Civil Appeal No1779 of 1991
From the Judgment and Order dated 10 4 1990 of the Bombay High Court in WPNo1944 of 1987
MCBhandare CPU Nair Ms
Kamini Lao and MNShroff for the Appellants
VNGanpule SKAgnihotri ASBhasme and Ms
HWahi for the Respondents
The Judgment of the Court was delivered by SawantJ
Leave granted
Appellant No1 is a Trust which runs and manages an Ayurveda College in Bombay
Appellant No2 is the Principal of the College
There was a vacancy in the post of a lecturer in Sanskrit for the academic year 1983 84 which was admittedly reserved for a candidate from the backward classes
The Ist respondent had applied for the said post on 19th September 1983 even before the appellant Trust had invited applications by advertising the vacancy as it was required 286 to do
Subsequently on October 13 1983 the appellant Trust issued an advertisement inviting applications for the post without mentioning for which academic year the appointment was to be made
The parties before us agree that it was for the academic year 1983 84
In the advertisement it was specifically mentioned that the post was reserved for a backward class candidate and if no suitable candidate from the backward classes was available a candidate from the non backward classes may be appointed for an year
It appears that within a month thereafter on the 12th November 1983 a second advertisement was issued repeating the earlier advertisement
No application was received from any candidate from the backward classes in response even to this advertisement and hence the Ist respondent who had already applied as stated earlier was appointed to the said post for the period from March 19 1984 till April 30 1984
The total period of service put in by the Ist respondent for the said academic year was 41 days
On April 28 1984 the appellant Trust issued an advertisement for the same post repeating the contents of the earlier advertisement but for the academic year 1984 85
The applications were invited by 30th April 1984
No candidate from the backward classes applied in response to the said advertisement
The interview was held on June 30 1984 and the Ist respondent was appointed for the period from 21st August 1984 to 19th April 1985
In the third academic year 1985 86 admittedly no advertisement was issued and no applications from the candidates including candidates from the backward classes were invited
However the Ist respondent was appointed to the post from July 10 1985 to April 30 1986
Thereafter the Ist respondent s services were terminated wef
30th April 1986 by a notice dated March 12 1986
No appointment was made to the said post for the academic year 1986 87
On May 11987 the Trust issued advertisement inviting applications to the said post from candidates belonging to all classes since according to the Trust the post was dereserved during the said period
Three candidates belonging to the non backward classes including the Ist respondent and the 5th respondent applied for the post and the 5th respondent was selected and appointed to the same
It appears that the Ist respondent was not paid salary for the summer vacations following the academic years 1984 85 and 1985 86
She was also not paid salary from November 1985 to April 1986
She approached the College Tribunal praying for salary for i November 1985 to April 1986 and ii for the summer vacations following 287 academic years 1984 85 and 1985 86 ie for the months of May and part of June 1985 and May and part of June 1986 and iii for setting aside her termination of service and for reinstatement
The Tribunal allowed her claim for the salary for the relevant periods but dismissed her claim for reinstatement holding that her appointment was purely temporary and her claim that she should be deemed to have been confirmed because she had served for two academic years was not established in the circumstances of the case
This decision was delivered by the Tribunal on December 9 1986
As stated earlier during the academic year 1986 87 no appointment was made to the said post and it was subsequent to this decision that an advertisement was issued calling for applications from candidates belonging to all classes and 5th respondent was appointment to the said post
Against the decision of the Tribunal the Ist respondent approached the High Court under Article 226 of the Constitution and the High Court held that notwithstanding the break in her actual appointment she was continuously in employment from March 19 1984 to April 30 1986
She was therefore entitled to the benefit of the resolutions of the State Government and the University of Bombay dated September 29 1986 and February 27 1987 respectively which according to the High Court laid down that an employee who was appointed for two consecutive academic years must be deemed to have been on probation right from the time of the first appointment and therefore confirmed in the post
The High Court therefore allowed her petition and directed the appellants to reinstate her forthwith in the post and also to treat her as if she had been in continuous employment from March 19 1984 with the benefit of full back wages seniority etc
The High Court also directed the University the Director of Ayurveda Maharashtra and the State of Maharashtra who were respondents 34 and 5 respectively to the petition and who are respondents 23 and 4 to the present appeal respectively to make appropriate sanctions including grant of money if necessary
The High Court further granted cost and directed compliance with the orders by the appellants within six weeks from the date of its order which is April 10 1990
