JUDGMENT [ENTITY], J.
1. This batch of writ petitions is filed seeking issuance of a Mandamus declaring the Note to [SECTION] of the [ACT], as ultra vires the [ACT] and the provisions in [SECTION] of the [ACT].
2. The petitioners are quarry lease-holders of black granite and coloured granite in the State of Andhra Pradesh. The order granting the lease stated that the grantee should abide by the [ACT] (hereinafter referred to as 'the Rules').
3. The petitioners aggrieved of the conditions envisaged in the impugned Rules, namely, establishment of a granite cutting and polishing unit within the State itself, interfering with the free trade in granite even after its extraction, and imposing penal rate (double the rate) of seigniorage in regard to granite exported through harbours, other than in the State of Andhra Pradesh, resorted to these proceedings.
4. Before dealing with the merits in detail, it is necessary to refer to some of the relevant provisions of the Central Act and the Rules framed thereunder by the State of Andhra Pradesh.
5. [SECTION] deals with the regulation of mines and development of minerals. It is relevant to extract the said entry, which reads thus:
"54. Regulation of mines and mineral development 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"
6. The Parliament by virtue of the above entry enacted the [ACT] (hereinafter referred to as "the Act"). The declaration envisaged under [SECTION] is found in [SECTION] of the Act, which is as follows:
"Declaration as to expediency of Union Control: It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided."
7. It may be stated here that the granite, which is the subject matter of these writ petitions, is a minor mineral. Except [SECTION] of the Act, the other provisions of the Act are not relevant for the present purpose. [SECTION] of the Act delegated power to the State Government to make rules for grant of quarry leases, mining leases or other mineral concessions in respect of minerals and for purposes connected therewith. Sub-sections to [SECTION] specify various matters in respect of which rules may be made including for collection of rent and royalty, transfer of lease, etc. It is significant to note that none of the subsections provide for the sale of quarried mineral.
8. The State of Andhra Pradesh by virtue of the power conferred by [SECTION] of the Act, framed the Rules.
9. We may here briefly refer to the Rules relevant for the present purpose. [SECTION] deals with regulation and grant of lease of granite useful for cutting and polishing. [SECTION] deals with seigniorage fee or dead rent in respect of the mineral granite. The 'Note' under [SECTION] prescribes that granite exported in raw form to outside the State attracts double the seigniorage fee, except for stones exported through the ports/harbours within the State. [SECTION] prescribes that notwithstanding anything contained in [SECTION] or [SECTION], the quarry leases granted against the establishment of a granite cutting and polishing unit are liable for termination, if the unit is not established within a period of two years from the date of grant of lease within the State. The [SECTION] empowers the State Government to extend the time for such establishment of the unit for a further period of one year in deserving cases and for reasons to be recorded in writing. [SECTION] prescribes that the lessee can transport, including inter-State movement, and export the rough blocks within the first two years of the grant of the lease or till the cutting and polishing unit is set up, whichever is earlier. It also prescribes that after the unit is set up or after two years from the date of grant, the lessee is allowed to make inter-State movement, or export the rough blocks in the ratio of 1:1 for black granite and 3:7 for coloured granite, namely, in respect of black granite the export should satisfy the ratio of one block of processed granite for one block of raw granite and three blocks of processed granite for seven blocks of raw granites in regard to coloured granite.
10. Thus, according to the Note under [SECTION], in respect of black and coloured granite exported in raw form to outside the State of Andhra Pradesh, the lessee has to pay double the seigniorage fee. According to [SECTION] a lessee, who has been granted lease under the Rules, has to establish a granite cutting and polishing unit within the State of Andhra Pradesh within a period of two years from the date of grant of the lease or further extended time. Otherwise, the lease is liable to be terminated. [SECTION] prescribes a restriction on inter-State movement or export of rough blocks of granite after the cutting and polishing unit is established and permits export of raw blocks outside the State only if the ratio of 1:1 between processed blocks and the raw blocks in the case of black granite and 3:7 between processed and the raw blocks in the case of coloured granite is maintained.
11. The important questions that arise thus for consideration are:
(1) Whether the Note under [SECTION] and [SECTION] and [SECTION] [ACT] are ultra vires the Mines and Mineral (Regulation and Development) Act, 1967 ? and (2) Whether the Note under [SECTION], [SECTION] of the [ACT] are ultra vires the provisions in [SECTION] of the [ACT]?
