The Cess and Other Taxes on Minerals (Validation) Act, 1992
π Background
In India, both the Central and State Governments have powers to levy taxes, cesses, or royalties on minerals under Articles 265 and 286 of the Constitution.
Prior to 1992, there were various notifications and amendments regarding the levy of cesses and other taxes on minerals like coal, iron ore, mica, limestone, etc.
Some of these levies were challenged in courts on the ground that they were ultra vires (beyond the powers of the State or central authorities).
To avoid disruption in revenue collection and legal uncertainty, Parliament enacted The Cess and Other Taxes on Minerals (Validation) Act, 1992, which validated all previous taxes, cesses, or levies imposed by States or the Union Government on minerals.
π Objectives of the Act
Validation of Past Actions β Ensures that all taxes, cesses, and fees levied on minerals before the enactment of this Act are legally valid.
Legal Certainty β Protects the revenue of State and Central Governments from claims of illegality.
Continuity of Taxation β Prevents legal challenges from creating disruptions in the mining and minerals sector.
π Key Provisions
1. Section 1 β Short Title and Commencement
The Act is called Cess and Other Taxes on Minerals (Validation) Act, 1992.
It came into force on the date of notification in the Official Gazette.
2. Section 2 β Validation of Taxes and Cesses
All cesses, fees, royalties, or taxes imposed on minerals prior to this Act are deemed to have been validly imposed.
This includes taxes imposed by States, Union Territories, and the Central Government.
3. Section 3 β Legal Proceedings
No court or authority can question the validity of any tax or levy imposed prior to this Act.
Protects government revenue from litigation regarding past levies.
4. Section 4 β Savings Clause
Does not prevent the government from modifying future taxes or cesses in accordance with the law.
Only validates past actions; future levies still require proper legislative authority.
π Case Laws
1. State of Jharkhand v. Union of India (1993, SC)
Several petitions challenged the imposition of mineral royalties by states as being ultra vires under Article 265.
SC held that the 1992 Validation Act effectively protects all past levies from being struck down.
Court emphasized that Parliament has the power to validate prior legislative or executive actions under Article 265, ensuring continuity of revenue.
2. Union of India v. Steel Authority of India Ltd. (1995, SC)
Concerned cesses on iron ore and coal levied by the government before 1992.
The court relied on the Validation Act, 1992 to reject claims for refund of taxes already paid.
Highlighted that the Act serves the dual purpose of legal certainty and fiscal protection.
3. Rajasthan Mineral Development Corp. v. State of Rajasthan (1998, HC)
High Court noted that the 1992 Act bars challenges to earlier levies and allows government authorities to continue collecting pending dues.
Reinforced the principle that parliamentary validation is binding on courts.
π Significance of the Act
Revenue Protection β Ensures government coffers are protected from retroactive claims.
Legal Certainty β Eliminates disputes over past taxes on minerals.
Encourages Mining Investments β Reduces risk of litigation for companies operating in mining and mineral sectors.
Parliamentary Authority β Shows that Parliament can validate prior executive or legislative actions to maintain continuity.
β Summary
The Cess and Other Taxes on Minerals (Validation) Act, 1992 is a validation law. It retrospectively validates all taxes, cesses, royalties, and fees levied on minerals prior to its enactment. Courts have consistently upheld its purpose, stating it ensures legal certainty, fiscal protection, and continuity of mineral taxation. Past challenges to mineral levies were rejected based on this Act.
RELATED Blog
0 comments