The Supreme Court on Thursday said it will examine the records and take a decision on listing several pending petitions related to the levy of tax on mineral rights, which have remained unheard after last year’s landmark nine-judge bench ruling.
A bench led by Chief Justice Surya Kant, sitting with Justice Joymalya Bagchi, was informed that numerous individual petitions filed by different states are still awaiting allocation to an appropriate bench following the Constitution Bench verdict delivered on July 25, 2024.
A lawyer pointed out that these matters were consequential to the nine-judge bench ruling and required adjudication. Solicitor General Tushar Mehta, appearing for the Union government, opposed any immediate listing, stressing that the Centre has already filed a curative petition challenging the July 2024 decision.
He submitted that the pending state petitions could be taken up only after the curative plea is decided. “Whether we win or lose… Everything will depend on the outcome of the curative petition,” Mehta told the court.
Chief Justice Surya Kant responded briefly: “Let me see the records. I will take a call.”
Background of the July 2024 Judgment
On July 25, 2024, a nine-judge Constitution Bench headed by then CJI D.Y. Chandrachud ruled by an 8:1 majority that:
- States have exclusive legislative power to tax mineral rights.
- Royalty paid on minerals is not a tax.
- Parliament does not have the competence to tax mineral rights under Entry 54, List I of the Constitution.
The ruling provided a major revenue boost to mineral-rich states and curtailed the Union’s taxation authority in the field. The court clarified, however, that Parliament could still enact laws prescribing “limitations” on the states’ power to levy such taxes.
Justice B.V. Nagarathna dissented, holding that royalty was in the nature of a tax or exaction and that the Centre did possess the authority to impose it.
Subsequent Developments
- On September 23, 2024, the Centre informed the Supreme Court that it had filed a curative petition against the nine-judge ruling.
- The court later dismissed review petitions challenging the judgment.
- On August 14 last year, the court allowed states to recover royalty and tax dues on mineral rights from the Centre and mining companies for the period beginning April 1, 2005.
- These payments are to be made in staggered instalments over 12 years, starting April 1, 2026.
- The court also waived interest and penalty for all assessees for periods prior to July 25, 2024.
The fate of the pending petitions from various states is now tied to the outcome of the Centre’s curative plea. Once the Chief Justice reviews the file, the court will decide whether these matters should be listed or kept in abeyance until the curative petition is resolved.
