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Tata Iron and Steel Co. Ltd. v. State of Bihar & Others

Civil Appeal · 2017 INSC 1236Decided 15 Dec 2017
Civil Appeal No. 5360 of 2005
Justice J. Chelameswar · Justice S. Abdul Nazeer

Background

This order sends the case back; it does not decide the dispute. Tata Iron and Steel Co. Ltd. challenged the State's demand for payment for water drawn from the Subarnarekha River. The High Court had upheld the demand on the assumption that the mere existence of a taxing entry in the Seventh Schedule of the Constitution was enough to justify the fee.

Decision Breakdown

This is not a final decision on the dispute. Relying on the nine-judge ruling in Jindal Stainless Ltd. v. State of Haryana, the Court held that a fee is covered by the word 'tax' in Article 265 of the Constitution and so needs express legislative authority. It did not decide whether this demand was validly backed by the Bihar and Bengal Irrigation Acts, because neither the High Court's judgment nor the pleadings had properly addressed that. It set aside the High Court's judgment and sent the matter back to the Jharkhand High Court to examine those questions after the parties file proper further pleadings.

Lesson Learnt

A government fee needs the same express backing of a law as a tax before it can be demanded. There is no final ruling yet on whether the company must pay the water fee.

Official source (sci.gov.in)View Judgment (PDF)

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