Although various contentions have been raised we find that it is not necessary to go into them
According to us the appellant Trust has violated the directions of the Government as well as of the University in the appointments in question in two major respects as a result of which neither the appointment of the Ist respondent nor that of the 5th respondent can be said to have been validly made
Unfortunately these aspects of the matter which are evident from the record 288 were lost sight of both by the Tribunal and the High Court
The result has been that the illegalities which are patent on the face of the record have been perpetuated
The Government of Maharashtra had issued a Govt
resolution No
1177129387XXXII CELL on October 25 1977 prescribing conditions of service as shown in Appendix III to the resolution
By a further resolution of April 3 1978 Government made it clear that the revised scales of pay which were sanctioned by the resolution of October 25 1977 could be implemented only after statutes had been duly made by the University
Since the making of the statutes was to take some time and the revised scales of pay recommended of the University Grants Commission were to be effective from January 1 1973 as laid down in the GR of October 25 1977 the Vice Chancellor exercised his powers conferred upon him under Section 116b of the Bombay University Act 1974 hereinafter referred to as the Act and issued his direction No192 of 1978 on 7th June 1978
This direction among other things laid down the mode of recruitment of the teachers and principals as follows Futuer recruitment to posts of Teachers and Principals of colleges shall be made through a Selection Committee the composition of which is specified in the terms and conditions Appendix II Appendix II states as follows  Terms and conditions attached to the revised scales of pay
i x x x x x x x x ii All appointments of teachers in colleges shall be made on merit and on the basis of all India advertisement
The qualifications prescribed for the posts should essentially be related to the academic attainment in the subject concerned and should not be linked with language or other regional consideration
Appointment should not be made on communal or caste consideration
The constitution of Selection Committee for recruitment to the posts of lectures in a college should be as follows a Chairman Governing Body of the College or his nominee 289 b a nominee of the Vice Chancellor
c one expert to be nominated by the University
d one nominee of the Director of Education Higher Education
e Principal of the college and f Head of the Department concerned of the college
No selection shall be considered valid unless at least one expert is present
The recommendations of the Selections Committee shall be subject to the approval of the Vice Chancellor
        Emphasis Supplied 8
The effect of the aforesaid government resolutions and the University directions is a that all appointment of teachers in colleges have to be made on merit and on the basis of all India advertisementb that the appointments have to be made by a Selection Committee which consists among others of nominee of the Vice Chancellor an expert to be nominated by the University and a nominee of the Director of Education Higher Education
No selection will be considered valid unless at least one expert is present for the selection
Admittedly the selection of the 5th respondent was made by a committee where neither the nominee of the Vice Chancellor nor the expert nominated by the University nor the nominee of the Director of Education Higher Education ie in the present case of the Director of Ayurveda was present
The selection so made was therefore not valid
Shri Bhandare the learned counsel for the appellant Trust Pointed out to us the letter of June 6 1989 sent by the University of Bombay according approval to the appointment of the 5th respondent as a lecturer in Sanskrit on probation from 2nd July 1987 and contended that in view of the said approval the invalidity of the appointment if any on account of the absence of the expert in the Selection Committee should be deemed to have been condoned
We are not impressed by this contention
In the first instance there is nothing on record to show whether when the appellant Trust forwarded its report on appointment of the 5th respondent the Trust had apprised the 290 University of the absence of the expert at the time of his selection
Secondly the University has not reserved the power to relax the rule and permit selection without the presence of the expert
There is nothing in the University s letter to show why the University had condoned the absence of the expert
It is therefore obvious that the approval given by the University being in ignorance of the true state of affairs and in breach of the rule is legally ineffective and cannot validate the appointment
There is further a common illegality in the appointment of both the 1st and the 5th respondent which arises on account of the failure to follow the Government Resolutions and University directions in the matter of reservation of the seats for the backward classes which are binding on the College
On 30th March 1981 the Government of Maharashtra passed a resolution in exercise of the powers conferred on it under sub Section 2 of Section 77 C of the Act issuing instruction to all the non agricultural Universities in regard to the reservation of posts to be made in favour of Scheduled Castes and Scheduled Tribes while making appointments to teaching and non teaching posts in the University affiliated colleges and recognized institutions
