Common Order:

Aparesh Kumar Singh, J.

1. Sri G.Vidyasagar, learned Senior Counsel for the petitioners in W.P.No.19635 of 1994 and 21941 of 1995.

               Sri C.Niranjan Rao, learned counsel for the petitioners in W.P.Nos.18444, 22946, 22965, 22966, 22968, 22971, 22973, 22974, 22975 and 22976 of 1994, 720, 1802, 1810, 1814, 2247, 3613, 3614, 5659, 6710, 8783, 10125 and 11808 of 1995.

               Sri Tagore Bala, learned counsel for the petitioner in W.P.No.11871 of 1994.

               Ms. K.Mamata Choudary, learned counsel for the petitioners in W.P.Nos.4306 and 6700 of 1995.

               Sri A.Sudarshan Reddy, learned Advocate General appears for the State.

2. In this bunch of writ petitions, the petitioners have assailed the validity of Section 8 of the Andhra Pradesh Non-agricultural Land Assessment Act, 1963 (hereinafter referred to as 'NALA Act'), the validity of the Andhra Pradesh Non-agricultural Land Assessment (Amendment) Act, No.8 of 1994, with effect from 01.07.1993 and the validity of demand notices issued under Section 4 of the NALA Act as well as the orders of distraint issued under the NALA Act. In W.P.No.10024 of 1995, the petitioner has sought a declaration that the provisions of NALA Act are inapplicable to the lands covered under mining lease granted under the Central Act by striking down the definition of Section 2(j)(i) of the NALA Act.

3. The aforesaid writ petitions have come up before us for fresh consideration pursuant to the order of remand dated 22.11.2005 passed by the Hon’ble Supreme Court in Civil Appeal Nos.2885-3035 of 1998 (State of Andhra Pradesh vs. M/s.Mahabaleswarappa and Sons). For the facility of reference, facts from W.P.No.22965 of 1994 are being referred to.

I. FACTS:

4. The petitioner, M/s.Pennar Steels Limited is a company incorporated under the Companies Act, 1956 having its factory at Isnapur Village, Patancheru Mandal, Medak District. The petitioner is the owner of land measuring 1,08,762 square meters. The petitioner has been paying non-agricultural land assessment tax for the land owned by it under the NALA Act. A Circular was sent by the Mandal Revenue Officer apprising the petitioner that the Commissioner, Land Revenue has issued circular instructions No.T3/434/94, dated 17.03.1994, by which the Mandal Revenue Officer was informed that NALA Act has been amended in the year 1974 and was further amended by the Amendment Act No.8 of 1994, which has come into force from 01.07.1993. The Mandal Revenue Officer was further apprised that rates of levy of non-agricultural land assessment provided in the Schedule of Section 3 of the NALA Act have been increased. The notices of demand dated 06.10.1993 and 01.07.1994 under Section 4 of the NALA Act in Form II were issued to the petitioner, by which the petitioner was asked to pay a sum of Rs.13,279/- and Rs.13,279/- respectively towards non-agricultural land assessment.

5. The petitioner, thereupon, filed the writ petition, namely W.P.No.22965 of 1994 inter alia on the ground that Section 8 of the NALA Act and amendment made to the Schedule vide Act No.8 of 1994, with effect from 01.07.1993 are ultra vires the Constitution. The rate of tax is also challenged on the ground that the same is arbitrary, collusive and is confiscatory in nature. It is the case of the petitioner that only a portion of land held by them is used for mining and rest of the land is vacant land. However, in view of the decision of the Full Bench of erstwhile High Court of Andhra Pradesh in S.V.Cement Limited vs. Revenue Divisional Officer, Nandyal (1993 (2) ALT 32 (FB)), the entire extent of land is being taxed. The validity of the notices of demand was also challenged on the ground that the State Legislature has no power either under List II or List III of the Constitution of India to impose any tax, which is a tax on wealth and not on land.

II. ANTECEDENT FACTS LEADING TO REFERENCE:

6. S.V.Cement Limited is a company which is engaged in the business of manufacture of cement. The aforesaid company was assigned land by an order dated 08.06.1985 admeasuring Ac.30.02 cents in survey No.440/A3 situated at Kanakadripalli, Hamlet of Itikala Village, Kolimigundla Mandal, Kurnool District. Out of the aforesaid land, the said company utilised only 2431.99 square meters of land for industrial/commercial purpose. However, the entire land of Ac.30.02 cents was taken into account for determining non-agricultural land assessment.

