Supreme Court Empowers States on Mineral Rights Taxation

The Supreme Court ruled that the legislative power to tax mineral rights resides with the states, not the central government. This decision is expected to benefit mineral-rich states like Jharkhand, which seeks compensation for extensive mining activities. The Centre retains the ability to impose limitations on these states' taxing powers.

In a landmark ruling, the Supreme Court on Thursday declared that the legislative power to tax mineral rights vests with the states, delivering a significant boost to mineral-rich regions like Jharkhand. A nine-judge constitution bench, led by Chief Justice D Y Chandrachud, ruled 8:1 in favor of state governance over mineral taxation.

The verdict clarifies that the royalty paid on minerals is not classified as a tax, which marks a setback for the central government. The bench stated that Parliament lacks legislative authority to tax mineral rights under Entry 54 of List I of the Constitution, which is exclusively about the regulation of mines and mineral development by the Centre.

JMM spokesperson Manoj Pandey expressed optimism, highlighting that Jharkhand, often neglected in national benefits despite shouldering the brunt of environmental and displacement issues due to mining, will now receive fair compensation. Jharkhand's Chief Minister Hemant Soren also emphasized the need for the Centre to address the state's demands for Rs 1.36 lakh crore owed by central mining companies.