Supreme Court Reserves Decision On Tax Collection for Mineral Wealth

The Supreme Court has reserved its decision after hearing arguments on the implications of the Constitution Bench’s ruling on tax collection from mineral wealth. During the hearing, the Central Government warned the court that applying dues retrospectively would have a multipolar effect.

On July 25, a 9-member Constitution Bench, led by the Chief Justice of India, delivered a landmark verdict. The bench affirmed that states have the power to levy taxes on mineral-rich land, overturning an earlier Supreme Court order. The bench’s 8-1 majority decision declared that royalty is not a tax, confirming states’ rights to impose levies on mining and mineral-use activities.

Solicitor General Tushar Mehta argued that states should seek payments from the Centre rather than from any Public Sector Undertakings or other entities, to maintain equity. Attorney General R. Venkataraman emphasized that the mining sector’s stability is crucial, as it affects the entire economy.

Chief Justice of India stated that a standard should be adopted to prevent further litigation and ensure stability in industrial and related matters. The interim decision followed for the past 35 years underscored the need for a definitive resolution.

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