# H. R. S. MURTHY v. COLLECTOR OF CHITTOOR AND ANOTHER

- **Citation:** [1964] 6 S.C.R. 666
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Case number:** Civil Appeals Nos. 316-A and 316-B of 1962
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, K. c. DAS GUPTA, J. C. Shah, N. Ra.Tagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/h-r-s-murthy-v-collector-of-chittoor-and-another-3212
- **Pages:** 13

## Headnote

Mining Lease-Notice of demand for payment of land cess-ValidityLand cess, if recoverable as an arrear of land revenue-If a tax
on mineral rights-Expression ''Royalty'', 1ne1111ing of-If include.s
royalty payable under a mining lease-Madras District Boards Act
(Mad. Act No. XIV of 1920), ss. 78 and 79-Mines and Minerals
(Regulation and Development) Act, (Lill of 1948), and Act LXV/l
of [957, Entry 49 of the State List.
Under the terms of a mining lease the lessee worked the mines and
won iron ore in a tract of land in a village in Chittor district and bound
himself to pay a dead rent if he used the leased land for the extraction
of iron ore, to pay a royalty on iron ore if it Were used for extraction
of iron and in addition to pay a surface rent in respect of the surface
area occupied or used. The lessee working the mines extracted ore
and marketed it. After separation from Madras in 1953, the District
of Chittoor became part of the Andhra State. In 1955 a demand was
made for the payment of land cess under ss. 78 and 79 of the Madras
District Boards Act and including in the computation of the
''annual
rent value", the amounts payable to Government in each year under
the mining lease both as surface rent and royalty. On challenge to the
validity of this notice by the lessee, the High Court quashed the notices.
(I) [19S8] S.C.R. !3S5.
6 S.C.R.
SUPREME COURT REPORTS
After this decision the lessee died.
On March 10, 1955, two notices
1964
were issued to the appellant demanding payment of cess for the years H. R. s. Murthy
1952-54 and 1955-57 respectively and threatening coercive proceedv.
ings, for their recovery in the event of non-compliance.
Impugning
Collector of
the validity of the earlier notices of demand, the appellant filed a writ
Chittoor
petition in the
High
Court and
a
similar
petition challenging
the validity of the notice of demand for the later period. Pending
these petitions a ·further notice of demand for payment of cess for the
years 1958-59 was served on the appellant in August 29, 1960 and to
obtain a similar relief in respect of this notice and the proceedings for
recovery thereof, the appellant filed a writ petition in this Court and
contended: (I) that the expression "royalty" under s. 79(1) ·does not
signify royalty as commonly understood but is confined to the rent
payable for the beneficial use of the surface of the land; (2) assuming
that royalty in the sense mentioned in point No. l is within ss. 78 and 79,
of the Act, the provision imposing the land cess quoad royalty under
the mining leases must be held to be repealed by the Central Acts of
1948 and 1957; (3) is the land cess demanded by the impugned notices
dated March 10, 1958 and August 29, 1960 recoverable as an arrear
of land revenue under the law? (4) s. 221 of the Act which made the
provision for the recovery of sums due as taxes had, by reason of the
changes effected in the rules, ceased to be applicable to the recovery
of land cess under s. 78.
Held: (i) Where the land is held On lease, as in the present case,
the lease amount is specifically referreU to in s. 79 of the Act as one
of the components for the complltation of the annual rent value.
It i1
therefore obvious that 'royalty' which follows the expression 'lease
amount' is something other than the return to the lessor or licenser for
the use of the land surface and represents as it normally connotes the
payment made for the materials or minerals won from the land.
(ii) There is no connection between the regulation and development
of mines and minerals dealt with in the Central Acts and the levy and
collection of land cess under ss. 78 and 79 of the Act. There is
therefore, nothing in common between the Act and the Central Acts
of 1948 and 1957 so as to require any detailed examination of the
enactments for discovering whether there is any overlapping.
Hingir Rampur Coal Co. v. State of Orissa, [1961] 2 S.C.R. 537 and
State of Orissa v. M. A. Tullock, A.LR. 1964 S.C. 1284, distinguished.

## Text

666
SUPREME COURT REPORTS
1964
of sales-tax by fixing upon the actual situation of the goods
Than Singh
within the Province at 1the date of the contract, for the
..
