging of regulation fee, cannot
be upheld, hence, same is hereby struck
down.
Significant paragraph 15-16
numbers
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VIVEK RUSIA, J. passed the following:-
ORDER
Shri Naman Nagrath, Senior Advocate along with Shri
Sparsh Prasad, learned Counsel for the petitioner.
Shri Pushyamitra Bhargav, Additional Advocate General for
the respondents.
****
The petitioner has filed the present petition challenging the
validity of the Notification No.F-19-3-2017-XII-1 dated 22.01.2021
published by the State Government in the exercise of the powers
conferred under Section 15 and 15-A of the Mines and Minerals
(Development and Regulation) Act,1957 (hereinafter referred to as
'MMDR Act, 1957') whereby regulatory fee Rs.25 per cubic meter
has been imposed on minor minerals brought within State of
Madhya Pradesh from other State.
Petitioner's case
1. The Petitioner is a company incorporated under the
provisions of the Companies Act,1956 having its registered office at
'B' Wing, Ahura Centre, 2nd Floor, Mahakali Caves Road, Andheri
(East), Mumbai-400 093. The petitioner is part of Aditya Birla
Group and is one of the largest Cement manufacturing Companies
in India having its manufacturing unit located at Khor, Tehsil-
Jawad, District Neemuch, Madhya Pradesh (458470). For the
production of cement, the petitioner requires a continuous supply of
specific raw minerals viz. limestone, gypsum and additives like red
ochre, laterite, bauxite etc. Some of the minerals reserves are
already allotted to the petitioner by the State Government but some
minerals which are not available in the State of Madhya Pradesh
like Aluminum Oxide, Iron Oxide which are essential components
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of cement manufacturing, hence, the petitioner is importing these
minor mineral from the neighbouring State of Rajasthan. According
to the petitioner, the minor minerals legally excavated in the State
of Rajasthan after payment of royalty amount to the State
Government and complying with all statutory requirements, the
suppliers dispatch to the petitioner by trucks/carriers.
2. The State of Madhya Pradesh has issued a Notification No.
F-19-3-2017-XII-1 dated 22.01.2021 in the exercise of the powers
conferred under Section 15 and 15-A of the MMDR Act 1957 for
amending Madhya Pradesh Mineral Rules, 1996 (hereinafter
referred to as ' Rules, 1996') by substituting sub-rule (6) of Rule 29
whereby a levy in the name of 'Regulation Fee' at the rate Rs. 25
per cubic meter has been imposed on minor minerals coming from
other States into the State of Madhya Pradesh. In pursuant to the
aforesaid notice, the District Mining Officer (in short' D.M.O.') has
issued a press note dated 01.02.2021 directing business institutions
and individuals to get themselves registered on the e-mineral portal
to get transit pass. Respondent No.4 vide notice dated 22.02.2021
has demanded the Regulation Fee at the rate of Rs.25 per cubic
meter on minor minerals coming from other States to the
petitioner's unit located at Neemuch. The petitioner has submitted a
detailed reply dated 26.02.2021 objecting to such demand. The
petitioner has also submitted an exhaustive representation to the
Principal Secretary-Mining, State of Madhya Pradesh alleging the
imposition of the regulation fee is an arbitrary Act of Government.
Being aggrieved by the aforesaid impugned amendment, the
petitioner has filed the present writ petition seeking issuance of a
writ of certiorari, order/direction for quahsment of Rule 29 (6) so
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far as it relates to levy of regulation fee for issuance of a transit pass
for mineral brought from outside the State of Madhya Pradesh
through Notification No.F-19-3-2017-XII-1 dated 22.01.2021.
Consequently, the petitioner is also seeking quashment of the
demand notice dated 22.02.2021.
Grounds of challenge in Writ Petition
3. The petitioner is assailing the aforesaid notification and
demand inter alia on the ground that the State Government is not
competent to impose regulation fees under sections 15 and 15-A of
the MMDR Act, 1957 as under the aforesaid sections, the State
Government can only regulate the grant of quarry leases, mining
leases or other mineral concessions in respect of minor minerals and
for purposes connected therewith. The petitioner is attacking the
validity of the aforesaid notification on the ground that even under
Section 15 or 15-A of MMDR Act, 1957, the State Government has
no authority to charge any fee on legally excavated minerals
brought from the other States as has been held by the Apex Court in
case of State of Gujrat v. Jayeshbhai Kanjibhai Kalathiya & Ors
[(2019) 16 SCC 513]. According to the petitioner, the levy in the
name of the regulation fee is a colourable exercise of power beyond
the competence of the State Government. The respondents/State by
way of Form IX issued under Rule 29(7) of ' the Rules, 1996'
charges the transit fee under the M.P. Minerals (Prevention of
Illegal Mining, Transportation and Storage Rules, 2006 read with
M.P. Minor Mineral Rules, 2006 ( hereafter referred to as 'Rules,
2006') which applies to the movement of minerals within the State
and not on the minerals coming outside of the State. Under Rules,
2006, the Government is already charging transit fees in the name
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of royalty on the minerals. Therefore, by amending Rule 29(6) of
M.P. Minor Mineral Rules, 1996 no other fee can be levied in the
name of the regulation fee. It is further submitted that there is no
nexus between the regulation fee and the incidence of import of
legally excavated minor minerals. The State Government has no
legal competence to impose such a fee on minor minerals legally
excavated in other States as there is no element of quid pro quo as a
levy cannot be termed as regulatory in nature.