7. A Division Bench of the erstwhile High Court of Andhra Pradesh in the Associated Cement Companies Limited vs. Government of Andhra Pradesh (AIR 1983 AP 234 : 1982 SCC OnLine AP 82), held that the extent on which the factory and its buildings are constructed alone can be subject matter of assessment under the provisions of the NALA Act and the assessment cannot be carried out in respect of the land which is not used for any other purpose. However, another Division Bench of this Court doubted the correctness of the view taken by the Division Bench of this Court in the Associated Cement Companies Limited (supra) inter alia on the ground that the same is contradictory to the provisions of the NALA Act. Therefore, the matter was referred for consideration to Full Bench in S.V.Cement Limited (supra).

8. The following issue was referred for consideration of Full Bench:

               "Whether non-agricultural land assessment is leviable only on the non-agricultural land which is actually used for the purpose mentioned in the Act or not?"

9. A Full Bench of this Court in S.V.Cement Limited (supra) answered the reference in the following terms:

               (1) The word "used" in Section 3 of the NALA Act has to be given a wider purport.

               (2) The word "used" does not only mean actually used but also includes any land meant to be used or set apart for being used or even readily available for use.

               (3) The words "used for industrial purpose" were to be interpreted strictly, meaning thereby "actually used for industrial purpose", it then cannot be said that manufacturing of any article is carried on with the aid of power in each of the building or in the area left for common use.

               (4) Such strict and restrictive interpretation of the word "used" will lead to absurd results, for example a case, where the area which is occupied by the buildings and machinery can also be said to be not used for industrial purpose if the machinery is not actually working, which ultimately frustrated the object of the Act.

               (5) In a case like the present one, it is not possible to say that a particular area is for industrial purpose and the other area is a waste land or land which is not being used for any other purpose.

               (6) That the definitions also do not say that the non-agricultural land should be actually utilised for an industrial or commercial activity, but it is enough if the land is kept for use for a purpose connected with industrial or commercial undertaking.

               (7) Therefore, when it is claimed to have been used for commercial/ industrial purposes, it also includes any purpose connected with the same. As per the definition, the said Non-Agricultural Land need not be actually utilized for the industrial/commercial purpose, but it is enough if the land is kept for use for a purpose connected with industrial or commercial undertaking. Hence the judgment in Associated Cement Companies Limited (supra) stands overruled.

10. The Judgment of the Division Bench of this Court in Associated Cement Companies Limited (supra) was overruled and the reference was answered accordingly.

11. In writ petition No.22965 of 1994 and batch, the petitioners therein as stated supra, had assailed the validity of Section 8 of the NALA Act, Amendment to the Schedule vide Act No.8 of 1994, with effect from 01.07.1993 and the demand notice. The Division Bench of the erstwhile High Court of Andhra Pradesh, vide its order dated 26.07.1995, inter alia came to the conclusion that levy of tax under the NALA Act on the ground that the land capable of being used or to be used or set apart for being used or even readily available for use would have the effect of rendering the charging provision authorizing levy of tax itself arbitrary and unconstitutional being violative of Article 14 of the Constitution of India. The Division Bench, therefore, held that the judgment of the Full Bench of erstwhile High Court of Andhra Pradesh in S.V.Cement Limited (supra) requires re-consideration in view of the observations of the Hon’ble Supreme Court in India Cement Limited vs. State of Tamil Nadu (AIR 1990 SC 85) and State of Orissa vs. Mahanadi Coalfields Limited (1995 Supp (2) SCC 686).

12. The Full Bench, thereupon inter alia held that even number of members of the Bench cannot re-consider the decision of another Bench. The Full Bench, therefore, referred the matter to Larger Bench of this Court consisting of five-Judges.

13. A five-Judge Bench of this Court, vide its order dated 13.08.1996 passed in Mahabaleswarappa and Sons, Bellary vs. Commissioner of Land Revenue, Government of Andhra Pradesh, Hyderabad (AIR 1997 AP 85 : 1996 SCC OnLine AP 551) inter alia held as under:

               1) The decision of the Full Bench in S.V. Cement's case (supra) does not call for any interference and it is affirmed;

               2) Sections 3, 8 and the Schedule to the NALA Act are not ultra vires Articles 14 and 19 of the Constitution;

               3) Section 2(d), in so far as the lands covered by 'mining operations' are concerned, has to be read down by empowering the State Government to levy and collect assessment only in accordance with the terms of the lease as contemplated under Rule 27(d) of the Mineral Concession Rules, 1960;

               4) 'Waste lands', which are unfit for use are not liable for assessment under the NALA Act and this aspect has to be decided by the Revenue Inspector under Section 4 of the NALA Act;

               5) There is an obligation on the Revenue Inspector to issue notice in Form No.1 before making assessment, failing which it would be in violation of Rules 3 and 4 of the Andhra Pradesh Non-Agricultural Lands Assessment Rules, 1960 and Section 4 of the NALA Act.