..
v.f
T
purposes of levying tax on sales. The Legislature has thereby
... qJt:o.
o
axes
-
not overstepped the limits of its authority : The Tata Iron
Shah J.
& Steel Company Ltd. v. The State of Bihar('). No argument has therefore been advanced before us to support the
plea of unconstitutionality.
1964
February, 4
All the appeals fail and are dismissed with costs. One
hearing fee.
Appeals dismissed.
H. R. S. MURTHY
v.
COLLECTOR OF CHITTOOR AND ANOTHER
(P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, K. c. DAS
GUPTA, J. C. SHAH AND N. RA.TAGOPALA AYYANGAR JJ.)
Mining Lease-Notice of demand for payment of land cess-ValidityLand cess, if recoverable as an arrear of land revenue-If a tax
on mineral rights-Expression ''Royalty'', 1ne1111ing of-If include.s
royalty payable under a mining lease-Madras District Boards Act
(Mad. Act No. XIV of 1920), ss. 78 and 79-Mines and Minerals
(Regulation and Development) Act, (Lill of 1948), and Act LXV/l
of [957, Entry 49 of the State List.
Under the terms of a mining lease the lessee worked the mines and
won iron ore in a tract of land in a village in Chittor district and bound
himself to pay a dead rent if he used the leased land for the extraction
of iron ore, to pay a royalty on iron ore if it Were used for extraction
of iron and in addition to pay a surface rent in respect of the surface
area occupied or used. The lessee working the mines extracted ore
and marketed it. After separation from Madras in 1953, the District
of Chittoor became part of the Andhra State. In 1955 a demand was
made for the payment of land cess under ss. 78 and 79 of the Madras
District Boards Act and including in the computation of the
''annual
rent value", the amounts payable to Government in each year under
the mining lease both as surface rent and royalty. On challenge to the
validity of this notice by the lessee, the High Court quashed the notices.
(I) [19S8] S.C.R. !3S5.
6 S.C.R.
SUPREME COURT REPORTS
After this decision the lessee died.
On March 10, 1955, two notices
1964
were issued to the appellant demanding payment of cess for the years H. R. s. Murthy
1952-54 and 1955-57 respectively and threatening coercive proceedv.
ings, for their recovery in the event of non-compliance.
Impugning
Collector of
the validity of the earlier notices of demand, the appellant filed a writ
Chittoor
petition in the
High
Court and
a
similar
petition challenging
the validity of the notice of demand for the later period. Pending
these petitions a ·further notice of demand for payment of cess for the
years 1958-59 was served on the appellant in August 29, 1960 and to
obtain a similar relief in respect of this notice and the proceedings for
recovery thereof, the appellant filed a writ petition in this Court and
contended: (I) that the expression "royalty" under s. 79(1) ·does not
signify royalty as commonly understood but is confined to the rent
payable for the beneficial use of the surface of the land; (2) assuming
that royalty in the sense mentioned in point No. l is within ss. 78 and 79,
of the Act, the provision imposing the land cess quoad royalty under
the mining leases must be held to be repealed by the Central Acts of
1948 and 1957; (3) is the land cess demanded by the impugned notices
dated March 10, 1958 and August 29, 1960 recoverable as an arrear
of land revenue under the law? (4) s. 221 of the Act which made the
provision for the recovery of sums due as taxes had, by reason of the
changes effected in the rules, ceased to be applicable to the recovery
of land cess under s. 78.
Held: (i) Where the land is held On lease, as in the present case,
the lease amount is specifically referreU to in s. 79 of the Act as one
of the components for the complltation of the annual rent value.
It i1
therefore obvious that 'royalty' which follows the expression 'lease
amount' is something other than the return to the lessor or licenser for
the use of the land surface and represents as it normally connotes the
payment made for the materials or minerals won from the land.
(ii) There is no connection between the regulation and development
of mines and minerals dealt with in the Central Acts and the levy and
collection of land cess under ss. 78 and 79 of the Act. There is
therefore, nothing in common between the Act and the Central Acts
of 1948 and 1957 so as to require any detailed examination of the
enactments for discovering whether there is any overlapping.