The reservation prescribed was as follows 1 Scheduled Castes 13 pc
2 Scheduled Tribes 7 pc
3 Nomadic Tribes  Vimukta Jatis 4 pc
Total 24 pc
That resolution further says that the various orders contained in the booklet Reservation and other concessions in Government service for backward classes will be applicable for recruitment to the teaching and non teaching posts reserved for backward classes in the University and the affiliated colleges and recognized institutions subject to the following modifications in regard to recruitment to the teaching posts
The modifications among other things were as follows Similarly at any given time of recruitment to the teaching posts only the total number of reserved vacancies and the sections from which they are to be filled in should be 291 determined
It would be enough if the require percentage is fulfilled as a whole and not with reference to any particular post
If the reserved vacancies cannot be filled then so many posts as cannot be filled in may be kept vacant for six months and should be again advertised thrice
Even after readvertising the posts 3 times if suitable candidates belonging to backward classes do not become available they may be filled in by candidate belonging to the open category For giving effect to the aforesaid instructions it will be necessary for the Universities to make statutes under Section 77C1 under their respective Universities Acts of 1974
For ensuring immediate implementation the Vice Chancellors of the Universities under clause b of Section 116 of the respective Universities Act of 1974
 Emphasis supplied 12
By its subsequent resolution of October 20 1983 the Government of Maharashtra clarified its earlier resolution of March 30 1981 and stated as follows 1 x x x x x x x x 2
After reconsideration of the above decision it is now directed that if suitable candidates cannot be found to fill posts reserved for backward classes in Universities affiliated colleges and recognized institutions those posts should be temporarily filled with candidates belonging to non backward classes for one academic year
But as mentioned in the resolution the appointment of a non backward class candidate to a reserved vacancy should be made only in the event of failure to find a backward class candidate even after the post has been advertised thrice
x x x x x x x x Emphasis supplied 13
Thereafter a further resolution was issued by the Government on September 291986 on the subject stating therein that it had come to the notice of the Government that some institutions had not 292 implemented the instructions contained in the earlier resolutions of March 30 1981 and of October 30 1983
The Government therefore directed that the said directions should be implemented strictly
This resolution further directed that the non backward class candidates who were being repented for the second and third academic years when backward class candidates were not found for appointment for the first academic year should not be called for interview every year and that the candidates belonging to the non backward classes should be appointed for the second and third academic year also without calling them for interview
It is further stated in the said resolution that similarly as soon as the reserved post is dereserved the appointed candidate should be confirmed in that post from the date of dereservation subject to all other terms and conditions
It was also directed that necessary statutes should be made by the University in accordance with the provisions of the Act and for ensuring immediate implementation the vice Chancellor should issue directions under clause b of Section 116 of the Act
Pursuant to the said resolution of the Government the Vice Chancellor of the University issued direction on March 11 1987 as follows x x x x x x x 1 That the reserved teaching post which is filled in by appointment of a suitable non backward class candidate in the first year by following the prescribed procedure of selection shall be advertised again for the second and third years for inviting applications only from persons belonging to Scheduled Castes Scheduled Tribes Denotified Tribes and Nomadic Tribes
However applications may also be invited from persons belonging to non backward class if the suitable non backward class candidate already appointed in the first year is not available for reappointment in the second or third year and or his services are required to be terminated on account of unsatisfactory performance of work in the first year 2 That if in the second year in response to the advertisement a backward class candidate is not available then the suitable non backward class candidate already appointed in the reserved post shall not be required to appear for interview before the Selection Committee again for the second 293 and or third year s but that he shall be reappointed in the reserved post if he is available for reappointment 3 That if in response to the third advertisement in the third year no application is received for the reserved post from candidates belonging to SC ST DT or NT the college authorities shall start the process of dereservation of the reserved post
After the process of dereservation of the post is completed the appointment of non backward class teacher shall be deemed to be on probation with retrospective effect from the date of his initial appointment if he has held continuous appointment for two years in the college or in any other college under the same management and that his appointment shall be confirmed from the dates of completion of two years of continuous appointment
