# STATE OF RAJASTHAN AND OTHERS v. MIS. BASANT AGROTECH (INDIA) LTD

- **Citation:** [2013] 17 S.C.R. 395
- **Court:** Supreme Court of India
- **Decided:** 2013-12-06
- **Case number:** Civil Appeal No.10867 of 2013
- **Bench:** Anil R. Dave, Dipak Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-rajasthan-and-others-v-mis-basant-agrotech-india-ltd-28781
- **Pages:** 35

## Headnote

Administrative Law - Subordinate/delegated legislation
-
Whether can be given retrospective effect -
Held:
A
B
Legislature can make a law retrospectively or prospectively C
subject to justifiability and acceptability within the
constitutional parameters - A subordinate legislation can be
given retrospective effect if a power in its behalf is contained
in the principal Act - In the present case, Notification could
not have been given retrospective operation, because such
D
an interpretation does not flow from the $tatute i.e. s. 16 of
Rajasthan Finance Act, 2008 - The words "from time to time"
used in s. 16 have a· futuristic tenor - It does not engulf the
spectrum .of retrospectivity or retroactivity in its ambit and
sweep - therefore, the Notification so far as it covered the
E
period prior to the date of its publication is transgression of
the statutory postulate - Rajasthan Finance Act, 2008- s. 16.
Interpretation of Statutes:
Construction of a statutory provision - If any implied
F
power is construed from the language used in the statute, there
has to be a holistic reading of the statute, but not a fragmented
one.
Interpretation of Fiscal legislation/taxing statutes -
G
Fundamental principles for - Discussed.
Words and Phrases - Expression 'From time to time' -
Connotation of - Discussed.
395
H
396
SUPREME COURT REPORTS (2013] 17 S.C.R.
A
The respondents - the mining lease-holders for
extraction of major minerals, filed writ petitions before
High Court challenging the Constitutional validity of
Chapter VII of Rajasthan Finance Act, 2008, which
provides for levy of cess on mineral rights. The leases holders were required to pay environment and health
cess imposed u/s. 16 of the Act.
In addition Notification dated 23.1.2009 issued by
State Government was also challenged, whereby the
Notification dated 25.2.2002 was amended. It was
C challenged on the ground that the Notification sought to
levy environment and health •cess with retrospective
effect i.e. w.e.f. 1.4.2008 and the Notification was illegal
and bad in l~w to thE! extent it was given retrospective
effect.
D
The High Court held that the levy by the State
Government was within its legislative competence and
hence not unconstitutional. However, the High Court held
the Notification dated 23.1.2009 was ultra vires and the
E same could no_t have retrospective effect. Hence the
present appeals by the State. The scope of the present
appeals was limited to the question whether the order of
High Court declaring the Notification to the effect that it
cannot have retrospective effect is valid or justified.
F
The appellant-State contended that wherever
statutory power is conferred, there is no limitation with
regard to exercise of that power and the same can be
exercised from time to time; and that administrative
power as well as quasi-legislative power can be exercised
G any. number of times, in view of the principle embodied
u/s. 21 of General Clauses Act.
Dismissing the appeal, the Court
H
HELD: 1.1. In construing fiscal statutes and in
STATE OF RAJASTHAN v. BASANT AGROTECH
397
(INDIA) LTD.
determining the liability of a subject to tax, one must have
A
regard to the strict letter of the law and not merely to the
spirit of the statute or the substance of the law. If the
Revenue satisfies the Court that the case falls strictly
within the provision of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the
four corners of the provisions of the taxing statute, no tax
can be imposed by inference or by analogy or by trying
B
to -probe into the intentions of the legislature and by
considering what was the substance of the matter. The
rule of construction of a charging section is that before c
taxing any person, it must be shown that he falls within
the ambit of the charging section by clear words used in
the section. No one can be taxed by implication. A
charging section has to be construed strictly. [Paras 14
and 17] [409-C-E; 411-C]
AS. Fernan

## Text

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[2013] 17 S.C.R. 395
STATE OF RAJASTHAN AND OTHERS
v.
MIS. BASANT AGROTECH (INDIA) LTD.
(Civil Appeal No.10867 of 2013)
DECEMBER 6, 2013
[ANIL R. DAVE AND DIPAK MISRA, JJ.]
Administrative Law - Subordinate/delegated legislation
-
Whether can be given retrospective effect -
Held:
A
B
Legislature can make a law retrospectively or prospectively C
subject to justifiability and acceptability within the
constitutional parameters - A subordinate legislation can be
given retrospective effect if a power in its behalf is contained
in the principal Act - In the present case, Notification could
not have been given retrospective operation, because such
D
an interpretation does not flow from the $tatute i.e. s. 16 of
Rajasthan Finance Act, 2008 - The words "from time to time"
used in s. 16 have a· futuristic tenor - It does not engulf the
spectrum .of retrospectivity or retroactivity in its ambit and
sweep - therefore, the Notification so far as it covered the
E
period prior to the date of its publication is transgression of
the statutory postulate - Rajasthan Finance Act, 2008- s. 16.
Interpretation of Statutes:
Construction of a statutory provision - If any implied
F
power is construed from the language used in the statute, there
has to be a holistic reading of the statute, but not a fragmented
one.
Interpretation of Fiscal legislation/taxing statutes -
G
Fundamental principles for - Discussed.
