More Stories

Informist, Wednesday, Jul 31, 2024

 

NEW DELHI – The Supreme Court today reserved its order on whether its verdict upholding the power of state governments to tax mineral rights and mineral-bearing lands would apply retrospectively or prospectively. Solicitor General Tushar Mehta said an order giving retrospective effect to the verdict would lead to a potential demand of 700 bln rupees to 800 bln rupees on the public sector companies.

 

The apex court last week upheld state governments' power to levy tax on mineral rights and mineral-bearing lands in a majority 8-1 judgement. The top court held that royalty payable on minerals was not like a tax under the Mines and Minerals (Development and Regulation) Act, 1957.

 

Today, Mehta said that minerals were used in every core sector of the nation and will impact the sectors critical to the infrastructure sector. "Can this burden of payment be shifted onto the new consumers? This will be acutely felt in the electricity sector as well. There are several domestic and international contracts based on the law prevailing at that time," said Mehta.

 

The solicitor general said the burden of retrospective effect would eventually go to the common man, as no industry can absorb that. The apex court on Jul 25 overruled its 1990 verdict, which had rejected the power of state governments to tax minerals and mineral-bearing lands. Mehta said that the previous ruling had held on for over 35 years and the positions which the parties had been following based on that precedent would be upset if the judgement was made retrospective.

 

Advocate Harish Salve, appearing for Mahanadi Coalfields Ltd, said that the past levy demands would be more than the net worth of many companies and if they were allowed, several of them would be pushed to bankruptcy. Mehta urged the court to use its "complete justice" powers as the impact of the order would be felt by the common man. 

 

The apex court pronounced its verdict last week on a batch of appeals filed by different state governments, mining companies and public sector undertakings. Some of the state governments, such as Jharkhand, Andhra Pradesh and Odisha, said the power to collect tax on minerals is exclusive to state governments. The Centre and mining companies have said the power to collect tax is restricted by the Mines and Minerals (Development and Regulation) Act.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.