SC junks review  petitions against verdict allowing states to levy tax on mineral rights

The Supreme Court has dismissed petitions seeking review of its July 25 verdict that ruled royalty payable on minerals is not a tax and states have the legislative competence to impose taxes on mineral rights and mineral-bearing land.

“Having perused the review petitions, there is no error apparent on the face of the record. No case for review under Order XLVII Rule 1 of the Supreme Court Rules 2013 has been established. The review petitions are, therefore, dismissed,” a nine-judge Constitution Bench led by CJI DY Chaanndrachud said in its September 24 order made public on Friday.

Other judges on the Bench were Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.

Justice Nagarathna, who had dissented from the majority, delivered a dissenting verdict even on review petitions as she issued notice and allowed the plea for an open court hearing of the review petitions.

Declaring that royalty payable on minerals is not a tax, a nine-judge Constitution Bench-led by CJI DY Chandrachud had on July 25 by 8:1 majority ruled that states had the legislative competence to impose taxes on mineral rights and mineral-bearing land. However, it held that Parliament has “wide enough” powers to impose restrictions, conditions, principles and prohibition on the legislative field created by that entry under Entry 50 of List II of the Seventh Schedule of the Constitution.

The Centre had contended that the verdict should be given only prospective effect as it will lead to revival of cumulative demands to the tune of approximately Rs 3,000 crores from different states. Without naming a profit-making stock market listed 'Maharatna' PSU, Mehta had said, if the July 25 verdict was given a retrospective effect, the potential demand of tax was three times the net worth of the company.

On August 14, the majority had further ruled that states were entitled to collect past dues on royalty on mineral rights and minerals bearing land from the Centre and mining companies from April 1, 2005, onwards on the basis of its July 25 verdict. It had allowed the assesses to pay that dues in a staggered manner in 12 instalments spread over 12 years from April 1, 2026.