Chhattisgarh High Court Quashes Cess on Exempted Mining Lands
Landmark Judgment Orders Refund of Collected Cess and Quashes Notification Enhancing Land Revenue Rates
In a significant ruling, the Chhattisgarh High Court has delivered a judgment in the case of Shree Cement Limited Company v. State of Chhattisgarh, providing clarity on the imposition of infrastructure development cess and environment cess under the Chhattisgarh (Adhosanrachna Vikas Evam Paryavaran) Upkar Adhiniyam, 2005. The Division Bench comprising Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru ruled that no cess could be levied on land exempt from land revenue or rent, thereby ordering the refund of cess collected from Shree Cement Limited since April 16, 2015.
The court emphasized the strict interpretation of taxing statutes, asserting that terms such as "land revenue" or "rent" cannot be substituted or interchanged with "surface rent." The judgment clarifies that surface rent is a contractual payment and not a tax, thus not subject to the cess provisions under Sections 3 and 4 of the 2005 Act.
Furthermore, the court quashed a notification dated December 27, 2011, which prescribed an enhanced rate of land revenue for mining leases prior to its repeal on January 31, 2020. The ruling ensures compliance with the legislative framework, reinforcing the need for explicit charging provisions to impose levies.
This judgment is expected to have wide implications for mining leaseholders in Chhattisgarh, reaffirming the legal principle that taxes and cesses cannot be imposed without clear statutory authority. The court’s decision also highlights the adequacy of contributions under the District Mineral Foundation (DMF) as per the Mines and Minerals (Development and Regulation) Act, 1957, covering developmental purposes without the need for additional cess.
Bottom Line:
Levy of cess under Sections 3 and 4 of the Chhattisgarh (Adhosanrachna Vikas Evam Paryavaran) Upkar Adhiniyam, 2005 is not permissible on land exempt from land revenue or rent. Surface rent for mining rights cannot be equated with land revenue or rent for the purpose of cess imposition.
Statutory provision(s): Sections 3 and 4 of Chhattisgarh (Adhosanrachna Vikas Evam Paryavaran) Upkar Adhiniyam, 2005, Madhya Pradesh Land Revenue Code, 1959, Mines and Minerals (Regulation and Development) Act, 1957.
