Big Win For Mineral Rich States In Court, Can Collect Past Dues On Royalty

The Supreme Court today allowed mining-rich states to collect past dues on royalties from mining companies. The court ordered that states can impose levies with effect from April 1, 2005 and the payments will be staggered in 12 years. 

The bench, however, directed the states to not impose a penalty of any kind on payment of dues.

The Centre has opposed the demand of states for refund of royalty levied on mines and minerals since 1989, saying it will impact the citizens and the PSUs will have to empty their coffers by Rs 70,000 crore according to initial estimates.

CJI Chandrachud said this verdict will be signed by eight-judges of the bench who by majority decided the July 25 judgement giving the state's power to levy taxes on mineral rights.

He said that Justice Nagarathna will not sign Wednesday's verdict as she had given a dissenting view in the July 25 verdict.

Last month, the Supreme Court upheld state governments' right to levy royalty on mineral-bearing land, reasoning they had the competence and power to do so.

The landmark 8:1 verdict was delivered by a bench led by Chief Justice DY Chandrachud, which ruled 'royalty' is not the same as 'tax'; Justice BV Nagarathna delivered the dissenting verdict.

The verdict will benefit mineral-rich states like Odisha, Jharkhand, Bengal, Chhattisgarh, Madhya Pradesh, and Rajasthan, as their governments can now charge additional levies on mining companies operating in their territories.