SC to consider plea for listing states’ petitions in minerals royalty case

New Delhi: The Supreme Court on Thursday said it would decide on listing several pending petitions concerning the levy of tax on mineral rights, following last year’s landmark ruling on the issue.

On July 25, 2024, a nine-judge Constitution Bench led by then Chief Justice D.Y. Chandrachud held, by an 8:1 majority, that the power to tax mineral rights lies with the states and that royalty on minerals is not a tax. The verdict, which significantly boosted revenues for mineral-rich states, also ruled that Parliament lacks the legislative competence to tax mineral rights under Entry 54 of List I of the Constitution.

A bench of Chief Justice Surya Kant and Justice Joymalya Bagchi was informed that many state petitions remain pending and have not yet been listed for hearing after the 2024 verdict. Solicitor General Tushar Mehta, appearing for the Centre, opposed listing the petitions at this stage, pointing out that the government has filed a curative petition against the nine-judge bench’s decision. These matters, he argued, should only be taken up once the curative plea is decided.

“Whether we win or lose... everything will depend on the outcome of the curative petition,” Mehta told the court.

The CJI said he would examine the records before taking a decision. Earlier, on September 23, the Centre had informed the court of filing the curative petition after the dismissal of its review pleas.

The 2024 verdict had been a setback for the Centre, though it clarified that Parliament could still impose “limitations” on states’ power to tax mineral rights. In her dissent, Justice B.V. Nagarathna held that royalty amounted to a tax and that the Centre was empowered to levy it.

On August 14 last year, the Supreme Court allowed mineral-rich states to recover royalty and tax dues on mineral rights dating back to April 1, 2005, to be paid in instalments over 12 years beginning April 1, 2026. The bench also waived interest and penalties on demands raised for periods before July 25, 2024.