The Central Government informed the Supreme Court on Thursday that it is actively working towards settling disputes over royalty and tax dues on mineral rights and mineral-bearing lands with several mineral-rich states. The ongoing legal battles revolve around significant sums, potentially amounting to thousands of crores of rupees.
During the proceedings, the Supreme Court deferred the hearing to April 24, allowing time for potential resolutions between the states and the Centre. A special three-judge bench, consisting of Justices Abhay S Oka, MM Sundresh, and Ujjal Bhuyan, is handling the matter and will determine the order in which the states’ pleas will be addressed.
Solicitor General Tushar Mehta, representing the Centre, suggested that the court list the pleas for the first week of May, indicating ongoing efforts to reach an amicable settlement. Meanwhile, Senior Advocate Rakesh Dwivedi, appearing for the state of Jharkhand, argued for a timely resolution, asserting that a settlement could be reached at any stage and should not delay the hearings.
The legal contention stems from a landmark ruling by a nine-judge bench on July 25, 2024, led by then Chief Justice D.Y. Chandrachud, which held in an 8:1 majority that the legislative power to tax mineral rights resides with the states, not Parliament. This overturned a previous 1989 judgment which had vested this power with the Centre.
Following this pivotal decision, the Supreme Court, in an order dated August 14, clarified that its judgment would have a retrospective effect from April 1, 2005, and allowed states to recover the contested dues over a twelve-year period.
The special bench was established subsequent to these judgments to address the disputes that arose between various states and the Centre. Issues highlighted include the enforcement of state laws regarding the collection of royalties on minerals and the legal challenges in implementing these taxes effectively.
Advocate Dwivedi, in previous sessions, highlighted the need for Jharkhand’s legislation to be upheld to facilitate tax collection on minerals. This follows a historical challenge where a key section of the Mineral Area Development Authority Act was struck down by the Ranchi bench of the Patna High Court in 1993.
