New Delhi: The Supreme Court has given a historic verdict on tax on minerals. The Supreme Court said that under the Constitution, the states have the legislative right to impose tax on mines and mineral-rich land. The Constitution Bench of nine judges of the apex court gave the verdict by a majority of 8:1. It said that the 'royalty' payable on minerals is not a tax. In this way, mineral-rich states have got a big victory in the Supreme Court. The court has upheld the right of state governments to impose royalty on mineral-rich land. In a historic 8:1 decision, a bench headed by Chief Justice DY Chandrachud gave the verdict. At the same time, Justice BV Nagarathna gave the only dissenting verdict in this bench. Know what he commented.
Landmark decision of the Supreme Court
The Supreme Court's historic decision on mineral tax has come. The central government has suffered a setback in this. The bench headed by the CJI said that royalty is not a tax. In this bench, Justice BV Nagarathna disagreed with the majority decision. He said that the nature of royalty payment under the MMDR Act is unique. Seen from this point of view, royalty payment under the MMDR Act is a type of tax. He said that any exercise of mineral rights to the lessee under the statutory scheme of the MMDR Act is subject to royalty payment. Recovery of royalty is statutory in nature. I believe that royalty is in the nature of tax or recovery.
SC On Mineral Tax: Royalty tax will not be levied on minerals, big decision of Supreme Court, big blow to the Center
What did Justice Nagarathna say
Justice Nagarathna in his judgment said that the states have no power to levy any tax or cess on mining activities or mineral use. Sections 9 and 9A of the MMDR Act are restrictions and limitations on the power of the states to levy any tax on the exercise of mineral rights. This is because the royalty paid for these rights is a statutory recovery of such right. He also agreed with the Centre's stand that allowing states to levy tax on mineral use would be against mineral development in the country.
This will lead to double taxation- Justice Nagarathna
Justice Nagarathna said that royalty as a compulsory tax satisfies all the criteria of a tax. Therefore, the states are deprived of the powers to levy cess or any other charge on royalty or to define it as land revenue. Such state charge on royalty is against the mineral development of the country. Justice Nagarathna concluded that if states are allowed to levy tax on mineral use or mining activities, it will lead to double taxation. He said this is unacceptable in view of the constitutional intent. Thus royalty cannot be a means of taxing mineral-bearing land. Thus, resorting to it by the states will have adverse effect.
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Who is Justice BV Nagarathna
The Supreme Court gave a historic decision by 8-1 on the tax on minerals. Justice BV Nagarathna was the only one who disagreed with the bench. She has given many big decisions before this as well. Calm-natured Nagarathna is known for her strict decisions. Nagarathna's strict stance is clearly visible in decisions ranging from demonetization to freedom of expression. Justice Nagarathna had also reprimanded the Gujarat government in the Bilkis Bano case. Born on 30 October 1962, Nagarathna will become the first woman Chief Justice of the country in 2027. Nagarathna became a Supreme Court judge on 31 August 2021. She will retire from her post on 30 October 2027. Nagarathna started her career as a lawyer on 28 October 1987. Nagarathna has obtained an LLB degree from Delhi University.