Hingir Rampur Coal Co. v. State of Orissa, [1961] 2 S.C.R. 537 and
State of Orissa v. M. A. Tullock, A.LR. 1964 S.C. 1284, distinguished.
(iii) In the context of ss. 78 and 79 of the Act and the scheme >f
those provisions it is clear that the land cess is in truth a 'tax on lands'
within the entry 49 of the State List.
Where the land is held under lease it is the lease amount mat forms
the basis. Where land is held under a mining lease, that which the
occupier is willing to pay is accordingly treated a8 the ''annual rent
value" of the property; such rent value would, therefore, necessarily
1964
H. R. S. Murthy
v.
Collector of
Chittoor
668
SUPREME COURT REPORTS
[1964]
include not merely the surface rent but the dead rent, as well as the
royalty payable by the licensee, lessee or occupier for the user· of the
:iroperty.
(iv) The cess under s. 78 would be "a cess lawfully imposed upon
land" under s. 52 of the Madras Revenue Recovery Act and woufd
therefore be covered by its terms.
The legality of the procedure, which
the respondents proposed to adopt for the recovery of the sums could
not, therefore, be successfully challenged.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos.
316-A and 316-B of 1962.
Appeals by special leave and by certificate from judgment and order dated March 25, 1960, of the Andhra
Pradesh High Court in Writ Petitions Nos. 534 and 535 of
1958.
AND
Writ Petition No. 302 of 1960.
Petition under Art. 32 of the Constitution of India for
the enforcement of Fundamental Rights.
P. Ram Reddy, for the appellant (in C.A. No. 316A
and 316B of 1962) and the petitioner (in petition No. 302
of 1960).
T. V. R. Tatachari and B. R. G. K. Achar, for the
respondents (in both the appeals and the peti1tion).
February 4, 1964. The Judgment of the Court was
delivered by
Ayyangar I.
AYYANGAR J.-The two Civil Appeals and the Petition
under Art. 32 of the Constitution which have been heard
together raise a common point rega,-ding the validity of
notices of demand for the payment. of land cess under the
Madras District Boards Act (Madras Act XIV of 1920)
which for shortness we shall call the Act, and the legality
of the procedure for the recovery of the amount of the said
cess.
The impugned notices made a demand also for
education cess but as this cess is merely a proportion of
the land-cess, and as the validity of that demand stands or
falls with that of the land-cess, it is sufficient if we refer
to and consider the challenge to the demand of land-cess
6 S.C.R.
SUPREME COURT REPORTS
alone, as that will determine the validity of the entire sum
demanded.
The appellant's father obtained a mining lease from the
Government of Madras dated September 15, 1953 under
which he was permitted to work and win iron ore in a tract
of land in a village in Chittoor district.
The terms upon
which the lessee was to work the mines are not very relevani
but what is material is that under this instrument the lessee
bound himself to pay a dead rent of Rs. 1,140/2 per year
if he used the leased land for the extraction of iron ore and
a higher amount if used for other purposes.
Besides, he
also bound himself to pay a royalty of 8 annas per ton of
iron ore if the ore were used for extraction of iron and if
the iron ore was used for any other punpose such as for
sale in specie, at Re. l /- per ton. In addition, the lease also
stipulated for the payment of surface rent at Rs. 1-8-3 per
acre per annum in respect of the surface area occupied or
used. The lessee worked the mines, extracted ore and
marketed i.t.
To raise finances for carrying on the local administration
in the District Boards, several taxes are leviable.
Among
them section 78 of the Act imposes a land-cess on lands in
the district in these terms :
"78. The land-cess shall be levied on the annual
rent value of ali occupied lands on whatever
tenure held and shall consist of a tax of two
annas in the rupee of the annual rent value of
all such lands in the district."
The "annual rent value" on the basis of which the land-cess
to be levied was to be computed in the manner laid down
in s. 79 and this section ran :
"79. The annual rent value shall, for the purposes of
section 78, be calculated in the following
manner:
(i) In the case of lands held direct from Government on ryotwari tenure or on lease or licence,
the assessment, lease amount, royalty or other
sum payable to Government for the lands,
1964
H. R. s. Murthy
v.
Collector of
Chittoor
Ayyangar J.
1964
H R. S. Murthy
v.
Collector of
Chittoor
A.yvangar !.
