Supreme Court Dismisses Review Petitions Against Judgment Allowing States To Tax Mineral Rights; Justice Nagarathna Dissents

The Supreme Court had dismissed the petitions seeking review of its judgment which upheld the power of the States to levy tax on mining rights and mineral-bearing lands.

On July 25, a 9-judge bench of the Supreme Court, by 8:1 majority, in Mineral Area Development Authority v. M/S Steel Authority Of India, delivered the judgment. 

The majority (CJI DY Chandrachud, Justices Hrishikesh Roy, AS Oka, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, SC Sharma and AG Masih) held that Royalty is not within the nature of a tax and that that legislative power to tax mineral rights vests with the state legislatures. Justice BV Nagarathna dissented from the majority.

The majority of 8 judges dismissed the review petitions filed by the Union Government, Karnataka Iron and Steel Manufacturers Association and other saying that there is no error apparent on the face of the judgment.

"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," the majority held.

However, Justice BV Nagarathna held that a case for review is made out. "Having perused the review petitions, a case for review under Order XLVII Rule 1 of the Supreme Court Rules, 2013 is made out," Justice Nagarthna observed ordering the issuance of notice on the review petition to the respondents returnable within eight weeks.

Given the majority view, the review petitions were dismissed.

After the main judgment was pronounced, the Union Government and certain mining entities had sought for a direction to give it only a prospective effect, raising concerns about the huge financial implications which would arise if the States took coercive steps against past tax dues.

On August 14, the Court refused to give the judgment only a prospective effect and allowed the States to recover the past tax dues, but not for a period before April 1, 2005. The Court also allowed the assesses to pay that dues in a staggered manner in 12 installments spread over 12 years from April 1, 2026.

Click here to read the order