Case: State of Bihar and others  Vs.  Indian Aluminum Company and others

has been regarded as meaning the land on surface and also below the surface. Therefore, in order that a tax can be levied under Entry 49 of List II it is essential that land as a unit must exist on which the tax is imposed. In the instant case the tax is, in effect, being levied not on land but on the absence of land. The levy is on the void which has been created. The forest land which is being used is not subjected to tax. The Schedule to the Act itself shows that the assessment of tax is on excavation and use of forest land for non-forest purpose. The Schedule further says that the rate of tax to be levied, in the case of mining or excavation varies with the extent of the land voided. In case the land has been rehabilitated no tax is to be levied. The tax is levied in effect on the activity of the removal or excavation of land. In other words the tax is squarely on the activity of mining because it is under the mining lease that mechanized and non-mechanized excavation as well as underground excavation takes place and this is what is referred to in column 1 of the Schedule to the Act while determining the amount of tax leviable. Levy in other words is on the activity of removal of earth and not on the land itself and is, therefore, outside the ambit of Entry 49 of List II 16. There is yet another reason why this tax cannot be regarded as being a tax on land. Section 3 read with the Schedule [and clauses (a), (b) and (c)] of the Act says that the tax is not on the surface of the land but is on the extent to which destruction has taken place. It is with reference to the extent of the empty space or the void which has been created as a result of the mining activity that the tax is levied. Tax, in effect, is levied on the absence of land and not on land itself. At the most this may be regarded as a tax in respect of land but it is certainly not a tax on land. The existing land or trees are not taxed, the tax is leviable only when a non-forest activity takes place and the land is not rehabilitated. Therefore, in pith and substance it is a tax on activity on land and not on land itself 17. Mr. Sibal placed strong reliance on the decision in the case of Goodricke Group Ltd. v. State of W. B. in support of his contention that the levy was on land itself and that the Act would be covered by Entry 49. Goodricke cases is clearly distinguishable. There education cess and rural employment cess were levied on certain lands and buildings in the State of West Bengal. The estates were carved out as a separate category and a different rate was prescribed therefor. The cess on tea estates was calculated on the basis of yield of tea whereas cess on other lands was determined having regard to the development value of the same. It was held that the tax was upon land though the cess was quantified on the basis of produce of the tea estate. In the present case, however, we do not find that the tax is on land. In fact what is sought to be taxed is in the absence of land. There being this fundamental difference the decision in Goodricke cases Can have no application merely because in that case the quantum of cess on the estate to be charged depended on the quantity of tea dispatched from the tea estate. The tax, in other words, was on the existing tea estate but, for the purpose of calculating the tax it was relatable to the quantum of the tea dispatched as a measure of the tax 18. One of the facets of tax being levied on land is that the primary responsibility of the payment of tax is on the owner of the land. In the instant case the levy is not on the general ownership of the land but is on the person who uses it and who may or may not be the owner. The primary liability is on the use by the occupier and if the occupier and the owner are two different persons the liability would be that of the occupier alone and not of the owner 19. The provisions of clauses (d), (e) and (f) of the Schedule to the Act, in effect and substance, amount to levy of tax on the use of forest land for non-forest purposes and for rehabilitating the forest land. The Forest Conservation Act, 1980 and the rules and guidelines made thereunder contain complete provisions for reclamation and rehabilitation of such land. Planting and replanting trees thereon is a matter clearly covered by the said Act and therefore, the said clauses (d) to (f) of the Schedule in the impugned Act directly impinge on the analogous provisions of the Forest Conservation Act, 1980 20. From the aforesaid discussion it is obvious that the present tax is one on the excavation and use of forest land and not on the forest land as such. Taxing of the undertaking of a non-forest activity in a forest land cannot be regarded as being covered by Entry 49 of the State List because what is sought to be taxed is not land but the tax is on absence of land or forest by reason of the activity of excavation and/or mining or use of forest land for a non-forest purpose. The High Court was, therefore, right in allowing the writ petitions filed by the respondents 21. As, in our opinion, legislative competence was lacking in the enactment of this Act, it is not necessary for us to consider the other questions or issues which were raised and decided by the High Court

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The validity of the levy of cess on royalty charged for mining levied by the Cess Acts of the States of Orissa, Bihar, Bengal and Madhya Pradesh came up for consideration before this Court in the case of Orissa Cement Ltd. v. State of Orissa where again relying upon the earlier decisions, this Court held that tax on land envisaged by Entry 49 of List II must be one directly imposed on land, levied on land as a unit and bearing a direct relationship to it. The last authority which needs to be referred to in this connection is of State of Orissa v. Mahanadi Coalfields Ltd. where this Court was called upon to determine the competence of the State Legislature to levy tax ong lands levied under the Orissa Rural Employment, Education and Production Act, 1992. This Act had been promulgated with a view to provide additional resources for promotion of education and employment in rural areas and for implementing rural employment, education and production programmes. The Act sought to levy rural employment, education and production tax only ong land. The validity of the Act having been challenged, the High Court held that the State Legislature did not have the competence to levy tax on coal bearing land. In appeal the legislative competence was sought to be derived from Entry 49 of List II. Rejecting this contention and following the ratio of the earlier decisions of this Court, it was held that the levy in that case was in substance on minerals and mineral rights and not on land and was beyond the competence of the State Legislature and did not fall within Entry 49 of List II15. Applying the ratio of the aforesaid decisions to the facts of the present case we find that the position is no different. Entry 49 of List II has been interpreted to mean the levy of tax directly on land as a unit. The land has been regarded as meaning the land on surface and also below the surface. Therefore, in order that a tax can be levied under Entry 49 of List II it is essential that land as a unit must exist on which the tax is imposed. In the instant case the tax is, in effect, being levied not on land but on the absence of land. The levy is on the void which has been created. The forest land which is being used is not subjected to tax. The Schedule to the Act itself shows that the assessment of tax is on excavation and use of forest land fort purpose. The Schedule further says that the rate of tax to be levied, in the case of mining or excavation varies with the extent of the land voided. In case the land has been rehabilitated no tax is to be levied. The tax is levied in effect on the activity of the removal or excavation of land. In other words the tax is squarely on the activity of mining because it is under the mining lease that mechanized andd excavation as well as underground excavation takes place and this is what is referred to in column 1 of the Schedule to the Act while determining the amount of tax leviable. Levy in other words is on the activity of removal of earth and not on the land itself and is, therefore, outside the ambit of Entry 49 of List IIIn the present case, however, we do not find that the tax is on land. In fact what is sought to be taxed is in the absence of land. There being this fundamental difference the decision in Goodricke cases Can have no application merely because in that case the quantum of cess on the estate to be charged depended on the quantity of tea dispatched from the tea estate. The tax, in other words, was on the existing tea estate but, for the purpose of calculating the tax it was relatable to the quantum of the tea dispatched as a measure of the tax20. From the aforesaid discussion it is obvious that the present tax is one on the excavation and use of forest land and not on the forest land as such. Taxing of the undertaking of at activity in a forest land cannot be regarded as being covered by Entry 49 of the State List because what is sought to be taxed is not land but the tax is on absence of land or forest by reason of the activity of excavation and/or mining or use of forest land for at purpose. The High Court was, therefore, right in allowing the writ petitions filed by the respondents21. As, in our opinion, legislative competence was lacking in the enactment of this Act, it is not necessary for us to consider the other questions or issues which were raised and decided by the High Court