4. It is further submitted that under the VII Schedule of the
Constitution of India, the State is not conferred with the power to
regulate the minerals coming from the other States as the same is
beyond the scope of Entry 66 and Entry 23 of the State List. In the
case of minerals, only the Central Government has power under
MMDR Act, 1957 to regulate the minerals by virtue of Entry 54 of
List 1 of VII Schedule of the Constitution of India. A similar view
has been taken by the High Court of Karnataka in the case of Shri
Sai Keshava Enterprises & others vs. State of Karnataka [(2021)
SCC Online KAR 10].
Objection by the Respondents/ State
5. The State Government has filed a reply refuting the aforesaid
grounds by submitting that imposition of regulation fee by issuing
an impugned notification on all the minor mineral coming from the
other States is well within the competence and power of the State
Government. The aforesaid notification has been issued in exercise
of the power conferred to the State Government under Section
15,15-A and 23-C of MMDR Act, 1957. It is further submitted that
regulation of mines and minerals development and imposition of
taxes/fees on minerals and also the imposition of any other fee in
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respect of minor minerals development, transportation and
regulation in the State of MP is well within the authority, power and
competence of the State Government under Entry No.23,50 and 66
of the List-II of VIIth Schedule (State List) of the Constitution of
India. The State Government gets the source of power to legislate
on the aforesaid subject under Article 246 of the Constitution of
India. Challenge to the amendment to Rules, 1996 can only be
considered only on the grounds of firstly lack of legislative
competence and secondly violation of Fundamental Rules
guaranteed or of any other constitutional provision and both the
grounds are not available in this petition. Hence, no interference is
called for and the petition is liable to be dismissed.
6. It is further submitted by the respondents that as a measure to
implement the statutory rule, the Department of Mines and Geology
has prescribed "E Transit Pass/ Inter-State Transit Pass (ISTP)" and
that would be issued to the transporters, who are transporting
minerals excavated in other States and transporting into the territory
of the State of M.P. and the E-Transit pass/ISTP is issued to the
persons complying with the requirement of deposition of regulation
fee, as prescribed under Rule 29(6) of the Rules, 1996 brought by
way of impugned notification. However, it is mentioned with a
force that the impugned amendment has also been brought under
the powers conferred under Section 23-C of the 1957 Act, being
read with sections 15 and 15-A of the 1957 Act. So far as the
reference to section 15 is concerned, sub-section 1 of the provision
required special emphasis wherein it has been contemplated that the
State Government may make rules for any other mineral concession
and, with emphasis, for the purpose connected therewith. It is thus
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submitted that sub-section 1 of section 15 itself confers powers
upon State Government to enforce and promulgate the amended
rules. More so, the petitioner has also emphasized sub-section 1-A
(g) of Section 15, wherein revenue related items arising from the
present subject have been amended. A bare reading of clause (g) of
Sub-section 1 makes it evidently clear that the regulation fee being
imposed by the impugned provisions is squarely covered within the
term '' other charges''. A reference at this stage to the principle of
statutory interpretation viz., ejusdem-generis also further the
reading of the term '' other charges'' in favour of the respondent
making it evident that the regulation fee as imposed under Rule
29(6) of the Rules, 1996 is covered therein. It is further submitted
that the petitioner has placed heavy reliance on the judgment passed
in the case of the State of Gujarat Vs. Jayeshbhai Kanjibhai
(Supra) is distinguishable on the sole fact the State of Gujrat had
imposed a blanket ban by the executive order against the
transportation of minerals to the State of Gujarat. The aforesaid
verdict was given considering the provisions of Rule 15(1) (o) of
the MMDR Act whereas the present case falls under Section 15(1)
(g). It is pertinent to point out that the transit fee is levied upon
transportation of minerals from outside the State of Madhya
Pradesh into the territory of the State of Madhya Pradesh under the
amendment rule 29(6) regulation fee @Rs. 25 per cubic meter to
check and control the illegal transportation and storage of minerals
as per law Hence, prayed for the dismissal of the writ petition.
Rejoinder by the petitioner
7. Petitioner has filed a rejoinder by submitting that under the
provision of Section 23 (C) MDDR Act, 1957, the power of State
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Government does not include or envisage restriction on inter-state
trade, commerce and intercourse, which shall be free. Entry 66 in
List-II of VII Schedule of the Constitution is about fees in respect
of any of the matters in List-II. The State Legislature is empowered
to make plenary legislation by invoking Entry-66 of List-II.
