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PETITIONER: SAURASHTRA CEMENT & CHEMICAL INDS.  & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       17/10/2000

BENCH: G.B.Pattanaik, U.C.Banerjee

JUDGMENT:

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     PATTANAIK,J.

     These appeals raise a common question of law as to the Constitutional  validity  of Section 9(3) of the  Mines  and Minerals (Regulation and Development) Act, 1957 [hereinafter referred to as the Act], inter alia on the ground that the levy  of  royalty  on minerals is not a tax  and  the  Union Legislature  do not have the powers under Entry 54 of List I to  enact  such a law which denudes the right of  the  State Legislature  to levy tax on mineral rights under Entry 50 of List  II.   A further contention also has been  advanced  in some  of  these  appeals  that the  enactment  of  the  Act, violates  the provisions of Articles 268, 269 and 270 of the Constitution,  and, therefore, Section 9(3) must be declared to  be ultra vires.  When the writ petition, challenging the vires of the provisions of Section 9(3) of the Act was filed before  the Gujarat High Court, a Bench of the Gujarat  High Court,  dismissed  the same, following the decision  of  the Supreme  Court  in the case of India Cement Ltd.   and  Ors. vs.   State  of  Tamil Nadu and Ors., 1990 (1) SCC  12,  and following  an  earlier  decision of the said High  Court  in Special  Civil Application No.  6226/94.  Subsequent to  the decision  of  this Court in India Cement, all the  questions raised  in  these  appeals have been considered by  a  three Judge  Bench  in  the case of State of  Madhya  Pradesh  vs. Mahalaxmi  Fabric Mills Ltd.  and Ors., 1995 Supp.  (1)  SCC 642,  and  this  Court in Mahalaxmis  case,  rejecting  the contentions  raised by the consumers of minerals, upheld the validity  of  the  Act and set aside the order of  the  High Court.  Since the judgment of this Court in Mahalaxmi, deals directly  on all issues raised in this batch of appeals, Mr. Chidambaram,  the  learned  senior counsel,  submitted  with force  that  this batch of appeals should be referred  to  a larger  Bench,  as the Bench while disposing of  Mahalaxmis case, had assumed some legal position erroneously, to be the law  laid  down by this Court in India Cement.  Mr.   Shanti Bhushan,  the  learned  senior counsel,  appearing  for  the appellants in some other appeals, however contended that the Constitutional  validity of Section 9(3) of the Act has  not been tested in the anvil of Articles 268, 269 and 270 of the Constitution and, therefore the matter remains wide open for being  re-considered by this Court notwithstanding the three Judge Bench judgment in Mahalaxmi.

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     Before  dealing  with  the contentions raised  by  the learned  counsel, appearing for the appellants, we think  it appropriate  to briefly notice how this Court has dealt with the  law relating to the Mines and Minerals (Regulation  and Development)  Act,  1957  in  different  cases.   The  first decision  which requires to be noticed in this connection is the  case in The Hingir-Rampur Coal Co., Ltd.  and Ors.  Vs. The  State of Orissa and ors., 1961 (2)S.C.R.  537.  In  the said  case, the competency of the State Legislature to enact Orissa  Mining  Areas Development Fund Act, 1952, was  under consideration  and one of the contentions in this Court  was such  a  legislation made by the State Legislature is  ultra vires  the law made by Parliament under Entry 54 of List  I. The Majority judgment answered the question and held that in the absence of requisite parliamentary declaration necessary under  Entry  54 of List I, the State Legislature cannot  be denuded  of  its  power under Entry 23 of List  II  and  the competence of the State Legislature under Entry 23 read with Entry  66  of List II was not impaired in any  manner.   The Court,  therefore,  upheld the validity of  the  legislation made   by  the  State   Legislature.   In  elaborating   the discussion,  this  Court  had observed that  the  limitation imposed  by  the  latter part of Entry 23 of List  II  is  a limitation  on  the  legislative  competence  of  the  State Legislature  itself and the test whether a statute passed by the  State  Legislature thereunder was ultra vires would  be whether the requisite declaration under Entry 54, List I has been  made by Parliament by law covering, the same field  or not.  Considering the effect of Entries 23 and 66 of List II and Entry 54 of List I, the Court observed:

