Case: India Cement Limited and Others Vs. State of Tamil Nadu and Others

not invited to the provisions of Mines and Minerals (Development and Regulation) Act, 1957 and Section 9 thereof. Section 9 (3) of the Act in terms states that royalties payable under the Second Schedule of the Act shall not be enhanced more than once during a period of four years. It is, therefore, a clear bar on the State legislature taxing royalty so as to in effect amend Section Schedule of the Central Act. In the premises, it cannot be right to say that tax on royalty can be a tax on land, and even if it is a tax, if it falls within Entry 50 will be ultra vires the State legislative power in view of Section 9(3) of the Central Act. In Hingir-Rampur Coal Co. Ltd. v. State of Orissa ((1961) 2 SCR 537 : AIR 1961 SC 459 ), Wanchoo, J. in his dissenting judgment has stated that a tax on mineral rights being different from a duty of excise pertains only to a tax that is leviable for the grant of the right to extract minerals, and is not a tax on minerals as well. On that basis, a tax on royalty would not be a tax on mineral rights and would therefore in any event be outside the competence of the State legislature. . The Rajasthan, Punjab, Gujarat and Orissa High Courts have held that royalty is not a tax See Bherulal v. State of Rajasthan (AIR 1956 Raj 161 -62 : 1955 Cri LJ 1390), Dr. S. S. Sharma v. State of Punjab (AIR 1969 P & H 79, 84 : ILR (1969) 1 Punj 680), Saurashtra Cement and Chemicals Industries Ltd. v. Union of India (AIR 1979 Guj 180 , 184 : (1979) 20 Guj LR 895), L. N. Agarwalla v. State of Orissa (AIR 1983 Ori 210 : (1983) 55 Cut LT 364). 31. It was contended by Mr. Krishnamurthy Iyer that the State has a right to tax minerals. It was further contended that if tax is levied, it will not be irrational to correlate it to the value of the property and to make some kind of annual value basis of tax without intending to tax the income. In view of the provisions of the Act, as noted hereinbefore, this submission cannot be accepted. Mr. Krishnamurthy Iyer also further sought to urge that in Entry 50 of List II, there is no limitation to the taxing power of the State. In view of the principles mentioned therein-before and the clauses provisions of Section 9(2) of the Mines and Minerals (Regulation and Development) Act, 1957, this submission can not be accepted. This field is fully covered by the central legislation.32. In any event, royalty is directly relatable only to the minerals extracted and on the principle that are general provision is excluded by the special one, royalty would be relatable to Entries 23 and 50 of List II, and Entry 49 of List II. But as the fee is covered by the central power under Entry 23 or Entry 50 of List. II, the impugned legislation cannot be upheld. Our attention was drawn to a judgment of the High Court of Madhya Pradesh in Miscellaneous Petition No. 410 of 1983 - Hiralal Rameshwar Prasad v. State of Madhya Pradesh (Miscellaneous Petition No. 410 of 1983, decided on March 28, 1986 (MP HC) (DB) which was delivered on March 28, 1986 by a Division Bench of the High Court J. S. Verma, Acting Chief Justice, as His Lordship then was, held that development cess by Section 9 of the Madhya Pradesh Karadhan Adhiniyam, 1982 is ultra vires. It is not necessary in the view taken by us, and further in view that the said decision is under appeal in this Court, to examine it in detail.33. In the aforesaid view of the matter, we are of the opinion that royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State legislature because Section 9 of the Central Act covers the field and the State legislature is denuded of its competence under Entry 23 of List II. In any event, we are of the opinion that cess on royalty cannot be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user of land. 34. Mr. Krishnamurthy Iyer, however, submitted that in any event, the decision in H. R. S. Murthy case ((1964) 6 SCR 666 : AIR 1965 SC 177 ) was the decision of the Constitution Bench of this Court. Cess has been realised on that basis for the organisation of village and town panchayats and comprehensive programme of measures had been framed under the National Extension Service Scheme to which our attention was drawn. Mr. Krishnamurthy Iyer further submitted that the Directive Principle of State Policy embodied in the Constitution enjoined that the State should take steps to organise village panchayats and endow them with power and authority as may be necessary to enable them to function as units of self-government and as the amounts have been realised on that basis, if at all, we should declare the said cess on royalty to be ultra vires prospectively. In other words, the amounts that have been collected by virtue of the said provisions, should not be declared to be illegal retrospectively and the State made liable to refund the same. We see good deal of substance in this submission. After all, there was a decision of this Court in H. R. S. Murthy case ((1964) 6 SCR 666 : AIR 1965 SC 177 ) and amounts have been collected on the basis that the said decision was the correct position. We are, therefore, of the opinion that we will be justified in declaring the levy of the said cess to be ultra vires the power of the State legislature prospectively only.