Words and Phrases - Expression 'From time to time' -
Connotation of - Discussed.
395
H
396
SUPREME COURT REPORTS (2013] 17 S.C.R.
A
The respondents - the mining lease-holders for
extraction of major minerals, filed writ petitions before
High Court challenging the Constitutional validity of
Chapter VII of Rajasthan Finance Act, 2008, which
provides for levy of cess on mineral rights. The leases holders were required to pay environment and health
cess imposed u/s. 16 of the Act.
In addition Notification dated 23.1.2009 issued by
State Government was also challenged, whereby the
Notification dated 25.2.2002 was amended. It was
C challenged on the ground that the Notification sought to
levy environment and health •cess with retrospective
effect i.e. w.e.f. 1.4.2008 and the Notification was illegal
and bad in l~w to thE! extent it was given retrospective
effect.
D
The High Court held that the levy by the State
Government was within its legislative competence and
hence not unconstitutional. However, the High Court held
the Notification dated 23.1.2009 was ultra vires and the
E same could no_t have retrospective effect. Hence the
present appeals by the State. The scope of the present
appeals was limited to the question whether the order of
High Court declaring the Notification to the effect that it
cannot have retrospective effect is valid or justified.
F
The appellant-State contended that wherever
statutory power is conferred, there is no limitation with
regard to exercise of that power and the same can be
exercised from time to time; and that administrative
power as well as quasi-legislative power can be exercised
G any. number of times, in view of the principle embodied
u/s. 21 of General Clauses Act.
Dismissing the appeal, the Court
H
HELD: 1.1. In construing fiscal statutes and in
STATE OF RAJASTHAN v. BASANT AGROTECH
397
(INDIA) LTD.
determining the liability of a subject to tax, one must have
A
regard to the strict letter of the law and not merely to the
spirit of the statute or the substance of the law. If the
Revenue satisfies the Court that the case falls strictly
within the provision of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the
four corners of the provisions of the taxing statute, no tax
can be imposed by inference or by analogy or by trying
B
to -probe into the intentions of the legislature and by
considering what was the substance of the matter. The
rule of construction of a charging section is that before c
taxing any person, it must be shown that he falls within
the ambit of the charging section by clear words used in
the section. No one can be taxed by implication. A
charging section has to be construed strictly. [Paras 14
and 17] [409-C-E; 411-C]
AS. Fernandez vs. The State of Kera/a AIR 1957 SC
657: 1957 SCR 837; Bank of Chettinad vs. Income-tax
Commr. AIR 1940 PC 183; Commissioner of Sa/ex-tax, IJ.P.
D
vs. Modi Sugar Mills Ltd. AIR 1961 SC 1047: 1961 SCR 189;
Commissioner of Income-tax, Madras vs. Kasturi and Sons
E
Ltd. AIR 1999 SC 1275: 1999 (1) SCR 1207; Commissioner
of Wealth Tax, Gujarat-Ill, Ahmedabad vs. Ellis Bridge
Gymkhana AIR 1998 SC 120: 1997 ( 4) Suppl. SCR 626 -
relied on.
Partington vs. The Attorney" General (1869) 4 H L 100
(8) - referred to.
F
2.1. A legislature can make a law retrospectively or
prospectively subject to justifiability and acceptability
within the constitutional parameters. A subordinate
G
legislation can be given retrospective effect if a power in
this behalf is contained in the principal Act. if the power
has been conferred under the main Act by the legislature,
the State Government or the delegated authority can
H
398
SUPREME COURT REPORTS [2013] 17 S.C.R.
A issue a notification within the said parameters. [Paras 22
and 26] [412-F; 414-D]
Mahabir Vegetable Oils (P) Ltd. and Anr. vs. State of
Haryana and Ors. (2006) 3 SCC 620: 2006 (2) SCR 1172;
8
MRF Ltd. Kottayam vs. Asstt. Commissioner (Assessment)
Sales Tax and Ors. (2006) 8 SCC 702: 2006 (6) Suppl. SCR
417; M. M. Nagalingam Nadar Sons vs. State of Kera/a
(1993) 91 STC 61 (Ker); Vice-Chancellor, M.O. University,
Rohtak vs. Jahan Singh (2007) 5 SCC 77: 2007 (3) SCR
676; Ahmedabad Urban pevelopment Authority vs.
C Sharadkumar Jayantikumar Pasawalla and Ors. AIR 1992 SC
2038: 1992 (3) SCR 328 - relied on.
A. Thangal Kunju Musaliar vs. M. Venkatachalam Potti,
Authorised Official and Income-Tax Officer and Anr. AIR 1956
D SC 246: 1955 SCR 1196; O.G. Gose and Co. (Agents) Pvt.
Ltd. vs. State of Kera/a and Anr. (1980) 2 SCC 410: 1980 (1)
SCR 804 - distinguished.
2.2. In the present case, the words used in Section
16 of Rajasthan Finance Act, 2008 are "from time to time".
E The State Government can fix the rate on any of the
minerals from period to period with the conditions
prescribed therein, namely, no limitation is imposed by
the Parliament by law relating to mineral development.