     The  effect  of reading the two Entries  together  is clear.   The  jurisdiction  of the State  Legislature  under Entry  23 is subject to the limitation imposed by the latter part  of  the  said  Entry.  If Parliament by  its  law  has declared  that regulation and development of mines should in public  interest  be under the control of the Union, to  the extent  of  such declaration the jurisdiction of  the  State Legislature  is excluded.  In other words, if a Central  Act has  been passed which contains a declaration by  Parliament as  required by Entry 54, and if the said declaration covers the  field  occupied by the impugned Act, the  impugned  Act would  be ultra vires, not because of any repugnance between the  two  statutes but because the State Legislature had  no jurisdiction to pass the law.

     In  the case of State of Orissa vs.  M.A.  Tulloch and Co.,  1964(4)  S.C.R.  461, the question  for  consideration before this Court was whether the continued operation of the Orissa  Mining  Areas  Development Fund Act,  1952  and  the continued  exigibility of the fees leviable from mine-owners under  the  said enactment, is legally and  constitutionally permissible.   The contention raised was that the Mines  and Minerals  (Regulation and Development) Act, 1957 called  the Central Act was brought into force from June 1, 1953 and the Orissa  Act  which  had  been   enacted  by  virtue  of  the legislative  power  conferred  by  Entry  23  of  the  State Legislative  List  would  ceased to be operative,  once  the Parliament made a declaration and enacted the law.  The High Court  of Orissa had upheld the contention and came to  hold that  the Orissa Act should be deemed to be non-existent  as from  June  1, 1958 for every purpose, with the  consequence that  there  was  lack of power to enforce and  realise  the demands  for  the  payment of the fee at the time  when  the demand  was  issued  and was sought to be  enforced.   After

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noticing the Entry 23 in List II and Entry 54 in List I, the Court  observed  that  it  does not need  much  argument  to realise that to the extent to which the Union Government had taken under its control the regulation and development of minerals  so much was withdrawn from the ambit of the power of  the State Legislature under Entry 23 and legislation  of the  State which had rested on the existence of power  under that  entry  would  to  the  extent  of  that  control  be suspended  or  be rendered ineffective, for here we  have  a case  not  of mere repugnancy between the provisions of  the two  enactments but of a denudation or deprivation of  State legislative  power  by the declaration which  Parliament  is empowered  to  make  and has made.  It  would,  however,  be apparent  that the States would lose legislative  competence only  to  the  extent to which regulation  and  development under  the  control  of  the  Union  has  been  declared  by Parliament  to  be  expedient in the Public  interest.  But having  held so, as the liability to pay the fee, which  was the  subject  of the notices of demand had accrued prior  to June  1,  1958,  the date on which the  Central  Legislation occupied  the field , the Court held that those notices were valid  and  the  amount due thereunder  would  be  recovered notwithstanding  the  disappearance  of the  Orissa  Act  by virtue  of the superior legislation by the Union Parliament. In India Cement Ltd.  and Ors.  Vs.  State of Tamil Nadu and Ors., 1990(1) S.C.C., 12, the question for consideration was whether  levy of cess on royalty is within the competence of the State Legislature?  In the aforesaid case, under Section 115  of the Madras Panchayats Act, as amended by the  Madras Act  18 of 1964, the lessee of minerals was required to  pay local  cess @ 45 paise/rupee, as royalty.  The contention on behalf  of  the State, relying upon the observation made  by this  Court  in H.S.R.  Murthys case, 1964(6) S.C.R.,  666, was repelled and it was held:

     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  Second 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.

     The  Court  also rejected the contention on behalf  of the  State  that  under  Entry 50 of List II,  there  is  no limitation to the taxing power of the State and held that in view  of express provisions of Section 9(2) of the Mines and Minerals  (Regulation  and  Development)   Act,  1957,   the submission cannot be accepted and the field is fully covered by  the  Central  Legislation.   In   paragraph  34  of  the judgment, the Court concluded:

     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.

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Royalty on mineral rights is not a tax on land but a payment for the user of land.