However, the subject of regulating mining operations outside the
State is not included in Entry-66 of List-II. Under entry 66 in List-
II, the power of the respondents to levy fees is limited to any of the
matters in List-II. As stated above, since any of the entries in List-II
does not vest the respondents with the power to regulate minor
minerals outside the State of Madhya Pradesh, the respondents
ought not to be allowed to derive the power of passing the
impugned sub-rule under Entry 66 of List-II. The reason for buying
Red Ochre from the State of Rajasthan is that the said mineral is not
available in the State of M.P. to the petitioner, hence the petitioner
is constrained to buy Red Ochre minor mineral from the State of
Rajasthan to provide the best quality of cement to its consumers,
and thus levying of Regulations Fee on the petitioner is arbitrary,
excessive and unreasonable resulting in violation of Articles 14 and
19(1) (g) of the Constitution. The petitioner has vehemently denied
the above contention of the respondents that the Regulations fee is
levied to ensure that only legally excavated minor minerals are
brought into the State of Madhya Pradesh and the same is
unfounded and is liable to be rejected. The petitioner humbly
submits that a similar fee has also been struck down by the Hon'ble
High Court of Karnataka on the ground that the State of Karnataka
does not have legislative competence to levy such a fee. In any
case, the respondents are liable to show independently that it has the
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legislative competence to enact the impugned sub-rule, which it has
failed to do so. A similar provision has been struck down by the
Karnataka High Court in the case of Shri Sai Keshava Enterprises
Vs. State of Karnataka W.P.8851/2020 (07.01.2021) by holding
that the State of Karnataka is not competent to enact sub-Rule (7) of
Rule 42 of the Karnataka Minor Mineral Concession Rules, 1994,
authorizing the collection of the entry fee from a person who
transports certain category of minor minerals from other States with
valid transit permit to the State of Karnataka.
Submission of petitioner's senior counsel
8. Shri Naman Nagrath, learned Senior Counsel for the
petitioner submitted that the State Government has amended Rule
29(6) of Rules, 1996 in the exercise of power under Section 15, 15-
A of MMDR Act, 1957 by imposing the regulation fee on the minor
minerals coming from other State through transportation @ Rs.25
per cubic meter but section 15 of MMDR Act, 1957 gives authority
to State Government to make rules to regulate the grant of quarry
leases, mining leases and for purposes connected therewith which
does not include charging of fee on transportation of minor minerals
from other States. Although the State Government is relying on
section 23-C of MMDR Act, 1957 but the said provision is not
mentioned in the impugned notification, even otherwise, 23-C only
talks about the State Government making rules for preventing
illegal mining, transportation and storage of mineral within the
State. The petitioner purchases the legally excavated mineral from
the State of Rajasthan that too royalty has been paid, therefore, the
said mineral cannot be subjected to charging of regulation fee after
coming within the territory of State of M.P. Shri Nagrath learned
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senior counsel has relied on the judgment passed by the Apex Court
in case of State of Gujarat Vs. Jayeshbhai Kanjibhai (Supra) and
High Court of Karnataka in the case of Shri Sai Keshava
Enterprises (Supra) in which it has been held that the provision of
both sections 15 and 23-C does not authorize the State Government
to make a rule for regulating the mineral lawfully excavated from
other State. Under Section 23-C rules can be made only for
preventing illegal mining, transportation and storage of legally
excavated minerals and its transportation cannot be said to be illegal
mining and transportation, therefore no such regulatory fees cannot
be charged on it. According to Shri Nagrath learned senior counsel
there is no reason to take a different view from the view already
taken by the High Court of Karnataka in the case of Shri Sai
Keshava Enterprises (Supra) and impugned notification is liable
to be struck down which is an ultra virus the section 15 and 23-C
of the MMDR Act, 1957. In the end, Shri Nagrath learned senior
counsel has submitted that any person purchasing and transporting
raw material from outside the state into the state of M.P. pays
Integral Goods and Services Tax (IGST) on each transaction at the
applicable rate of 12% of the sale consideration. Pursuant to
charging IGST the Central Government transfers the due tax to the
destination State i.e. M.P. in this case, hence the State would not be
losing revenue in case of the minor mineral as raw material is
brought to the State without paying any fee, hence there is no need
to levy regulatory fee.
Submission of Additional Advocate General
9. Shri Pushyamitra Bhargav, Additional Advocate General
appearing on behalf of the respondent has refuted the aforesaid
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submission by contending that judgment passed in the case of Shri
Sai Keshava Enterprises (Supra) is completely based on the
judgment passed by the Apex Court in case of State of Gujarat Vs.
Jayeshbhai Kanjibhai (Supra) and in the case of State of Gujarat
Vs. Jayeshbhai Kanjibhai (Supra) section 15(1-A) (o) has been
considered in facts and circumstances where the ban was imposed
on complete transportation of minerals from outside the State. The
Apex Court has held that such restriction cannot be imposed on
inter-state trade hence, the notification issued under Section 15(1-
A) (o) has been struck down. It is further submitted that although
section 23 -C is not mentioned in the impugned notification, State
Government gets the power under Section 23-C to make a rule to
prevent illegal mining, transportation and storage of minor
minerals. No mineral can be transported without permission or
permit issued by the State Government. If the petitioner is
transporting the mineral, then the permit is mandatory under the
Madhya Pradesh Minerals (Prevention of Illegal Mining,
Transpiration and Storage) Rules, 2006 and for which the State
Government is competent to charge a fee. It is further submitted
that the power and competence of the State Government in respect
of the regulation of mines and mineral development and imposition
of tax/fee flows from the entry No.23,50 and 66 of List II of the
Seventh Schedule of the Constitution of India since there is no lack
of competency, hence, such provision cannot be struck down.
