Extra excavation alone does not justify royalty on soil unless its use as a minor mineral is shown, Bombay High Court rules

The petitioner, a construction firm, had permission to construct on the relevant plots and had paid royalty for excavation of 897 brass of murum.

The revenue authorities found an additional 3,216.4 brass of soil, earth or murum excavated and imposed a penalty of ₹1,21,05,180 under Section 48(7) of the Maharashtra Land Revenue Code, 1966.

The petitioner challenged that order, contending that excavation was incidental to construction and that the material was to be refilled on site.

The State maintained that the excess material had been transported and used as a minor mineral, and argued that the petitioner should pursue an appeal.

Whether excess excavation of soil or earth during construction, without proof that it was used for a purpose specified in the relevant notification, could be treated as excavation of a minor mineral attracting royalty.

Whether the impugned order imposing royalty and penalty should be set aside in the circumstances of the case.

Section 3(e) of the Mines and Minerals (Development and Regulation) Act, 1957 defines “minor minerals” to include the listed materials and minerals declared as minor minerals by Central Government notification.

Relying on Promoters and Builders Association of Pune v. State of Maharashtra and Others, 2015(1) Bom.C.R. 26, the Court held that excavated earth becomes a minor mineral for the purposes of the relevant notification when it is used for the specified end purposes; absent proof or a clear inference of such use, royalty cannot be imposed merely because excavation occurred.

Section 48(7) of the Maharashtra Land Revenue Code, 1966 was the provision under which the challenged order was passed.

The Court treated excavation as a natural part of construction and recognised that some excavated material may need to be refilled on the site.

Although the authorities alleged excess excavation, that fact alone did not establish that the material was used for a notified purpose or otherwise qualified as a minor mineral attracting royalty.

The end use was not established, and the petitioner maintained that the material remained on site for refilling.

In the absence of proof or a clear inference of qualifying use, the assessment could not stand.

It quashed and set aside the impugned order, allowed the writ petition, and made the Rule absolute.