Supreme Court Upholds Mineral Pricing Rules to Curb Revenue Evasion

The Supreme Court validated the inclusion of royalty, DMF, and NMET in mineral pricing computations, endorsing government measures to prevent revenue leaks and pricing manipulation. The court dismissed the petition against these rules, affirming their rationale and legality under economic policy and tax evasion frameworks.

In a landmark ruling, the Supreme Court has affirmed the constitutionality of specific provisions in India's mineral pricing regulations. By including royalty, District Mineral Foundation (DMF), and National Mineral Exploration Trust (NMET) contributions in the calculation of the Average Sale Price (ASP), the court recognized a legitimate effort by the government to prevent revenue leakage and manipulation of mineral prices.

The court dismissed a petition by Kirloskar Ferrous Industries Ltd., which challenged these inclusions as unconstitutional and argued they amounted to an undue burden. According to the court, these regulatory measures do not violate constitutional rights and align with the objectives of avoiding evasion of royalty and other dues. It clarified that these rules pertain to computation methodologies rather than the imposition of new levies.

Emphasizing the government's right to devise economic policies, the bench noted the absence of arbitrary or irrational actions in this framework. The court rejected comparisons with coal pricing mechanisms and upheld that such regulations are necessary for protecting public revenues. The decision underscores the courts' deference towards legislative actions designed to safeguard fiscal interests.