According to the learned Additional Advocate General is that one of
the objectives to levy the Regulation fee is to ensure that only
legally excavated minerals and royalty paid minerals are brought
into the State of Madhya Pradesh from other States. Learned
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Additional Advocate General has further contended that the said E-
Transit pass/Inter-State Transit Pass (ISTP) would be a one-stop-
certificate for the transporters to bring the minor minerals from
other States into the State of Madhya Pradesh. thus petition is
liable to be dismissed.
We have heard the learned counsel for the parties and perused
the record.
Conclusions.....
10. By notification dated 22.01.2021, in the exercise of power
under Section 15 of MMDR Act, 1957 the State Government has
brought an amendment in Rules, 1996. Validity of amendment in
Rule 29(6) is only under-challenged in this Writ Petition which is
reproduced below:-
29(6). The Transit Pass shall be in Form IX. Regulation
fee on minor mineral coming from other State through
transportation will be charged at the rate of Rs.25/-
(rupees twenty-five) per cubic meter as per the prescribed
procedure.''
The petitioner is aggrieved by charging a regulation fee of 25
per cubic meter by the State Government on the mineral purchased
from other States mainly the State of Rajsthan and brought within
the State through transportation. Although section 23-C is not
mentioned in the impugned notification but undisputedly that the
State Government has the power to make rules or amendments to
the rules to prevent illegal mining, transportation, and storage of
minerals. Section 13 of the MMDR Act,1957 gives power to
Central Government to make rules in respect of major minerals for
regulating the grant of reconnaissance permits, prospecting licenses
and mining leases with respect to minerals. Section 13 (2) (i) of
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MMDR Act, 1957, provides fixing and collection of fees for surface
rent, security deposit, fines, and other fees. Section 15 of the
MMDR Act, gives the same power to State Government to make
rules in respect of minor minerals and according to which the State
Government may, by notification in the Official Gazette, make rules
for, regulating the grant of quarry leases, mining leases or other
mineral concessions in respect of minor minerals and for purposes
connected therewith. Likewise, section 15(A) of the MMDR Act,
1957 deals with the fixing and collection of rent, royalty, fees, dead
rent, fines or other charges. The power of the Central Government
and State Government are identical in these two sections i.e. 13 and
15 of the MMDR Act 1957. Section 14 clarifies that the provisions
of section 13 [sections 5 to 13] (inclusive) shall not apply to quarry
leases, mining leases or other mineral concessions in respect of
minor minerals, therefore, for all these subjects, in respect of minor
mineral, the State Government is competent to make rules.
11. Apart from section 15, Section 23-C of the MMDR Act also
give power to the State Government to make rules for preventing
illegal mining, transportation and storage of minor minerals. In
exercise of the power conferred under sections 15 and 23-C, the
State of Madhya Pradesh has framed M.P. Minor Minerals Rules
1996 and M.P. Minerals (Prevention of Illegal Mining,
Transportation and Storage Rules, 2006 (hereinafter referred as
Rules of 1996). Section 2 (p) of Rules, 2006 defines the transit
pass which means a pass issued by an officer authorized under the
provision of Madhya Pradesh Minor Mineral Rules, for lawful
transportation of any mineral/minerals and/ or its products from the
lease area or from one place to another by a carrier. CHAPTER-II
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deals with the transportation of minerals and their products.
CHAPTER -V of Rules 2006 deals with the penalty for unauthorised
transportation or storage of minerals and their products, therefore,
within the State of Madhya Pradesh, the transportation of minerals
is controlled and regulated by Rules, 1996 and Rules, 2006 and
without any permit, the transportation of mineral shall be illegal as
held by Division Bench of this Court in the case of Maa Jalpa
Enterprises Versus State of M.P. reported in AIR 2012 MP 1.
Hence the contention of Shri Nagrath learned senior counsel is
unacceptable that since section 23-C is not mentioned in the
impugned notification it cannot be said to have been passed under
section 23-C of the MMDR Act.
12. The MMDR Act, 1957 has been enacted by the Parliament
for the development and regulation of mines and minerals under the
control of the Union. Section 3 provides various definitions and
section 4 deals with the mining operation and according to which
no person shall undertake any reconnaissance prospecting or mining
operation in any area except under in accordance with terms and
conditions of the permit or a prospecting license as the case may be,
of a mining lease, granted under this Act and the Rules made
thereunder. Section 4A provides termination of prospecting licences
or mining leases. Section 13 describes the power of the Central
Government to make rules in respect of minerals like
reconnaissance permits, prospecting licences and mining leases.
Section 13 (2) (i) provides fixing and collection of the fee. Section
15 gives the same power to the State Government to make the rule
in respect of mining minerals, therefore, by virtue of section 14 the
power has been given to the Central Government to make rules for
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measurement and in respect of mining minerals power has been
given to the State Government to make rules regulating the quarry
leases, mining leases or other mineral concessions. In addition to
the power conferred under section 15, section 23C which has been
inserted w.e.f. 18.12.1999 also gives power to the State Government
to make a rule for preventing illegal mining, transportation and
storage of minerals make rule by way of notification in the Official
Gazette.