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

Explanation:
1[ds]10. The appellant is bound to pay royalty to the government according to the rates provided in the Second Schedule to the said Act of 1957. Clause (1) of Part VII of the lease document provides aslessee/lessees shall pay the rent, water rate and royalties reserved by this lease at such times and in the manner provided in Parts V and VI of these presents and shall also pay and discharge all taxes, rates, assessment and impositions whatsoever being in the nature of public demand which shall from time to time be charged, assessed or imposed by the authority of the Central and State Government upon or in respect of the premises and works of the lessee/lessees in common with other premises and work of a like nature except demands for landAs mentioned hereinbefore, there is an obligation of the lessee to pay rent and other charges mentioned in the said clause, and all other Central and State Government dues "except demands for land revenue".In this connection, it may be appropriate to refer to the statement of Objects and reasons for the amendment which stated, inter alia, asthe Explanation to Section 115 of the Act "land revenue" means public revenue due on land and includes water cess payable to the government for water supplied or used for the irrigation of land but does not include any other cess or surcharge payable under Section 116. The Explanation does not cover "royalties ", lease amount or other sum payable to the government in respect of land held direct from the government on lease or licence which were included in the definition of "land revenue" under the Madras District Boards Act, 1920. As under the Madras District Boards Act, 1920, certain panchayat union councils continued to levy the cess and surcharge under the Madras Panchayats Act, 1958 also. It is the considered that the levy should be on the same basis as under the Madras District Boards Act, 1920. It is, therefore, proposed to include "royalty", lease amount and other sums payable to the government" in the definition of land revenue in the Explanation to Section 115 of the Act and also to validate the levy and collection of the cess and surcharge made hitherto on the said basis.It is obvious that the said amendment was intended to bring royalty within the Explanation and the definition of land revenue in Section 115 as well as Section 116 of the Act, and was effected by the gazette notification of September 2, 1964 by Act 18 of 1964. In order to appreciate the controversy, it has to be understood that in this case royalty was payable by the appellant which was prescribed under the lease deed, the terms where of have been noted hereinbefore. The royalty had been fixed under the statutory rules and protected under those rules. The royalty was fixed under the Mines and Minerals (Regulation and Development) Act, 1957 which is a central Act by which the control of mines and minerals had been taken over by the Central Government. It was an act for the regulation of the mines and development of minerals under the control of Union of India. That Act was to provide for the regulation of mines and the development of minerals under the control of the Union of India.Certain rules have been evolved in this regard, and it is well settled now that the various entries in the three lists are not powers but fields of legislation. The power to legislate is given by Article 246 and other articles of the Constitution. See the observations of this Court in Calcutta Gas Co. v. State of West Bengal (1962 Supp 3 SCR 1 : AIR 1962 SC 1044 ). The entries in the three lists of the Seventh Schedule to the Constitution, are legislative heads or fields of legislation. These demarcate the area over which appropriate legislature can operate. It is well settled that widest amplitude should be given to the language of these entries, but some of these entries in different lists or in the same list may overlap and sometimes may also appear to be in direct conflict with each other. Then, it is the duty of the court to find out its true intent and purpose and to examine a particular legislation in its pith and substance to determine whether it fits in one or the other of the lists. See the observations of this Court in H. R. Banthia v. Union of India ((1969) 2 SCC 166 , 174 : (1970) 1 SCR 479 , 489) and Union of India v. H. S. Dhillon ((1971) 2 SCC 779 , 792). The list are designed to define and delimit the respective areas of respective competence of the Union and the States. These neither impose any implied restriction on the legislative power conferred by Article 246 of the constitution, nor prescribe any duty to exercise that legislative power in any particular manner. Hence, the language of the entries should be given widest scope, (D. C. Rataria v. Bhuwalka Brothers Ltd., (1955) 1 SCR 1071 : AIR 1955 SC 182 ) to find out which of the meaning is fairly capable because these set up machinery of the government. