New Delhi: On Thursday, the Supreme Court of India made a major verdict and concluded that the amount payable on minerals is not taxable. This landmark judgment was delivered in a nine-judge bench presided over by Chief Justice of India D. Y. Chandrachud and comprising Justice Hrishikesh Roy, Justice A. S. Oka, Justice J.B. Pardiwala, Justice Manoj Misra, Justice Ujjal Bhuyan, Justice Satish Chandra Sharma, and Justice Augustine George Masih all of whom concurred with the
Further, while delivering the judgment of the Bench, pointed out that Entry 50, falling under List II of the Constitution, does not empower the Parliament to impose taxes on mineral rights. This entry concerns taxes on mineral rights, albeit not beyond the Parliament’s set limits for mineral development. He also declared a prior Supreme Court decision made in 1989 regarding recognising royalty payments as a tax – as legally erroneous.
The appellant had only Justice B. V. Nagarathna on his side, dissented with the majority view, stating that while assessing the tax base of the mineral rights, the Central Government only had the authority to do so and that by permitting the states to slap extra demands, they could ultimately lead to the state laws superseding the central laws. This verdict responds to a continued controversy as to whether the royalty on minerals should be legally categorized as tax under the Mines and Minerals (Development and Regulation) Act of 1957 and defines the additional competence of the Centre as compared to the States on imposing such fees.
From the above legal opinion, the ruling sets the division of power between the Centre and the states regarding mineral rights more clearly, indicating that the state can attach taxes concerning minerals in their territory. The bench will take further hearings on July 31 regarding whether the judgment under consideration should not be given retrospective or prospective operation. This rule may form a kind of retrospective application, which could help state governments where local laws are applied to enhance further levies on miners, such as the states of West Bengal, Odisha and Jharkhand, to mention a few.
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