13. Section 23C (2) (c) deals with the regulation of minerals
being transported from the area granted under a prospecting licence
or a mining lease or a quarrying licence or a permit, in whatever
name the permission to excavate minerals, has been given,
therefore, under this power the State Government can regulate the
transportation within the territory of State from the area granted
under the license or lease or by way of permit. In exercise of power
under Section 15, the State Government has framed the rules in the
name of the Madhya Pradesh Minor Mineral, Rules, 1996
(hereafter referred to as Rules of 1996). Section 2 (xxiii-A) Rules,
1996 defines 'Transport Permit' and according to which the permit
granted for transportation of the mineral secured by operations
other than a mining operation.
In the exercise of the power conferred under Section 23C, the
State Government has framed the Rules of 2006 in order to prevent
illegal mining, transportation and storage of minerals. These rules
have been framed to control illegal mining, illegal transportation
and illegal storage and whosoever found contravening these
provisions, shall be subjected to the penalty as provided in Section
18 of CHAPTER-V, of the Rules, 2006. Therefore, in the State of
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Madhya Pradesh, mining storage and transportation are controlled
under the Rules, 2006. Section 3 of Rules, 2006 prohibits that no
person shall transport or cause to be transported any
mineral/minerals or/ and its products by any carrier from the place
of raising or from one place to another without having a valid
Transit Pass issued under these rules. Sub Rule (2) of Section 3
deals with major minerals as well as minor minerals. As per
proviso 2 rule 3(1), no such Transit Pass shall be required in case a
mineral/mineral or its products are being transported directly from
the lease area by means of mechanical device viz railway wagon or
aerial ropeway or conveyor belt, it means a permit is required for
transportation of minerals outside the lease area by way of the
carrier only. CHAPTER-II deals with the transportation of Minerals
and their products. According to Rule 5 (2) (I) the holder of a
reconnaissance permit, prospecting license, mining lease for
transportation of a mineral or its products from the
permit/license/lease area, as the case may be, shall make an
application in the form to the Officer Incharge of the Mining
Section. He shall have to bear the costs of the Transit Passbook and
the royalty due of the mineral to be transported shall be deposited in
the same manner, as prescribed in Clause (a) sub-rule (3) of Rule 7.
It is clear from Rule 5 (2) (I) that only the holder of the permit or
prospecting licencee or lease/quarry holder can get a transport
permit to transport the mineral from the quarry lease area to other
places under the prescribed format attached with the Rules. Rule 5
(2) (i) is reproduced below:-
"5 (2) (i). The holder of a reconnaissance permit, prospecting
licence, mining lease for transportation of a mineral or its
products from the permit/ licence/lease area, as the case may
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be, shall make an application in Form 1 to the Officer in
Incharge of the Mining Section of concerned District
Collectorate. The cost of the Transit Pass Book and the royalty
due of the mineral to be transported shall be deposited in the
same manner, as prescribed in Clause (a) of sub-rule (3) of Rule
7 and the original treasury' challan shall be attached with the
Form 1;
14. The FORM-1 which is reproduced below, in which also the
name and address of permit/license/leaseholder, place of
permit/licence/ lease area, period of the permit, and name of the
mineral are to be disclosed.
15. FORM-2 is the format for the transport permit in which also
the name of mines, district etc. is required to be filled. Both these
forms have been made to be obtained by the owner of the lease or
licensee. Likewise, Form -3 is also liable to be obtained by the
licensee. Only Form -4 under Rule 5(3) (ii) which is a transit pass
for transportation of minerals by dealer licensee and Form-4-A
provides registration of carrier for transpiration of minerals.
Therefore, Form 4-A to Form-4-D are required to be obtained by
the owner of the carrier for transportation of minerals and after that,
the owner of the carrier is required to submit a quarterly return for
transportation of minerals, therefore, in the State of M.P., the
transportation of mineral is controlled under CHAPTER-II. Hence
as per the definition of 'Transport Permit' under Section 2 (xxiii-A)
of M.P. Minor Mineral, Rules, 1966 the permit shall also be granted
for transportation of the mineral won by any person i.e. other than a
mining operation. The petitioner being a procurer of the mineral
from a state other than M.P. is also required to obtain the "Transit
Permit".
16. That either in Rules 1996 or 2006, there are no provisions for
- : 19 :-
prohibition of transportation of minerals from other States to the
State of M.P. No prescribed format is given to obtain licence/permit
to get a licence for the transportation of inter-state movement of
mineral. The first time, vide impugned notification, provision has
been made only for charging regulation fees without corresponding
amendment in CHAPTER-V of Rules, 2006. Under Rule 3 of
Rules, 2006 there is no such prohibition for transportation of
minerals from other States to the State of M.P. The only prohibition
is that no person shall transport and store minerals within the State
of M.P. from the quarry area to another place without a transit
permit. Rule 5 also deals with only the necessity of obtaining the
permit for transportation of minerals from quarry area, lease area to
another place. Therefore, making an amendment by way of Rule 29
(6) in M.P. Minor Minerals Rules, 1996 for charging a regulation
fee for minerals transported from other States to the State of M.P.
would be beyond the power of the State Government. Unless that
mineral transportation from other States into the State of M.P. is
declared as illegal transportation without a permit no regulation fee
can be charged. That, under Section 23-C of MMDR Act, 1957
power has been given to the State Government to control the illegal
transportation and unless such transportation is declared illegal
under the Rules,1996 or Rules 2006, no regulatory fees can be
charged, as held by Apex Court in case of State of T.N. Vs. M.P.P.
