The Supreme Court of India on Wednesday announced that it will hear pleas regarding the legislative power of states to tax mineral rights on May 20. The decision comes after the Central Government informed the court that its curative petition, challenging a previous landmark ruling on the matter, remains pending.
The legal battle centers on a historic 8:1 majority verdict delivered on July 25, 2024, by a nine-judge bench. That ruling established that the legislative power to tax mineral rights is vested in the states, rather than the Centre. The bench clarified that Parliament does not possess the legislative competence to tax mineral rights under Entry 54 of List I of the Constitution, which relates to the regulation of mines and mineral development.
Following that judgment, the Supreme Court, in August 2024, granted mineral-rich states the authority to recover thousands of crores in royalty and tax dues from the Centre and mining companies. These recoveries, dating back to April 1, 2005, are to be paid in staggered installments over 12 years starting April 1, 2026. While the court allowed these backdated claims, it waived all interest and penalties for demands made for the period before the July 25, 2024, verdict.
In September 2024, the apex court dismissed review petitions against this ruling, prompting the Centre to file a curative petition—the final legal recourse available in the Supreme Court.
On Wednesday, a bench comprising Justices Vikram Nath, Sandeep Mehta, and Vijay Bishnoi took up the matter. Solicitor General Tushar Mehta, representing the Centre, requested an adjournment, noting the pendency of the curative petition.
“The curative petition filed by the Centre is pending,” Mehta submitted, suggesting that the current pleas be heard after that petition is decided. Several advocates appearing in the matter supported this request, with some suggesting a listing in July.
However, the move met with opposition from lawyers representing various state authorities. They argued that the review petitions had already been dismissed and highlighted the age of the litigation, noting that some of the involved appeals date back to 1999 and 2011.
The original nine-judge bench verdict, while favoring states, did note that Parliament could still legislate to impose “any limitations” on the states’ power to levy such taxes.
The ruling was not unanimous; Justice B.V. Nagarathna delivered a dissenting opinion, stating that royalty is in the nature of a tax or an exaction and that the Centre maintains the power to levy it.
By posting the matter for May 20, the court has set a timeline to address how these ongoing pleas interact with the Centre’s final challenge to the established precedent.