12. Sri [ENTITY], the learned counsel for the petitioners, contended that the impugned rules are neither compensatory nor regulatory in nature, outside the legislative competence of the State as they impose undue burden and restriction on inter-State trade and commerce and so ultra vires the [ACT].
13. The learned Advocate General appearing for Respondents contended that the rules framed are by virtue of the delegated power Under [SECTION] of the Act and therefore they form part and parcel of the Act and that there is no impediment as such to sale or trade as levy of seigniorage fee is envisaged Under [SECTION] of the Act.
14. Now, adverting first to [SECTION] of the Act, it is to be seen that it is expedient in the public interest that the Union should take under its control the regulation of the the mines and the development of mineral to the extent provided thereunder.
15. The Supreme Court had an occasion to consider the effect of this declaration in [SECTION] of the Act enacted by virtue of the power vested in the Parliament under [SECTION] and its effect upon [SECTION].
16. In [PRECEDENT], the effect of the declaration contained in [SECTION] of the present Act was considered. It was held that in view of the Parliamentary declaration as made Under [SECTION] of the Act, the State Legislature is denuded of its legislative power to make any law in respect of the regulation of Mines and Mineral Development and the entire legislative field has been taken over by the Parliament.
17. In [PRECEDENT], which relates to the levy and collection of fees under the [ACT], the observations of [ENTITY], J., (as he then was) in the earlier case in [PRECEDENT], , were followed and the provisions of State Law were held to be ultra vires the powers of the State. [ENTITY], J., observed that the test of two legislations containing contradictory provisions is not, however, the only criteria of repugnancy, for, if a competent legislature with a superior efficacy expressly or impliedly enacts by its legislation the intention to cover the whole field, the enactments of the other legislature, whether passed before or after, would be over borne on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of two statutes, but by the mere existence of the two pieces of legislation.
18. In [PRECEDENT], , which related to levy of dead-rent and royalty under the [ACT], after referring to the law laid down in Hinger-Rampur Coal case (3 supra) the [ACT] Bench of the Supreme Court held that the entire legislative field in relation to minor minerals has been withdrawn from the State Legislature.
19. It is, thus, settled that the entire field relating to the regulations of mines and development of minerals is taken over by the Parliament by virtue of [SECTION] of the Act and accordingly the State is denuded of the power to legislate under [SECTION].
20. The learned Advocate General contended that the State has got executive power under [SECTION] of the [ACT] and it can, therefore, frame rules in exercise of the said power. This is a very far-fetching contention. The executive power of the State under [SECTION] of the [ACT] is co-extensive as well as co-terminus with its legislative power. When the State is denuded of the power on the subject in respect of which the Parliament has got exclusive power to legislate, the State's executive power under [SECTION] does not survive. It is to be noticed that [SECTION] of the [ACT] has specifically demarcated the powers of the Federal Legislature and the Provincial Legislatures. As stated supra, the executive power of the Union under [SECTION] and executive power of the State under [SECTION] are co-extensive with their legislative powers as conferred by [SECTION] of the [ACT]. Thus, the State cannot encroach upon the subject exclusively occupied by the Union, more so, under the garb of executive power when there is basically no legislative power on the subject. Hence, the State Government has no competence to frame rules travelling beyond what is delegated Under [SECTION] of the Act.
21. The learned Advocate General next contended that the rules framed by virtue of the power conferred Under [SECTION] of the Act are deemed to be part and parcel of the Act i.e., rules are deemed to have been made by the Parliament itself, and therefore relatable to [SECTION] to the [ACT], that the Parliament has got ample powers not only to deal with the regulation of mines and development of minerals but also to similarly regulate trade and commerce, that when a particular subject is traceable to more Lists, legislation brought in cannot be confined to one entry for scrutinising validity of such enactment and that therefore the impugned rules are valid and constitutional.
22. On the other hand, the learned counsel for the petitioners contended that the Act specifically relates to [SECTION] to the [ACT] which is within the exclusive province of the Parliament, that no provision of the Act deals with export, import, sale or trade, that it is evident from the provisions of the Act, that the Act deals only with the regulation of mines and development of minerals and that therefore the contention that the enactment can be traced to other entries of the [ACT] is not tenable.