The aforesaid direction shall come into force with retrospective effective from the date of the Maharashtras Government Resolution that is of 29 9 1986 which means that non backward class teacher who is eligible to get the benefit of the above direction shall be confirmed in his post with effect from 29 9 1986 or from any later date on which he may become eligible for confirmation in accordance with the aforesaid directions
x x x x x x x x x Emphasis supplied 14
According to these Government resolutions and University directions a whenever a post is reserved to be filled in by the candidates from the backward classes the post is to be advertise thrice within 6 months in each academic year
The post is to be kept vacant for the said months 6 months if no suitable candidate from the backward classes is available b the post is to be filled in temporarily for one academic year by a non backward class candidate only after the three advertisements have been given as above c the aforesaid process is to be repeated for two more academic years c the candidate from the non backward classes appointed temporarily in the first academic year for want of a backward class candidate is to be continued as a temporary appointee for the next two academic years without being interviewed afresh for the next two years d if in spite of the third advertisement in the third academic year no application is received from a backward class candidate the College authorities are free to 294 start the process of dereservation of the reserved post e after the process of dereservation of the post is completed the appointment of non backward class teacher will be deemed to be on probation with retrospective effect from the date of his initial appointment and he shall be confirmed in the post on his completing two years of his continuous service
Admittedly as pointed out earlier the post was reserved for the academic year 1983 84
The Trust had not given three advertisements within six months for any of the academic years 1983 84 1984 85 and 1985 86
On the other hand for the academic year 1983 84 it issued only two advertisements viz on October 30 1983 and November 12 1983
It is not known as to why even two advertisements were not issued at the beginning of the said academic year
The academic year admittedly begins from June
May that be as it is
As regards the second academic year 1984 85 it issued only one advertisement and that was on April 28 1984
It did not issue any advertisement for the academic year 1985 86
The initial appointment of the 1st respondent for the academic year 1983 84 and her continuation for the subsequent academic years viz 1984 85 and 1985 86 was thus in breach of the Government resolutions and the University directions and therefore illegal
Similarly since the appointment of the 5th respondent was made without fallowing the procedure prior to dereservation viz three advertisements repeated every year for all the three academic years for which the post was to be reserved his appointment to the post as if the post stood legally dereserved was also illegal since in the facts and circumstances of the case it is obvious that the post could not have been dereserved to make it available for non backward class candidate
Shri Bhandare however contended that in the meanwhile the appellant Trust had taken steps to shift the reservation from the post of a lecturer in Sanskrit to the post of lecturer in Sanhita
The Trust had written a letter on July 2 1986 for the purpose to the Directorate had by its letter of July 11 1986 accorded the sanction
It may however be pointed out the representation made by the lecturer in Sanskrit to the post of lecturer in Sanhita had proceeded on the basis that the Trust had made efforts to fill in the said post from the candidates of the backward classes as required by the Government resolutions and the University directions
As pointed out above the Trust had not made the efforts as required by the said resolutions and directions
It had not issued the advertisements 295 as it was required to do
The sanction was obtained and granted obviously on the basis of inadequate information
The sanction was therefore defective in law
The High Court unfortunately did not notice these infirmities in the appointment of either of the respondents
Shri Ganpule the learned counsel appearing for the 1st respondent contended that since the 1st respondent was appointed in the first academic year viz 1983 84 and continued for the next two academic years viz 1984 85 and 1985 86 she was entitled to the benefit of the directions of the University contained in Circular No 98 of 1987 dated March 111987 which had stated that if the non backward class teacher is on probation continuously for two years he would be deemed to be on probation with retrospective effect from the date of his initial appointment
Although the services of the 1st respondent were terminated wef
April 30 1986 since she was entitled to the benefit of the vacation salary following the academic year 1985 86 she would be deemed to be in service after the completion of the vacation and therefore she may be said to be in service on September 29 1986 from which date the said University direction was to be effective
The contention proceeds on the footing that her initial appointment and the continuation of service for the next two academic years was valid
We have already pointed out above that they cannot be considered to be valid
