Supreme Court allows states to levy tax on mineral rights retrospectively
The tax arrears can be paid in instalments over 12 years starting from April 1, 2026, the bench said.
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The Supreme Court on Wednesday held that its July 25 judgement allowing state governments to tax mining and related activities will apply retrospectively, but only on transactions from April 1, 2005, Bar and Bench reported.
The nine-judge bench headed by Chief Justice DY Chandrachud rejected the argument that the verdict should only have a prospective effect.
On July 25, the bench ruled that the royalty paid by mining operators to the Centre is not a tax. Therefore, state governments have the right to levy cesses on mining and mineral-use activities.
The matter pertains to the question of whether state governments have the authority to regulate and tax activities relating to mines and minerals under the Mines and Minerals Development and Regulation Act.
Justice BV Nagarathna had dissented from the majority. Therefore, she did not sign Wednesday’s ruling.
On Wednesday, the court ruled that the tax arrears can be paid in instalments over 12 years starting from April 1, 2026. It also said that there should be no levy of interest or penalty for the tax demand made on or before July 25, 2024, Live Law reported.
Chandrachud had said on July 25 that royalty was not in the nature of tax. “We conclude that the observation in India Cements judgement stating that royalty is tax is incorrect,” the chief justice had said. “…payments made to...