The rate fixed can be varied, changed or modified from
F time to time. Because of the use of the words "time to
time" a notification can not be issued imposing a rate of
tax with retrospective effect or apply the notification
retrospectively. A notification can only be issued,
prospectively, because the legislature has deliberately
G used the words "from time to time" [Para 36] [421-E-H;
422-A]
The State of Madhya Pradesh and Ors. vs. Tikamdas
(1975) 2 SCC 100: 1975 (0) Suppl. SCR 234; Bansidhar and
other vs. State of Rajasthan and Ors. (1989) 2 SCC 557:
H 1989 (2) SCR 152 - distinguished.
STATE OF RAJASTHAN v. BASANT AGROTECH
399
(INDIA) LTD.
2.3. The words "from time to time" in law have a
A
different connotation.
In case one thinks of any implied power from the
language used in the statute by using the words "from
time to time" there has to be a holistic reading of the
statute but not a fragmented one. [Para 37 and 38) [4228
B, G-H]
Kashmir Singh vs. Union of India and Ors. (2008) 7 SCC
259: 2008 (8) SCR 464 - relied on.
Words and Phrases, Volume 17A, 1974; The Law C
Lexicon, The Encyclopedic Law Dictionary: 2nd edition,
1997; Blacks Law Dictionary: 5th edition; Stroud's
JudicialDictionary: 5th edition volume 2 - referred to.
I
2.4. On certain occasions the words "from time to o \
time" have their signification when one relies on a
provision that the power exercised once does not get
exhausted solely because the use of words "from time
to time", but the said terms may not have any importance
but when reliance is placed as a source of power to issue
E
a notification or order to act otherwise with retrospective
effect. In that event, it warrants proper interpretation. In
the present case, it can definitely be stated that despite
reading the entire Act in a holistic manner no other
provision can be traced throwing any light on the words
I
"from time to time" and, therefore, the conferment Gf
F
power shall rest upon the construction that is exclusively
placed on Section 16 of the Act. [Para 37) [423-A-C]
2.5. The words, namely, "from time to time" may be
associated with any number of times, of course subject
to the principle of reasonableness and its impact but
does not engulf the spectrum of retrospectivity or
retroactivity in its ambit and sweep. [Para 39) [424-B]
M.P. Vidyut Karamchari Sangh vs. M.P. Elect.,.icity Board
H
400
SUPREME COURT REPORTS [2013] 17 S.C.R
A (2004) 9 SCC 755: 2004 (3) SCR 105; Shree Sidhbali Steels
Limited and Ors. vs. State of Uttar Pradesh and Ors. (2011)
3 sec 193: 2011 (3) SCR 134 - relied on.
UP. Power Corpn. Ltd. vs. V. Sant Steels and Allys (P)
B Ltd. (2008) 2 SCC 777: 2007 (12) SCR 1160 - referred to.
2.6. The words "from time to time" have a futuristic
tenor and they do not have the etymological potentiality
to operate from a previous date. The use of the said
words in the Section 16 of the Act cannot be said to have
C conferred the jurisdiction on the State Government or
delegate to issue a notification in respect of the rate with
retrospective effect. Such an interpretation does not flow
from the statute which is the source of power. Therefore,
the notification as far as it covers the period prior to the
D date of publication of the notification in the official
Gazette is really a transgression of the statutory
postulate. [Para 45] [428-H; 429-A-8]
3. The Court has not adverted to the defensibility of
the analysis from other spectrums which are founded on
E the principles set forth in *Kesoram's case as the matter
has been referred to a larger Bench i.e. Nine Judge
Bench in **Mineral Area Development Authority case,
because there appeared to be some conflict between the
decision in Kesoram's case and the decision delivered
F by Seven-Judge Bench in ***India Cement case. [Paras
45 and 9] [429-C; 407-F]
***India Cement Ltd. and Ors. vs. State of Tamil Nadu
and Ors. (1990) 1 SCC 12: 1989 (1) Suppl. SCR 692; Orissa
G Cement Ltd. vs. State of Orissa (1991) Suppl. 1 SCC 430:
1991 (2) SCR 105; *State of W.B. vs. Kesoram Industries Ltd.
and Ors. (2004) 10 SCC 201: 2004 (1) SCR 564; **Mineral
Area Development Authority and Ors. vs. Steel Authority of
India and Ors. (2011) 4 SCC 450: 2011 (4) SCR 19 - referred
H to.
STATE OF RAJASTHAN v. BASANT AGROTECH
401
(INDIA) LTD.
Case Law Reference:
A
1989 (1) Suppl. SCR 692
referred to
Para 4
1991 (2) SCR 105
referred to
Para 4
2004 '(1) SCR 564
referred to
Para 5
B
2011 (4) SCR 19
referred to
Para 9
1957 SCR 837
relied on
Para 13
(1869) 4 H L 100
referred to
Para 13
c
AIR 1940 PC 183
relied on
Para 14
1961 SCR 189
relied on
Para 15
1999 (1) SCR 1207
relied on
Para 16
1997 (4) Suppl. SCR 626
relied on
Para 17
D
2006 (2) SCR 1172
relied on
Para 22
2006 (6) Suppl. SCR 417
relied on
Para 23
(1993) 91 STC 61 (Ker)
relied on
Para 23
E
2007 (3) SCR 676
relied on
Para 24
1992 (3) SCR 328
relied on
Para 25
1955 SCR 1196
distinguished Para 28
F
1980 (1) SCR 804
distinguished Para 31
1989 (2) SCR 152
distinguished Para 33
1975 (0) Suppl. SCR 234
distinguished Para 34
2008 (8) SCR 464
relied on
Para 37
G
2004 (3) SCR 105
relied on
Para 38
2011 (3) SCR 134
relied on
Para 40
2007 (12) SCR 1160
referred to
Para 40
H
402
SUPREME COURT REPORTS (2013] 17 S.C.R.
