Virudhunagar District Quarry Owners Welfare Association vs. The State Of Tamilnadu Represented By

Held

The Court held that the State Government possesses the legislative competence to introduce the Green Fund levy. The Court reasoned that the Green Fund is fundamentally an environmental management fee, not a royalty for mineral extraction, and is designed to mitigate the adverse effects of commercial quarrying operations, aligning with the sovereign power of the State to regulate mines and mineral development under Section 15 of the Mines and Minerals (Development and Regulation) Act, 1957. The Court found that Rule 35-A operates as a distinct environmental management provision, giving effect to the sovereign mandate for environmental preservation and the right under Article 21 of the Constitution. The Court distinguished the Thressiamma Jacob case, stating that the Green Fund Rules do not differentiate between quarrying on private patta lands and government lands, as the State exercises its sovereign powers (imperium) in regulating mineral extraction, irrespective of land ownership (dominium). The Court further held that the Green Fund is an outcome of the internationally recognized Polluter-Pays Principle and the Doctrine of Public Trust, citing Vellore Citizens’ Welfare Forum v. Union of India, Indian Council for Enviro-Legal Action v. Union of India, and M.C. Mehta v. Kamal Nath. The Court concluded that the impugned rules are justified, legally relevant, and necessary, and the challenge to the Green Fund rules fails. The writ petition was dismissed.

Facts

The Virudhunagar District Quarry Owners' Welfare Association filed a writ petition challenging G.O.(Ms) No. 23, Industries (MMC.1) Department, dated February 23, 2022, which amended the Tamil Nadu Minor Mineral Concession Rules, 1959, by introducing Rules 35-A to 35-H. These new rules mandated the compulsory levy and collection of a 'Green Fund' at 10% of the seigniorage fee. The petitioner argued that this levy was an unauthorized tax, an unreasonable restriction on their right to conduct business, and amounted to double taxation, as similar purposes were already covered by existing rules and funds. The State, represented by the Special Government Pleader, contended that the writ petition was not maintainable by a society and that the State had the authority to enact the rules.

Key Issues

1. Whether the State Government has the legislative competence to introduce the 'Green Fund' levy under the impugned G.O.(Ms) No. 23, Industries (MMC.1) Department, dated February 23, 2022, and the consequent amendments to the Tamil Nadu Minor Mineral Concession Rules, 1959, specifically Rules 35-A to 35-H, in light of Article 265 of the Constitution of India and Section 15 of the Mines and Minerals (Development and Regulation) Act, 1957? Petitioner's arguments: The petitioner contended that the Green Fund is an unauthorized compulsory exaction amounting to a tax, for which the State lacks the authority under the guise of environmental protection. They cited State of West Bengal vs. Kesoram Industries Ltd. and Mineral Area Development Authority vs. SAIL to argue that state taxation powers cannot be arbitrary or prohibitory. They also argued that the levy is a form of double taxation, as its purpose is already addressed by existing provisions like the District Mineral Foundation Trust, Rules 22 and 28 of the Tamil Nadu Minor Mineral Concession Rules, and lease deed clauses for land restoration. Furthermore, they argued that the levy is an unreasonable restriction on their fundamental right to carry on business under Article 19(1)(g) of the Constitution. They also relied on Thressiamma Jacob & Ors. Vs. Geologist, Department of Mining and Geology and Ors. to argue that the State lacks jurisdiction to levy the Green Fund on minerals extracted from private patta lands. An additional plea was raised that Section 9-D of the Amendment Act 20 of 2006 renders the levy without authority. Respondent's arguments: The respondent objected to the maintainability of the writ petition by a registered society, citing Illachi Devi v. Jain Society. They asserted that the State Government has sufficient authority under the preamble of the Mines and Minerals (Development and Regulation) Act, 1957, and specifically Section 15, to enact rules for fixing and collecting rent, royalty, fees, and dead rent, which includes environmental management.