Supreme Court Affirms State Authority to Tax Minerals, Clarifies Royalty Status

In a landmark decision, a nine-judge bench of the Supreme Court ruled in an 8-1 verdict that states have the authority to impose taxes on minerals and mineral-bearing lands in addition to the royalties already charged by the central government.

The court clarified that these royalties are considered contractual payments, not taxes, to the Centre for the extraction of minerals.

The bench, led by Chief Justice of India (CJI) Dhananjaya Y Chandrachud, upheld that states can levy extra charges and surcharges.

However, it acknowledged that the central government retains the right to impose limitations on this authority through parliamentary law.

Since the Mines and Minerals (Development and Regulation) Act, 1957, currently lacks such provisions, the states' powers remain unrestricted.

Justice BV Nagarathna dissented, arguing that granting states this authority undermines the federal structure and could lead to economic complications and increased prices for minerals and industrial products.

The ruling's retrospective or prospective application will be discussed in a hearing on July 31, which could financially benefit state governments with existing local laws for additional levies on miners.

Refrence: https://www.google.com/amp/s/www.livemint.com/companies/news/supreme-court-mining-companies-state-governments-union-government-royalties-taxes-minerals/amp-11721888513512.html