In today’s case, the Supreme Court on Thursday gave a backstitch breakthrough to the Centre’s stand, buttressing that the royalty payable coupled with Minerals does not fall in the category of tax.
The Chief Justice of India, D. Y. Chandrachud, led the nine-judge bench to vote in support of the historical decision. The other eight justices included Hrishikesh Roy, A. S. Oka, J. B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih.
For the majority, CJI Chandrachud said that the Parliament does not have the legislative competence to tax the mineral rights under Entry 50 of List II of the Constitution.
However, Entry 50 addresses the taxation of mineral rights but is subject to restrictions on developing these minerals as provided by Parliament. The CJI also said that what was wrongly interpreted as royalty being covered under tax was decided by the Supreme Court in 1989 was wrong.
Justice B. V. Nagarathna was the only one to dissent when she said that the Centre alone had the prerogative to tax mineral rights in the country. She pointed out that if lending states were given equal rights in imposing further gloss over the miners’ royalty, the states’ legislative competence would supersede supreme reign.
This historic judgment deals with one of the many environmental questions: whether the royalty payable on minerals can be treated as a Tax under the Mines and Minerals (Development and Regulation) Act of 1957. It also defines the Centre’s and states’ relations over mineral rights and states’ competence to levy taxes on minerals.
The parties will be called to make submissions to the bench on July 31 to decide whether the judgment above will be effected prospectively or from the date of the judgment.
An application of the present methodology could possibly improve state governments such as West Bengal, Odisha, or Jharkhand, which have ligi laws empowering them to levy supplementary royalties on miners.