SUPREME COURT REPORTS
together with any water-rate which may be
payable for their irrigation, shall be taken to
be the annual rent value.
(ii) In the case of inam lands or lands held wholly
or partially free from assessment, the full
assessment which such lands would bear if they
were I).ot inam, together with any water-rate
which may be payable for their irrigation, shall
be taken to be the annual rent value; and such
full assessment and water-rate shall be determined by the district collector under the general
orders of the Board of Revenue.
(iii) In the case of lands held on any other tenure,
the annual rent payable to the landholder, sublandholder or any other intermediate landholder
holding on an under-tenure created, continued
or recognized by a landholder or sub-landholder,
as the case may be, by his tenants, together
with any water-rate which may be payable
for their irrigation, shall be taken to be
the annual rent value; and where such lands
are occupied by the owner himself or by any
person holding the same from him free of rent
or at a favourable rent, the annual rent value
shall be calculated according to the rates of
rent usually paid by occupancy ryot for ryoti
lands in the neighbourhood with similar advantages, together with any water-rate which may
be payable for the irrigation of the lands so
occupied.
(iv) In the case of lands, the assessment of rent of
whkh is paid in kind, the aooual rent value
shall be calculated according to the rates of
rent established or paid for neighbouring lands
of a similar description and quality, together
with any water-rate which may be payable for
the irrigation of the lands first mentioned, or
if such method of calculation is, in the opinion
of the Board of Revenue, impracticable in any
6 S.C.R.
SUPREME COURT REPORTS
'
particular case, according to any method which
1964
the Board of Revenue may approve for that H. R. S.-Murtltv
case :
Provided that, where any landholder or sub-landholder has obtained under the provisions of
sections 30 (iii) and 3 3 of the Madras Estates
Land Act, 1908, a decree empowering him to
increase his rent in consequence of any additional payment by way of water-rate made by
him 'to Government, the annual rent value shall
!le the balance remaining after· deducting such
increase of rent up to the amount of the waterrate from the sum ascertained as aforesaid."
When the State of Andhra was separated from Madras
in October, 1953 the district of Chittoor became part of
the State of Andhra.
Tn 1955 a demand was made upon
the father of the appellant for the payment of land cess
calculated in accordance with the provisions of ss. 7 6 and
79 of the Act and including in the computation of the
"annual rent value", the amounts payable to Government
in each year under the mining lease both as surface rent
and royalty. The validity of this notice was objected to on
grounds which are no longer material and the objections
being upheld. the notices were quashed on writ petitions
filed to the High Court. Andhra Pradesh by the appellant's
father.
After the decis10n by the High Court in his favour the
appellant's father died.
On March 10, 1958 two notices
were issued to the appellant demanding the payment of the
sums specified therein as being the cesses for the years 1952
to 1954 and 1955 to 1957 resrpectively and threatening
coercive proceedings for their recovery in the event of the
demand not being complied with.
Impugning the validity
of the notices of demand for the earlier triennuim, the
appellant filed writ petition 534 of 1958 in the High Court
of Andhra Pradesh and a similar petition No. 535 of 1958
challenging the validity of the notice of demand for the
later period. While these petitions were pending before the
High Court a further notice of demand claiming the payv.
Collector of
Chittoor
Ayyangar J.
•
SUPREME COURT REPORTS
1964
ment of cess for the years 1958 and 1959 was served on
H. R. ·-;-Murthy the appellant in August 1960 and to obtain a similar relief
v.
in respect of this notice and the proceedings for the recovery
Collector of
Chittoor
thereof, the appellant has filed writ petition 302 of 1960
A.yyangar .1.
in this Court. To complete the narrative it is only necessary
to mention that both the writ petitions 534 and 535 of 1958
were dismissed by the High Court and when the appellant
sought to obtain certificates of fitness the learned Judges
granted a certificate in respect of their judgment in writ
petition 535 of 1958 on the ground that the value of the
claim made against the appellant was over Rs. 20,000,
but refused a similar certificate in writ petition 534 of 1958
where the amount demanded was less than that figure-it
was Rs. 15,000 and odd. The appellant thereupon moved
this court for special leave in respeot of the dismissal of his
writ petition 534 of 1958 and the same having been granted
all these three matters have been heard together.