23. In [PRECEDENT], , the Supreme Court while dealing with the validity of [SECTION] of the [ACT] held that the said rule could not be declared invalid on the ground that it creates monopoly, though being a subordinate piece of legislation. Justice [ENTITY] declared that the statutory rule, while ever subordinate to the parent statute, is otherwise to be treated as part of the statute and equally effective, relying upon the rule of interpretation that rules made under the statute must be treated for all purposes of construction as if they were in the Act and are to be of the same effect as if in the Act There is no dispute about the said proposition.
24. We have gone through the entire provisions of the Act. No provision in the Act deals with trade, commerce or sale. When the parent statute itself is silent, it cannot be inferred that the intention of the Parliament was to provide for trade, commerce and sale through the Rules. Even if the contention of the Advocate General that rules form part and parcel of the Act by virtue of [SECTION] of the Act is accepted, nothing is mentioned in [SECTION] about delegation of power in respect of trade, commerce and sale. When a similar contention was raised in [PRECEDENT], , the Supreme Court held that the power to control the sale and sale price of minor mineral is not covered by [SECTION] and the said clause is related only to the regulation of the grant of quarry and mining leases and other mineral concessions. Therefore, we see no force in this contention of the learned Government Pleader. Further, the Act is traceable to [SECTION] to the [ACT] and even if the Act relates other entries, there is neither independent delegation of power anywhere else nor the concept of 'superior efficacy' is in favour of the State Legislation in this proceedings.
25. The issue thus boils down to whether the rules framed by the State Legislature by virtue of the delegated power are within the four corners of [SECTION] of the Act, which reads as under:
"15. Power of State Governments to make Rules in respect of Minor Minerals:- (1) The State Government may, by notification in the Official Gazette, makes rules for regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith.
(1-A) In particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-
(a) the person by whom and the manner in which, applications for quarry leases, mining leases or other mineral concessions may be made and the fees to be paid therefor:-
(b) the time within which, and the form in which, acknowledgment of the receipt of any such applications may be sent;
(c) the matters which may be considered where applications in respect of the same land and received within the same day;
(d) the terms on which, and the conditions subject to which and the authority by which quarry leases, mining leases or other mineral concessions may be granted or renewed;
(e) the procedure for obtaining quarry lease, mining leases or other mineral concessions;
(f) the facilities to be afforded by holders of quarry leases, mining leases or other mineral concessions to persons deputed by the Government for the purpose of undertaking research or training in matters relating to mining operations;
(g) the fixing and collection of rent, royalty, fees, dead rent, fines or other charges and the time within which and the manner in which these shall be payable;
(h) the manner in which rights or third parties may be protected (whether by way of payment of compensation Or otherwise) in cases where any such party is prejudicially affected by reason of any prospecting or mining operations;
(i) the manner in which rehabilitation of flora and other vegetation such as trees, shrubs and the like destroyed by reason of any quarrying or mining operations shall be made in the same area or in any other area selected by the State Government (whether by way of reimbursement of the cost of rehabilitation or otherwise) by the person holding the quarrying or mining lease;
(j) the manner in which and the conditions subject to which, a quarry lease, mining lease or other mineral concession may be transferred;
(k) the construction, maintenance and use of roads, power transmission lines, tramways, railways, aerial ropeways, pipelines and the making of passage for water for mining purposes on any land comprised in a quarry or mining lease or other mineral concession;
(l) the form of registers to be maintained under this Act;
(m) the reports and statements to be submitted by holders of quarry or mining leases or other mineral concessions and the authority to which such reports and statements shall be submitted;
(n) the period within which and the manner in which and the authority to which applications for revision of any order passed by any authority under these rules may be made, the fees to be paid therefore, and the powers of the revisional authority; and
(o) any other matter which is to be, or may be prescribed.
(2) Until rules are made under Sub-section (1), any rules made by a State Government regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals which are in force immediately before the commencement of this Act shall continue in force.
(3) The holder of a mining lease or any other mineral concession granted under any rule made under Sub-section (1) shall pay royalty or dead rent whichever is more in respect of minor minerals removed or consumed by him or by his agent, manager, employees, contractor or sub-lesee at the rate prescribed for the time being in the rules framed by the State Government in respect for minor minerals:
Provided that the State Government shall not enhance the rate of royalty or dead rent in respect of any minor mineral for more than once during any period of three years."
26. It is settled principle of law that while framing the rules by virtue of delegated power, the delegatee cannot traverse beyond the powers conferred on it. It is relevant here to refer to the decision of the Supreme Court in [PRECEDENT], where it was held:
"It is an accepted principle that delegated authority must be exercised strictly within the limits of the authority. If rule making power is conferred and the rules made are in excess of that power, the rules would be void even if the Act provided that they shall have effect as though enacted in the Act as was relied in [PRECEDENT], ."