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. In interpreting an entry it would not be reasonable to import any limitation by comparing or contrasting that entry with any other one in the same list. It is in this background that one has to examine the present controversy.19. Here, we are concerned with cess on royalty. One can have an idea as to what cess is, from the observations of Hidayatullah, J., as the learned Chief Justice then was, in Guruswamy and Co. v. State of Mysore ((1967) 1 SCR 548 : AIR 1967 SC 1512 ) where at page 571, the learned Judgeword cess is used in Ireland and is still in use in India although the word rate has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expense what the name (health cess, education cess, road cess etc.) indicates. When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which it is an increment.The said observations were made in the dissenting judgment, but there was no dissent on this aspect of theis, however, not possible to accept this submission, in view of the obligation indicated by the language of the provisions. Cess is not on land, but on royalty which is included in the definition of land revenue. None of the three lists of the Seventh Schedule of the Constitution permits or authorises a State to impose tax on royalty. This levy has been sought to be justified under entry 45 of List II of the Seventh Schedule. Entry 45 deals with land revenue, which is a well known concept and has existed in India before the Constitution came into force. In N. R. Reddy v. State of A.P. ((1965) 2 Andh LT 297 (AP HC) Jaganmohan Reddy, J. as the learned Judge then was of the Andhra Pradesh High Court, while sitting in a Division Bench observed that no land revenue Act existed in the composite State of Madras nor had the ryotwari system ever been established by legislative enactment. The learned Judge at page 306 of the report observed that in the earlier days, sovereigns had in exercise of their prerogative right claimed a share of the produce of all cultivated land known as Rajabhagam or by any of the various other names, and had fixed their share or its commuted money value from time to time, according to their will and pleasure. The learned Judge noted that as long as the share of the sovereign was being paid, the sovereign had no right to the possession of the lands, and the proprietorship of these lands was vested in the occupier, who could not be removed because another offered more. The right of the sovereign to a share in the produce as observed by the Government of Madras in 1856 "is not rent which consists of all surplus produce after paying the cost of cultivation and the profits of agricultural stock but land revenue only which ought, if possible, to be so lightly assessed as to leave a surplus or rent to the occupier, when he in fact lets the land to others or retains it in his own hands". It was noted that the amount of tax that was levied before the Mohamedan rule, amounted to 1/8th, 1/6th or 11/12th according to Manu depending on the differences in the soil and the labour necessary to cultivate it, and it even went up to 1/4th part, in times of urgent necessity, as of war or invasion. The later commentators, Yajnavalkya. Apastamba, Gautama, Baudhayana and Narada, have all asserted not only the right but the extent of the share. When the British came to India they followed not only the precedent of the previous Mohamedan rulers who also claimed enormous land revenue, with this difference that what the Mohamedan rulers claimed they could never fully realise, but what the British rulers claimed they realised with vigour. It is not necessary to refer in detail how land revenue developed in India after the advent of the British rule. There was an appeal from the said decision of the High Court of Andhra Pradesh and this Court dismissed the appeal in State of A. P. v. N. R. Reddy ((1967) 3 SCR 28 : AIR 1967 SC 1458 ).21. It is, however, clear that over a period of centuries, land revenue in India has acquired a connotative meaning of share in the produce of land to which the King or the government is entitled tohas, however, to be borne in mind that Explanation to Section 115(1) was added and there was an amendment as we have noted before. That very Explanation makes a distinction between land revenue as such and royalty which by amendment is deemed to be land revenue. It is, therefore, recognised by the every force of that Explanation and the amendment thereto that the expression royalty in Sections 115 and 116 of the Act cannot mean land revenue properly called or conventionally known, which is separate and distinct fromhowever, cannot be accepted. In this connection, reference may be made to the decision of this Court in Raja Jagannath Baksh Singh v. State of U.P. ((1963) 1 SCR 220 : AIR 1962 SC 1563 : (1962) 46 ITR 169 ) where at page 229 it was indicated that the expression lands in Entry 49 