               6) The demand notices impugned in Writ Petitions are hereby quashed since not contemplated by the mining lease. It is open to the respondents to act in accordance with Rule 27 of the Mineral Concession Rules.

               7) In some cases, it is contended, no notices were issued in Form No.I by the Revenue Inspector. We have held that issuance of notice by the Revenue Inspector is mandatory according to Rules 3 and 4 read with Section 4 of the Act. But, in the present cases, most of the matters are carried in appeal to the Tahsildar and after their disposal, the present writ petitions were filed. The questions that were raised by the petitioners were decided by the said authorities. In these writ petitions, we have decided all the points raised by the petitioners. It is, therefore, not necessary to direct the authorities to issue notices again in the present cases. However, in cases where the land is 'waste land', it is open to the petitioners to bring it to the notice of the Revenue Inspector by filing a petition and setting out details thereof with supporting material thereto. On filing of such a petition, the concerned Revenue Inspector shall dispose of the same after conducting enquiry and pass appropriate orders. If the petitioners have paid assessment even in respect of 'waste land', it is open to the authorities to adjust the same for subsequent assessment years in case it is found that such land is 'waste land'.

               The writ petitions are accordingly disposed of.

14. The Federation of Andhra Pradesh Chambers of Commerce and Industry, being aggrieved by the decision in Mahabaleswarappa and Sons (supra) filed Special Leave Petitions, which were numbered as Civil Appeal Nos.1039 of 2000 and batch. Three-Judge Bench of the Hon’ble Supreme Court in Federation of Andhra Pradesh Chambers of Commerce and Industry vs. State of Andhra Pradesh ((2000) 6 SCC 550) held as follows:

               i) A taxing statute has to be strictly construed.

               ii) Only the land which is actually in use for an industrial purpose as defined in the Andhra Pradesh Non Agricultural Land Assessment Act, 1963 can be assessed to non-agricultural assessment at the rate specified for land used for industrial purposes.

               iii) The wider meaning given to the word 'used' in Mahabaleswarappa and Sons, Bellary vs. Commissioner of Land Revenue, Government of Andhra Pradesh [1996 SCC OnLine AP 551: AIR 1997 AP 85] is untenable.

               iv) The Act is a taxing statute, no court is justified in imputing to the legislature an intention that it has not clearly expressed in the language it has employed.

Paragraph 10 of the aforesaid order is extracted below, for the facility of reference:

               “10. In the result, the appeals are allowed and the judgment and order under challenge is set aside insofar as it deals with the interpretation of the word "used" in Section 3 of the said Act."

Thus, the order passed by the five-Judge Bench of the erstwhile High Court of Andhra Pradesh insofar it related to the word "used" in Section 3 of the NALA Act is set aside.

15. Thus, it is evident that the land which is actually in use for industrial purposes as defined under the NALA Act can alone be assessed to non-agricultural assessment at the rate specified for land used for industrial purposes.

16. It appears that the erstwhile State of Andhra Pradesh also challenged the order passed by the five-Judge Bench of the erstwhile High Court of Andhra Pradesh in Mahabaleswarappa and Sons (supra) in Civil Appeal Nos.2885- 3035 of 1998. The aforesaid civil appeals were disposed by a two-Judge Bench of the Hon’ble Supreme Court, vide order dated 22.11.2005, which is extracted below for the facility of reference:

               "Leave granted in SLP (C) No.11087/1998.

               Heard learned counsel for the parties.

                All these appeals need be remitted to the High Court to be considered afresh in the light of the Constitution Bench decision of this Court in State of West Bengal vs. Kesoram Industries Limited [(2004) 10 SCC 201, more particularly the principles set out in paragraph 129 of the judgment. While hearing the matters afresh the principle indicated in the judgment of this Court in Federation of Andhra Pradesh Chamber of Commerce and Industries and others vs. State of Andhra Pradesh and others [(2000) 6 SCC 550] shall also be taken note of.

               The appeals are accordingly disposed of. No costs."

In the aforesaid background, the matter arises for our consideration.

