Centre opposes plea seeking mineral royalty refund to states

Satya Prakash
Tribune News Service
New Delhi, July 31
The Centre on Wednesday opposed before the Supreme Court mineral-rich states’ plea for refund of royalty levied by it on mines and mineral-bearing land since 1989, saying any order with retrospective effect will have a “multi-polar” impact and the PSUs will have to shell out an estimated amount of Rs 70,000 crore.

‘Step will have multi-polar impact’

• Attorney General R Venkataramani, also appearing for the Centre, argued that any order asking the government to pay the alleged dues with retrospective effect will have a "multi-polar" impact.
• The Centre contended that making the July 25 verdict retrospective will have cascading effects as companies will pass on the financial burden on citizens and the PSUs will have to empty
  their coffers by ~70,000 cr

Holding that royalty payable on minerals is not a tax, a nine-judge Constitution Bench led by CJI DY Chandrachud had on July 25 said states have 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 Bench had posted the matter for further hearing on July 31 to consider the states’ demand for making the verdict operational with retrospective effect to ensure refund of taxes from the Centre.
On Wednesday, Attorney General R Venkataramani told the Bench that any order asking the government to pay the alleged dues with retrospective effect will have a “multi-polar” impact. Solicitor General Tushar Mehta submitted that making the verdict retrospective will have a cascading effect as PSUs will pass on the financial burden on citizens.
“A preliminary estimate of the potential financial impact of the judgment due to past State levies which may become due (in the form of additional state levies of taxes, interest and penalties) on only the Public Sector Units (PSUs) engaged in mining, and in production activities dependent on minerals (like electricity production), is to the tune of Rs 70,000 crore,” Mehta said.
Without naming a profit making ‘Maharatna’ PSU – a stock market listed PSU, Mehta 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.