is wide enough to include agricultural land as well as non-agricultural land. Gajendragadkar, J. as the learned Chief Justice then was, observed that the cardinal rule of interpreting the words used by the Constitution in conferring legislative power was that these must receive the most liberal construction and if they are words of wide amplitude the construction must accord with it. If general word was used, it must be so construed so as to extend to all ancillary or subsidiary, matters that can reasonably be included in it. So construed, there could not be any doubt that the word land in Entry 49, List II of the Seventh Schedule includes all land whether agricultural or non-agricultural. Hence, since the impugned Act imposed tax on land and building which was within the competence of the State legislature and its validity was beyond challenge but the court observed that as there was Entry 46 in List II which refers to taxes on agricultural income, it is clear that agricultural income is not included in Entry 49. If the State legislature purports to impose a tax on agricultural income it would not be referable to Entry 49. Mr. Krishnamurthy Iyer relied not said principle. But in the instant case, royalty being that which is payable on the extraction from the land and cess being an additional charge on that royalty, cannot by the parity of the same reasoning, be considered to be a tax on land. But since it was not a tax on land and there is no entry like Entry 46 in the instant situation like the position before this Court in the aforesaid decision, enabling the State to impose tax on royalty in the instant situation, the State was incompetent to impose such a tax. There is a clear distinction between tax directly on land and tax on income arising from land. The aforesaid decision confirmed the above position. In New Manek Chowk Spinning and Weaving Mills Co. Ltd. v. Municipal Corpn. of the City of Allahabad ((1967) 2 SCR 679  at 696 : AIR 1967 SC 1801 ) this Court after referring to the several decisions observed that Entry 49 of List II of the Seventh Schedule only permitted levy of tax on land and building. It did not permit the levy of tax on machinery contents (sic) in or situated on the building for a particular purpose. Rule 7(2) of the Bombay Municipal Corporation Rules was held to be accordingly ultra vires in that case. In S. C. Nawn v. W. T. O., Calcutta ((1969) 1 SCR 108 : AIR 1969 SC 59 : 69 ITR 897) this Court had occasion to consider this and upheld the validity of the Wealth Tax Act, 1957 on the ground that it fell within Entry 86 of List I and not Entry 49 of List II. Construing the said entry, this Court observed that Entry 49 List II contemplated a levy on land as a unit and the levy must be directly imposed on land and must bear a definite relationship to it. Entry 49 of List II was held to be more general in nature than Entry 86, List I, which was held to be more specific in nature and it is well settled that in the event of conflict between Entry 86, List I and Entry 49 of List II, Entry 86 prevails as per Article 246 of the Constitution.23. In Asstt. Commissioner of Urban Land Tax v. Buckingham and Carnatic Co. Ltd. ((1969) 2 SCC 55 , 62-63 : (1970) 1 SCR 268 , 278) this Court reiterated the principles laid down in S. C. Nawn case ((1969) 1 SCR 108 : AIR 1969 SC 59 : 69 ITR 897) and held that Entry 49 of List II was confined to a tax that was directly on land as a unit. In Second Gift Tax Officer, Mangalore v. D. H. Nazareth ((1970) 1 SCC 749 , 753 : (1971) 1 SCR 195 , 200) it was held that a tax on the gift of land is not a tax imposed directly on land but only on a particular user, namely, the transfer of land by way of gift. In Union of India v. H. S. Dhillon ((1971) 2 SCC 779 , 792), this Court approved the principle laid down in S. C. Nawn case ((1969) 1 SCR 108 : AIR 1969 SC 59 : 69 ITR 897) as well as Nazareth case ((1970) 1 SCC 749 , 753 : (1971) 1 SCR 195 , 200). In Bhagwan Dass Jain v. Union of India ((1981) 2 SCC 135 , 14 : 1981 SCC (Tax) 84 : (1981) 2 SCR 808 , 816) this Court made a distinction between the levy on income from house property itself which would be referable to Entry 49 List II. It is, therefore, not possible to accept.Mr. Krishnamurthy Iyers Submission and that a cess on royalty cannot possibly be said to be a tax or an impost on land. Mr. Nariman is right that royalty which is indirectly connected with land, cannot be said to be a tax directly on lands as a unit. In this connection, reference may be made to the differentiation made to the different types of taxes for instance, one being professional tax and entertainment tax. In the Western India Theatres Ltd. v. Cantonment Board, Poona Cantonment (1959 Supp 2 SCR 63, 69 : AIR 1959 SC 582 ) it was held that an entertainment tax is dependent upon whether there would or would not be a show in a cinema house. If there is no show, there is no tax. It cannot be a tax on profession or