However assuming that her initial appointment and subsequent continuation of service was valid she would not be entitled to the b benefit of the University Direction of March 11 1987 because her entitlement to the vacation salary does not extend her period of employment up to the end of the vacation
That is a perquisite which is conferred on every teacher who has served during the academic year
It has no connection with the continuation of the employment since even those teachers whose services are validly terminated before the beginning of the vacation period are given the benefit of the salary of the vacation period
Statute 424 of the University which is reproduced as Annexure C  to the petition makes this position clear
The argument therefore has no merit
In the view we have taken the appointments of both 1st and the 5th respondents were not valid
The post was reserved for the academic year 1983 84
We are now at the end of the academic year 1990 91 A fresh appointment therefore will have to be made for the academic year 1991 92
In the meanwhile several events have occurred
The appointment of the 1st 296 respondent has already been terminated wef April 30 1986
The 5th respondent has been in service from July 2 1987
We are informed across the bar that today he has become overaged
The 1st respondent was overaged even at the time of her initial appointment
Although the advertisemently had stated that the candidate should not be above 32 years at the time of her initial appointment itself she was about 40 years old
The advertisement had also not lmentioned anywhere that the age was relaxable
But that is a matter of history
In the meanwhile
as pointed out above on incomplete information the Directorate of Ayurveda has allowed the appellant Trust to shift the reservation from the post to the post of a lecturer in Sanhita
Taking into account all the facts and circumstances we are of the view that an opportunity should be given to the appellant Trust to cure the illegalities
While therefore we maintain the order of Tribunal and set aside the order of the High Court we direct the appellant Trust to advertise the post three times sufficient in advance and in any case within six months from the close of the present academic year viz
1990 91 as a post reserved for the backward class candidate and if no application is received from a suitable backward class candidate the post will be deemed to have been dereserved
The Trust will then proceed to fill in the same by a candidate belonging to non backward classes
This fact may be made clear in all the three advertisements
The 5th respondent will be entitled to apply for the post notwithstanding the fact that he has by this time become overaged
If he is selected on the basis of his other qualifications the Selection Committee shall relax in his favour the condition with regard to the maximum age
If he is appointed to the post his appointment will be a fresh one and his past service will not count for the probation period
The Trust shall for the purpose constitute a proper Selection Committee according to the rules
The appeal is allowed accordingly
The parties will bear their own costs
Before parting with this appeal we must observe that our decision has proceeded on the basis of the Government resolutions and University directions placed before us
The resolutions and directions as pointed out above require that the posts reserved for backward class candidates should be kept vacant for six months and it is only after the third advertisement during the said six months in each academic year that they should be filled in by candidates belonging to 297 the non backward classes if suitable candidate from backward classes are not available
Literally interpreted it would mean that in each academic year there will be no teacher for the first six months if the process of advertisement is to begin at the commencement of the academic year
This is bound to cause hardship to the students
It is therefore incumbent upon the institutions concerned to advertise the posts thrice within six months well before each academic year begins
Since in the present case the academic year begins in June the process of advertisement must begin in December of the preceding year
This should be the normal practice
An exception has to be made in the present case because the decision is being given today
To overcome the hardship to the decision is being given today
To overcome the hardship to the students we would recommend that the 5th respondent may be permitted to teach as a purely temporary teacher during the period that the process is not completed for the academic year 1991 92
However the appellant Trust will take steps within two weeks from the receipt of this order to start the process of advertisement as directed above
GN Appeal allowed


Summary:
The States of Orissa Bihar and Madhya Pradesh levied a cess which was based on the royalty derived from mining lands
The cess was levied by these States under their respective statutes viz Orissa Cess Act 1962 Bengal Cess Act 1880 as applicable to the State of Bihar Madhya Pradesh Upkar Adhiniyam 1981 and Madhya Pradesh Karadhan Adhiniyam 1982
The assesses challenged the constitutional validity of the cess by filing various petitions in the High Courts of Orissa declared the cess unconstitutional on the ground that it was beyond the legislative competence of the State Legislatures but rejected the prayer of the assessees for a direction to the State to grant refund of the cess collected from the assessees
Against the decision of the Orissa High Court the assessees have filed appeal in this Court whereas the State of Orissa has filed a cross appeal