     In  Orissa Cement Ltd.  vs.  State of Orissa and Ors., 1991  Supp.(1)  S.C.C.   430, the levy of cess  on  royalty, charged  for mining lease under Orissa Cess Act, came up for consideration.    After   elaborate    discussion   of   the legislative  entries  as well as the history leading to  the enactment  and considering the different decisions right  up to  the  decision of the Supreme Court in India Cement,  the Court held in para 39:

     To  take  up  Entry 50 first, a perusal of  Entry  50 would show that the competence of the State legislature with respect thereto is circumscribed by any limitations imposed by  Parliament by law relating to mineral development.  The MMRD  Act,  1957, is  there can be no doubt about this   a law  of Parliament relating to mineral development.  Section 9  of  the said Act empowers the Central Government to  fix, alter,  enhance  or reduce the rates of royalty  payable  in respect of minerals removed from the land or consumed by the lessee.   Sub-section (3) of Section 9 in terms states  that the  royalties payable under the Second Schedule to that Act shall  not  be  enhanced more than once during a  period  of three years.  India Cement has held that this is a clear bar on the State legislature taxing royalty so as, in effect, to amend the Second Schedule to the Central Act and that if the cess  is  taken as a tax falling under Entry 50, it will  be ultra vires in view of the provisions of the Central Act.

     Considering,  the  provisions of Entry 23 of List  II, the Court observed:

     But  Entry  23, it will be seen, is subject  to  the provisions  of  List  I  with   respect  to  regulation  and development  of mines and minerals under the control of the Union.   Under  Entry 54 of List I, regulation of mines  and mineral  development  is  in   the  field  of  Parliamentary legislation  to  the  extent to which such  regulation  and development  under  the control of the Union is declared  by Parliament  by law to be expedient in the public  interest. Such  a  declaration is contained in Section 2 of  the  MMRD Act,  1957, which has been set out earlier.  It,  therefore, follows  that  any  State  legislation   to  the  extent  it encroaches  on the field covered by the MMRD Act, 1957, will be  ultra vires.  The assessees contend, in this case,  that the  legislation  in question is beyond the purview  of  the State  legislature  by reason of the enactment of  the  MMRD Act.   It would appear, prima facie that the contention  has to  be  upheld  on  the basis of the  trilogy  of  decisions referred  to at the outset viz.  Hinger-Rampur, Tulloch  and India  Cement.   They seem to provide a complete  answer  to this question.

     In  State of Orissa and Ors.  Vs.  Mahanadi Coalfields Ltd.  and Ors.  , 1995 Supp.(2) S.C.C., 686, the validity of the  Orissa Rural Employment, Education and Production  Act, 1992  was  under  challenge and the Orissa  High  Court  had struck  down the Act on the ground that the levy is a tax on minerals and mineral rights and the subject is fully covered by  the  Central Legislation by enacting Mines and  Minerals (Regulation  and Development) Act.  This Court examined  the different  relevant  entries  in List I and  List  II,  more particularly,  Entry 54 of List I and Entry 23 and Entry  50 of List II and came to hold :

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     It  appears  to  us that Entry 49 of List II  is  the general  entry which enables the State Legislature to impose taxes  on  lands  and buildings.  A particular  category  or specie is taken out of the general entry, and is provided by Entry  50 of List II.  But the tax that can be levied  under List  II  Entry  50  is subject to  limitations  imposed  by Parliament  by  law  relating  to regulation  of  mines  and mineral  development.   Similarly, under List II  Entry  23, though  the  State Legislature can enact a law  relating  to regulation  of mines and mineral development, it is  subject to the provisions of List I (Legislation by Parliament) with respect  to regulation and development under the control  of the Union.  In other words, if the impugned Orissa Act 36 of 1992  falls  either under List II Entry 50 or List II  Entry 23,  it is subject to the law made by Parliament relating to the  regulation  of  mines and mineral development  (List  I Entry  54).  A perusal of the Mines and Minerals (Regulation and Development) Act, 1957 (Central Act 67 of 1957), Section 2,  3(a)  and 3(d), Section 9 and 9-A and Second  and  Third Schedules  to the Act, quoted in para 3 (supra) will clearly point  out that taxation on mineral and mineral rights, viz. any  tax, royalty, fee or rent are provided in the said Act. In  particular, Section 9A Provides payment of dead rent  as provided  therein  by  the holder of a mining lease  to  the State  Government  at  the  rates  specified  in  the  Third Schedule to the Act.  And the proviso thereto states that in cases where the holder of the mining lease is to pay royalty under  Section  9, he shall be liable to pay either  royalty under  Section 9 or the dead rent, as provided under Section 9-A,  whichever is greater.  Section 9-A enables the Central Government  to  enhance or reduce dead rent by amending  the Third  Schedule.  The Second and the Third Schedules provide varying  rates for different minerals including coal.  Since exhaustive provisions as also the Parliamentary declaration, contemplated by List I Entry 54, have been made in the Mines and   Mineral  (Regulation  and   Development)  Act,   1957, regarding  all  kinds  of taxation on minerals  and  mineral rights    tax, royalty  fee -- dead rent etc.,  the  State Legislature is denuded or deprived of the power to enact any law  or  to impose any tax or other levy with  reference  to List II Entry 23 or List II Entry 50."

