The Supreme Court on Wednesday announced it will establish a bench to hear follow-up cases from mineral-rich states like Jharkhand, which are seeking to recover royalty and tax dues on mineral rights and mineral-bearing lands worth thousands of crores from the central government and mining companies
This follows a ruling on July 25 by a nine-judge bench, led by Chief Justice D Y Chandrachud, which declared that the authority to tax mineral rights rests with the states, not Parliament. The bench, in an 8:1 majority verdict, clarified that states, not the Centre, have legislative power over mineral taxes.
On August 14, the court further clarified that this decision would apply retroactively, allowing states to recover unpaid royalty and taxes on mineral rights from the Centre and mining firms dating back to April 1, 2005, with a 12-year recovery period.
During Wednesday’s hearing, senior advocate Rakesh Dwivedi, representing Jharkhand, urged a bench comprising the CJI and Justices J B Pardiwala and Manoj Misra to allocate these related cases concerning recovery issues to a bench. Dwivedi highlighted the need to resolve legal barriers preventing the state from recovering mineral taxes and royalties.
Senior advocate Abhishek Singhvi, representing private mining firms, confirmed that states are now seeking to collect these payments.
The CJI assured the matter would be assigned to an appropriate bench, preferably including one of the judges from the earlier constitutional bench.
Following the July 25 ruling, Jharkhand had raised concerns over legal hurdles in enforcing tax levies on minerals and mineral-bearing lands. Dwivedi had earlier pointed out that a law permitting Jharkhand to collect royalty on minerals was previously invalidated and needed to be reinstated.
Specifically, he referenced a 1993 judgment by the Ranchi bench of the Patna High Court that had struck down Section 89 of the Mineral Area Development Authority Act, 1992. This section had allowed the state of undivided Bihar to levy taxes not only on mineral-bearing lands but also on those used for industrial and commercial purposes.
The July 25 ruling overturned a 1989 verdict that had granted the Centre exclusive power to impose royalty on minerals. Following the recent ruling, several mineral-rich, opposition-led states are seeking refunds for royalties and taxes imposed by the Centre and paid by mining companies since 1989.
(With inputs from agency)
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