SC to hear pleas on legislative power to tax mineral rights on May 20

The Supreme Court on Wednesday said it would consider on May 20 the pleas related to legislative power to tax mineral rights, after the Centre said its curative petition in the matter was pending.

In September 2024, the apex court had dismissed the pleas seeking review of its July 25, 2024 nine-judge bench verdict, which ruled that the legislative power to tax mineral rights was vested in the states.

The nine-judge bench, in a majority 8:1 verdict, had said Parliament did not have the legislative competence to tax mineral rights under Entry 54 of List I of the Constitution related to the regulation of mines and mineral development by the Centre. After the review pleas were dismissed, the Centre filed a curative petition in the top court. On Wednesday, Solicitor General Tushar Mehta requested a bench of Justices Vikram Nath, Sandeep Mehta and Vijay Bishnoi to adjourn the matter, saying that the curative petition filed by the Centre was pending.

Some advocates appearing in the matter supported Mehta’s submission and said the pleas be heard after the curative petition was decided. They urged the bench that the pleas be listed in July.

However, lawyers representing some state authorities opposed the submissions and said the review petitions were already dismissed. One of the advocates said some of the appeals were filed in 1999 and the matter was referred to a nine-judge bench in 2011. The bench posted the matter for May 20.

The nine-judge bench verdict had said Parliament could still legislate to impose “any limitations” on power of states to levy tax on mineral rights.

Justice BV Nagarathna, in her dissenting verdict, had said royalty was in the nature of a tax or an exaction and the Centre does have the power to levy it.

On August 14, 2024, in a major victory for mineral-rich states, the top court allowed them to recover from the Centre and mining companies royalty and tax dues on mineral rights and mineral-bearing land worth thousands of crore of rupees since April 1, 2005 over a period of 12 years.

It had said the time for payment of the demand of tax by the states would be staggered in instalments over a period of 12 years commencing from April 1, 2026.

The apex court further said bearing in mind the consequences that would emanate from the past, it had imposed the conditionalities and directed that the levy of interest and penalty on demands made for the period before July 25, 2024 would stand waived for all assessees.