New Delhi: The Supreme Court on Wednesday permitted mineral-rich states to collect past dues on royalties from mining companies, bringing clarity to its earlier judgment passed on July 25 and allowing retrospective collection of the cess on all transactions executed after April 1, 2005.
A nine-judge Bench of the Supreme Court comprising Chief Justice of India (CJI) D Y Chandrachud with Justices Hrishikesh Roy, Abhay S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih delivered the verdict.
States can levy and renew demand for taxes but the demand of tax shall not operate on transactions made prior to April 1, 2005, the court said.
The bench held that the time for payment of demand for tax shall be staggered in instalments over a period of 12 years commencing from April 1, 2026 and the levy of interest and demand of penalty made on or before July 25, 2024, shall stand waived off.
Justice Nagarathna did not sign the judgment since she had dissented in the main judgment of July 25.
The nine-judge bench had on July 25 held that royalty paid by mining operators to the Central government is not a tax and that States have the power to levy cess on mining and mineral-use activities.
The matter was then listed and heard again to decide whether the judgment would apply prospectively or retrospectively.
The case involved the issue of whether State governments are denuded of powers to tax and regulate activities concerning mines and minerals in view of the enactment of the Mines and Minerals (Development & Regulation) Act (Mines Act).
The central government had opposed the demand of states for refund of royalty levied on mines and minerals since 1989.
