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Court has been further told by the Union government that the impact of the ruling will be felt in the market for every mineral and by extension in every one of the core sectors of the economy
The Supreme Court of India has on Wednesday reserved its decision on the question whether the ruling that states are entitled to collect royalty on minerals should apply prospectively or retrospectively.
Notably, the central government has urged the Supreme Court to declare that the said judgment shall apply only “prospectively".
Solicitor General Tushar Mehta submitted before a 9-judge Constitution bench led by Chief Justice of India DY Chandrachud that a preliminary estimate of the financial impact of the judgment due to past State levies which may become due on the public sector units engaged in mining, and in production activities dependent on minerals was approximately Rs 70,000 crore.
Notably states like Rajasthan and Madhya Pradesh have backed the Centre's stand of prospective application of the judgment, while Uttar Pradesh and Jharkhand have urged for retrospective application.
Supreme Court's nine-judge bench has on July 25, 2024 declared that States have got legislative competence to levy tax on mineral-bearing lands. The court explained that the tax is different from royalty, as it is just a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights.
By a majority view of 8:1, court has upheld the power of the states to impose tax and the Mines and Minerals (Development and Regulation) Act 1957 does not limit the power of the States in this regard.
The judgment comes as a big boost for mineral rich States, like Karnataka, Odisha, Andhra Pradesh, Jharkhand, West Bengal Chhattisgarh, Madhya Pradesh, and Rajasthan. It is also likely to settle the tussle between the Centre and states for revenue from mineral bearing land.
Justice BV Nagarathna, however, differed with the majority view and held that royalty is in nature of tax and exaction. She declared that the Centre possessed the exclusive right to tax mineral rights in the country.
Justice Nagarathna said that if States were given the authority to impose additional levy on the royalty paid by the miners, then it would lead to an anomalous situation.
Case Title: Steel Authority of India & Anr Etc.
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