Is royalty paid by mining operators a tax? Constitution Bench of Supreme Court reserves verdict

The Supreme Court on Thursday reserved its verdict in the case dealing with the question of whether royalty paid by mining operators to the Central government constitutes a tax [Mineral Area Development Authority etc vs Steel Authority of India and ors]..A bench of Chief Justice of India (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 concluded hearing arguments of all counsel today, in what was the ninth day of hearing..The matter is the oldest pending 9-judge bench case before the apex court. It also involves the issue if whether State governments are denuded of powers to tax and regulate mines and minerals in view of the enactment of the Mines and Minerals (Development & Regulation) Act (Mines Act).The Supreme Court had in 1989 held in the case of India Cement Ltd v State of Tamil Nadu that the royalty is 'tax' under the Mines Act and cesses on royalty were beyond States' legislative competence.In February 1995, a three-judge bench of the Supreme Court in State of Madhya Pradesh v Mahalaxmi Fabric Mills Ltd upheld Section 9 of the Mines Act and reiterated the 1989 decision. In January 2004, a five-judge bench in State of West Bengal v Kesoram Industries Ltd by a 3:2 majority held that the 1989 bench had made a typo and only meant to say that cess on royalty is a tax and not royalty itself. In March 2011, a three-judge bench held that there was a “prima facie” conflict between the decisions in India Cements and Kesoram Industries, leading to the instant reference. .The Central government argued that States cannot levy taxes on mineral-bearing lands, and the royalties levied by the former eventually go to the latter only."The development of mineral industry needs uniformity at a national level failing which fragmented State-wise levy will adversely impact the development of mineral and systemic utilization of minerals in larger public interest," Solicitor General Tushar Mehta argued today.