The Central government has requested an early listing of a curative petition it has filed contesting the nine-judge Constitution Bench judgment that upheld States' authority to impose taxes on mineral rights..Last month, the Court rejected review petitions against the ruling.Today, a Bench of Chief Justice of India Surya Kant and Justice Joymalya Bagchi heard the request to take up the curative plea..Seeking priority for the curative plea, Solicitor General Tushar Mehta explained the broader implications of the issue."It is about distribution of royalty on minerals and every state having right the decide so. We have moved a curative because every state will have different mineral prices..it has international ramifications. This affects the federal structure.".CJI Kant said that he had planned to commence hearings by nine-judge Constitution Benches from January 2026, though the proposal has not yet been discussed with other judges.“Let me take a look,” said CJI Kant in response to the request for early listing..In July 2024, the top court had ruled that the Mines and Minerals (Development & Regulation) Act (Mines Act) will not denude states of the power to levy tax on mineral rights. It overruled its 1989 judgment in the case of India Cements Ltd vs. State of Tamil Nadu.The judgment was delivered by a Bench of then CJI DY Chandrachud with Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.The findings of the majority on the Bench included the following:Unless the Parliament imposes a limitation, the State's plenary right to impose taxes on mineral rights is unaffected.Parliament can impose limitations under Entry 50 of List 2 of the Constitution by means of statutory instruments. The scheme of the MMRDA Act cannot be stretched to impinge upon the taxing rights of the States.Since the royalty paid under Section 9 is not a tax on mineral rights, any limitation on the enhancement of royalty is not an imposition of a tax under Entry 50 of List 2. Section 9 limits power of the centre and it does not govern tax.The expression "land" includes land of every description.. It can be used to grow tea leaves or extract minerals.. Thus we hold that the State legislature is competent to design a levy under Entry 49 of List 2 to tax lands which comprise of mines and quarries. In other words, mineral-bearing lands also fall under the expression of "land" under Entry 49 of List 2.While holding that a royalty payment is not a tax, the majority also explained its views on the difference between a royalty and a tax as follows:"There are major conceptual differences between royalty and a tax. One, a proprietor charges royalty as a consideration for parting with rights to minerals while tax is an imposition of a sovereign. Two, royalty is paid in consideration of doing a particular action, that is extracting minerals in the soil while tax is generally levied with respect to a taxable event determined by law. Three, royalty can be foreclosed from the lease deed as compared to tax which is enforced by law.".However, Justice Nagarathna dissented from the majority, issued notice on the review petitions, and also allowed the plea for an open court hearing of the review petitions. She had dissented in the judgment under review as well..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.