The High Court of Madhya Pradesh also declared the levy of cess unconstitutional on the ground that it was beyond the legislative competence of the State legislature
Against the decision of the Madhya Pradesh High Court the State of Madhya Pradesh has filed an appeal in this Court
On the other hand the High Court of Patna dismissed the writ petition of the assessee
Against the decision of the Patna High Court the assessee has filed an appeal in this court
In appeal to this court it was contended on behalf of the State of Orissa that i the levy of cess being referable to Entries 45 49 and 50 of the State List of the Seventh Schedule of the Constitution the impugned legislation was within the legislative competence of the State legislature ii the limitations imposed in the statute on the modes of utilisation of cess supports a view that the cess is fee on which the State legislature is competent to legislate under Entry 23 read with Entry 66 of the State List iii since the impugned Act was concerned with the raising of funds to enable panchayats and Samithis to discharge their responsibilities of local administration and take steps for proper development of the area under their jurisdiction the impugned legislation was referable to Entry 5 of State List and iv the enactment of the Central Legislation viz has not denuded the State legislation of its competence to enact the impugned legislation since the scope and subject matter of the two legislations are entirely different and the impugned State Legislation does not encroach upon the field covered by the Central Legislation ie 1957 Act
107 On behalf of the assessees it was contended inter alia that i all the State levies were ultra vires for the reasons given by this Court in the India Cement case ii the State cannot seek to sustain the levy under the Bengal Cess Act 1880 by relying on Article 277 of the Constitution and iii the levy being unconstitutional the Court should direct the States to refund the cess collected from the assessees because a a refund is the automatic and inevitable consequence of the declaration of invalidity of tax and b the States have given undertakings before this Court that they would refund the amount collected in case the levy is declared invalid by this Court
Disposing of the appeals this Court HELD 1
The levy of cess under sections 5 to 7 of the Orissa Cess Act 1962 is beyond the competence of the State Legislature
169B 11
A royalty or the tax thereon cannot be equated to land revenue
Therefore the cess cannot be brought under Entry 45 of List II
142D India Cement  Ors
vs State of Tamil Nadu  Ors  followed
12 A tax on royalties cannot be a tax on minerals and is outside the purview of Entry 50 of List II
Even otherwise the competence of the State Legislature under the said Entry is circumscribed by any limitations imposed by Parliament by law relating to mineral development
The is a law of Parliament relating to mineral development and Section 9 of the said Act empowers the Central Government to fix alter enhance or reduce the rates of royalty payable in respect of minerals removed from the land or consumed by the lessee Sub Section 3 of Section 9 in terms States that the royalties payable under the Second Schedule to that Act shall not be enhanced more than once during a period of three years
This is a clear bar on the State legislature taxing royalty so as in effect to amend the Second Schedule to the Central Act
This is exactly what the impugned Act does
Therefore the validity of the impugned Act cannot be upheld by reference to Entry 50 of List II
And if the cess is taken as a tax falling under Entry 50 it will be ultra vires in view of the provisions of the Central ACt
144B 153B D 168D India Cement  Ors
vs State of Tamil Nadu  Ors
 1990 1 SCC12 followed
108 Hingir Rampur Coal Co Ltd  Ors
vs State of Orissa  Ors
 1961 2 SCR537 Justice Wanchoo s dissent explained
13 There is a difference in principle between a tax on royalties derived from land and a tax on land measured by reference to the income derived therefrom
A tax on buildings does not cease to be such merely because it is quantified on the basis of the income it fetches
But in the impugned legislation the levy is not measured by the income derived by the assessee from the land as is the case with lands other than mineral lands
The measure of the levy is the royalty paid in respect of the land by the assessee to his lessor which is quite a different thing
The impugned statute only purports to levy a cess on the annual value of all land
There is a clear distinction between tax on land and tax on income arising from land
The former must be one directly imposed on land levied on land as a unit and bearing a direct relationship to it
A tax on royalty cannot be said to be a tax directly on land as a unit
Hence the cess is outside the purview of Entry 49 List II
148H 149A D Ajay Kumar Mukherjea vs Local Board of Barpeta 1965 3 Ss
CR 47 Ralla Ram vs The province of East Punjab 1948 FCR207 Buxa Dooars Tea Co vs State 1989 3 SCR211 Bhagwan Dass Jain vs Union of India  and RR Emgomeeromg Co vs Zila Parishad   referred to
Union of India vs Bomnbay Tyre International 1984 1 SCR347 Re A reference under the Government of Ireland Act 1920 and Section 3 of the Finance Act Northern Ireland 1934 1963 2 All ERIII cited
If the levy in question cannot be described as a tax on land it cannot be described as fee with regard to land either
169A 21 Section 10 of the Orissa Cess Act 1962 earmarks the purposes of utilisation of only fifty per cent of the proceeds of the cess and that too is limited to the cess collected in respect of lands other than lands held for carrying on mining operations