     It  is  no  doubt  true  that  in  all  the  aforesaid decisions,  it is only the validity of the Legislation  made by  State  Legislature, which was under challenge  but  that will  not in any way alter the ratio of the cases,  referred to  above,  in construing the different legislative  entries and  the competence of the Union Legislature as well as  the State Legislature.  In Mahalaxmis case 1995 Supp.(1) S.C.C. 642,  the  validity  of the Central  legislation  was  under challenge  and the three Judge Bench upheld the  legislative competence  of the Union Legislature, in enacting Mines  and Minerals  (Regulation  and  Development)   Act,  1957,  more particularly,  Section 9 thereof as well as the power of the Central Government to enhance or reduce the rate of royalty, payable  in  respect  of minerals and it was held  that  the parliamentary  legislation  under 1957 Act, having  occupied the  entire field, neither Entry 23 of List II nor Entry  50 of  the  said List, could be attracted.  The Court  also  in addition,  came  to  hold that the royalty being  a  tax  on mineral  including  land,  labour and  capital  employed  in extraction of the mineral, it would fall under the residuary Entry 97 of List I.

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     In  view of the aforesaid decisions of this Court,  on interpreting  the different legislative entries,  conferring power  on  the  Union  Legislature  as  well  as  the  State Legislature  and the law made by the Parliament in  enacting the  Mines  and Minerals (Regulation and  Development)  Act, 1957,  we  would now examine the contentions raised  by  Mr. Chidambaram  and  Mr.   Shanti  Bhusan,  appearing  for  the appellants.  According to Mr.  Chidambaram, Entry 50 of List II  deals  with the power of the State Legislature  to  levy taxes on mineral rights subject to any limitation imposed by Parliament by law relating to mineral development.  Entry 54 of List I is the competence of the Union Legislature to make law, regulating Mines and Minerals Development to the extent to  which such regulation and development under the  control of  the  Union  is  declared  by Parliament  by  law  to  be expedient  in the public interest and the Mines and Minerals (Regulation  and  Development) Act, 1957 has  been  enacted, which  can be referable to the aforesaid Entry 54 in List I. In List II, the Regulation of Mines and Minerals Development is   provided   under  Entry   23,  and,  therefore,   State Legislature  would  have the power to make  law,  regulating Mines  and Minerals Development, but it would be subject  to the  provisions  of  List I with respect to  Regulation  and Development  under  the control of the Union.  It cannot  be disputed  that  the  Mines   and  Minerals  (Regulation  and Development)  Act,  1957  is  a  legislation  made  for  the development  of mines and minerals and has been declared  by Parliament  to  be  expedient in the public  interest.   Mr. Chidambaram  contends that the aforesaid Act of 1957  covers the  field,  so far as Entry 23 in List II is concerned  but does  not,  in  any way affect the competency of  the  State Legislature  in the field covered by Entry 50 of List II and in  that view of the matter, the provisions of Section  9(3) of  the Act which purports to denude the power of the  State Legislature from levying tax on mineral rights, must be held to  be  unconstitutional.  Mr.  Chidambaram,  also  contends that the power of regulation and control, referable to Entry 54  of  List  I is separate and distinct from the  power  of taxation, referable to Entry 50 of List II and such specific power  of  the State Legislature under Entry 50 of List  II, cannot  be  cut down or fetter in any manner by the  general power of control exercised by Parliament by a legislation on a  matter  falling under Entry 54 of List I.  In support  of this contention, reliance has been placed on the decision of this  Court  in  the case of State of U.P.   and  Anr.   vs. Synthetics  and Chemicals Ltd.  and Anr., 1991(4) S.C.C.139. Mr.   Chidambaram,  also urged that in a federal  system  of governance,  as in our country, the Constitution itself  has clearly  demarcated the legislative field for levying tax by the  Union  and  the  State  and so far  as,  the  Union  is concerned,  those entries are Entries 82 to 92 in List I and so  far as the State is concerned, those entries are Entries 45  to 63 in List II of the Seventh Schedule.  The field  of levy  of tax having been clearly demarcated and  limitations and  restrictions  having also mentioned therein, the  Mines and  Minerals (Regulation and Development) Act, 1957, cannot be  held to be an Act, authorising levy of tax on  minerals, as  the competence of the Union Legislature in the aforesaid legislation  is referable to Entry 54 of List I and by  such general  enactment,  the distinct taxing power of  State  on Minerals  under Entry 50 of List II of the Seventh Schedule, cannot  be  obliterated  and  denuded  and,  therefore,  the provisions  of  the 1957 Act, purporting to taking away  the power  of  the State Legislature must be struck  down.   Mr. Chidambaram,  being  conscious of the Three Judge  Bench  of

