This dispute involves the Centre and several mineral-rich states, including Jharkhand, which are seeking to recover dues worth thousands of crores from the government and mining companies.
New Delhi: Today, 20th March, The Central Government has informed the Supreme Court that it is working to settle the long-standing issue of royalty and tax dues related to mineral rights and mineral-rich lands.
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This dispute involves the Centre and several mineral-rich states, including Jharkhand, which are seeking to recover dues worth thousands of crores from the government and mining companies.
A special three-judge bench comprising Justices Abhay S Oka, MM Sundresh, and Ujjal Bhuyan has decided to hear the matter on April 24. The court will also determine the order in which different states’ petitions will be addressed.
Solicitor General Tushar Mehta, representing the Central Government, stated that efforts were being made to reach a settlement on the matter. He requested that the case be scheduled for a hearing in the first week of May.
“Efforts were on to find a settlement of the issue and the pleas may be listed in the first week of May,” Mehta said.
However, Senior Advocate Rakesh Dwivedi, appearing on behalf of Jharkhand, opposed the delay and emphasized that hearings should proceed without further postponement.
“A settlement can be arrived at any stage and the hearing should not be delayed,” Dwivedi argued.
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This legal battle follows a landmark judgment by a nine-judge bench of the Supreme Court, which delivered its ruling on July 25, 2024. The bench was led by the then Chief Justice D Y Chandrachud, who has since retired.
In an 8:1 majority verdict, Case title: Mineral Area Development Authority vs. Steel Authority of India and others; the court ruled that the power to tax mineral rights belongs to the states and not the Parliament.
A nine-judge Constitution bench, led by Chief Justice DY Chandrachud, will pronounce its judgment. The bench, which also includes Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih, reserved its decision on March 14 after eight days of hearings on 86 appeals filed by various state governments, mining companies, and public sector undertakings.
The controversy dates back to 1989 when the Supreme Court, in India Cement Ltd v State of Tamil Nadu, ruled that royalty under the Mines Act is a form of ‘tax’ and that States lacked the legislative competence to impose cesses on such royalties. This stance was reaffirmed by a three-judge Bench in 1995 in State of Madhya Pradesh v Mahalaxmi Fabric Mills Ltd, which upheld Section 9 of the Mines Act.
However, a five-judge Bench in 2004, in State of West Bengal v Kesoram Industries Ltd, by a narrow 3:2 majority, clarified that the 1989 judgment had a typographical error, intending to denote that cesses on royalty are a form of tax, not the royalty itself.
In March 2011, a three-judge bench noted a “prima facie” conflict between the 1989 India Cements judgment and the 2004 Kesoram Industries ruling, leading to the referral of the matter to a nine-judge Bench.
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