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4. The Respondents contend that minerals and products of mines and quarries are forest produce as defined in Section 2(7) of the State Act; and grant of mining leases by State Government to the Petitioners to mine, recover and remove minerals from the leased lands belonging to State Government amounts to disposal by 'sale or otherwise' of the iron/manganese ore belonging to State Government; and royalty paid by the Petitioners to State Government is nothing but consideration for the mineral that is recovered and removed from the leased lands; and even if royalty is tax, it does not cease to be consideration. It is contended that, under the transaction between the State Government and the petitioners, the petitioners mine and remove the ore/minerals and the State does not retain any right in regard to such minerals, and therefore the transaction in so far as minerals so removed, is sale and not a lease. It is contended that grant of a mining lease is a sale of minerals (forest produce) by the State under Rule 85(1)(iii) of Karnataka Forest Rules, 1969; and even if it is not a sale under Rule 85(1)(iii), it will still be a sale falling under the category 'disposal otherwise'. The respondents next contend that levy of tax by the State Government on forest produce is within its legislative competence having regard to Entries 23, 49 and 54 of List-ll to Schedule VII to the Constitution of India; and a declaration made by the Parliament for Regulation of mines and mineral development under Entry 54 List-l does not totally divest the competence of the State Legislature to legislate on the subject and the erosion of the power of the State Legislature is only to the extent to which control is assumed by the Parliament as spelt out in the Central Act; and power to legislate Section 98A of the Forest Act is traceable to Entry 54 of List-ll or alternatively under the residuary power under Entry 23 and entry 49 of List-ll, and it does not trench upon an occupied field. Reliance is placed on the decision of the Division Bench of this Court in GURUSIDDAPPA v. STATE OF KARNATAKA, . Lastly, it is contended that even if the levy is invalid, the petitioners are not entitled to refund as any declaration in regard to such invalidity need not automatically result in a direction for a refund and this Court should direct that the declaration should only operate prospectively. 

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 (2)   The said Tax shall be collected along with such consideration. 
 

 (3)    It is hereby declared that the said Tax shall be in addition to and not in lieu of any tax payable in respect of such produce under any other law in force,"
6.1. "Forest produce" defined in Section 2(7) of the forest Act includes surface soil, rock and mineral and all products of mines and quarries, found in, or brought from a forest.

6.2. Thus if the grant of a mining lease by the State Government to a Lessee, amounts to a disposal of mineral/product of a mine by the State Government, by sale or otherwise, for consideration and if the royalty paid is 'consideration' for such disposal by sate or otherwise, then the Lessee will be liable to pay forest development tax on the royalty amount at eight per cent.