The matter in controversy in the appeal is very limited
and the point involved very narrow.
Mr. Ram Reddylearned counsel for the appellant raised three points in
support of the appeal : ( 1) What is the meaning of the
expression 'royalty' in s. 79 ( 1) of the Act? Does it include
the royalty payable under a mining lease on the ore won
by the lessee. (2) Assuming that royalty in the sense
mentioned in point No. I is within ss. 78 and 79, of the
Act the provision imposing the land cess quoad royalty
under mining leases must be held to be repealed by the
Mines & Minerals (Regulation & Develo;Jment) Act, 1948
(Central Act LITI of 1948) or in any event, by the Mines
& Minerals (Regulation & Development) Act, 1957 (Central
Act L.XVII of 1957). so that after the date when these
Central enactments came into force the land cess that could
be levied under s. 78 must be exclusive of royalty under
a mining lease.
(3) Is the land cess which was demanded
by the impugned notices dated March 10, 1958 and August
29, 1960 recoverable as an arrear of land revenue under
the law?
We shall examine these submissions in thrut order. The
first contention that the expression 'royalty' under s. 79 ( l)
does not signify royalty as commonly unrlerstood but is
. 6 S.C.R.
SUPREME COURT REPORTS
confined to the rent payable for the beneficial use of the
surface of the land, scarcely deserves serious consideration.
Where the land is held on lease, as in the present case, the
lease amount is specifically referred to in s. 79 of the Act
as one of the components for the computation of the annual
rent value.
It is therefore obvious that "royalty" which
follows the expression "lease amount" is something other
than the return to the lessor or licensor for the use of the
land surface and represents as it normally connotes the
payment made for the materials or minerals won from the
land.
The argument is therefore without substance and is
rejected.
The second i;ioint has 'not, in our opinion, more merit
The en.tirety of the argument on this head is based on two
decisions of this Court in which this Court had to consider
the continued operation of the Orissa mining areas !Development Fund) Act, (Act XXVIT of 1952)-The HinglrRampur Coal Co. Ltd. and Others v. The State of Orissa and
Others(') and State of Orissa v. M. A. Tullock & Co. (2).
As a matter of fact it migM be mentioned that the present
appellant intervened in State of Orissa v. M. A. Tullock & Co.
and there was a direction by this Court that the present
appeals and ;petition might be heard a~ter the judgment was
pronounced in the Orissa appeals. We are, however, clearly
of the opinion that neither of the two decisions, the later
one really following the earlier in respect of the matter now
relevant, really help the appellant in these ap;ieals. In
Hingir-Rampur Coal Co.'s case(') the decision rendered
on writ petitions
filed
in this
court
under
Art.
32
of the Constitution challenging the validity of the Orissa
Mining Areas
(Development Fund)
Act.
A cess had
been levied under that enactment and it was the validity
of the imposition of the cess that was the subject of debate
in the petition.
One of the points urged in support of the
petition was that on the enactment of the Mines & Minerals
(Regulation and Development) Act, 1948 (Central Act
LITI of 1948) the Orissa Act stood repealed and the cess
leviable under its provisions was not thereafter capable of
(I) [1961] 2 S.C.R. 537.
134-159.SC-43
(2) A.l.R. 1964 S.C. 1284.
H. R. S. Murthy
v.
Co/ltctor ol
Chittoor
Ayyangar · I.
674
SUPREME COURT REPORTS
[rg64]
196.f
being enforced, with the result that the demand for the cess
s. R. S.-1111rthy could not be sustained. This Court on a detailed comparison
eoik:i
1 of the provisions of the Orissa Act and the Central Act of
Chin°.:,,°
1948 came to the conclusion that 'the Central Act covered
the same field as the Orissa enactment.
An examination
_.,,,,..,,,.., J.
of the scheme of the Orissa Act disclosed that it had been
passed for the purpose of the develQ;>ment of 'mining areas'
in the State and this was affected by constituting "mining
areas" and making provision for the development of such
areas by improving communications by the construction of
roads, by providing means of transport, supply of water,
electricity and other amenities for sanitation as also for the
edm;ation of the labour force to attract workmen to these
'mining areas'.