Kavery Chetty reported in (1995) 2 SCC 402, State of Gujrat v.
Jayeshbhai Kanjibhai Kalathiya & Ors (supra) and the Division
Bench of High Court of Karnataka in the case of Shri Sai Keshava
Enterprises (Supra). It has been held that section 15 and section
23C does not authorize the State Government to make rule
- : 20 :-
concerning minor mineral lawfully excavated in the other State. It
has been said to the extent that both the provisions do not authorize
to State Government to make rules for regulating the mineral
lawfully excavated in other States. By way of delegated legislation
under Section 15 and 15-A, the Central Government has given the
power to State Government only to make a law to control the grant
of quarry lease, license, storage and transportation within the State.
After considering the aforesaid judgment passed by Apex Court in
the case of State of T.N. Vs. M.P.P. Kavery Chetty reported in
(1995) 2 SCC 402, State of Gujrat v. Jayeshbhai Kanjibhai
Kalathiya & Ors (supra), the High Court of Karnataka has held as
under:
22. As can be seen from the said two Gujarat Rules, it
appears that there was a complete prohibition imposed on
transportation of the sand from the State of Gujarat to the
neighboring States even with authorized royalty pass or
delivery challan. The said two rules prohibited the
movement of sand beyond the border of the State of
Gujarat. In the statement of object and reasons it was stated
that new provision has been made with a view to prevent
illegal mining. The Apex Court noted in paragraph 9 of the
said Judgment that the impugned rules were framed in
exercise of power conferred under Section 23-C of the said
Act of 1957. Paragraphs 10 and 11 of the decision of the
Apex Court are relevant which read thus:
"10. A perusal of Sections 15 and 23-C in relation to the
aforesaid discussion would clearly suggest that the power of
the State Government to make rules is restricted to:
10.1. making rules for grant of quarry leases, mining
leases or other mineral concessions in respect of minor
minerals and for the purposes connected therewith; and
10.2. making rules for preventing illegal mining,
transportation and storage of minerals and for the purposes
connected therewith.
11. In the aforesaid context, the question arose before the
High Court as to whether in exercise of such powers
delegated by the legislature upon the State Government,
could the State Government make a rule to the effect that
- : 21 :-
the sand which is a minor mineral would not be allowed to
be taken beyond the borders of the State of Gujarat and
making such movement as punishable offence. According to
the High Court, delegation of powers to the State
Government under the aforesaid provisions does not
include or envisage restriction on inter-State trade,
commerce and intercourse which shall be free. Thus, the
impugned rules are held to be ultra vires the provisions
of Sections 15 and 23-C of the MMDR Act. They are
also held to be violative of Article 301 of the Constitution".
xxxxxxxxxxxxx
24. While dealing with the submissions, the Apex Court
formulated two questions which are quoted in paragraphs
34.1 and 34.2 which read thus:
"34.1. Whether the impugned Rules framed by the State
of Gujarat as a delegate of Parliament are beyond the
powers granted to it under the MMDR Act? In other
words, whether the impugned rules are ultra
vires Sections 15, 15-A and 23-C of the MMDR Act?
34.2. Whether the impugned Rules are violative of Part
XIII of the Constitution of India?
25. The Apex Court also considered its earlier Judgment in
the case of State of Tamil Nadu -vs- M.P.P. Kavery Chetty. In
paragraph 42 while dealing with the said judgment, the
Apex Court held thus:
"42. It is in this context the words "transportation" and
"storage" in Section 23-C are to be interpreted. Here the two
words are used in the context of "illegal mining". It is clear
that it is the transportation and storage of illegal mining and
not the mining of minor minerals like sand which is
legal and backed by duly granted licence, which can be
regulated under this provision. Therefore, no power flows
from this provision to make rule for regulating
transportation of the legally excavated minerals".
- : 22 :-
(underlines supplied)
26. Hence, the Apex Court held that the words
'transportation' and 'storage' used in Section 23-C of the said
Act of 1957 are in the context of illegal mining and not the
mining of minor minerals like sand which is legal and
backed by duly sanctioned licence. Hence, the Apex Court
specifically held that there is no power vesting in the State
under Section 23-C of the said Act of 1957 to make a rule for
regulating transportation of lawfully excavated minerals.
27. A careful perusal of the impugned sub-rule in the present
petitions shows that it deals with only transportation of
processed building stone materials from other States with a
valid permit. It provides for levy of amount of Rs.70/- per
metric ton from the person who transports processed
building stone material as mentioned in the impugned sub-
rule from other States to State of Karnataka with a valid
permit. Thus, the impugned sub-rule provides for levy of a
charge at the rate of Rs.70/- per metric ton of processed
minerals transported from other States which is legally
excavated. Thus, the levy made under the impugned sub-
rule is on transport of lawfully excavated building stone
from other States to State of Karnataka.
28. Clause (a) sub-section (2) of Section 23-C provides for
framing of Rules for establishment of check-posts for
checking of minerals under transit. As far as the regulation
of transport of minerals is concerned, the rule making power
is under clause (c) of sub-section (2) of Section 23-C.