27. Again, while considering the scope of the powers of the delegatee, the Supreme Court in [PRECEDENT], , held that before a rule can have the effect of a statutory provision, two conditions must be fulfilled, viz., (1) it must conform to the provision of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule-making-power of the authority framing the rule. It was further held that if either of these two conditions is not fulfilled, the rule so framed would be void.
28. In [PRECEDENT], , it was held that conferment of rule-making-power cannot permit a rule that travels beyond the scope of the Act or is inconsistent or repugnant to the Act.
29. Keeping these principles laid down by the Supreme Court, we have to now scrutinise whether the rules framed are within the limits of [SECTION] of the Act.
30. [SECTION] of the Act empowers the State Government to make rules in respect of minor minerals. [SECTION] provides for the State Government to 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. The Act, including [SECTION], does not deal with the trade, muchless foreign trade in granite. [SECTION] the Act does not empower the State Government to make rules in respect of the trade, whether foreign trade or inland trade. The impugned rules provide for collecting double the seigniorge fee when the granite is exported to outside the State, whereas it is single seigniorage fee if it is within the State. There is a mandatory requirement of establishing a cutting and polishing unit within two years or further extended time, lest the lease is liable to be terminated. Further, after establishment of cutting and polishing unit, after polishing the granite a ratio is fixed in exporting the processed granite and raw granite. It is 1:1 and 3:7 in respect of black and colour granite respectively. None of [SECTION] nor any provision of the Act provides for such contingencies. Therefore, we are not able to agree with the learned Advocate General that the rules impugned fall within the limits of power conferred by [SECTION] of the Act.
31. The learned Advocate General next contended that the rules are regulatory in nature.
32. [SECTION] of the Act empowers the State Government to make rules regulating the grant of quarry leases, mining leases or other mineral concessions in respect of minor minerals and for purposes connected therewith. Therefore, the power conferred is to frame rules for any purposes connected with regulating and granting of mining leases which are necessary in public interest. No doubt, therefore, the State Government can frame rules, but only to the extent indicated in [SECTION], but not beyond the limits of [SECTION]. The term 'the rules can be framed for the purpose connected for regulating or granting of quarry leases' has to be read as indicating incidental essentials for the purpose of regulating the grant of leases only and not beyond mat. When the entire Act including [SECTION] is silent regarding trade, commerce, export and sale of minerals, it cannot be said that by virtue of the term 'purposes connected therewith', the same have to be read into the Section. If it is done, it amounts to enlarging the scope of enactment. Courts while interpreting a particular statute or rules have to see the scope and ambit of the statute by reading the entire statute as such. Therefore, if the submission of the Government Pleader is accepted, it amounts to upholding the amendment or enlargement of the main enactment brought in by the State through the impugned rules and note, which otherwise in fact is within the exclusive purview of the Parliament.
33. The learned Advocate General relied on a decision of the Rajasthan High Court in [PRECEDENT], wherein it was held that a narrow meaning cannot be assigned to the word 'regulation' and a wider meaning has to be given to it. There is no dispute with the said principle. It was further held in the said decision that the authority Under [SECTION] of the Act is the State Government which can lawfully prescribe the rate of royalty for the grant of licences and mining leases in respect of minor minerals.
34. It is to be noticed that [SECTION] of the Act confers power on the State Government to regulate the grant of mining leases. Grant of lease takes-in fixation of lease amount, in other words 'royalty' or 'seigniorage fee'. Keeping the above aspect in consideration, the High Court of Rajasthan interpreted the word 'regulation' as above. But the facts of the present case are quite different
35. Considering the importance of the words 'regulating' and 'for purposes connected therewith' employed in [SECTION] of the Act, a Division Bench of Allahabad High Court in [PRECEDENT], held:, "The word 'Regulating' gives the power to the State Government to make Rules for the purpose of laying down the conditions necessary for regulating the grant of leases and licences, the period and the money payable by a lease to the lessor or the terms to be mentioned in a lease. In the absence of these terms, a lease would not be complete
Further, the State Government is empowered to make rules for all such 'purposes connected there with'. Fixation of royalty for extracting minor minerals for the grant of lease undoubtedly comes within this expression Royalty or dead rent is a necessary concomitant of mining leases."
