Vedanta Challenges Goa Rural Improvement Cess Act in Supreme Court

26 Mar 2024 , 03:17 PM

Vedanta Ltd. filed a lawsuit in the Supreme Court contesting the Goa Rural Improvement and Welfare Cess Act's constitutionality. The act levies a cess on carriers that carry ore and certain other products.

It contended that the cess levy is a tax and not a fee, and that the state lacks the authority to maintain it because it is covered by the Central Goods and Services Tax Act 2017 and the Goa Goods and Services Tax Act, which were created in accordance with the Constitution (One Hundred and First) Amendment Act of 2016, which established the GST regime and, with it, the subsumption of previous state cesses, effective September 16, 2017.

Vedanta challenged a January 10 Bombay High Court order that rejected its plea, arguing that the contested levy is a tax rather than a fee because it did not receive any special benefits, either as an individual or as a class, which the Supreme Court has held is necessary for a levy to be considered a fee in the Jalkal Vibhag Nagar Nigam vs. Pradeshiya Industrial and Investment Co. case.

The Goa government has received a notice from the top court, which has also linked the Vedanta appeal to other cases that are similar to it.

The business asserted that the charge is on two types of goods: 'Goan ore,' which is subject to royalty payments, and 'non-Goan ore,' which is not. It made this claim through senior attorney Gourab Banerji and counsel Ninad Laud.

'What the impugned levy provides is either a general service (such as road building) or investment in the welfare of the health of the citizens, which is a mere performance of statutory duties,' Vedanta claimed. 'These services are ex facie such that the petitioner receives their benefit as a member of the general public and not as a member of a class.'

At least two SC five-judge constitution benches, according to Vedanta, have ruled that the tax would not qualify as a charge if it included such a benefit.
The High Court's ruling 'proceeds on the assumption that only ore brought in from a neighbouring state, say Karnataka, utilises roads in Goa, without noticing that even ore mined in Goa is transported using the very same roads' , stated the court. 'This is especially so since virtually all iron ore mined in Goa is exported through ships, and hence the ore is transported by roads from the mines to the port,' said the statement.

The High Court's ruling 'proceeds on the assumption that only ore brought in from a neighbouring state, say Karnataka, utilises roads in Goa, without noticing that even ore mined in Goa is transported using the very same roads' , stated the court. 'This is especially so since virtually all iron ore mined in Goa is exported through ships, and hence the ore is transported by roads from the mines to the port,' said the statement.

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