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Informist, Thursday, Nov. 7, 2024

 

NEW DELHI – The Supreme Court Thursday asked the government to take a final call on the issue of double calculation of royalty for computation of the "average sale price" under the Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 and the Mineral Conservation and Development Rules, 2017. The top court gave the government two months to conclude the public consultation process undertaken for amending the Mines and Minerals (Development and Regulation) Act, 1957 for removing the anomaly regarding computation of royalty relating to iron ore and other minerals.

 

"...take a final decisive call in regard to the cascading impact of royalty on royalty in the calculation of the 'average sale price' by virtue of the Explanation(s) to Rule 38 of the MCR(Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016) and Rule 45 of the MCDR (Mineral Conservation and Development Rules, 2017)," said the court. The top court was hearing a challenge by Kirloskar Ferrous Industries Ltd. and other parties challenging the validity of explanations to Rule 38 and Rule 45 that stipulated the computation of royalties to be levied for the extraction or consumption of mined ores. 

 

The top court said that once the government had themselves initiated a public consultation process for amending the 1957 Act to address the given anomaly in computation of royalty, they must take a prompt decision in this regard. Merely because the government has the discretion to take such a policy decision does not mean that it can endlessly keep on prolonging the decision-making process whereby the very discretion is rendered "ad-lib" and the issue in itself a forgone conclusion, said the court.

 

The top court said that although the computation of royalty for different minerals is purely a matter of policy, yet it should not just shut its eyes to the prima-facie anomaly that exists both in the very computation mechanism of average sale price for minerals in terms of the provisions and the perplexing stance of exclusion of only coal from such mechanism despite the general nature and application of the given rules. "Even the respondents (government) herein appear to have acknowledged that the differing mechanism for computation of royalty for coal and other minerals is not based on any fine distinction between the two, but rather an anomaly in the MCR, 2016 and MCDR, 2017, which is why it constituted a committee to look into the same and has proposed amendments for rectifying the same," said the court.

 

Kirloskar Ferrous was engaged in the extraction of pig iron and the manufacturing and sale of its byproducts by way of a mining lease for iron ores in Karnataka. The petitioners said that after explanations to Rule 38 and Rule 45 were added, royalty which had already been paid in the previous month was again being factored for the purposes of computation of royalty to be paid for the subsequent months. Thus, this "compounding" of royalty by virtue of the explanations was "manifestly arbitrary" in as much as it has led to a cascading effect within the fold of determination of the rate of royalty under the 1957 Act. 

 

The petitioners said that when it came to computation of royalty in respect of coal, the government had remedied the anomaly by excluding the previously paid royalty and contributions towards District Mineral Foundation and National Mineral Exploration Trust in its calculation, by way of an amendment. The petitioners said that for the purposes of computation of royalty there existed no intelligible differentia between coal and iron ore and thus, the exclusion of royalty and other contributions for computation of sale value for coal but not for other minerals such as iron was manifestly arbitrary.  End

 

Reported by Surya Tripathi

Edited by Tanima Banerjee

 

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