calling. Professional tax does not depend on the exercise of ones profession but only concerns itself with the right to practice. It appears that in the instant case also no tax can be levied or is leviable under the impugned Act if no mining activities are carried on. Hence, it is manifest that it is not related to land as a unit which is the only method of valuation of land under Entry 49 of List II, but is relatable to minerals extracted. Royalty is payable on a proportion of the minerals extracted. It may be mentioned that the Act does not use dead rent as a basis on which land is to be valued. Hence there cannot be any doubt that the impugned legislation in its pith and substance is a tax on royalty and not a tax on50 of List II of the Seventh Schedule deals with taxes on mineral rights subject to limitation imposed by Parliament relating to mineral development. Entry 23 of List II deals with regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union and Entry 54 in List I deals with regulation of mines and minerals under the control of Union declared by the Parliament by law to be expedient in public interest. Even though minerals are part of the State List they are treated separately, and therefore the principle that the specific excludes the general, must be applied. See the observations of Waverly Jute Mills Co. Ltd. v. Raymon and Co. (I) Pvt. Ltd. ((1963) 3 SCR 209 , 220 : AIR 1963 SC 90 ), where it was held that land in Entry 49 of List II cannot possibly include50 of List II of the Seventh Schedule deals with taxes on mineral rights subject to limitation imposed by Parliament relating to mineral development. Entry 23 of List II deals with regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union and Entry 54 in List I deals with regulation of mines and minerals under the control of Union declared by the Parliament by law to be expedient in public interest. Even though minerals are part of the State List they are treated separately, and therefore the principle that the specific excludes the general, must be applied. See the observations of Waverly Jute Mills Co. Ltd. v. Raymon and Co. (I) Pvt. Ltd. ((1963) 3 SCR 209 , 220 : AIR 1963 SC 90 ), where it was held that land in Entry 49 of List II cannot possibly includelevy in question has to be either a tax or a fee or an impost. If it is neither a tax nor a fee then it should be under one of the general entries under List II. The expression land according to its legal significance has an indefinite extent both upward and downwards, the surface of the soil and would include not only the face of the earth but everything under it or over it. See the observations in Anant Mills Co. Ltd. v. State of Gujarat ((1975) 2 SCC 175 , 204 : (1975) 3 SCR 220 , 249). The minerals which are under the earth, can in certain circumstances fall under the expression land but as tax on mineral rights is expressly covered by Entry 50 of List II, if it is brought under the head taxes under Entry 49 of List II, it would render Entry 50 of List II redundant. Learned Attorney General is right in contending that entries should not be so construed as to make any one entryspeaking for the court, one of us, Venkataramiah, J. of the Mysore High Court, as the learned Chief justice then was, observed that a combined reading of reading of Entries 23 and 50 List II and Entry 54 of List I, establishes that as long as the Parliament ones not make any law in exercise of its power under Entry 54, the powers of the State legislature in Entries 23 and 50 would be exercisable the State legislature. But when once the Parliament makes a declaration by law that it is expedient in the public interest to make regulation mines and minerals development under the control of the Union, to the extent to which such regulation and development is undertaken by the law made by the Parliament, the power of the State legislature under entries 23 and 50 of List II are denuded. There the court was concerned with the Mysore Village Panchayats and Local Boards Act, 1959. Thus, it was held that it could not, therefore, be said that even after passing of Central Act, the State legislature by enacting Section 143 of the Act to confer power on the Taluk Board to levy tax on the mining activities carried on by the persons holding mineral concessions. It followed that the levy of tax on mining by the Board as per the impugned notification was unauthorised and liable to be set aside. At page 306 of he said report, it was held that royalty under Section 9 of the Mines and Act was really a tax.28. To the similar effects are the observations of the High Court of in L. Mal v. State of Bihar (AIR 1965 Pat 491 , 494). Mr. Krishnamurthy Iyer, however, to the decision of this Court in H.R. S. Murthy case ((1964) 6 SCR 666 : AIR 1965 SC 177 ). There under terms of a mining lease the lessee worked the mines and won iron in a tract of land in a village in Chittur district and bound himself to a dead rent if