Therefore the levy cannot be correlated to any services rendered or to be rendered by the State to the class of persons from whom the levy is collected
Accordingly the levy cannot be treated as a fee which the State legislature is competent to legislate for under entry 66 of the State List
153E F 22 Even assuming that the levy is a fee the State legislature can impose a fee only in respect of any of the matters in the State List
The 109 entry relied upon for this purpose ie Entry 23 is itself subject to the provisions of List I with respect to regulation and development of mines and minerals under the control of the Union
Under Entry 54 of List I regulation of mines and mineral development is in the field of parliamentary legislation to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest
Such a declaration is contained in Section 2 of the 
The validity of the impugned Act cannot be upheld by reference to Entry 23 List II
153G H 154A 168D 3
There is a difference between the object  of the Act and its subject 
The object of the levy may be to strengthen the finances of local bodies but the Act has nothing to do with municipal or local administration
Accordingly State s reliance on Entry 5 of List II is plainly too tenuous
164D 4
The answer to the question whether the State Legislature was denuded of its competence to enact the impugned legislation because of the Parliament having enacted the depends on a proper understanding of the scope of the Act and an assessment of the encroachment made by the impugned State legislation into the field covered by it
161D 41 The mere declaration of a law of Parliament that it is expedient for an industry or the regulation and development of miners and minerals to be under the control of the Union under Entry 52 or entry 54 of List I does not denude the State legislatures of their legislative powers with respect to the fields covered by the several entries in List II or List III
Particularly in the case of a declaration under Entry 54 this legislative power is eroded only to the extent control is assumed by the Union pursuance to such declaration as spelt out by the legislative enactment which makes the declaration
The measure of erosion turns upon the field of the enactment framed in pursuance of the declaration
161E F 42 In assessing the field covered by the Act of Parliament in question one should be guided not merely by the actual provisions of the Central Act or the rules made thereunder but should also take into account matters and aspect which can legitimately be brought within the scope of the said statute
Viewed in this light and in the Light of the provisions of the Bihar Cess Act the conclusion seems irresistible that the State Act has trespassed into the field covered by the Central Act 110 viz Mines and Minerals Regulation and DevelopmentAct 1957163F 43 The impugned legislation which stands impaired by the Parliamentary declaration under Entry 54 can hardly be equated to the law for land acquistion or municipal adminstration which are traceable to different specific entries in List II or List III 163G H Hingir Rampur Coal Co Ltd  Ors
vs State of Orissa  Ors
  State of Orissa vs MA Tulloch  Co  and Indian Cement  Ors vs State of Tamil Nadu  Ors 19901 SCC 12 followed
State of Haryana vs Chanan Mal   Ishwari Khatan Sugar Mills P Ltd vs State of UP  and Western Coalfields Ltd vs Special Area Development Authority
 1982 2 SCR1distinguished
Indian tobacco Co Ltd vs Union 1985 Supp 1 SCR 145 State of West Bengal vs Union 1964 1
SCR 371 Central Coalfields vs State of MP AIR 1986 MP33 M Karunanidhi vs Union of India   State of Tamil Nadu vs Hind Stone etc
   ITC vs State of Karnataka  Bharat Coking Coal vs State of Bihar   Kannan Dewan Hills Co vs State of Kerala 1973 1
SCR 356 Baijnath Kedia vs State of Bihar   HRS Murthy vs Collection of Chittoor  Ors
1964 6 SCR Ch
Tika Ramji  Ors
vs State of UP1956 SCR 393 Laxmi Narayan Agarwala vs State AIR 919830 Ori210 Bherulal vs State AIR 1965 Raj 161 Sharma vs State AIR 1969 PH 79 and Saurashtra Cement  Chemical Industries Ltd vs Union  referred to
Trivedi  Sons vs State of Gujarat
1986 Suppl
SCC 20 cited
Section 6 of the Bengal Cess Act 1880 specifically enacts that the cess will be on royalty from mines and quarries and on the annual net profit of railways and tramways
The further amendments to Section 6 have not changed this basic position
Though the Section referees also to the value of the mineral bearing land that furnishes only the maximum upto which the cess based on royalty could go
Therefore the cess is levied directly on royalties from mines and quarries
The different notifications issued by the State of Bihar under section 6 111 of the Act determining the rate of cess on the amount of rayalty of all minerals of the State place the matter beyond all doubt
The levy is a percentage or multiple of the royalty depending upon the kind of mineral and in the case of iron ore the method of extraction and nature of the process employed
There are no clear indications in the statute that the amounts are collected by way of fee and not tax
Section 9 indicates that only a small percentage goes to the district fund and the remaining forms part of the consolidated fund of the State  for the constrution and maintenance of other works of public utility
However the proviso does require at least ten percent to be spent for purposes relating to mineral development
