Summary
The Supreme Court upheld municipal terminal tax challenged by a coal company operating in Scheduled Areas. Exclusion of Part IXA under Article 243-ZC does not itself prevent State municipal laws from applying there. In the absence of a Governor’s notification excluding or modifying the taxing laws under paragraph 5 of the Fifth Schedule, the statutory power remained effective. The separate legislative-entry challenge was conceded to be covered by Constitution Bench authority.
Issues
- Whether exclusion of Part IXA from Scheduled Areas invalidated the municipality’s statutory taxing power.
- Whether the terminal-tax challenge based on legislative entries remained open.
Provisions considered
- Articles 243-X, 243-ZC and 244(1); Fifth Schedule, paragraph 5(1), Constitution of IndiaPart IXA’s exclusion does not remove State legislative competence. A Governor’s notification may exclude or modify a parliamentary or State law in Scheduled Areas, but none restricting these taxing statutes was produced. (¶¶ 4, 5, 9, 10, 11, 12, 13, 14, 15, 16)
Held
- Paragraph 5(1) enables the Governor to exclude a law or apply it with exceptions and modifications in Scheduled Areas. It does not automatically exclude every parliamentary or State enactment; without such a notification the municipal statutes remained applicable. (¶¶ 11, 12, 13)
- Article 243-ZC makes Part IXA inapplicable to Scheduled Areas, but Article 243-X’s inapplicability does not deprive the State legislature of power to enact laws for the State. Merely identifying an area as Scheduled does not establish an exemption from the existing municipal taxing laws. (¶¶ 14, 15, 16)
- The separate challenge contrasting Union terminal-tax power with the State legislative entries was not further pressed: counsel fairly conceded that the Constitution Bench decision in Empress Mills had concluded the issue. The Court found neither challenge substantial. (¶¶ 7, 17, 18)
Result
Appeals dismissed; the High Court judgment rejecting the terminal-tax challenge was upheld. Pending applications disposed of.