III. SUBMISSIONS:

17. Learned Senior Counsel Sri G.Vidya Sagar appearing for the petitioners in writ petition Nos.19635 of 1994 and 21941 of 1995 submits that the issue which arises for consideration in this batch of cases is that whether the total non-agricultural land under the NALA Act is liable to be taxed under the Act or only the commercial and the industrial area actually used is to be levied tax? He submits that this issue decided by this Court in the earlier round of litigation in the case of Mahabaleswarappa and Sons (supra) was not approved by the Hon’ble Supreme Court and the matter was remanded to this court.

18. Learned Senior Counsel further submits that a nine-Judge Bench of the Hon’ble Supreme Court in Mineral Area Development Authority vs. Steel Authority of India ((2024) 10 SCC 1) (for short ‘MADA’) held that the State has the power to levy tax under Entry 49. He further submits that Entry 49 deals with the land whereas Entry 50 deals with the mineral rights. Learned Senior Counsel seeks to confine the challenge only to those matters other than mining lease where also the same ratio would apply.

19. Learned Senior Counsel has referred to the decision in State of West Bengal vs. Kesoram Industries Limited ((2004) 10 SCC 201) in which the issue was whether Royalty is tax or not. Reference is also made to a judgment of this Court in Pokarna Limited, Secunderabad vs. Government of Andhra Pradesh (1996 (4) ALT 334).

20. It is submitted that in the judgment of the Hon’ble Supreme Court in Federation of A.P. Chambers of Commerce & Industry (supra) this issue was decided holding that it is confined only to the land which is used for industrial or commercial purpose. Learned Senior Counsel submits that amendment took place in 1994, by which the entire land used for commercial/industrial purpose could be assessed for levy of Tax. A batch of writ petitions were filed on the issue whether State has got power under the NALA Act to levy tax and whether it is for the entire non-agricultural land in the possession of the owner or is it confined to the land used for commercial/industrial use. The learned Division Bench referred the matter to Five-Judge Bench doubting the correctness of the judgment in the Associated Cement Companies Limited (supra). The learned five-Judge Bench held that it is not confined to the extent of industrial/commercial avocation undertaken under the NALA Act. The matter was carried to the Hon’ble Supreme Court. The Apex Court remanded all these appeals to the High Court to be considered afresh in the light of the Constitutional Bench decision of this Court in Kesoram Industries Limited (supra), more particularly the principle set out in para 129 thereof and in Federation of A.P. Chambers of Commerce and Industry (supra).

21. Learned Senior Counsel further submits that this judgment in Federation of A.P. Chambers of Commerce and Industry (supra) has been followed and not been overruled till date. Therefore, the Hon’ble Supreme Court has referred to this judgment while remanding the matter.

22. Learned Senior Counsel submits that the second issue had been answered at para 129 of the judgment in Kesoram Industries Limited (supra). However, in the case of MADA (supra) by the nine-Judge Bench, Entries 49 and 50 of List II of the Seventh Schedule of the Constitution have been interpreted to hold that it is within the domain of the State Legislature to levy tax on land and mineral rights. The NALA Act falls under Entry 49 of List II. The Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as ‘the MMDR Act’) comes under Entry 54 of List I. Learned Senior Counsel submits that the judgment of the Hon’ble Supreme Court in the case of MADA (supra) has clarified that Entry 49 does not have any restriction. So far as Entry 50 of List II is concerned, limitations may be placed by law as enacted by Parliament. The Apex Court has held that MMDR Act does not place any restriction therefrom. Therefore, the legislative field is open for the State, both on Entry 49 and 50. The NALA Act falls under Entry 49.

23. Learned Senior Counsel Sri G.Vidya Sagar submits that these writ petitions have been filed challenging the NALA Act 1963 and amendment made thereto. That Act was repealed with effect from 02.01.2006. The subject matter of the NALA cases before this Court is prior to 02.01.2006. A procedure was prescribed under Sections 3 and 4 how to assess the tax. No procedure has been followed under Section 4 to identify which is the land used for commercial purpose or which is used for industrial purpose. During the pendency of the writ petitions, interim stay was granted, however, some of the recoveries have been made.

24. Sri G.Vidya Sagar, learned Senior Counsel, further submitted that Section 3 and Schedule specifies the rate to be levied for the industrial and commercial purpose and other purposes. Therefore, not all the non-agricultural lands can be assessed for tax.

