THE JHARKHAND STORY DESK
New Delhi, July 25: The Supreme Court on Thursday said that under the Constitution, the states have the legislative power to impose tax on mines and mineral-rich land.
A nine-judge Constitution Bench of the Supreme Court said in an 8:1 majority decision that royalty payable on minerals is not a tax.
The court ruled on the contentious issue of whether the royalty on minerals is a tax under the Mines and Minerals (Development and Regulation) Act of 1957.
The decision addressed whether only the central government has the authority to levy such a tax or if states also have the right to impose taxes on mineral-rich land within their territories.
Bench headed by CJI says royalty is not a tax
The bench headed by the CJI said that royalty is not a tax.
The court’s decision will benefit Jharkhand, Odisha, Andhra Pradesh, Assam, Chhattisgarh, Madhya Pradesh and mineral-rich states of the North-East.
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However, the court also clarified that Parliament has the power to impose limits, restrictions and even bans on taxing extracted minerals.
1989 verdict by seven-judge Constitution bench is incorrect: SC
CJI DY Chandrachud read out his and the bench’s decision which said that Parliament does not have the power to impose tax on mineral rights under Entry 50 of the List 2 of the Constitution.
In the majority decision, the Supreme Court said that the decision given by the seven-judge Constitution Bench in the year 1989, which said that royalty on minerals is a tax, is not correct.
The Chief Justice said that the bench has given two different decisions and Justice BV Nagarathna has given a dissenting decision.
Justice BV Nagarathna disagrees with current verdict
While reading out the verdict, Justice BV Nagarathna said that the states do not have the legislative power to impose tax on mines and mineral-rich land.
Apart from the Chief Justice and Justice Nagarathna, the other members of the bench are Justice Hrishikesh Roy, Justice Abhay S. Oka, Justice J.B. Pardiwala, Justice Manoj Misra, Justice Ujjwal Bhuyan, Justice Satish Chandra Sharma and Justice Augustine George Masih.
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