The cess which was there impugned was
levied and collected for meeting the cost of this development
of tJie "mining areas". An examination of the Central
enactment which was ·also passed to provide for the conservatibn of minerals was held to cover the same field as the
Orissi Act.
The Orissa State enactment had been passed
m pursuance of the legislative power conferred by Entry 23
of the State List in the 7th Schedule reading :
"Regulation of mines and mineral development
subject to the provisions of List I with respect
to regulation and development under the control of the Union."
The provision in List I referred to here is Entry 54 in the
Union List reading :
"Regulation of mines and mineral development to
the extent to which such regulation and development under the control of the Union is
declared by law made by Parliament to be
expedient in public interest."
It was argued on behalf of the State that the Central Act
of 1948 though it contained a declaration that the Regulation and Development of mines and mineral development
was expedient in the public interest, still such a declaration
was not by "Parliament" as required by Entry No. 54, but
by the Dominion legislature and could not on the terms of
item 23 of List II affect the State power of legislation. This
6 5.C.R.
SUPREME COURT REPORTS
argument was accepted and the State Act was, therefore,
~
held to be competently enacted, and to remain unaffected H. R. s. Murthy
by the Central Legislation.
It was the same enactment of
the Orissa legislature that came up for consideration in
State of Orissa v. M.A. Tullock & Co.( 1 ). By that date
however Parliament had legislated and had enacted Central
Act LXVII of 1957 which contained, if anything, more
comprehensive provisions for the regulation and development
of mines and minerals throughout the country.
The Central
Act also contained a declaration that "it was 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." This Court held that
having regard to the comprehensive provisions contained in
the several sections of the Act which were examined, "the
extent provided" included those which fell within the scope
of the State Act of Orissa which was, as stated earlier, for
the regulation and development of "mining areas" within
the State. For these reasons it was held that the Orissa Act
must be deemed to have been impliedly repealed and rendered ineffective by the Central Act.
It will be seen that there is no resemblance, whatever,
between the provisions of the Orissit Act considered in the
two decisions and the provision for the levy of the land
cess under ss. 78 and 79 of the Act with which we are
c-oncerned. Sections 78 and 79 have nothing to do and are
not concerned with the development of mines and minerals
or their regulation. The proceeds of the land cess are, under
s. 92 of the Act, to be credited to the District fund, into
v1hich, under the terms of the Finance Rules in Sch. V to
t!he Act, the land-cess as well as several other taxes, fees and
receipts are directed to be credited. This fund is to be used
under Ch. VTT of the Act with which s. 112 starts ''for
everything necessary for or conducive to the safety, health,
convenience or education of the inhabitants or the amenities
of the local area concerned and everything incidental to
the administration" and include in particular the several
natters which are mentioned in those sections. It will thus
le seen that there is no connection between the regulation
(!) A.l.R. 1964 S.C. 1284.
v.
CoUtctor at
Chittoor
Ayyangtll' J.
SUPREME COURT REPORTS
and development of mines and minerals "dealt· with in the
H. R. s. Murzhy Central Acts and the levy and collection of Jand-cess for
•·
which provision is made by ss. 78 and 79 of the Act. There
Col/tctor of
Chlttoor
is therefore no scope, at all, for the argument that there is
anything in common between the Act and the Central Acts
of 1948 and 1957 so as to require any detailed examination
of these enactments for discovering whether there is any
over-lapping.
It was next urged that the land-cess was really a tax on
mineral rights falling within Entry 50 of the State List
reading
"Taxes on mineral rights subject to any limitation
imposed by Parliament by law relating to
mineral development"
and that the Central Acts under which also taxes and fees
might be levied brought into play the last portion of this
Entry and that as a result the ~wer to impose this ta'"C was
not available after the Central Acts of 1948 and 1957 came
into force. In this connection Mr. Ram Reddy pointed out
that as the impugned Iand-cess was payable only in
the
event of the mining lessee winning the mineral and so
paying the royalty and nut when no minerals were extracted,
it was in effect a tax on the minerals won and therefore on
mineral rights.
We are unable to accept this argument.
When a question arises as to me precise head of legislative
power under which a taxing statute has been passed, the
subject for enquiry is what in truth and substance is the
nature of the tax.
