Union Files Curative Petition Against 9-Judge Bench Judgment Upholding States' Power To Levy Tax On Minerals

The Union Government has filed a curative petition in the Supreme Court against the 9-judge bench judgment which upheld the power of the States to levy tax on mining rights and mineral-bearing lands.

In July 2024, a 9-judge bench of the Supreme Court, by 8:1 majority, in Mineral Area Development Authority v. M/S Steel Authority Of India, held that Royalty is not within the nature of a tax and that the legislative power to tax mineral rights vests with the state legislatures.  In August 2024, the 9-judge bench refused the Union's plea to give the judgment only a prospective effect and allowed the States to recover the past tax dues, but not for a period before April 1, 2005. The Court also allowed the assesses to pay those dues in a staggered manner in 12 installments spread over 12 years from April 1, 2026. In October 2024, the Court had dismissed the Union's review petition filed against the judgment.

Today, Solicitor General of India Tushar Mehta informed the bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi that the Union has filed a curative against the judgment. The SG made this statement in response to a mentioning by another counsel who sought the listing of over 80 appeals which were sent to regular bench after the 9-judge bench's decision on the reference.

SG suggested that the Union's curative plea be considered before the other appeals.

The 9-judge bench which delivered the judgement was headed by CJI DY Chandrachud and comprised Justices Hrishikesh Roy, Abhay Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, SC Sharma and AG Masih.  Justice BV Nagarathna delivered a dissenting judgment.

The majority held that royalty set under S.9 of the Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act) does not qualify as tax. It held that royalty on a mining lease is a contractual payment given by the lessee to the lessor of the mineral land which is conceptually different from government-imposed tax for public welfare. Therefore, the States can levy tax under their laws over and above the royalties levied as per the MMDR Act.