Clause (c) is about regulation of minerals being transported
from the area granted under a prospecting licence or a
mining lease or a quarrying licence or a permit. Thus, clause
(c) authorizes framing of rules for transportation of lawfully
excavated minerals from the lands within the State.
Obviously, clause (a) refers to establishment of check-posts
for the purposes of checking the instances of illegal
excavation and/or illegal transportation of minerals within
the State. The State Government does not get the authority
under Section 23-C of the said Act of 1957 to make rules for
the regulation of transport of legally excavated minerals
from other States. The impugned sub-rule expressly
authorizes the State Government to collect a sort of an entry
- : 23 :-
fee at the rate of Rs.70/- per metric ton from a person who
transports legally excavated minerals from the other States.
29. In its statement of objections, firstly, the State
Government has relied upon the provisions of Section 15 for
supporting the impugned sub-rule. Clause (g) of sub-section
(2) of Section 15 confers a rule making power for making
Rules for fixing and collection of rent, royalty, fees, dead
rent, fines or other charges. Obviously, clause (g) refers to
collection of royalty, fees, dead rent, fines or other charges
on the minor minerals excavated within the State. This
provision does not confer on the State Government a rule
making power to make rules for collection of royalty, fees,
dead rent, fines or other charges on the minor minerals
lawfully excavated within other States. Clause (o) of sub-
section (1) of Section 15 authorises rule making in respect of
a matter which is to be prescribed or may be prescribed.
Clause (f) of Section 2 of the said Act of 1957 define the
word "prescribed", as prescribed by rules. Therefore, clause
(o) can be invoked for rule making when there is a rule
prescribing the subject matter on which rules can be framed.
Even sub-section (1) of Section 15 confers an authority to
make rules for regulating grant of quarrying leases, mining
leases and other mineral concessions in respect of minor
minerals and the purposes connected therewith. This power
can be exercised for dealing with mining or quarrying inside
the State of Karnataka. This provision does not authorize
the State Government to make rules concerning minor
minerals lawfully excavated in the other States. It is
pertinent to note here that provision of Section 23-C does not
apply only to minor minerals, but it applies to all categories
of minerals. Therefore, the provisions of both Section
15 and Section 23-C do not authorize the State Government
to make rules for regulating the minerals lawfully excavated
in other States.
30. In paragraph five of the statement of objections, the
State Government has derived support from Section 23-C
for justifying introduction of the impugned sub-rule. The
averments made in paragraphs 6 to 9 of the statement of
objections are relevant which read thus:
"6. In Karnataka, the entire system of issue of mineral
dispatch permits to lease holders within the State is
technology based and certain adequate safeguards are put in
- : 24 :-
place to ensure that illegal transportation of quarried
material is minimized to the maximum extent. However, it
was noticed that there was large-scale movement of mineral
from outside the State and that there is no proper
mechanism to supervise the activity/movement, resulting in
serious difficulties in identifying illegally quarried mineral
from outside the State. The permits issued in other States
are, generally, paper-based and the entries pertaining to the
movement of the goods are left to be filled up by the permit
holder. It has been the experience of the State that the same
permits/transmit passes would be used repeatedly. Once the
vehicle enters into the State, there is no method to track the
movement of material or if the minor mineral is already
delivered to the consignee. Since there is no unified
mechanism and each State follows its own method in
respect of issuance of permits, it has proved to be extremely
difficult to distinguish between legally transported material
and illegally transported material as based on the same
permits, multiple trips were being carried out. From the
transit passes produced by the petitioners themselves as
Annexures to the writ petition, it is demonstrable that
identification and supervision of the movement of vehicles
from outside the State without the necessary protocols is a
very difficult task, which hinders the State's efforts in
prevention of illegal transport of minor mineral and giving
scope for illegal quarrying within the State.
7. In this regard, it is submitted that, in order to check the
illegal transportation of Minerals from outside the State of
Karnataka into the State, and also to verify the permits and
ensure that there is no illegal transport of minor mineral
within the State based on permits/transit passes issued
outside the State, the State is in the process of dedicated
check posts and weigh-bridges at various locations in the
State. Presently, the Government has established one check-
post in Attibele near the Tamil Nadu-Karnataka border, and
is in the process of setting up more check- posts and weigh
bridges.
8. It is submitted that the purpose of establishing these
check posts is primarily to ensure that only legally extracted
mineral is permitted to be brought into the State and to
ensure that the permit, once issued, should not be prone to
multiple uses. In other words, these check-posts ensure that
all the mineral that is being transported into the State has
- : 25 :-
been legally extracted and that no illegally extracted mineral
is permitted to brought into and sold in the State.
9. It is submitted that in order to maintain these check-posts,
the State is required to incur significant expenditure,
including maintenance of personnel and infrastructure. It is
estimated for the total cost for deployment of Squad Teams
and maintenance of check-posts in the State, an annual
expense of Rs.15,72,00,000/- is required to be incurred by
the State. It can, therefore, be seen that the State incurs
substantial expenses for the maintenance of check-posts in
order to ensure that no illegally extracted mineral is
transported in the State. In this background, it is submitted
that the amount of Rs.70/- per metric ton i.e., being levied
under Rule 42 (7) is a reasonable regulatory fee that is
collected in order to defray the expenses incurred for
maintenance of check-posts and to check the transportation
of illegally extracted mineral into the State. Therefore, the
fee that is levied under the impugned rule is in the nature of
a regulatory fee that is collected from the transporter of the
specified mineral into the State. A copy of a chart showing
the estimate of expenses that would be incurred by the State
Government in order to establish check posts and
effectively check the illegal transportation of minerals is
produced as Annexure R-1."
