Supreme Court Victory Empowers States on Mineral Taxation

The Supreme Court ruled in favor of mineral-rich states, allowing them to seek dues on royalty and tax on mineral rights from April 1, 2005, in a staggered period of 12 years. The court rejected the Centre’s argument for prospective effect and clarified states' power to levy these taxes.

In a landmark decision, the Supreme Court has empowered mineral-rich states to reclaim dues on royalty and tax on mineral rights dating back to April 1, 2005. The ruling allows these states to issue payments staggered over 12 years, starting from April 1, 2026.

The nine-judge Constitution bench, led by Chief Justice DY Chandrachud, dismissed the argument for applying the ruling prospectively from July 25. Instead, it reaffirmed that legislative powers to tax mineral rights lie with the states.

The Centre opposed the states' demand for royalty refunds dating back to 1989, citing potential financial drain on PSUs to the tune of Rs 70,000 crore. However, the Supreme Court's ruling mandates that while states can levy or renew demands based on constitutional entries, such demands shall not apply to transactions before April 1, 2005.

(With inputs from agencies.)