36. In the present case, lease amounts are already paid by the lessees and the rules providing for further control and restrictions after mineral is extracted by lessee and after payment of lease amounts are impugned. Therefore, the facts that case are different and the said decision is not applicable to the case on hand,
37. In [PRECEDENT], a Full Bench of this Court considering the question whether the State Government is empowered to lay penalty for the delayed payment of royalty or seigniorage fee, held that levying of penalty is an essential concomitant of the incidence of the lease.
38. There is no doubt about the principles laid down in the above cited decisions. In all the said cases it was held that the power of the State to make rules encompassed matters necessary for the grant of lease or essential for the purpose of proper regulation of the lease.
39. It is nextly contended that the impugned rules are virtually conditions of the grant, that therefore they are regulatory in nature and that accordingly it cannot be said that they are outside the purview of the delegated power of the State.
40. The principles laid down in the above cited decisions vividly make it clear that all essential concomitants for the purpose of proper regulation of the lease are within the scope of power of the State as conferred by [SECTION] of the Act.
41. As per the scheme of the Act and the Rules, mining leases are granted on payment of royalty and seigniorage fee as fixed by the State Government. As soon as the royalty and the seigniorage fee are paid to the Government in respect of mining lease, lessee becomes the owner of the minor mineral and he is free to sell the same in domestic market or export the same subject to laws made by the competant authority. Whatever may be the right of the Government initially over the underground minerals, once the mining lease is granted, royalty and seigniorage fee are paid by the lease-holder to the Government and granite is extracted, the ownership of the granite so extracted passes on from the Government to lease-holder and for all purposes he will be deemed to be the owner. Once the lease holder becomes owner of the property, any control or interference, not provided for in the Act, amounts to violation of his rights.
42. In [PRECEDENT] (6supra),while considering the [ACT], the [ACT] Bench of the Supreme Court held:
"There is no power conferred upon the State Government under the said Act to exercise control over minor mineral after they have been excavated. The power of the State Government, as the subordinate rule making authority, is restricted in the manner set out in [SECTION]. The power to control the sale and the sale price of a minor mineral is not covered by the terms of [SECTION]. This clause can relate only to the regulation of the grant of quarry and mining leases and other mineral concessions and it does not confer the power to regulate the sale of already mined minerals."
43. In view of the above decision of the Supreme Court, once mineral is extracted after paying royalty and seigniorage fee and other taxes, the State has no control over sale of such minerals. Therefore, the impugned rules imposing further conditions are outside the purview of the Act and ultra vires the provisions of the Act.
44. The next question for consideration is, whether the impugned rules are violative of the provisions in [SECTION] of the [ACT].
45. As stated supra, the rules impose restrictions, such as, after mineral is extracted by the lessee or lease-holder, he has to establish a cutting and polishing unit within a period of two years within the State or within further extended period, otherwise his lease is liable to be terminated. The lease-holder or lessee has to pay Rs. 750/- towards seigniorage fee if he exports the mineral from the harbours within the State and Rs. 750/- more if he exports otherwise to outside the State. Further, it is mandatory on the part of the lease-holder after setting up the factory to maintain the ratio of 1:1 between processed blocks and raw blocks in case of black granite and 3:7 between processed and the raw-form block in case of coloured granite and accordingly he will be allowed to export the rough blocks. These restrictions relate to post-extraction of minerals. For extracting the mineral from the mine, the lease-holder has to pay royalty and seigniorage fee as fixed by the State Government from time to time. Therefore, the restrictions imposed by the impugned rules are undue burden and are violative of [SECTION], [SECTION] and [SECTION] of the [ACT]. [SECTION] provides for free trade, commerce and intercourse throughout the territory of India. [SECTION] empowers the Parliament to impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in public interest. [SECTION] restricts the Parliament or the Legislature of a State from making any law giving or authorising to give any preference to one State over another by virtue of any entry relating to trade and commerce in any of the lists in the [SECTION], and [SECTION] says mat the Parliament can, however, do so in case of a situation arising from scarcity of goods in any part of the territory of India. [SECTION] says that the States are empowered to impose restrictions on trade, commerce and intercourse subject to the conditions laid down and proviso there under.
46. The Advocate General contended that the bar envisaged under [SECTION] in relation to the Parliament or the State Legislatures as regards making a law giving preference to one State over the other applies only to the subject traceable to the entry relating to trade and commerce and not to any other entry and inasmuch as the Act is traceable to [SECTION] and not to any entry governing trade, commerce and intercourse, the said bar has no role in the present legislation.