25. On the issue of the liability, learned Senior Counsel Sri G.Vidya Sagar, submitted that in one of the writ petitions there was a restraint order for about Rs.5,24,000/-. As on date, since the judgment of the earlier Full Bench has been remanded back, the taxing can be done only in respect of the lands which are put to use for commercial or industrial only. That exercise has not been undertaken.

26. Learned counsel Ms. Mamata Choudary also made her submissions on the word ‘used’ or ‘meant to be used’. She states that Federation of A.P. Chambers of Commerce and Industry (supra) in respect of the NALA Act went in appeal against the judgment of the five-Judge Bench judgment in Mahabaleswarappa and Sons (supra). The Apex Court confirmed that the word ‘used’ has to be understood as ‘actually used’ in the context of Section 3 of the NALA Act. The judgment of the Larger Bench was accordingly reversed. She submits, therefore, that none of the issues are open. The Hon’ble Supreme Court in Mineral Area Development Authority vs. Steel Authority of India ((2024) 10 SCC 257) (MADA-II) laid down that no demand can be made in respect of the transactions prior to 01.04.2005. In fact, two types of lands are involved i.e., mineral lands and the other industrial/commercial purposes. She submits that the issues whether royalty is taxed or not, whether it is an occupied field and what is the legislative competence, arise only in respect of mineral bearing lands, but in respect of other commercial and industrial uses, there is no such issue. The decision in MADA (supra), therefore, will only be relevant for the purposes of mineral bearing lands. The issue of legislative competence in respect of mineral bearing lands also stands answered by the nine-Judge Bench of the Hon’ble Supreme Court.

27. Learned counsel Ms. Mamata Choudary also submits that in W.P.No.4306 of 1995 in which she is appearing, the levy under Section 3 of the NALA Act is also on lands which are mineral bearing. She submits that except few cases in most of the matters this issue does not arise. She further submits that the measure of tax can be based on the value of the minerals. She submits that Section 3 of the NALA Act has been repealed in 2006 by another NALA Act currently in force. It does not have annual assessment based on use, instead on conversion base. The purpose of this NALA Act was to compensate for land revenue which it would have otherwise earned if that land had been put to agricultural use. Therefore, putting it to non-agricultural use was the basis for levying tax. Waste lands could never have been put to agricultural use. Therefore, they would be outside the ambit of NALA Act. It is further submitted that no notices were issued before levying the tax. The manner in which the waste lands have to be assessed is a question of fact. On the issue of waste land, there is no separate appeal by the State. Therefore, the Larger Bench judgment and also the consequential orders given on assessments and re-assessments would continue to hold the field.

28. Learned counsel Ms. Mamata Choudary, submits that in fact in some cases, interim stay was granted subject to condition of certain payments. Therefore, if the assessment is to be reduced from total land available to actually used, it would result in refunds.

29. Learned counsel Ms. Mamata Choudary, submits that the judgment in MADA (supra) is only in the context of mining lands. Mining lands were kept out of the scope of NALA. Therefore, if it was to be brought within the scope of NALA, then resulting demands would need to be dealt with under MADA-II (supra).

30. Sri Tagore Bala, learned counsel for the petitioner in W.P.No.11871 of 1994 (National Airports Authority of India), submits that in this case, the issue pertains to land owned by the Central Government. Therefore the land which is owned by or vested with the National Airports Authority of India is the land of the Central Government. Therefore, the contention is that under the NALA Act, there is a specific provision which provides that lands owned by the State Government or the Central Government are exempted from the purview of the NALA Act. He submits that the case of the petitioner herein is completely different from the other matters. The relevant provision is Section 12 of NALA Act. In 1994, it was the Airports Authority of India Act. As per the Act, it is very clearly mentioned in Section 34 of the Act.

31. Learned Advocate General submits that the expression ‘used’ or ‘unused’ is to be left to the discretion of the State. After the Federation of A.P. Chambers of Commerce and Industry (supra), the judgment in MADA (supra) has come. The said decision made it clear that Entry 49 is the State’s jurisdiction. Learned Advocate General further submits that the judgment in Federation of A.P. Chambers of Commerce and Industry (supra) was not referred to or overruled by nine-Judge Bench in MADA (supra). Therefore, in terms of this judgment, the power is available to the State. It is further submitted that on the issue of legislative competence under Entry 50, there is no restriction on the State.

32. Learned Advocate General submits that much water has flown from the time when the matter was remanded here. The judgment of MADA (supra) has come after the remand.

