• Source:JND
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The Supreme Court on Thursday affirmed the authority of state governments to impose royalties on mineral-bearing land, citing they had the competence and power to do so. The landmark 8:1 verdict has been delivered by a bench led by CJI DY Chandrachud. Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih were also part of the bench.

This move will benefit mineral-rich states such as Odisha, Jharkhand, Bengal, Chhattisgarh, Madhya Pradesh, and Rajasthan.

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Justice BV Nagarathna, however, spoke against it asserting that allowing states to tax mineral rights would lead to ‘unhealthy competition between states to derive revenue’.

"I hold royalty is in nature of the tax. States have no legislative competence to impose any tax or fee on mineral rights. Entry 49 is not related to mineral-bearing lands. I hold India cement decision was correctly decided," Bar and Bench quoted Justice Nagarathna as saying.

CJI, while reading out the verdict, stated that ‘Royalty is not in the nature of tax’ and the observations in the apex court’s 1989 judgment were ‘incorrect’ in this regard.

The bench also noted that the states and not the Centre have rights to tax mineral rights under Article 246. The Court ruled that the Mines and Minerals (Development & Regulation) Act does not strip States of their authority to impose taxes on mineral rights.

The apex court also overruled its 1989 judgment in the case of India Cement Ltd vs. State of Tamil Nadu.

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The case is considered as a big victory for a mineral-bearing state as it will now be able to amass more revenue.