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this  Court  in Mahalaxmi, submitted that it would  be  only appropriate  to  refer  the matter to a larger  Bench.   Mr. Chidambaram,  also lastly urged that in Mahalaxmi, the Court was  not  sure  about  the  legislative  competence  of  the Parliament  under  Entry  54 of List I,  for  upholding  the validity  of  Section 9 of the 1957 Act and that is why,  it took  recourse to the residuary power under Entry 97 of List I and in view of the specific taxing power under Entry 50 of List  II, the residuary power of the Parliament under  Entry 97 of List I will not over-ride.

     Mr.  Shanti Bhusan, the learned senior counsel for the appellants  in some of these appeals, contended that in none of  the  cases, this Court has considered the provisions  of Articles   268  to  272,  contained  in  Part  XII  of   the Constitution,  and,  therefore, the matter requires  further examination.

     After the conclusion of the arguments on behalf of the appellants,  the  decision of this Court in B.A.Jayaram  and Ors.  Vs.  Union of India and Ors., 1984(1) S.C.C.  168, has been  brought  to  the  notice, where-under  the  Court  was construing  Entry 57 of List II and Entry 35 of List III and the  power  of levying tax on vehicles suitable for  use  on roads  and the Court held that it is the State  Legislature, which  has the power to levy taxes on vehicles suitable  for use  on  roads, though it may be open to Parliament  to  lay down  the  principles  on  which  taxes  may  be  levied  on mechanically propelled vehicles.

     Mr.   S.K.   Dholakia,  the  learned  senior  counsel, appearing  for  the State of Gujarat as well as the  learned counsel, appearing for the Union of India, on the other hand submitted  that  Entry  50  of List II  itself  contains  an in-built  limitation,  the same being limitation imposed  by the  Parliament  by  law relating  to  mineral  development. Since  MMRD  Act  is a law made by Parliament,  relating  to minerals  development,  any provision in the  aforesaid  Act would  over- ride the taxing power of the State on  minerals and  in this view of the matter, the MMRD Act, must prevail. It was also contended that this Central Legislation has been in  the  field  for more than 45 years  and  the  provisions thereof  have  been  interpreted by this  Court  in  several cases,  as referred to, both in India Cement and  Mahalaxmi, and,  therefore, it would be futile to refer the matter to a larger   Bench  for  reconsideration.    According  to   Mr. Dholakia,  the  Three  Judge Bench  Judgment  in  Mahalaxmi, covers  all  the points urged and, therefore, these  appeals should be dismissed.