47. The above aspect came up for consideration before the Supreme Court in [PRECEDENT], . A [ACT] Bench of seven Judges held in one voice that the bar imposed therein is narrow and will apply to any legislation though it does not relate to an entry dealing with trade, commerce and intercourse, if it infringes free trade, commerce and intercourse thereby violating [SECTION].
48. In a recent judgment of the Supreme Court reported in [PRECEDENT], , the scope and content of [SECTION] of the [ACT] was laid down after considering the relevant decisions on that aspect of the matter. It would, therefore, suffice to extract the relevant part of mat judgment for a clear understanding of the scope and ambit of the provisions in [SECTION] of the [ACT] with reference to fiscal measures or taxation and as to when they can be regarded as creating restrictions on inter-State or intra-State movement of persons or goods.
"The Scope and content of [SECTION] of the [ACT] has been laid down in innumerable decisions of this Court beginning from [PRECEDENT], . "Suffice it to say that it is only when the intra-State or inter-State movement of the persons or goods are impeded directly and immediately as distinct from creating some indirect or inconsequential impediment, by any legislative or executive action, infringement of the freedom invisaged by [SECTION] can arise. Without anything more, a taxi law, per se, may not impair the said freedom. At the same time, it should be stated that a fiscal measure is not outside the purview of [SECTION] of the [ACT]. It is un-necessary to refer to all the decisions on the point. We shall only refer to a few important decisions of this Court on this aspect-[PRECEDENT], ; [PRECEDENT], ; [PRECEDENT] and a recent decision which has surveyed the entire case law on the subject- [PRECEDENT],
[ENTITY], J., on behalf of the [ACT] Bench, in the State of [PRECEDENT] at p. 155 stated thus:
"There is also no doubt that exercise of the power to tax may normally be presumed to be in the public interest."
49. Summarising the principles laid down in the above case, it is to be held:
1. No rule made by a State in exercise of power available Under [SECTION] of the Act can impose any burden or restriction, which is neither compensatory nor regulatory and which acts as direct impediment on the inter-State trade, commerce or export.
2. State action, which acts in areas of inter-State and foreign trade, commerce and inter-course, is outside the legislative competence.
3. Once the mineral is extracted and duty thereon is paid, such mineral becomes the exclusive property of the lease-holder and is not amenable under the Act to any further mechanisms.
50. When the provisions of the [ACT] came up for challenge before the Supreme Court of United States, while interpreting the Commerce Clause in [PRECEDENT], it was held:
"A State statute forbidding the shipping of raw and unshelled shrimp out of the State when the product produced and prepared within the State may be freely shipped, not because any portion is needed for consumption and use therein, but to compel the canning of the meat and manufacture of the bran made from the shells and heads in the State, violates the commerce Clause of the Federal [ACT]."
51. Dealing with the statutes of South Carolina which imposed poundage tax on shrimp taken in the three mile belt of its coast and the requirement of licence fee for each shrimp beat owned by a non-resident one hundred times the fee for boats owned by residents, in [PRECEDENT], Chief Justice [ENTITY] delivered the opinion of the majority thus:
"A majority of the Court, in an opinion by the South Carolina has sufficient interest in the shrimp fishery within three miles of its coast to warrant it in protecting and regulating mat fishery, the poundage tax did not unconstitutionally taximports or unduly burden inter-state commerce, the imposition of a discriminatory licence fee for boats owned by non-residents was without reasonable basis and therefore a violation of the privileges and immunities clause and the requirement mat shrimp fishing beats dock at a South Carolina port and unload, pack and stamp their catch for tax purposes before shipping or transporting it to another State, unconstitutionally burdened inter-state commerce and could not be sustained as a proper means of insuring collection of the poundage tax."
52. In [PRECEDENT], the City Ordinance declaring the sale of milk as pasteurized unless if has been processed and bottled at an approved pasteurization plant within the radius of five miles from the central square of Madison as unlawful, was held to be invalid as it imposes undue burden on inter-state commerce.
53. In [PRECEDENT], when the action of the State prohibiting a company from shipping cantaloupes out of the State unless they were packed in containers in a manner and of a kind approved by the State, was brought to challenge on the ground that it imposed an undue burden on the inter-state commerce, [ENTITY], ]., expressing the unanimous view of the Court, held that the commerce clause does not permit a State to require a person to go into a local packing business solely for the sake of enhancing the reputation of other producers within its borders.
