M/S Ultratech Cement Limited Thr. Its Authorized Signatory Mr. Raj Kumar Khetan vs. State Of Madhya Pradesh

Held

The Court held that the State Government is not competent to make rules under Section 15 and Section 23-C of the Mines and Minerals (Development and Regulation) Act, 1957, for regulating minor minerals lawfully excavated in other states and transported within Madhya Pradesh. The powers under these sections are limited to controlling the grant of quarry leases, licenses, storage, and transportation *within* the State. Therefore, a fee cannot be charged on minor minerals coming from other states through transportation. The Court found that the State Government lacked the rule-making power to impose such a fee on minerals legally excavated in other states. Consequently, the notification dated January 22, 2021, amending Rule 29(6) of the M.P. Minor Mineral Rules, 1996, to the extent it imposes a regulation fee on minor minerals brought from outside the state, was struck down as ultra vires the MMDR Act, 1957, and declared unconstitutional. The Court also directed the refund of any fees collected from the petitioner. The arguments regarding Article 301 and 304 of the Constitution and the existence of quid pro quo were not addressed as the primary issue of legislative competence was decided against the State.

Facts

The petitioner, Ultratech Cement Limited, challenged a notification dated January 22, 2021, issued by the State of Madhya Pradesh, which amended Rule 29(6) of the M.P. Minor Mineral Rules, 1996. This amendment imposed a 'Regulation Fee' of Rs. 25 per cubic meter on minor minerals transported into Madhya Pradesh from other states. The petitioner imports certain minor minerals, legally excavated in Rajasthan, for its cement manufacturing unit in Neemuch, Madhya Pradesh. The District Mining Officer subsequently issued a demand notice for this regulation fee. The petitioner argued that the State Government lacked the competence to impose such a fee on minerals legally excavated in other states.

Key Issues

1. Whether the State Government is competent to impose a 'Regulation Fee' under Section 15 and Section 15-A of the Mines and Minerals (Development and Regulation) Act, 1957, on minor minerals legally excavated in other states and transported into Madhya Pradesh. 2. Whether the amendment to Rule 29(6) of the M.P. Minor Mineral Rules, 1996, imposing the regulation fee, is ultra vires the Mines and Minerals (Development and Regulation) Act, 1957. Petitioner's arguments: The State Government's power under Sections 15 and 15-A of the MMDR Act, 1957, is limited to regulating the grant of quarry leases, mining leases, and connected matters within the state. They contended that the State cannot charge fees on legally excavated minerals from other states, citing the Supreme Court's decision in State of Gujarat v. Jayeshbhai Kanjibhai Kalathiya & Ors. The petitioner also argued that the levy is a colourable exercise of power and that existing rules already cover transit fees. They relied on the Karnataka High Court's decision in Shri Sai Keshava Enterprises & others vs. State of Karnataka. Respondents' arguments: The State argued that the fee is a reasonable regulatory fee collected to cover expenses for check-posts and to prevent illegal transportation of minerals. They cited Vam Organic Chemicals (supra) to argue that a quid pro quo is not always necessary for regulatory fees and that the State has executive power under Section 23-C of the MMDR Act, 1957, and legislative competence under Entry 66 of List II of the Seventh Schedule of the Constitution.