[BREAKING] Mining Royalty Case | "Spinal Cord Of India's Economy": Centre Opposes SC Plea For Refund Of Mineral Royalties To States After Landmark Verdict

The Central government Today (July 31st) opposed states’ plea in the Supreme Court for a refund of royalty levied on mines since 1989, arguing it would burden public units by over Rs 70,000 crore. The Supreme Court’s recent ruling stated royalty is not a tax, and states sought retrospective application, which the Centre opposed.

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[BREAKING] Mining Royalty Case | "Spinal Cord of India's Economy": Centre Opposes SC Plea for Refund of Mineral Royalties to States After Landmark Verdict

NEW DELHI: The Central government opposed states’ plea in the Supreme Court seeking a refund of royalty levied on mines and mineral-bearing land since 1989. Solicitor General Tushar Mehta argued that the mining sector is the spinal cord of India’s economy and any such ruling would have a multi-polar impact, potentially putting a burden of over Rs 70,000 crore on public units.

Mehta indicated that the financial burden on a particular company, which he did not name, would be three times its net worth. He suggested that states should not demand the levy retrospectively, nor should any PSU or undertaking seek a refund of the money.

On Wednesday, the Centre opposed in the Supreme Court a plea from mineral-rich states for a refund of the royalty levied on mines and mineral-bearing land since 1989.

The Centre argued that any order mandating it to pay the alleged dues with retrospective effect would have a “multipolar impact.”

In a significant verdict on July 25, a nine-judge constitution bench headed by Chief Justice DY Chandrachud, by a majority 8:1 verdict, held that the legislative power to tax mineral rights vests with the states and that the royalty paid on minerals is not a tax.

This landmark verdict, which provided a substantial revenue boost to mineral-rich states, has led to another dispute regarding the implementation of the verdict.

Some opposition-ruled mineral-bearing states have urged the top court to apply the verdict retrospectively, enabling them to seek a refund of royalty from the Centre. However, the Centre opposes this, stating that it will have a “multipolar impact.” Many firms involved in mining activities also support the Centre’s view on the refund of royalty to mineral-bearing states.

Solicitor General Tushar Mehta, representing the Centre, noted that states like Madhya Pradesh and Rajasthan, which are ruled by the BJP, wanted the judgement to be applied prospectively.

The hearing is ongoing.

The 200-page majority verdict was authored by the Chief Justice for himself and on behalf of Justices Hrishikesh Roy, Abhay S Oka, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih.

The majority verdict stated,

“Royalty is not a tax. Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights. The liability to pay royalty arises out of the contractual conditions of the mining lease. The payments made to the government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears.”

However, Justice B V Nagarathna dissented, asserting that the Centre has the power to levy royalty.