33. Learned Advocate General further submits that none of the petitioners have pleaded that they have not passed on the tax which is imposed by the State to their customers. Any refund now would be a case of unjust enrichment. They have not pleaded that the burden has not been passed on to their customers. Therefore, these writ petitions are liable to be dismissed on that ground alone.

34. Learned Advocate General has then referred to Section 2(g) of the NALA Act, which defines “non-agricultural land” to mean, land other than the land used exclusively for the purpose of agriculture, but does not include the land used exclusively for — (i) cattle sheds; (ii) hay-ricks”. He submits that, therefore, all other lands which are not being used for agriculture are non-agricultural lands and liable to be taxed. The ‘waste land’ is not defined anywhere.

35. Learned Advocate General submits that the judgment in MADA (supra) would go to show that absolute power rests with the State in respect of Entry 49 List II of the Seventh Schedule of the Constitution.

36. Learned Advocate General has submitted that anybody who uses land and is either the owner of the land or has taken lease for the purpose of mining need to pay tax under the NALA Act if it is used for non-agriculture purpose. That this land was given to them either as a lease or purchased by them for the purpose of using it for non-agriculture purpose. By not putting it to use for agriculture it will be deemed to be used for non-agricultural purpose and falling within the ambit of the NALA Act for the purpose of taxation. He submitted that the Schedule of the NALA Act contains 4 columns. The 2nd column refers to used for industrial purpose per fasli year, 3rd column for commercial purpose per fasli year and 4th column for any other non-agricultural purpose including residential purpose per fasli year. Therefore, lands which are not being put to agriculture are covered under the NALA Act.

37. Learned Advocate General further submitted that in the event there is a mistake done by the Tahsildar, Revenue Divisional Officer or the Assessing Officer, any person aggrieved can make a representation. The writ petitions therefore need to be dismissed.

38. In reply, learned Senior Counsel Sri G.Vidya Sagar, submitted that it is a levy on the land, which is used either for commercial, industrial or any non-agricultural purpose and not passing on to a dealer or a consumer.

IV. ANALYSIS:

39. Insofar as the contention of the petitioner in W.P.No.11871 of 1994 (National Airports Authority of India) that since the land which is owned or vested with the NAAI is the land of the Central Government, it is exempted from the purview of the NALA Act is concerned, it is pertinent to refer to the provisions of the National Airports Authority Act, 1985 (for short, ‘Act of 1985’), under which the Authority was constituted. Sections 2(c), Sections 3(1) and (2) of the said Act are extracted as under:

               “2(c) ‘Authority’ means the National Airports Authority constituted under Section 3.

               3(1) With effect from the commencement of this Act, the Central Government shall constitute an authority to be called the National Airports Authority.

               3(2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire, hold and dispose of property both movable and immovable, and to contract and shall by the said name sue and be sued.”

The above provisions do not leave any room of doubt that National Airport Authority is constituted under the Act of 1985 as body corporate. It cannot be said to be the State Government or the Central Government which is exempted from the purview of the NALA Act. Therefore, this contention is fit to be rejected.

40. The Andhra Pradesh Non-agricultural Land Assessment Act, 1963 provides for levy and assessment on lands used for non-agricultural purposes in the State of Andhra Pradesh. The aforesaid Act came into force with effect from 01.07.1963. Section 2(b) defines 'commercial purpose'. Section 2(d) of the Act defines the expression 'industrial purpose', whereas Section 2(g) defines 'non-agricultural land'. The aforesaid definitions, namely Sections 2(b), 2(d) and 2(g) of the Act read as under:

               “2(b) 'Commercial purpose' means purpose connected with the undertaking of any trade, commerce or business but it does not include an industrial purpose.

               2(d) 'Industrial purpose' means any purpose connected with an industrial undertaking where the process of manufacturing any article is carried on with the aid of power and includes a purpose connected with an excavation, underground or otherwise where any operation for the purpose of searching for, or obtaining a mineral has been or is being carried on.

               2(g) 'non-agricultural land' means a purpose connected with the undertaking of any trade, commerce or business but it does not include an industrial purpose."

