Mumbai, April 8, 2022: Holding that the sand exporters will be entitled to a refund of the amount paid by them to the District Mineral Foundation, the Bombay High Court has held that the State Government is not competent to demand an amount equivalent to 10% of royalty from an exporter of minor minerals who has excavated such minor minerals in another State and seeks to import such minor minerals into the State of Maharashtra.
The Division Bench of Justice A.S. Chandurkar and Justice M.S. Jawalkar noted that such power to demand contribution to be made to the DMF where such minor mineral is being brought, has not been conferred on the State Government under the Mines and Minerals (Development and Regulation) Act, 1957.
The High Court also observed that the State Government is not competent to demand an amount equivalent to 10% of royalty from a transporter of minor minerals who seeks to transport such minor minerals excavated in another State to the DMF of the district while entering the State of Maharashtra.
In this case, two Writ Petitions were filed by sand exporters and the transporters of minor minerals. The sand exporters challenged a Circular dated February 5, 2021 by which the State Government through its Revenue and Forest Department required payment of an amount equivalent to 10% of the royalty amount to the District Mineral Foundation. The transporters of minor minerals also challenged the same circular on the issue of imposition of an amount equivalent to 10% of royalty amount.
The Division Bench was of the opinion that under the Act, there is no provision empowering the State Government to require either an exporter of minor minerals or a transporter of such exported minor minerals to make any payment to the DMF of the district where no excavation has taken place.
Observing that the object of the DMF is clear that it has to work for the interest and benefit of persons and areas affected by mining related operations, the Bench asserted that under Section 15-A the State Government can prescribe the payment to be made by holders of concessions related to minor minerals of amounts to the DMF of the district where the mining related operations are being carried out. But, the Court recognized the fact that an exporter or transporter of minor minerals is not included in the term “mineral concession” as defined by Section 2(ae).
Referring to the Maharashtra District Mineral Foundation (Trust) Rules, 2016,the Bench posited that there is no rule by which an exporter of minor minerals into the State of Maharashtra or a transporter who transports such excavated minor mineral from another State into the State of Maharashtra can be required to contribute to the DMF Trust of the district where neither any excavation or mining related operations have taken place. This is for the reason that such contribution has to be made by the holders of a mining lease, a quarry lease or a quarry permit in the case of minor minerals..
Thus, from a conjoint reading of Sections 2, 9-B, 14, 15-A and 23-C of the Act of 1957, Rule 2(9) and Rule 3 of the State DMF Rules, 2016 as well as Rule 2 of the Maharashtra Minor Minerals (Contribution to District Mineral Foundation) Rules, 2017, the Court concluded that there is no authority conferred on the State Government to require payment of an amount equivalent to 10% of royalty to the DMF of the district where such excavated minor mineral from another State is brought.
The Bench held that Clause 5 of the Circular which requires an amount equivalent to 10% of royalty to be paid to the DMF of the district where any minor mineral excavated in another State is brought into the limits of such district in the State of Maharashtra either by road or by rail, is is bad in law. The Court asserted that Clause 5 seeks to achieve indirectly that what is not permissible under the aforesaid statutory provisions. The principle that what cannot be done directly cannot be sought to be achieved indirectly as referred to in Mechanical Engineers Versus State of Punjab was held to be clearly attracted to the present case.
The Court also relied upon the judgment of this Court in Salonah Tea Co. Ltd. & Others Versus Superintendent of Taxes, Nowgong & Others wherein it was held that in a case where tax or money has been realized without the authority of law, the same is liable to be refunded and in an application under Article 226 of the Constitution of India, the Court has power to direct such refund unless there are avoidable laches on the part of the petitioner which could indicate either the abandonment of his claim or which is of such nature for which there is no probable explanation or which will cause any injury either to the respondent or any third party.
The Bench thus, passed an Order saying, “It is held that the State Government is not competent to demand an amount equivalent to 10% of royalty from an exporter of minor minerals who has excavated such minor minerals in another State and seeks to import such minor minerals into the State of Maharashtra since such power to demand contribution to be made to the DMF where such minor mineral is being brought has not been conferred on the State Government under the Act of 1957.”
Affirming that Clause 5 of the said Circular would not be operative being excessive and traveling beyond the rule making power of the State of Maharashtra, the High Court held that the sand exporters would be entitled to a refund of an amount of Rs 2 lakh and Rs 8,300 being the amount paid by them to the DMF. The order calling upon the petitioners to pay an amount equivalent to 10% of the amount of royalty to the DMF, was also set aside by the Bench.