54. In [PRECEDENT], the requirement that timber taken from State lands should be partially processed prior to export was held to be primary manufacture requirement and the same is invalid as it is a burden on inter-State and foreign commerce.
55. All the above decisions have precisely laid down the principle that any undue burden or restriction on the freedom of trade, commerce and intercourse is violative of the constitutional right guaranteed under [SECTION] of the [ACT].
56. Every fiscal legislation is enacted in the public interest and therefore the taxing laws made, as provided in [SECTION] of the [ACT], cannot be held to be violative of [SECTION] of the [ACT], unless the impediment or restriction is immediate and direct. Therefore, we have to examine whether the conditions laid down under the impugned rules have the effect of immediate and direct restriction and burden on the freedom of trade.
57. The mandatory conditions directing establishment of cutting and polishing unit within the State, it is submitted, is again another undue burden, particularly to those who have got factories in other States i.e., outside the State of Andhra Pradesh. Another condition that if the lease-holder is to export the mineral from the harbours outside the State, has to pay double the seigniorage fee and it is also nothing but a form of restriction. The other condition that after establishment of cutting and polishing unit, the lease-holder has to polish the granite in the ratio fixed for the black and colour granite and men only he can export the processed granite and raw granite, is also an harsh one. It is undoubtedly an immediate impediment and causes undue burden besides being a direct restriction on the freedom of trade. None of the above restrictions can be said to be remote. The conditions cannot be said to be either regulatory or compensatory in nature. We fail to see how these conditions regulate the granting of lease after the mineral has been excavated. Therefore, we are constrained to hold that the impugned rules impose undue burden and restriction which is a direct impediment affecting the free trade, commerce and intercourse of the granite. Further, as the impugned rules direct payment of double the seigniorage fee in case of export of granite from the harbours outside the State, they are directly in contravention of the provisions of the [ACT]. The impugned rules are trenching into the field occupied by the Parliament and accordingly suffer from lack of legislative competence.
58. It is lastly contended by the learned Advocate General that the writ petitions are not maintainable as the petitioners are lessees under a contract, that the petitioners have to approach the civil Court for violation of conditions of the contract and that it is not open to the petitioners to challenge the conditions of lease in a writ petition and this Court will not interfere under [SECTION] of the [ACT] in contractual matters. He relied on a decision of this Court in [PRECEDENT], which laid down that mining leases are simple contracts.
59. The petitioners are challenging the statutory rules framed by the State Government by virtue of the power conferred Under [SECTION] of the Act. The said rules are statutory in character though they are in the form of conditions of lease. Merely because the statutory rules are in the form of conditions of lease, they are not immune from challenge in proceedings under [SECTION]. It is well settled principle of law that where the statutory rules go against the main Act, or travel far beyond the scope of the Act or go against the provisions of the [ACT], they can be challenged in writ proceedings. Therefore, we are not able to agree with this contention of the learned Advocate General.
60. For the foregoing reasons, Note to [SECTION] of the [ACT] are struck. down as unconstitutional and ultra vires the provisions of the Act. The Writ Petitions are, therefore, allowed. There will be no order as to costs.
ORDER (dated 19-4-1996)
1. The learned Counsel for the petitioners contend that since the writ petitions are allowed striking down the impugned rule, double seignorage fee paid has to be refunded as this Court passed interim orders that payment of double seigniorage fee will be subject to the result of writ petitions.
2. On the other hand, the Government Pleader contends that in view of the decision of the Supreme Court in [PRECEDENT], amount already paid need not be returned. That decision is not applicable to the facts of the present cases. In the present cases, pending disposal of writ petition the payment of double seigniorage fee was ordered to be subject to the result of the writ petition. We allowed the writ petitions by order, dt.4-8-1995 and the result must follow.
3. In the view of the interim orders passed by this Court regarding payment of double seigniorage fee, we think it just and proper to direct the respondents to return the extra seigniorage fee paid to the concerned petitioner in all such writ petitions wherever there is order that payment of double seigniorage fee will be subject to the result of W.P. ORDER (dated 26-4-1996) This Court by an earlier order dt.19-4-1996 directed to return the extra seigniorage fee in pursuance of the directions granted in the writ petitions. As the petitioners are subsisting lessees, the Government is directed to adjust the extra seigniorage fee towards royalty/seigniorage fee to be paid by the petitioners in future.