41. Section 3 of the NALA Act deals with levy and collection of assessment on non-agricultural land. Section 3 is extracted below for the facility of reference:

               “3. (1) In the case of non-agricultural land in a local area with the population specified in column (1) of the Schedule, there shall be levied and collected by the Government for each Fasli Year commencing on the first day of July from the owner of such land, an assessment, at the rate specified in column (2) where the land is used for any industrial purpose, at the rate specified against it in column (3) where the land is used for any commercial purpose and at the rate specified against it in column (4) where the land is used for any other non-agricultural purpose including residential purpose:

               Provided that where assessment is levied and collected in respect of such land under this Act, no land revenue shall be payable in respect of that land and nothing contained in any enactment, regulation order, bye-law, rule, scheme, notification, or other instrument having the force of law, in operation immediately before the commencement of this Act relating to the assessment, levy and collection of land revenue on non-agricultural land shall apply in respect of that land, except as respect things done or omitted to be done before the commencement of this Act:

               Provided further that any amount payable on such land at the commencement of this Act towards the arrears of land revenue may be recovered under the provisions of the Andhra Pradesh Revenue Recovery Act, 1964.

               EXPLANATION: Where the land is used for any industrial or commercial purpose and also for any other non-agricultural purpose, such land shall be assessed at the rates specified in column (2) or column (3) of the Schedule as if it were used solely for any industrial or commercial purpose, as the case may be.

               (2) Notwithstanding anything contained in sub-section (1) where the assessment leviable on any non-agricultural land under this Act is less than the land revenue payable on such land, the land revenue alone shall be payable on that land."

42. Thus, it is evident that Section 3 of the NALA Act authorizes levy and collection of assessment on non-agricultural lands, which are used for industrial, commercial or any other non-agricultural purposes as per the rates specified in the Schedule. The assessment is on non-agricultural lands and use of such lands is taken for purposes of determining the rates of assessment to be fixed. The first proviso provides that where non-agricultural land assessment is levied, no land revenue shall be levied and collected under any other Act. However, in cases where the land revenue is more than the non-agricultural land assessment under this Act, the former will prevail. It is further clarified through Explanation that where the land is used for industrial or commercial purpose, the entire land appurtenant thereto will also be assessed as land used for industrial or commercial purpose, as the case may be.

43. Section 4 of the NALA Act enables the Revenue Inspector to determine the assessment payable by owner of non-agricultural land after making inquiry and to cause notice of demand to be served on the owner specifying the amount of such assessment. Against the demand raised under Section 4 of the Act, an appeal lies to the Tahsildar under Section 5 and a revision lies to the Revenue Divisional Officer under Section 6 of the Act. Section 8 of the Act deals with power of the State Government to alter, add or to cancel any of the items in the Schedule subject to post approval by the Legislature. Section 8 was amended by Andhra Pradesh Act No.8 of 1994, with effect from 01.07.1993 and is extracted below for the facility of reference:

               "(1) The Government may, by notification, alter, add to or cancel any of the items of the Schedule.

               (2) Where a notification has been issued under sub-section (1), there shall, unless the notification is in the meantime rescinded, be introduced in the Legislative Assembly as soon as may be but following the date of the issue of the notification, a Bill on behalf of the Government, to give effect to the alteration, addition or cancellation as the case may be, of the Schedule specified in the notification and the notification shall cease to have effect when such Bill becomes Law, whether with or without modification but without prejudice to the validity of anything previously done thereunder:

               Provided that if the notification under sub-section (1) is issued when the Legislative Assembly is in session, such a Bill shall be introduced in the Legislative Assembly during that session:

               Provided further that where for any reason a Bill as aforesaid does not become law within six months from the date of its introduction in the Legislative Assembly, the notification shall cease to have effect on the expiration of the said period of six months.

               3) All references made in this Act to the Schedule shall be construed as relating to the Schedule as for the time being amended in exercise of the powers conferred by this Section."

44. Section 10 of the NALA Act provides for collection of assessment from the occupier of the land in cases where the owner of the land himself is not an occupier. The State Government is also empowered under Section 13 of the Act to make rules by notification for carrying out all or any of the purposes of the NALA Act.

45. After having noticed the relevant provisions of the NALA Act, this Court is now required to decide the writ petitions in the light of the observations made in paragraph 129 of the Kesoram Industries Limited (supra) and in the light of the principles indicated in Federation of Andhra Pradesh Chambers of Commerce and Industry (supra). It is pertinent to note that correctness of the view taken by the Constitution Bench of the Hon’ble Supreme Court in Kesoram Industries Limited (supra) was doubted vide order dated 30.03.2011 passed in Civil Appeal Nos.4056-4064 of 1999 (Mineral Area Development Authority vs. M/s.Steel Authority of India) in view of the divergence of views of the decisions of the Hon’ble Supreme Court in India Cement Limited (supra) and Kesoram Industries Limited (supra).

