The Centre seeking revision of the apex court’s judgement that the right to levy royalty and taxes on mineral extraction and mineral bearing lands- It will deprive the States of a an important source of revenue, having federal implications
To
Respected Chief Ministers
Respected Chief Minister,I refer to a landmark judgement pronounced on July 25, 2024, followed by a clarificatory order of August 14, 2024, by a nine-judge bench headed by Chief Justice D Y Chandrachud, in a majority 8:1 verdict, that the legislative power to tax mineral rights vests in States and not Parliament. It implied that the States could levy royalty and taxes on extracted minerals and mineral-bearing lands. The apex court in that judgement also permitted States to recover from the Centre and mining firms the royalty and tax dues on mineral rights and mineral-bearing lands worth crores of rupees since April 1, 2005 over a period of 12 years.
The above cited judgement reinforces the federal structure envisaged in the Constitution and provides an important source of revenue for the States.
It appears that the Centre, instead of falling in line with the above landmark judgement to uphold the role of the States in mineral development and regulation, has filed a Revision Petition before the apex court seeking the latter to restore the Centre’s authority to levy royalty and taxes on minerals. The justification for it cited by the Centre is that it would affect the finances of mining companies, both private and CPSEs. According to the Centre, it imposes a financial burden on mining companies to the tune of Rs 1,50,000 Crores by way of arrears and an additional recurring annual financial burden (https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/centre-seeks-review-of-scs-mineral-royalty-judgment-points-out-apparent-errors/articleshow/113276769.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst)
Another ground on which the Centre’s Revision Petition is based seems to be that such a levy would burden the citizens, for which it has joined hands with the MP government to get impleaded along with it in the Revision Petition!
Considering the long-term implications of the Revision Petition filed by the Centre, the States may have to engage a competent team of legal counsel to present their point of view. The Centre has not hesitated to extract huge dividends from the mining CPSEs when it comes to its argument that the judgement burdens the CPSEs. It is also important to bear in mind that many private mining companies are profiteering at the cost of the public exchequer.
Since this subject has long-term implications for the federal structure of Centre-States relations, I appeal to the States to press their point of view before the apex court.
Regards,
Yours sincerely,
E A S Sarma
Former Secretary to the Government of India
Visakhapatnam