he used the leased land for the extraction of iron ore, pay a royalty on iron ore if it were used for extraction of iron and in to pay a surface rent in respect of the surface area occupied or used. In the said decision the legislative competence of Sections 78 and 79 of the Madras District Boards Act was upheld by which land cess was made payable on the basis of royalty. This Court proceeded on the basis that other cess related to land and would therefore be covered by Entry 49 of List II. It was held that land cess paid on royalty has a direct relation to the land and only a remote relation with mining. This, with respect, seems to be not a correct approach. It was further observed that it was not necessary to consider the meaning of the expression tax on mineral right following under Entry 50 of List II inasmuch as according to this Court, Parliament has not made any tax on mineral rights. This is not a correct basis.It seems, therefore, that attention of the court was not invited to the provisions of Mines and Minerals (Development and Regulation) Act, 1957 and Section 9 thereof. Section 9 (3) of the Act in terms states that royalties payable under the Second Schedule of the Act shall not be enhanced more than once during a period of four years. It is, therefore, a clear bar on the State legislature taxing royalty so as to in effect amend Section Schedule of the Central Act. In the premises, it cannot be right to say that tax on royalty can be a tax on land, and even if it is a tax, if it falls within Entry 50 will be ultra vires the State legislative power in view of Section 9(3) of the Central Act. In Hingir-Rampur Coal Co. Ltd. v. State of Orissa ((1961) 2 SCR 537 : AIR 1961 SC 459 ), Wanchoo, J. in his dissenting judgment has stated that a tax on mineral rights being different from a duty of excise pertains only to a tax that is leviable for the grant of the right to extract minerals, and is not a tax on minerals as well. On that basis, a tax on royalty would not be a tax on mineral rights and would therefore in any event be outside the competence of the StateRajasthan, Punjab, Gujarat and Orissa High Courts have held that royalty is not a tax See Bherulal v. State of Rajasthan (AIR 1956 Raj 161 -62 : 1955 Cri LJ 1390), Dr. S. S. Sharma v. State of Punjab (AIR 1969 P & H 79, 84 : ILR (1969) 1 Punj 680), Saurashtra Cement and Chemicals Industries Ltd. v. Union of India (AIR 1979 Guj 180 , 184 : (1979) 20 Guj LR 895), L. N. Agarwalla v. State of Orissa (AIR 1983 Ori 210 : (1983) 55 Cut LTview of the provisions of the Act, as noted hereinbefore, this submission cannot be accepted. Mr. Krishnamurthy Iyer also further sought to urge that in Entry 50 of List II, there is no limitation to the taxing power of the State. In view of the principles mentioned therein-before and the clauses provisions of Section 9(2) of the Mines and Minerals (Regulation and Development) Act, 1957, this submission can not be accepted. This field is fully covered by the central legislation.32. In any event, royalty is directly relatable only to the minerals extracted and on the principle that are general provision is excluded by the special one, royalty would be relatable to Entries 23 and 50 of List II, and Entry 49 of List II. But as the fee is covered by the central power under Entry 23 or Entry 50 of List. II, the impugned legislation cannot be upheld. Our attention was drawn to a judgment of the High Court of Madhya Pradesh in Miscellaneous Petition No. 410 of 1983 - Hiralal Rameshwar Prasad v. State of Madhya Pradesh (Miscellaneous Petition No. 410 of 1983, decided on March 28, 1986 (MP HC) (DB) which was delivered on March 28, 1986 by a Division Bench of the High Court J. S. Verma, Acting Chief Justice, as His Lordship then was, held that development cess by Section 9 of the Madhya Pradesh Karadhan Adhiniyam, 1982 is ultra vires. It is not necessary in the view taken by us, and further in view that the said decision is under appeal in this Court, to examine it in detail.33. In the aforesaid view of the matter, we are of the opinion that royalty is a tax, and as such a cess on royalty being a tax on royalty, is beyond the competence of the State legislature because Section 9 of the Central Act covers the field and the State legislature is denuded of its competence under Entry 23 of List II. In any event, we are of the opinion that cess on royalty cannot be sustained under Entry 49 of List II as being a tax on land. Royalty on mineral rights is not a tax on land but a payment for the user ofsee good deal of substance in this submission. After all, there was a decision of this Court in H. R. S. Murthy case ((1964) 6 SCR 666 : AIR 1965 SC 177 ) and amounts have been collected on the basis that the said decision was the correct position. We are, therefore, of the opinion that we will be justified in declaring the levy of the said cess to be ultra vires the power of the State legislature prospectively only.