46. A nine-Judge Bench of the Hon’ble Supreme Court in MADA (supra) has overruled the judgment rendered by the Hon’ble Supreme Court in Kesoram Industries Limited (supra) to the extent of conclusions mentioned in paragraph 365 of its decision. Therefore, it is apposite to read paragraph 129 of Kesoram Industries Limited (supra) in juxtaposition with paragraph 365 of the nine-Judge Bench decision of the Hon’ble Supreme Court in MADA (supra):











47. From the ratio rendered in the case of MADA (supra) it is thus clear that the State has the legislative competence under Article 246 of the Constitution of India read with List II Entry 49 to tax lands which comprise of mines and quarries. Similarly, it has been laid down that the legislative power to tax mineral rights under Entry 50 of List II vests with the State Legislatures. Parliament does not have legislative competence to tax mineral rights under List I Entry 54, it being a general entry. MMDR Act as it stands has not imposed any limitations as envisaged under List II Entry 50. List II Entries 49 and 50 deal with distinct subject matters and operate in different fields. Mineral value or mineral produce can be used as a measure to impose a tax on lands under List II Entry 49. Therefore, the question of legislative power to levy tax on lands under Entry 49 and on mineral rights under Entry 50 is settled. The challenge thereto therefore has to fail.

48. From the order of remand passed by the Hon’ble Supreme Court, it is also noteworthy that this Court has been asked to take note of the decision of the Hon’ble Supreme Court in Federation of Andhra Pradesh Chamber of Commerce and Industries (supra). In the aforesaid decision, the Hon’ble Supreme Court has already modified the decision rendered by a five-Judge Bench in Mahabaleswarappa and Sons (supra) insofar as it pertains to interpretation of word 'used' in Section 3 of the NALA Act and it has been held that for the word 'used' under the NALA Act, it is only the land which is actually in use for industrial purposes which can be assessed to non-agricultural assessment at the rates specified for the land used for industrial purposes.

49. In other words, the remaining conclusions of the five-Judge Bench of the erstwhile High Court of Andhra Pradesh have been upheld which is binding on us. Therefore, after careful perusal of the decision of the nine-Judge Bench in MADA (supra) and Federation of Andhra Pradesh Chamber of Commerce and Industries (supra), we record our conclusions, as under:

               (i) The decision of the Full Bench of the erstwhile High Court of Andhra Pradesh in S.V.Cement Limited (supra) does not lay down the correct principle of law and stands overruled;

               (ii) Sections 3, 8 and the Schedule to the NALA Act are not ultra vires Articles 14 and 19 of the Constitution;

               (iii) Under Section 3, only the land which is actually in use for industrial purpose, as defined under the NALA Act can only be assessed to non-agricultural assessment tax at the rates specified for land used for industrial purposes;

               (iv) Section 2(d), insofar as it relates to the lands covered by 'mining operations' is concerned, has to be read down by empowering the State Government to levy and collect assessment only in accordance with the terms of the lease as contemplated under Rule 27(d) of the Mineral Concession Rules, 1960;

               (v) 'Waste lands', which are unfit for use are not liable for assessment under the NALA Act and this aspect has to be decided by the Revenue Inspector under Section 4 of the NALA Act;

               (vi) There is an obligation on the Revenue Inspector to issue notice in Form I before making assessment, failing which it would be in violation of Rules 3 and 4 of the Andhra Pradesh Non-Agricultural Lands Assessment Rules, 1960 and Section 4 of the NALA Act;

               (vii) The Demand notices and orders of distraint impugned in the writ petitions are quashed. However, liberty is reserved to the respondents to proceed afresh to levy non-agricultural assessment tax on the land actually in use for industrial purpose at the rates specified for land used for industrial purposes, in accordance with law, within six months; and

               (viii) The claim of refund, if any, would be processed and sanctioned after determination of the levy of non-agricultural assessment tax on the land actually in use by the petitioners in accordance with law as directed above.

50. The plea raised by the learned Advocate General on grounds of unjust enrichment does not merit acceptance in a case like this, where the tax on non-agricultural land is of such a nature which could not be passed on to the end consumer like in cases tax on sale of goods or services or manufacture.

51. The petitioners have taken a plea that since the demand notices have to be quashed, no levy can be made for a period prior to 01.04.2025 in view of the judgment of the Hon’ble Supreme Court in Mineral Area Development Authority vs. Steel Authority of India [(2024) 10 SCC 257].

52. This plea does not hold good in the present case, which is being decided in the light of the governing law applicable to the case of the parties, i.e., NALA Act.

The reference made to the Full Bench is answered accordingly.