Centre seeks review of SC's mineral royalty judgment, points out 'apparent errors'

Pointing out several 'errors apparent in the judgment', the Centre has filed a review petition, seeking to review a judgement of nine-judge bench of Supreme Court that allowed states to collect royalty on extracted minerals and to levy tax on mineral-bearing land.

In the review petition filed by Centre, it has pointed out that 'land, as a concept, is to include everything under sun, it would thereby empower the States to legislate on any subject in the name of legislation on land and buildings. The same would be a constitutional anathema and is an error apparent on the face of the record.'

Furthermore, the Centre has expressed fear over granting rights to mineral rich states. "Any collection by the respective State Governments in the name of tax on mineral bearing land would create havoc in the fiscal sector of the country. It will impact economic integration of the country and also encourage State Government to levy taxes on minerals bearing land measuring on the value of mineral produced. It is to say that the respective State Governments would levy high/variable taxes thereby leading to non-operation of mines," said Centre in review petition.


Previously, the apex court on Wednesday said it will set up a bench to hear subsequent pleas of mineral-rich states like Jharkhand seeking to recover royalty and tax dues on mineral rights and mineral-bearing lands worth thousands of crore of rupees from the Centre and mining firms.

Read More: How Tata Steel and JSW Steel will be impacted by SC ruling on mining royalty

On July 25, a nine-judge bench headed by Chief Justice D Y Chandrachud, in a majority 8:1 verdict, had ruled that the legislative power to tax mineral rights vests in states and not Parliament.

In a subsequent order on Aug 14, SC clarified that the judgement will not have prospective effect and permitted mineral-rich states recover from the Centre and mining firms the royalty and tax dues on mineral rights and mineral-bearing lands worth crore since April 1, 2005 over a period of 12 years.

'Review of a Constitution bench judgement'
Additionally, the Centre has roped in Madhya Pradesh as a co-petitioner to seek review of the July 25 judgment in an open court hearing and argued that the issue raised by it “pertains to the fundamental rights of the citizens of the country and raises larger issue of public interest and grave injustice would ensue if the application for oral hearing of the review petition is not allowed”.

Read More: Mining royalty case: Setback for mining operators as SC rules states can impose levies retrospectively

Appearing for some mineral-rich states, senior advocate Rakesh Dwivedi sought early listing of pending cases relating to dues before a regular bench to follow the nine-judge verdict and give the intended financial relief.

“Review of a Constitution bench judgement,” exclaimed the Chief Just of India DY Chandhrachud after hearing about the review plea. Dwivedi said the review plea was indicative of the fact that PSUs, who have benefited immensely from extraction of minerals without paying royalty or tax on mineral-bearing land for decades, did not want to pay the minimum amount fixed by the SC.

Financial burden on PSUs
A huge financial burden is expected for the public sector undertakings as without interest, the amount to pay back has been estimated to be Rs 70,000 crore. This jumps to Rs 1.5 lakh crore if the arrears due from 2005 to be realised from private sector industries are included. Mineral-rich states which would benefit majorly are Jharkhand, Odisha, Chhattisgarh, Karnataka, Andhra Pradesh and Rajasthan.

Pleading with the SC for prospective implementation of its nine-judge bench ruling, the Union govt had argued that retrospective application would create a burden humongous enough to ruin many PSUs and industries, dent the larger economy and send prices of almost every product soaring.

(with ToI inputs)