A
CIVIL APPELLATE JURISDICTION : Civil Appeal
No.10867 of 2013
From the Judgment and Order dated 12.10.2011 of the
High Court of Judicature for Rajasthan at Jodhpur in D. B Civil
8 Writ Petition No. 4357 of 2009.
WITH
C. A. Nos. 10868, 10869, 10870, 10871, 10872, 10873,
'
10874, 10875, 10876, 10877, 10878, 10879, 10880,10881,
c 10882, 10883, 10886, 10887 and 10890 of 2013.
Dr. Manish Singhvi (for lrshad Ahmad), AAG for the
Appellants.
Shweta Garg, A. G. Garg, Vivek Singh, Shakeel S. Wani,
D Arvind K. Gupta, Madhurima Talia, Rajendra'Singhvi, K. K. L.
Gautam, Brij Bhushan, Ajay Bhargava, Vanita Bhargava,
Priyambada Mishra (for Khaitan & Co.) Biju Mattam, Nikhil
Goel, Naveen Goel, Marsook Bafaki for the Respond.ents.
'
E
The Judgment of the Court was delivered by
DIPAK MISRA, J. 1. Leave granted in all the Special
Leave Petitions.
2. Regard being had to the commonality of issue involved
F and the similitude of controversy pyramided in all these appeals
preferred by special leave, they were heard together and are
disposed of by a singular order. For the sake of convenience'
the facts in Civil Appeal arising from Special Leave Petitior
(Civil) No. 8283 of 2012 are adumbrated herein.
G
H
3. The respondent preferred DB Civil Writ Petition No
4357 of 2009 before the High Court of Judicature for Rajasthar.
at Jodhpur challenging the constitutional validity of Chapter VI I
of the Rajasthan Finance Act, 2008 (for brevity 'the Act') which
provides for levy of cess on mineral rights. The respondent was
STATE OF RAJASTHAN v. BASANT AGROTECH
403
(INDIA) LTD. [DIPAK MISRA, J.]
granted a mining lease for extraction on major minerals. As per A
the amendment brought in the year 2008 it was required to pay
the environment and health cess imposed under Section 16 of
the Act. The State Government, in exercise of the powers
conferred by Section 19 of the Act, framed a set of rules called
Rajasthan Environment and Health Cess Rules. 2008 (for short B
"the Rules"). Rule 13 of the Rules provides for the head under
which the cess collected under Section 16 of the Act is to be
credited. Rule 14 of the Rules provides for the allocation of the
funds for implementation of environment and health projects in
mining areas in various parts of the State. Questioning the c
constitutional validity of the impost under the Act it was
contended before the High Court that the State Legislature had
no competene<e to impose environment and health cess on
major minerals as the field is occupied by the provisions
contained in the Mines and Minerals (Development and 0
Regulation) Act, 1957 (for short 'the MMDR Act'), which is an
enactment by the Parliament. It was urged that the imposition
of such cess is not a fee but a tax which is covered by the
MMDR Act whereunder the power to levy tax on the mineral
rights in respect of major minerals is vested in the Parliament.
It was further put forth that the Parliament, in exercise of the
E
powers conferred on it by Entries 54 and 55 of List-I of the
Seventh Schedule to the Constitution of India, -ha's enacted the
MMDR Act and the Rules framed thereunder and under the said
Act, the power vests from all spectrums in the Central
Government in respect of major minerals and, therefore, the
F
State Legislature could not have enacted such law for imposing
such cess on major minerals. It was cor,tc;ncled that the cess
in_ question is a nature c,f ' 0 ': dnd the ;evy of fee on major
rr~nerals is governed by the provisions contained in the MMDR
Act and the Rules framed thereunder and hence, the State G
Legislature does not have competence to impose such cess.
4. Apart from the aforesaid contentions, certain other
submissions were advanced and reliance was placed on India
H
404
SUPREME COURT REPORTS [2013] 17 S.C.R.
A
Cement Ltd. and others v. State of Tamil Nadu and others'
wherein it has been held that the royalty was a tax. Be it noted,
keeping in view the principle stated in India Cement Ltd. 's
case, (a seven-Judge Bench decision) a three-Judge Bench
in Orissa Cement Ltd. v. State of Orissa2 , held that the decision
B of levy of cess impugned therein was unconstitutional.
5. On behalf of the State reliance was placed on the
Constitution Bench decision in State of WB. v. Kesoram
Industries Ltd. and Others3 . In the said case the State of West
Bengal was aggrieved by the judgment rendered by the High
C Court of Calcutta wherein it was held that the levy of cess on
coal bearing land was similar to the one which had been struck
down in India Cement Ltd. (supra) and Orissa Cement Ltd.