     Having  considered the rival submissions, although, we find   the  arguments  advanced  by  Mr.   Chidambaram   are attractive,  but in view of the series of decisions, already referred  to, we do not think it appropriate to refer  these appeals  for  the  decision  of a larger Bench  and  in  our opinion,  the contentions raised have been fully covered  by the  Three Judge Bench Judgment of this Court in  Mahalaxmi. Royalty  on  minerals  is a tax, is concluded by  the  Seven Judge  Judgment of this Court in India Cement.  The power of State  Legislature  under Entry 50 in List II namely tax  on minerals  vis-a-vis Section 9(3) of the MMRD Act, 1957  made by  Parliament under Entry 54 of List I was also  considered in  the  case  of India cement and it was held that  in  any event,  it  would  be outside the competence  of  the  State Legislature  in view of Sections 9 and 9(3) of the Mines and

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Minerals  (Regulation and Development) Act, 1957.  In  fact, the  Court  in  India  Cement, did not  accept  the  earlier judgment of this Court in H.S.R.Murthys case, on the ground that  in  Murthy,  the attention of the Court had  not  been invited  to MMRD Act and Section 9 thereof.  In paragraph 30 of the Judgment in India Cement, the Court held:

     It   is,  therefore,  a  clear   bar  on  the   State legislature  taxing royalty so as to in effect amend  Second Schedule of the Central Act.

     In the aforesaid India Cement case, the Court had also further  held  that since the control of mines and  minerals development were taken over by Parliament, the impost by the State  Legislature  either under Entry 49 or 50 of List  II, cannot  be  upheld.   The Court had also held  that  tax  on minerals  is covered by Section 9 of the Central Act and the entire  field  is thus covered.  Though, the validity  of  a State   legislation  was  under   consideration,   but   the conclusion  of  this  Court was that for levying  a  tax  on minerals  under  the MMRD Act, the Central  Legislature  was fully  competent  in  view of the declaration  made  by  the Parliament  and  on the other hand State  Legislatures  have been  denuded  of  its  power.  In  Mahalaxmi,  however,  as already  stated, the validity of the Central Legislation was under challenge, as in the present case and the Court upheld the  provisions of MMRD Act and Section 9 and 9(3)  thereof, by  holding  that by Entry 54 of List I, it was  within  the legislative  competence  of  Parliament to make the  law  in question  and  neither Entry 23 of List II nor Entry  50  of List II would be attracted.  It is no doubt true that in the aforesaid  case,  the Court had also held that Entry  97  of List  I  will  confer the legislative  competence,  but  not because  the Parliament has no competence under Entry 54  of List  I, but that was an additional prop, and, therefore Mr. Chidambaram  is  not right in his submission that the  Court took  recourse to the residuary power under Entry 97 of List I.   In Synthetic Chemicals case, 1991(4) S.C.C.  139, this Court no doubt had observed that the power of regulation and control is separate and distinct from power of taxation, but while  considering  Entry 50 of List II and  comparing  with Entry  54 of List II, this Court had observed that the  wide taxing  power of the State under Entry 54 of List II and its conditional  or  restricted taxing power, for example,  over mineral  rights,  mentioned in Entry 50 of the said List  is significantly different.  Thus, the Court itself noticed the conditional   or  restricted  taxing   power  of  the  State Legislature  under  Entry  50, the  same  being  limitations imposed   by   Parliament  by   law,  relating  to   mineral development  and the MMRD Act being a law made by Parliament relating  to  mineral  development,   obviously  because  of Section  9  in  the Central Act, the  State  Legislature  is denuded  of its power and at the same time, the Parliaments competence to have the law made, no longer remains in doubt. The  aforesaid decision, therefore is of no assistance.   In B.A.Jayaram  and Ors.  Vs.  Union of India and Ors., 1984(1) S.C.C.,  168, the two entries, which were for  consideration before  this Court were Entry 57 of List II and Entry 35  of List  III.   Entry 57 is itself subject to Entry 35 of  List III and, therefore, question for consideration was, what was the  content and extent of power under Entry 35 of List  III which reads:  Mechanically propelled vehicles including the principles  on  which  taxes  on such  vehicles  are  to  be levied. In construing Entry 35 of List III, this Court held that  it  would  be  open  to Parliament  to  lay  down  the

