Centre Opposes Pleas for Retrospective Refund of Mineral Royalty in Supreme Court

Government Warns of Major Consequences If Court Orders Retroactive Payments

New Delhi, Jul 31 2024 : The Central Government has voiced strong opposition in the Supreme Court to pleas from mineral-rich states seeking a refund of royalty payments on minerals and mineral-bearing land dating back to 1989. The Centre argues that any order requiring retroactive payments would have extensive and unpredictable impacts.

The opposition arises from a landmark ruling delivered on July 25 by a nine-judge constitution bench led by Chief Justice D.Y. Chandrachud. The majority verdict, passed with an 8:1 vote, determined that the legislative authority to tax mineral rights rests with the states, and that royalty payments on minerals do not constitute a tax. This decision significantly increased revenue prospects for states rich in mineral resources.

Despite the boost, the verdict has sparked further legal contention regarding its implementation. Opposition-ruled states have requested that the Supreme Court enforce the ruling retrospectively to enable them to reclaim royalty payments from the Centre. However, the Centre contends that such a move would have a “multipolar” impact, and several mining firms support this view.

Solicitor General Tushar Mehta, representing the Centre, highlighted that states like Madhya Pradesh and Rajasthan, governed by the BJP, prefer that the judgment be applied only prospectively.

The detailed 200-page majority opinion, authored by Chief Justice Chandrachud along with Justices Hrishikesh Roy, Abhay S. Oka, J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih, maintained that royalty is a contractual obligation rather than a tax. In contrast, Justice B.V. Nagarathna dissented, arguing that the Centre retains the authority to levy royalty.

The hearing on this issue is ongoing.

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