(supra) and on that foundation it was ruled that the State
Legislature had no competence to levy such cess. The majority
D
in the Constitution Bench referred to the Entries 52, 54, 96 and
97 of the Union List (List-I) and Entries 23, 49, 50 and 56 of
the State List (List-II) of the Seventh Schedule, adverted to
issues pertaining to tax legislation and dwelled upon how the
nature of tax levied is different from the measure of tax and
E culled out number of principles two of which are reproduced
below:
F
G
"(6) "Land", the term as occurring in Entry 49 of List 11, has
a wide connotation. Land remains land though it may be
subjected to different user. The nature of user of the land
would not enable a piece of land being taken out of the
meaning of land itself. [lifferent uses to which the land is
subjected or is capable of being subjected provide the
basis for classifying land into different identifiable groups
for the purpose of taxation. The nature of user of one piece
of land would enable that piece of land being classified
separately from another 'piece of land which is being
1.
(1990) 1 sec 12.
2.
(1991) Suppl. 1 sec 430.
H
3.
(2004) 10 sec 201.
STATE OF RAJASTHAN v. BASANT AGROTECH
405
(INDIA) LTD. [DIPAK MISRA, J.]
subjected to anothe~ kind of user, though the two pieces A
of land are identically situated except for the difference in
nature of user. The tax would remain a tax on land and
would not become a tax on the nature of its user.
(7) To be a tax on land, the levy must have some direct
8
and definite relationship with the land. So long as the tax
is a tax on land by bearing such relationship with the land,
it is open for the legislature for the purpose of levying tax
to adopt any one of the well known modes of'determining
the value of the land such as annual or capital value of the
land or its productivity. The methodology adopted, having C
an indirect relationship with the land, would not alter the
nature of the tax as being one on land."
6. Elaborating on the said principles, the Constitution
Bench adverted to the concept of regulation and, in that context,
D
culled out the principle to the effect that the primary object and
the essential purpose of legislation must be distinguished from
its ultimate or incidental results or consequences for
determining the character of the levy. A levy essentially in the
nature of a tax and within the power of the State Legislature
E
cannot be annulled as unconstitutional merely because it may
have an effect on the price of the commodity. A State
legislation, which makes provisions for levying a cess, whether
by way of tax to augment the revenue resources of the State
or by way of fee to render services as quid pro quo but without
F
any intention of regulating and controlling the subject of the levy,
cannot be said to have encroached upon the field of "regulation
and control" belonging to the Central Government by reason of
the incidence of levy being permissible to be passed on to the
buyer or consumer, and thereby affecting the price of the G
commodity or goods. Thereafter, it observed as follows: -
"A tax or fee levied by the State with the object or
augmenting its finances and in reasonable limits does not
ipso facto trench upon regulation, development or control
of the subject. It is different if the tax or fee sought to be
H
406
SUPREME COURT REPORTS [2013) 17 S.C.R.
A
levied by the State can itself be called regulatory, the
primary purpose whereof is to regulate or control and
augmentation of revenue or rendering service is only
secondary or incidental."
8
7. After so stating the Constitution Bench ruled that taxes
on lands and buildings in Entry 49 of List II cannot be levied by
the Union. Taxes on mineral rights, a subject in Entry 50 of List
II, can also not be levied by the Union though as stated in Entry
50 itself the Union may impose limitations on the power of the
State and such limitations, if any, imposed by Parliament by
C
law relating to mineral development to that extent shall
circumscribe the States' power to legislate. Power to tax
mineral rights is with the States; the power to lay down
limitations on exercise of such power, in the interest of
regulation, development or control, as the case may be, is with
D
the Union and that is the result achieved by homogeneous
reading of Entry 50 of List 11 and Entries 52 and 54 in List I. So
long as a tax or fee on mineral rights remains in pith and
substance a tax for augmenting the revenue resources of the
State or a fee for rendering services by the State and it does
E
not impinge upon regulation of mines and mineral development
or upon control of industry by the Central Government, it is not
unconstitutional.
F
G
H
8. Thereafter, the Court adverted to individual cases,
namely, coal matters, tea matters, brick earth matters, mining
and mineral matters and then addressed itself to the purpose
behind the MMRD Act and, eventually, came to hold as follows:-
"147. Royalty .is not a tax. The impugned cess by no
stretch of imagination can be called a tax on tax. The
impugned levy also does not have the effect of increasing
the royalty. Simply because the royalty is levied by
reference to the quantity of the minerals produced and the
impugned cess too is quantified by taking into
consideration the same quantity of the mineral produced,
the latter does not become royalty. The former is the rent
STATE OP RAJASTHAN v. BASANT AGROTECH
407
(INDIA) LTD. [DIPAK MISRA, J.]
of the land on which the mine is situated or the price of
A
the privilege of winning the minerals from the land parted
with by the Government in favour of the mining lessee. The
cess is a levy on mineral rights with impact on the land and
_quantified by reference to the quantum of minerals
produced. The distinction, though fine, yet exists and is
B
perceptible."
