CA Sansaar
Supreme Court to Examine Centre’s Plea on Mineral Tax
PrintThe Supreme Court on Thursday indicated that it will consider the Centre’s request for an early hearing of its curative petition against last year’s landmark judgment that granted states the power to levy taxes on mineral rights.
The Centre has challenged the nine-judge Constitution Bench ruling which allowed state governments to impose and recover taxes on mineral-related transactions from April 1, 2005.
Solicitor General Tushar Mehta, appearing before a Bench headed by Chief Justice Surya Kant, argued that the matter concerns the distribution of royalty on minerals and the rights of states to fix mineral prices. He stated that the issue has international implications and could disturb the federal structure, as different states may adopt different taxation policies.
The Centre warned that allowing states to collect taxes on mineral-bearing land could create serious fiscal disruption, harm economic integration, and lead to inconsistent tax practices based on mineral value.
In its earlier ruling, the Supreme Court held that royalty paid by mining companies is not a tax but a contractual payment to the land lessor for the right to extract minerals. This interpretation enabled states to impose separate taxes in addition to royalty. The Bench, led at that time by Chief Justice DY Chandrachud, observed that the Mines and Minerals (Development and Regulation) Act, 1957 does not restrict states from taxing mineral-bearing land under Entry 49 of the State List.
The Centre has challenged the nine-judge Constitution Bench ruling which allowed state governments to impose and recover taxes on mineral-related transactions from April 1, 2005.
Solicitor General Tushar Mehta, appearing before a Bench headed by Chief Justice Surya Kant, argued that the matter concerns the distribution of royalty on minerals and the rights of states to fix mineral prices. He stated that the issue has international implications and could disturb the federal structure, as different states may adopt different taxation policies.
The Centre warned that allowing states to collect taxes on mineral-bearing land could create serious fiscal disruption, harm economic integration, and lead to inconsistent tax practices based on mineral value.
In its earlier ruling, the Supreme Court held that royalty paid by mining companies is not a tax but a contractual payment to the land lessor for the right to extract minerals. This interpretation enabled states to impose separate taxes in addition to royalty. The Bench, led at that time by Chief Justice DY Chandrachud, observed that the Mines and Minerals (Development and Regulation) Act, 1957 does not restrict states from taxing mineral-bearing land under Entry 49 of the State List.
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