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principles  on  which  taxes may be levied  on  Mechanically propelled vehicles, but Parliament, while enacting the Motor Vehicles  Act,  more  particularly, Section  63(7)  thereof, refrain   from  indicating  any   such  principles,   either expressly  or  by necessary implication and, therefore,  the States  power to tax on such motor vehicles under Entry  57 of  List II was left un-inhabited.  But in the case in hand, the  Seven  Judge Bench judgment in India Cement as well  as the other decisions including the three Judge Bench Judgment in  Mahalaxmi, have already held that the Union  Legislature did  have  the competence under Entry 54 of List I to  enact MMRD  Act,  1957 and Section 9 and 9(3) thereof provide  for levy  of royalty on minerals and, therefore, we are bound by the  same  and  the aforesaid decisions relied upon  by  Mr. Chidambaram will not assist the appellants.

     Articles  268  to 272 in Part XII of the  Constitution deal  with the distribution of revenue between the Union and the  States.   In Part XII of the Constitution, Article  265 provides  that there cannot be any levy of collection of tax without  the authority of law.  The expression authority of law  refers to a valid law which means the tax proposed  to be  levied must be within the legislative competence of  the legislature  imposing the tax ;  and the law must be validly enacted;  the law must not be a colourable use of or a fraud upon the legislative power to tax;  the law must not violate the  conditions  of  fundamental right as  that  in  Article 19(1)(a)  or  19(1)(g);   it must not  also  contravene  the specific  provisions  of  the   Constitution  which   impose limitation  on  legislative  power  relating  to  particular matters  like Articles 276 to 286 or 301 and ;  the tax must be  authorised  by  such   valid  law.   The  constitutional provisions  dealing with the distribution of revenue between the  Union and the States contained in Articles 268, 269 and 272  depends upon the fact when a particular legislation  is attacked  on any one of these grounds and an examination  of those  assertions.   The legislation in question namely  the MMRD  Act and its validity has been upheld as already stated in  the  anvil of Article 265 inasmuch as it has  been  held that  the  tax levied on minerals under Section 9(3) of  the Act  is  by  virtue  of  a valid  legislation  made  by  the Parliament  in exercise of its legislative competence  under Entry  54  of  List  I  and  no  question  of  violation  of fundamental  right arises.  In one of the judgments, it  has been  held that the power cannot be held to be in colourable use of legislative power.  In that view of the matter on the submissions  made  by Mr.  Shanti Bhushan, we are unable  to persuade  ourselves to refer these matters for decision of a larger Bench.  In the aforesaid premises, these appeals fail and are accordingly dismissed.

     A  group of writ petitions had been disposed of by the Gujarat  High  Court,  dismissing the  same,  following  the judgment  of the said High Court dated 22nd of June, 1994 in Special   Civil  Application  No.    6226  of  1994.   While dismissing  the writ applications, though the interim orders stood  vacated,  the  Court had not passed  any  order  with regard  to  payment  of  interest.   But  in  Special  Civil Application  No.  6226/94, while vacating the interim  order and discharging the rule, the Court has specifically ordered for payment of interest @ 18% per annum.  On application for clarification  being filed in those group of writ petitions, where  no order with regard to payment of interest had  been made,  the High Court directed the payment of interest @ 18%

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per annum, which direction had not been made while disposing of  the  writ  petitions.  Those orders of the  High  Court, clarifying the earlier order directing payment of interest @ 18% per annum, are also subject matter of appeals in some of these  appeals including Civil Appeal No.  3119/95.  We have heard  the  learned  counsel  for the  parties  and  in  our considered  opinion, the direction to pay interest @ 18% per annum  must  be  held to be  unreasonable.   We,  therefore, modify the same and direct that the interest would be paid @ 9%  per  annum.   Civil  Appeal Nos.7607/95  &  7472/94  and SLP(Civil) No.21620/94:--

     These  Civil  Appeals and the Special  Leave  Petition arise out of judgment of the Madhya Pradesh High Court.  The High  Court had followed the earlier decision in Mahalaxmis case.   The  said decision in Mahalaxmi, has been upheld  by the Supreme Court in 1995(Supp.) 1 S.C.C.642.  Consequently, these   appeals  and  the   special  leave  petition   stand dismissed.