9. At this juncture, it is apt to note that the decision in
Kesoram Industries Ltd. (supra) has been referred for
consideration by a larger Bench in Mineral Area Development
C
Authority and others v. Steel Authority of India and others•. It
may be profitably stated that a three-Judge Bench has referred
the matter to a Bench of nine Judges by framing eleven
questions of law. A direct reference to a nine-Judge Bench has
been explained in the following terms:-
D
" ... we may clarify that normally the Bench of five learned
Judges in case of doubt has to invite the attention of the
Chief Justice and request for the matter being placed for
hearing before a Bench of larger coram than the Bench
whose decision has come up for consideration (see
E
Central Board of Dawoodi Bohra Community v. State of
Maharashtra5 ). However, in the present case, since prima
facie there appears to be some conflict between the
decision of this Court in State of W.B. v. Kesoram
Industries Ltd (supra) which decision has been delivered F
by a Bench of five Judges of this Court and the decision
delivered by a seven-Judge Bench of this Court in India
Cement Ltd. v. State of T.N. (supra), reference to the
Bench of nine Judges is requested."
10. It is the admitted position that certain matters arising
G
out of the said decision are awaiting for answer of reference
in the case of Mineral Area Development Authority (supra) by
4.
(2011) 4 sec 450.
s.
(2005) 2 sec 673.
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408
SUPREME COURT REPORTS [2013] 17 S.C.R.
A the larger Bench. In the present batch of cases, the controversy
is different as the High Court has declared the notification
dated 23.1.2009 amending the earlier notification dated
25.2.2008 w.e.f. 1.4.2008 with regard to imposition of cess on
Rock Phosphate at the rale of Rs.500/- per tonne is ultra vires
B because the notification issued by the Government ccould only
be prospectively effective and cannot have retrospective
operation. The said opinion has been expressed on the
foundation that legislature has not conferred the power on the
Executive to issue such a notification. Regard being had to the
c said controversy, our advertence in this batch of appeals shall
be a restricted one, namely, to scrutinize whether the view
expressed by the High Court declaring the notification to the
effect that it cannot have retrospective effect is valid and
justified or warrants any interference.
D
11. We have heard Dr. Manish Singhvi, learned counsel
'
for the appellants and Ms. Shweta Garg, learned counsel for
. the respondents .
•
12. Before we appreciate the controversy that has travelled
E to this Court, we think it necessary to state the fundamental
principles that serve as guidance to understand the fiscal
legislations· and the duty of the Court while dwelling upon the
interpretation of taxing statutes.
13. In A. V. Fernandez v. The State of Kerala6 , Bhagwati,
F J. referred to a passage from Partington v. The Attorney
Genera/7 which is as follows: -
"As I understand the principle of all fiscal legislation it is
this : if the person sought to be taxed, comes within the
G
letter of the law he must be taxed however great the
hardship may appear to the judicial mind to be. On the
other hand, if the Crown, seeking to recover the tax, cannot
6.
AIR 1957 SC 657.
H
7.
(1869) 4 HL 100 at p. 122(8).
STATE OF RAJASTHAN v. BASANT AGROTECH
409
(INDIA) LTD. [DIPAK MISRA, J.]
bring the subject within the letter of the law, the subject is
free, however apparently within the spirit of the law the
case might otherwise appear to be."
14. The said passage, as has been stated in the said
pronouncement, was quoted with approval by the Privy Council
in Bank of Chettinad v. Income-tax Commf3. and the Privy
Council had registered its protest against the suggestion that
in revenue cases "the substance of the matter" may be
regarded as distinguished from the strict legal position.
Proceeding further the learned Judge stated that:
A
B
c
"It is no doubt true that in construing fiscal statutes and in
determining the liability of a subject to tax one must have
regard to the strict letter of the law and not merely to the
spirit of the statute or the substance of the law. If the
Revenue satisfies the Court that the case falls strictly
D
within the provision of the law, the subject can be taxed. !L.
on the other hand, the case is not covered within the four
corners of the provisions of the taxing statute. no tax can
be imposed by inference or by analogy or by Irving to probe
into the intentions of the legislature and by considering
E
what was the substance of the matter."
[Emphasis added]
15. In Commissioner of Sa/ex-tax, U.P. v. Modi Sugar
Mills Ltd9 .
, Shah, J., speaking for the majority in the
F
Constitution Bench, has observed thus: -
"In interpreting a taxing statute, equitable considerations
are entirely out of place. Nor can taxing statutes be interpreted
on any presumptions or assumptions. The Court must look
G
squarely at the words of the statute and interpret them. It must
interpret a taxing statute in the light of what is clearly expressed
8.
AIR 1940 PC 183.
9.
AIR 1961 SC 1047.
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410
SUPREME COURT REPORTS [2013] 17 S.C.R.
A : if cannot imply anything which is not expressed; it cannot
import provisions in the statutes so as to supply any assumed
deficiency."
16. In Commissioner of Income-tax, Madras v. Kasturi
8 and Sons Ltd10• , a two-Judge Bench has approvingly quoted
a passage from the book "Principles of Statutory Interpretation"
by Justice G.P. Singh, Sixth Edition 1966, which is as follows:
c
D
'E
F
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"The well established rule in the familiar words of LORD
WENSLEYDALE, reaffirmed by LORD HALSBURY and
LORD SIMONDS, means : "The subject is not to be taxed
without clear words for that purpose; and also that every
Act of Parliament must be read according to the natural
construction of its words". In a classic passage LORD
CAIRNS stated that the principle thus: "If the person sought
to be taxed comes within the letter of the law he must be
taxed, however great the hardship may appear to the
judicial mind to be. On the other hand, if the Crown seeking
to recover the tax, cannot bring the subject within the letter
of the law, the subject is free, however apparently within
the spirit of law the case might otherwise appear to be. In
other words, if there be admissible in any statute, what is
called an equitable, construction, certainly, such a
construction is not admissible in a taxing statute where you
can simply adhere to the words of the statute." VISCOUNT
SIMON quoted with approval a passage from Rowlatt, J.
expressing the principle in the following words : "In a taxing
Act one has to look merely at what is clearly said. There
is no room for any intendment. There is no equity about a
tax. There is no presumption as to tax. Nothing is to' be
read in, nothing is to be implied. One can only look fairly
at the language used." Relying upon this passage Lord
H
10. AIR 1999 SC 1275.
STATE OF RAJASTHAN v. BASANT AGROTECH
411
(INDIA) LTD. [DIPAK MISRA, J.]