Even the assumption that the levy can be treated in part as a fee and in part as a tax will not advance the case of the respondents
Therefore the levy of cess sunder the Bengal Cess Act 1880 is declared invalid
169C FH170A Indian Cement  Ors
vs State of Tamil Nadu  Ors followed
Central Coalfields Ltd vs State CWJC 208589 decided on 61190 by Patna High Court referred to
51 The attempt to sustain the tax under the Bengal Cess Act 1880 on the basis of Article 277 cannot also succeed171C Ramkrishna Ramanath vs Janpad Sabha 1962Suppl
3SCR 70 Town Municipal Committee vs Ramachandra   referred to
The levy of cess under section 11 of the Madhya Pradesh Upkar Adhiniyam 1981 is not covered by Entry 49 or Entry 50 of List II and is therefore ultra vires
 172B MP Lime Manufacturers  Association vs State AIR 1989 MP 264 referred to
61 Under Section 9 of Madhya Pradesh Karadhan Adhiniyam 1982 the proceeds of the cess are to be utilised only towards the general development of mineral bearing areas
Although there is no provision for the constitution of a separate fund for this purpose as is found in relation to the cesses levied under Part II or Part III of the Act yet this consideration alone does not preclude the levy from being considered as a fee
The clear ear marking of the levy for purposes connected with development of mineral areas was rightly considered by 112 the High Court as sufficient to treat it as a fee
The High Court was also right in holding that such a fee would be referable to item 23 but out of bounds for the State Legislature after the enactment of the 
171F H Srinivasa Traders vs State   referred to
The grant of refund is not an automatic consequence of a declaration of illegality ie where the levy of taxes is found to be unconstitutional the Court is not obliged to grant an order of refund
Therefore a finding regarding the invalidity of a levy need not automatically result in direction for a refund of all collections thereof made made earlier
The declaration regarding the invalidity of a provision and the determination of the relief that should be granted in consequence thereof are two deferent things and in the latter sphere the Court has and must be held to have a certain amount of discretion
Once the principle that the Court has a discretion to grant or decline refund is recognised the ground on which such discretion should be exercised is a matter of consideration for the Court having regard to all the circumstances of the case
The Court can grant would or restrict the relief in a manner most appropriate to the situation before it is such a way as to advance the interests of justice
The Court is entitled to refuse the prayer for good and valid reasons
Laches or undue delay or intervention of third party rights would clearly be one of those reasons
Unjust enrichment of the refundee may or may not be another
Also there is no reason why the vital interest of the State should not be a relevant criterion for deciding that a refund should not be granted
185H 186A C D  E 181D E 71 In the instant case though the levy of the cess is unconstitutional yet there shall be no direction to refund to the assessees of any amounts of cess collected until the date on which the levy in question has been declared unconstitutional
This in regard to the Bihar cases will be the date of this judgment ie 441991
In respect of Orissa and Madhya Pradesh cases the relevant date will be the date on which the concerned High Court has declared the levy unconstitutional ie22121989 in case of Orissa and 2831986 in case of Madhya Pradesh
The dates of the judgments of the appropriate High Court may not constitute a declaration of law within the scope of Article 141 of the Constitution but it cannot be gainsaid that the State cannot on any ground of equity be permitted to retain the cess collected on and after the date of the High Court s judgment
Accordingly the State should refund the amounts of cess collected after the relevant dates to assesses directly or in the Coalfields from whom they were collected with 113 interest at the rate directed by this Court or mentioned in the undertaking from the date of the relevant judgment to the actual date of repayment
The Coalfields when they get the refunds should pass on the same to their customers the assessees
186F G 187B C India Cement  Ors
State of Tamil Nadu  Ors 1990 1 SCC12 followed
Linkletter 14 L Ed
2d 601 Sunburst
77 LEd310 Mahabir Kishore  Ors
vs Stte of Madhya Pradesh 1989 4 SCC 1 Chhotabhai Jethabhai Patel  Co vs Union of India   State of Madhya Pradesh vs Bhailal Bhai  Ors   Tilok Chand Motichand vs Munshi 1969 2 SCR 824 Ramchandra Shankar Deodhar vs State of Maharashtra   Shri Vallabh Glass Works Ltd vs Union of India 1984 3 SCR 180 State of MP vs Nandlal Jaiswal 1986 4 SCC566  D Cawasji  Co vs State of Mysore 1975 2 SCR511 Salonah Tea Co Ltd vs Superintendent of Taxes  and Lakshmi Narain Agarwala vs State AIR 1983_ Orissa 210 referred to
Behram Khursheed Pesikaka vs State of Bombay 1955 1 SCR613 RMD Chamarbaugwala vs Union of India   MPV Sundararamier  Co vs State of Andhra Pradesh  Anr
   West Ramnad Electric Distribution Co vs State of Madras   MLJain vs State of UP 1963 suppl  KT Moopil Nayar vs State of Kerala  Anr 1961 3 SCR77 Balaji vs ITO Special Investigation Circle   Raja Jagannath Bakshi Singh vs State of UP   Prem Chand Garg vs Excise Commissioner UP Allahabad 1963 Suppl
1 SCR 885 and IC Golaknath  Orsv
State of Punjab  Ors
1967 2 SCR 762 cited
The undertaking given by the parties or interim directions given by the Court cannot be understood in such a manner as to conflict with the Court s final decision