It has international ramifications: Centre urges SC to take up its curative petition on mineral tax verdict

Noting international ramifications of the issue, the Centre on Thursday urged the Supreme Court to take up its curative petition against the SC’s July-2024 verdict allowing states to levy tax on mineral rights.

The Centre has filed a plea at a time when some of the states have sought early disposal of their individual cases by two or three-judge Benches.

“It is about distribution of royalty on minerals and every state has the right to decide so. We have moved a curative petition because every state will have different mineral prices. It has international ramifications. This also affects the federal structure,” Solicitor General Tushar Mehta told a Bench of CJI Surya Kant and Justice Joymalya Bagchi.

As a senior counsel, representing a state, sought listing of over 800 petitions that were sent to regular Benches for adjudication on the basis of the July-2024 verdict by a nine-judge Constitution Bench, Mehta said the top court should first decide the Centre’s curative petition as the issue had broader implications. “Let me take a look,” responded the CJI.

Declaring that royalty payable on minerals was not a tax, a nine-judge Constitution Bench led by the then CJI DY Chandrachud had on July 25, 2024, ruled (by an 8:1 majority) that states had the legislative competence to impose taxes on mineral rights and mineral-bearing land.

However, the Bench had held that Parliament had “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 Centre had contended that the verdict should only be given a prospective effect as it would lead to the revival of cumulative demands to the tune of Rs 3,000 crore from different states.

Without naming a profit-making stock market listed ‘Maharatna’ PSU, Mehta had said that if the July-2024 verdict was given a retrospective effect, the potential demand of tax could be three times the net worth of the company.

On August 14, 2024, the majority had ruled that states were entitled to collect past dues on royalty on mineral rights and minerals bearing land from the Centre and mining companies from April 1, 2005, onwards on the basis of its July 25 verdict.

It had allowed the assessee to pay dues in a staggered manner in 12 instalments spread over 12 years from April 1, 2026.

The top court had on September 24, 2024, dismissed petitions seeking review of its July 25 verdict. “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 nine-judge Constitution Bench, led by the then CJI Chandrachud, said in its September 24, 2024, order that was made public on October 4, 2024.

Other judges on the Bench were Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.

Justice Nagarathna – who had dissented from the majority -- delivered a dissenting verdict even on review petitions as she issued notice and allowed the plea for an open court hearing of the review petitions.