Upjohn said : "Fiscal measures are not built upon any
A
theory of taxation". "11
17. In Commissioner of Wealth Tax, Gujarat-Ill,
Ahmedabad v. Ellis Bridge Gymkhana 12 , it has been observed
thus: -
B
"The rule of construction of a charging section is that
before taxing any person, it must be shown that he falls
within the ambit of the charging section by clear words
used in the section. No one can be taxed by implication.
A charging section has to be construed strictly. If a person
C
has not been brought within the ambit of the charging
section by clear words, he cannot be taxed at all."
I
18. Keeping in mind the aforesaid primal principles and
the kernel of fiscal legislation, we.shall now proceed to deal with
principal source of power under the Act and then test whether
the amended notification, a retrospective one, has been issued
in consonance with the said power. In this context, it is
imperative to refer to Section 16 of the Act which delegates
authority to the State Government to issue a notification to levy
and collect the cess in issue in such manner as may be
prescribed. The said provision reads as follows:-
"16. Levy and collection of cess on mineral rights. - Subject
D
E
to any limitation imposed by Parliament by law relating to
mineral development, there shall be levied and collected,
F
in such manner as may be prescribed, an environment and
health cess on mineral rights in respect of such minerals
and at such rates, not exceeding rupees five hundred each
tonne of mineral dispatched, as may be notified by the
State Government from time to time."
G
19. In exercise of power contained in Section 16 of the Act
11. This Passage presently finds place at page 826, Twelfth Edition 2012 of
"Principle of Statutory Interpretation by G.P. Singh.
12. AIR 1998 SC 120.
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412
SUPREME COURT REPORTS [2013) 17 S.C.R.
A )he Finance Department issued a notification on 25.2.2008.
The said notification stipulated that the rate of environment and
health cess on mineral rights and the minerals in respect of
which cess shall be levied. The rate as stipulated in the said
notification in respect of minerals, namely, (i) Cement Grade
B Limestone,- (ii) Gypsum, (iii) Rock Phosphate, (iv) Wollastone
and (v) M.R. Cess on Lead and Zinc was Rs.5/-, Rs.5/-, Rs.35/
-, Rs.40/" and Rs.80/- per tonne respectively.
20. While the said notification .was in vogue, the State
Government brought a notification dated 23.1.2009 amending
C the notification dated 25.2.2008 with effect from 1.4.2008. The
said amendment reads as follows: -
D
"In the said notification the existing S. No. 3 and entries
thereto shall be substituted by the following namely: -
13 I M.R. Cess on Rock Phosphate I 500/-" I
21. From the aforesaid notification, it is vivid that the first
notification was issued on 25.2.2008 in exercise of power under
Section 16 of the Act for imposing a levy at a particular rate
E on certain major minerals. By bringing the amendment on
23.1.2009 the rate of tax in respect of Rock Phosphate was
increased to Rs.500/- per tonne with retrospective effect.
22. There is no dispute over the fact that a legislature can
f
make a law retrospectively or prospectively subject to
justifiability and acceptability within the constitutional
parameters. A subordinate legislation can be given
retrospective effect if a power in this behalf is contained in the
principal Act. In this regard we may refer with profit to the
G decision in Mahabir Vegetable Oils (P) Ltd. and another v.
State of Haryana and Others13 , wherein it has been held that:-
"We may at this stage consider the effect of omission of
the said note. It is beyond any cavil that a subordinate
H
13. (2006) 3 sec 520.
. STATE OF RAJASTHAN v. BASANT AGROTECH
413
(INDIA) LTD. [DIPAK MISRA, J.]
legislation can be given a retrospective effect and
A
retroactive operation, if any power in this behalf is
contained in the main Act. The rule-making power is a
species of delegated legislation. A delegatee therefore
can make rules only within the four corners thereof.
42. It is a fundamental rule of law that no statute shall be
construed to have a retrospective operation unless such
a construction appears very clearly in the terms of the Act,
or arises by necessary and distinct implication. (See West
v. Gwynne14)."
B
c
23. In MRF Ltd. Kottayam v. Asstt. Commissioner
(Assessment) Sales Tax and Others15 , the question arose
whether under Section 1 O (3) of the Kerala General Sales Tax
Act, 1963 power was conferred on the Government to issue a
notification retrospectively. This Court approved the view
D
expressed by the Kerala High Court in M. M. Nagalingam
Nadar Sons v. State of Kerala 16 , wherein ii has been stated
that in issuing notifications under Section 10, the Government
exercises only delegated powers while legislature has plenary
powers to legislate prospectively and retrospectively, a
E
delegated authority like the Government acting under the
powers conferred on it by the enactment concerned, can
exercise only those powers which are specifically conferred. In
the absence of such conferment of power the Government, the
delegated authority, has no power to issue a notification with
F
retrospective effect.
