SC to set up bench to hear pleas of states on recovery of royalty, tax dues

The Supreme Court on Wednesday said it will set up a bench to hear subsequent pleas of mineral-rich states like Jharkhand seeking to recover royalty and tax dues on mineral rights and mineral-bearing lands worth thousands of crore of rupees from the Centre and mining firms.

On July 25, a nine-judge bench headed by Chief Justice D Y Chandrachud, in a majority 8:1 verdict, had ruled that the legislative power to tax mineral rights vests in states and not Parliament.

In a subsequent order on August 14, the top court clarified that the judgement will not have prospective effect and permitted mineral-rich states recover from the Centre and mining firms the royalty and tax dues on mineral rights and mineral-bearing lands worth thousands of crore of rupees since April 1, 2005 over a period of 12 years.
 

On Wednesday, senior advocate Rakesh Dwivedi, appearing for Jharkhand, urged the bench comprising the CJI and Justices JB Pardiwala and Manoj Misra to allocate the pleas, relating to recovery of dues and the legal impediments in realising them, to a bench.

"This is regarding subsequent steps after the nine-judge bench judgement. All the matters are now put together," the senior lawyer said.

Senior lawyer Abhishek Singhvi, appearing for some private mining firms, said now the states wanted realisation of money.

"I will assign (the bench), preferably one of the judges, who was with us on the (Constitution) bench to hear it," the CJI said.

Post the July 25 judgement that held that the states have the power to levy tax and royalty, Dwivedi had referred to legal impediments coming in the way of Jharkhand in levy tax on minerals and mineral-bearing lands.

He had said one issue still remained and that was Jharkhand's law to collect royalty on minerals and mineral-bearing land, which was set aside earlier, needed to be upheld now.

"Unless the Act is declared valid, we cannot collect taxes on minerals and mineral-bearing land. Please list it expeditiously before the appropriate bench," Diwvedi, who appeared along with senior advocate Tapesh Kumar Singh for Jharkhand, had said.

He had referred to a decision of the Ranchi bench of the Patna High Court that had struck down Section 89 of the Mineral Area Development Authority Act of 1992 vide its judgment dated March 22, 1993.

Section 89 of the Mineral Area Development Authority Act empowered the state government of then undivided Bihar to levy tax on not only mineral-bearing land but also land used for commercial or industrial purposes.

In a majority 8:1 verdict on July 25, the bench had held that legislative power to tax mineral rights vests with states.

The verdict had overruled a 1989 judgement, which held that only the Centre has power to impose royalty on minerals and mineral-bearing land.

Some opposition-ruled mineral rich states then sought refund of royalty levied by the Centre and taxes from the mining companies since the 1989 verdict.