Royalty on minerals is not tax, rules Supreme Court
PTC News Desk: In a major ruling on Thursday, the Supreme Court reversed its earlier verdict and upheld states' powers to impose royalties on mining and mineral-use operations. In an 8:1 decision, the bench led by Chief Justice of India DY Chandrachud declared that 'royalty' is not the same as 'tax'.
The nine-judge panel, led by CJI Chandrachud, included Justices Hrishikesh Roy, A S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih, who all agreed with the majority view. Justice B V Nagarathna was the sole dissenting judge.
"Royalty is not in the nature of tax...We conclude that the observation in India Cements judgment stating that royalty is tax is incorrect. Payments made to the government cannot be deemed to be a tax merely because a statute provides for its recovery in arrears," Chief Justice ruled.
The majority of the judges on the bench ruled that states have the authority to impose cesses on mining and related activities.
"The legislative power to tax mineral rights lies with the State legislature and the Parliament does not have the legislative competence to tax mineral rights...since it is a general entry and Parliament cannot use its residuary power regarding this subject matter...State legislature has the legislative competence under Article 246 read with Entry 49 of List 2 to tax mineral bearing lands."
- PTC NEWS