24. In Vice-Chancellor, MD. University, Rohtak v. Jahan
Singh 17 , it has been clearly laid down that in the absence of
any provision contained in the legislative Act, a delegatee
cannot make a delegated legislation with retrospective effect.
14. (1911) 2 Ch 1 : 104 LT 759 (CA).
15_ (2006) a sec 102.
16. (1993) 91 s~c 61 (Ker).
11. (2001) 5 sec n.
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SUPREME COURT REPORTS (2013) 17 S.C.R.
25. In Ahmedabad Urban Development Authority v.
Sharadkumar Jayantikumar Pasawal/a and others'", a threeJudge Bench has ruled thus: -
" ... in a fiscal matter it will not be proper to hold that even
in the absence of express provision, a delegated authority
can impose tax or fee. In our view, such power of
imposition of tax and/or fee by delegated authority must
be very specific and there is no scope of implied authority
for imposition of such tax or fee. It appears to us that the
delegated authority must act strictly within the parameters
of the authority delegated to it under the Act and it will not
be proper to bring the theory of implied intent or the
concept of incidental and ancillary power in the matter of
exercise of fiscal power."
D
26. On a perusal of the aforesaid authorities there can be
no scintilla of doubt that if the power has been conferred under
the main Act by the legislature, the State Government or the
delegated authority can issue a notification within the said
parameters. In the case at hand, the High Court interpreting
E Section 16 has opined that such a power has not been
conferred on the Government to issue a notification
retrospectively and, therefore, it can only apply with prospective
effect. Dr. Manish Singhvi, learned counsel appearing for the
· . State, has submitted that wherever a statutory power is
F conferred, there is no limitation with regard to exercise of that
power and the same could be exercised from time to time and
even if the words "time to time" are absent in the statute, the
power conferred under the Act could be exercised all over again
and there is no limitation to the number of times the power is
·G exercised and if the power is exercised once, it cannot be
stated that the power stands exhausted. It is his submission that
the administrative power as well as quasi-legislative power
could be exercised any number of times and this principle is
embodied under Section 21 of the General Clauses Act. The
H 18. AIR 1992 SC 2038.
STATE OF RAJASTHAN v. BASANT AGROTECH
41.5
(INDIA) LTD. [DIPAK MISRA. J.]
lea.med counsel would further contend that even if the words
A
"time to time" would not have been there in Section 16 of the
Act, the power could be exercised any number of ti.mes. To·
bolster his submissions, he has commended us to the
decisions in A. Thangal Kunju Musaliar v. M. Venkataqhalam
Potti, Authorised Official and Income-Tax Officer and another19 . · B
, D. G. Gose and Co. (Agents) Pvt. Ltd. v. State of Kera/a and
anothei'0 , Bansidhar and other v. State of Rajasthan and
others21 and The State of Madhya Pradesh and others v ..
Tikamdas22 .
27. First we shall deal with the afotesaid authorities as
C
learned counsel for the State has assiduously endeavoured to
justify the retrospective application of the notification on the
fulcrum ·of aforesaid decisions.
28. In A. Thanga/ Kunju Musaliar (supra), !he Constitution .D.
Bench, apart from other facets, was dealing with .the validity of
the notification dated 26. 7. 1949 as it had brought the
Travancore Taxation on Income (Investigation, Comrnission) Act
into force with effect from 22. 7.1949. The said notification was
challenged on the ground that it was bad as it had purported • 6
to bring the ACt into operatio[l from retrospective effect. It was
urged that Government could not, in the absence of express
provision authorizing in that behalf, fix the commencement of
the Act r~tr6spectively and further the courts disfavoured
retrospective operation of laws which prejudicially affect vested
F
rights. Repelling the said submission, the Constitution bench
stated thus: -
"No s.uch reason is involved in this case. Section 1(3)
authorises the Government to bring the Act into force on
such daJ:e as it may, by notification, appoint. In exercise
G
19. AIR 1956 SC 246.
20. (1980) 2 sec 41 o.
21. (1989) 2 sec 557.
22. (1975) 2 sec 100.
H
A
B
c
D
E
416
SUPREME COURT REPORTS [2013) 17 S.C.R.
of the power conferred by this section the Government
surely had the power to issue the notification bringing the
Act into force on any date subsequent to the passing of ·
the Act. There can, therefore, be no objection to the
notification fixing the commencement of the Act on
22.1:1949 which was a date subsequent to the passing
of.the Act.
So the Act has not been given retrospective operation,. that
is to say, it has not been made to commence from a date
prior to the date of its passing. It is true that the date of
commencement as fixed by the notification is anterior to
the date of the notification but that circumstance does not
attract the principle disfavouring the retroactive operation
of a statute."
29. After so stating, their Lordships proceeded to advert
to the aspect whether the notification was retrospective or not
and in that regard ruled thus: -
"The operation of the notification itself is not retrospective.
It only brings the Act into operation on and from an earlier
date. In any case it was in terms authorised to issue the
notification bringing the Act into force on any date
subsequent to the passing of the Act and that is all that
the Government did.';
·
F
30.