New Delhi: The Supreme Court verdict on mining royalty case will give a further jolt to the Indian mining industry and will have huge financial implications, as arrears may work out to the tune of Rs 1.5-2 lakh crore, since April 2005, industry players said.
The apex court on Wednesday upheld the power of states to levy tax on mineral rights and mineral-bearing land, and allowed them to seek refund of royalty from April 1, 2005 onwards.
Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi said on X,"The spectre of #RetrospectiveTaxation hangs once again on India, as the #SupremeCourt allows States to collect past dues in the form of royalty and tax on mining from April 2005 (!). Laws must protect against expropriation of property by individuals as well as by the state."
According to a senior mines ministry official, the verdict will have a very large financial impact on mining, steel, power and coal companies. "The investment of the companies operating in mining, power and steel sectors will also be hit," the official said.
Miners' body FIMI said the Indian mining sector is already saddled with highest taxation in the world. The July 25 judgement of the Supreme Court has given unbridled powers to states for imposing various taxes and levies, said B K Bhatia, Additional Secretary General FIMI.
"Now this order of 14th August mandating collecting dues retrospectively with effect from 1st April, 2005 will give further jolt to the Indian mining industry as arrears may work out to the tune of more than Rs 1.5 to Rs 2 lakh crore and the mines in the states like Odisha and Jharkhand would be most affected," Bhatia added.
According to Bhatia, the SC verdict is bound to have a crippling impact not only on the mining industry but on the entire value chain and will lead to unprecedented inflationary rise in all the end products.
"Considering the severity of the issue and to have a stable tax regime for bolstering the growth of the mining sector, we feel that the union government should take necessary legislative mitigating measures on an urgent basis," Bhatia added.
Echoing similar sentiments, the International Copper Association India Managing Director Mayur Karmarkar said these changes coming from the Supreme Court disturbs the business models of the industry.
A Vedanta spokesperson said the company is evaluating the Supreme Court judgement. "We can confirm that we have no material demands raised upon any of our businesses at this time. If and when any such demands are raised, Vedanta will consider all regulatory and legal remedial measures on a case-to-case basis."
According to a source, the Centre expects an impact of around Rs 1 lakh crore on the mining industry due to the SC verdict. The source further said that the decision on GST on royalty is likely to be taken in the future.