No doubt, in a sense, but in a very
remote sense, it has relationship to mining as also to the
mineral won from the mine under a contract by which
royalty is payable on the quantity of mineral extracted. But
that, does not stamp it as a tax on either the e.'"Ctraction of
the mineral or on the mineral right. It is unnecessary for
the rpurpooe of this case to examine the question as to what
exactly is a tax on mineral rights seeing that such a tax is
not leviable by Parliament but only by the State and the
sole !imitation on the State's power to levy the tax is that
it must not interfere with a law made by Parliament as
regards mineral development. Our attention was not invited
to the provision of any such law enacted by Parliament. In
6 S.C.R.
SUPREME COURT RE.PORTS
the context of ss. 78 and 79 and the scheme of those provi1964
sions it is clear that the land .cess is in truth a "tax on s. R. s. Miln/11
lands" within Entry 49 of the State List.
Coll.;;,,, °'
Under ~. 78 of the Act the cess is levied on occupied
land on whatever tenure held. The basis of the levy is the
"annual ren.t value" i.e., the value of the beneficial enjoyment of thi: property. This being the basis of the tax and
disclosing its true nature, s. 79 provides for the manner in
which the "annual rent value" is determined i.e., what is
the amount for which the land could reasonably be let, the
benefit to fie lessor representing the rateable value "or the
annual rent value". In the case of ryotwari lands it is the
assessment which is payable to the Government that is taken
as the rental value being the benefit that accrues to the
Government. Where the land is held under lease it is the
lease amount that forms the basis. Where land is held under
· a mining kase, that which the occwpier is willing fo pay
is accordingly treated as the "annual rent value" of the
property.
Such a rent value would, therefore, necessarily
include not merely the surface rent, but the dead rent, as
well as the royalty payable by the licensee, lessee or occupier
for the user of the property. The position then is that the
rent which a tenant might be expected to pay for the property is, in the case of leas1>-hold interests, treated as the
statutory "annual rent value". It is therefore not possible
to accept the contention, that the faot that the lessee or
licensee pays a royalty on the mineral won, which is in excess
of what he would pay if his right over the land extended
only to the mere use of the surface land, places it in a
category different from other types where the lessee uses the
surface of the land alone. In each case the rent which a
lessee or licensee actually pays for the land being the test,
it is manifest that the land-cess is nothing else except a land
tax.
Learned counsel pointed out that in the case of inam
lands and other lands dealt with in els. (ii), (iii) and (iv)
of s. 79 the royalty payable by the lessee or licensee did
not figure in the computation of the annual rent value.
That, however, ap;iears to us to be wholly irrelevant, for
ChltlOM
Ayyon"" /.
SUPREME COURT REPORTS
1964
what we are concerned with is whether on the terms of
11. R. T M 11rthy sub-cl. (i) the land cess is not in truth a tax on land.
v.
Collector of
Chittoor
The last of the points raised relates to the threat on the
part of the Government to recover the impugned demands as
an arrear of land revenue. Learned counsel pointed out that
s. 221 of the Act which made provision for the recovery
of sums due as taxes had, by rea>on of the changes effected
in the rules, ceased to be applicable for the recovery of land
cess under s. 78.
The learned Judges of the High Court
upheld this submission and, in our opinion, correctly, but
this is of no assistance to the appellant because of s. 52
of the Madras Revenue Recovery Act which enacts:
"52. All arrears of revenue other than land-revenue
due to the State Government, all advances made
by the State Government for culitivation or
other ~urposes connected with the revenue, and
all fees or other dues payable by any person to
or on behalf of the village servants employed
in revenue or police duties, and all cesses
lawfully imposed upon land and all sums due
to the State Government, including compensation for any loss or damage sustained by them
in consequence of a breach of contract, may
be recovered in the same manner as arrears of
land-revenue under the provisions of this Act,
unless the recovery thereof shall have been or
may hereafter be otherwise specially provided
for."
lit was not disputed that the cess under s. 78 would be "a
cess lawfully imposed upon land" and would therefore be
covered by its terms. The legality of the procedure, which
the respondents proposed to adopt for the recovery of the
sums could not, therefore, be successfully challenged.
The appeals and the writ petition fail and are dismissed
with costs----<me hearing fee.
Appeals and petition dismi~sed.