Centre opposes plea in Supreme Court seeking refund of royalty on minerals to States retrospectively

Landmark verdict on mineral rights taxation by Constitution Bench, leading to disputes over retrospective application and royalty refunds.

The Centre on July 31 opposed in the Supreme Court a plea of the mineral-rich States seeking a refund of the royalty levied by it on mines and mineral-bearing land since 1989, saying any such order asking it to pay the alleged dues with retrospective effect will have a "multipolar” impact.

In a significant verdict on July 25, a nine-judge Constitution Bench headed by Chief Justice D.Y. Chandrachud, by a majority 8:1 verdict, held that the legislative power to tax mineral rights vests with the States and the royalty paid on minerals is not a tax.

The landmark verdict, which gave a huge revenue boost to mineral-rich States, however, led to another dispute with regard to the operation of the verdict.

Some Opposition-ruled mineral-bearing States urged the Supreme Court to make the verdict operational with retrospective effect so that they can seek refund of royalty from the Centre.

However, the Centre opposes any such order saying it will have a "multipolar impact.

Editorial | Fiscal federalism: On taxing mineral rights

Many firms involved in mining activities also support the Centre’s view on refund of royalties to mineral-bearing States.