Clearing the way for a steady revenue stream for the mineral-rich states in the country, the Supreme Court has allowed the states to collect the past dues on royalty on mineral-bearing land from the Centre and mining companies, effective from 1 April 2005. The nine-judge constitution bench of the top court gave the decision on Wednesday.
The mining companies will have to make their payments to the states over the next 12 years. The constitution bench directed the states not to impose any penalty or additional tax for the past demands. The order is expected to bring steady revenue to states such as Jharkhand, Odisha and Chhattisgarh.
The court stated, “The time for payment of demand for tax shall be staggered in instalments over a period of 12 years commencing from 1 April 2026.”
The Chief Justice of India DY Chandrachud was pronouncing the verdict of the constitution bench on whether the 25 July verdict of the apex court which upheld the power of states to levy royalty on mineral rights and mineral-bearing land will have a prospective or retrospective effect.
The CJI had earlier said, “Prima facie there is no question of prospective overruling. We cannot be oblivious of the fact that in some states, their laws levying taxes were struck down (Post 1989 verdict). We need to see what kind of conditionalities can be put if we make it retrospective.”
On 25 July 2024, the nine-judge constitution bench of the top court ruled (8:1 majority) that the royalty levied on mining is not a tax but a contractual payment made by the miners to the Centre. The court allowed the states to impose an extra levy on mineral rights. Justice BV Nagarathna was of the opinion that the Centre has the exclusive right to impose a tax on mineral rights across the country.