(underlines supplied)
31. It is thereafter contended by the State Government that
various decisions of the Apex Court including the decision
in the case of Vam Organic Chemicals (supra) lay down that
there is no requirement of showing quid-pro-quo or a
measure of exactitude when the State collects any amount
by way of regulatory fees. Only if such a rule making power
exists, the question of going into the nature of levy arises.
We have found that there is no such rule making power
conferred on the State Government. The real question is
whether transportation of lawfully excavated minerals in
other States can be regulated by exercising the rule making
powers either under Section 23-C or Section 15. The answer
to this question must be in negative, as held by us earlier.
32. Reliance was placed on the sub-rule (1) of Rule 46 of
the said Rules 1994. Sub-Rule (1) of Rule 46 provides for
an officer empowered by the State Government by
notification in this behalf making entry and carrying out
- : 26 :-
inspection. Rule 43 or 46 has nothing to do with the
lawfully excavated minerals which are brought from other
States into the State of Karnataka. It is contended in
paragraph 9 of the statement of objections filed by the State
Government that the fee levied under the impugned sub-rule
is in the nature of a regulatory fee. The State Government
has no rule making power to make rules providing for
recovery of regulatory fee on minerals lawfully excavated in
the other States. Therefore, we need not go into the question
of the nature of fees.
ARGUMENT OF EXECUTIVE POWER:
33. Another argument was canvassed by relying upon a decision
of this Court in the case of V.S. Lad and Sons (supra) to the
effect that the State Government has an executive power to deal
with the subjects envisaged under Section 23-C.
However, Section 23-C will not apply at all to regulating the
entry of minerals lawfully excavated in other States. The
substantial part of the arguments canvassed on behalf of the State
Government is on the issue of quid-pro-quo regarding co-relation
between the fees collected and the services being rendered. The
said argument is relevant provided that there is a power conferred
on the State to make the rules to regulate the entry of minor
minerals lawfully excavated from other States by levying fee.
Such power is not vesting in the State Government.
ARGUMENT BASED ON ENTRY 66, LIST-II OF
SCHEDULE VII OF THE CONSTITUTION:
34. An argument was also canvassed based on entry 66 in list-II
of seventh schedule of the Constitution. Entry 66 is about fees in
respect of any of the matters in list-II. List-II is about the
Legislative Powers of the State Governments. Therefore, the
State Legislature is empowered to make a plenary legislation by
invoking Entry-66 of List-II. However, the subject of regulating
mining operations outside the State is not included in entry-66,
List-II. Entry-66 is about prescribing fees in respect of any of the
matters in list-II. Entry-23 in List-II is about regulation of mines
and mineral development subject to the provisions of List-I with
respect to regulation and development under the control of the
Union. The field is occupied by the said Act of 1957 enacted by
the Union Government which does not provide for levy of fees as
provided in the impugned sub-rule. Moreover, the State
Government has not enacted any law in terms of entry-66 of the
said list. Assuming that such a power to levy fee is vested in the
State Legislature by virtue of Entry-66 of List-II, a rule making
power can be exercised provided that a law is enacted by the
- : 27 :-
State Legislature authorizing such a levy by making rules. No
such law has been enacted.
35. As the State Government has no legislative competence to
make rules for levy of transportation fee or charge on minerals
lawfully excavated in other States, it is not necessary for us to go
into the question of quid pro quo regarding existence of co-
relation between the fees collected and the services being
rendered.
36. Now, coming to other argument canvassed by the petitioners
regarding breach of Article 301 and 304 of the Constitution, it is
not necessary for us to go into the said argument, inasmuch as,
we have held that neither under Section 15 nor under Section 23-
C of the said Act of 1957, there is a power vesting in the State
Government to make rules for regulating the entry of lawfully
excavated minerals from the other State and to levy the fees on
entry of lawfully excavated minerals from other States into the
State of Karnataka. Therefore, these petitions must succeed.
Accordingly, we pass the following:"
Relief...
17. In view of the above discussion the writ petition is allowed as
under:
(a) Rule 29 (6) of the Madhya Pradesh Minor Mineral Rules,
1996 inserted by way of an amendment notified in the Extra
Ordinary Gazette dated 22.01.2021 bearing Ref No. F-19-3-2017-
XII-1 (Annexure-P/1) so far it relates to charging regulatory fees
ultra vires the Mines and Minerals (Development and Regulation)
Act, 1957 (Central Act 67 of 1957) hence struck down as declared
unconstitutional.
(b) Any fees collected from the petitioner be refunded forthwith.
There shall be no order as to the costs.
( VIVEK RUSIA ) (SUBODH ABHYANKAR)
JUDGE JUDGE
praveen/-
Digitally signed by PRAVEEN
NAYAK
Date: 2022.05.02 19:26:17
+05'30'
