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Supreme Court upholds states' rights to levy mineral royalties

by TRANS WORLD FEATURES | @twfindia 25 Jul 2024, 02:00 pm

New Delhi/IBNS: In a 8:1 verdict, the Supreme Court on Thursday upheld the state governments' right to levy royalties on mineral-bearing lands, media reports said.

The judgement was passed by a Supreme Court bench, which is led by Chief Justice of India DY Chandrachud.

The only judge who ruled in favour was Justice BV Nagarathna.

"Royalty is a contractual (consideration) paid by lessee to lessor," read the CJI as quoted by NDTV and added, " does not have power to tax mineral rights under Entry 50, List I".

"We hold that both royalty and debt rent don't fulfil the ingredients of tax," he added.

In his reason behind the dissenting voice, Justice Nagarathna said, as quoted by the news channel, that the royalty will lead to "unhealthy competition between states to derive revenue... the national market could be exploited... this would lead to a breakdown of the federal system, in the context of mineral development."

In its argument, the central government has said only Parliament has the right to levy tax on minerals.

The states which will benefit from the judgement are Odisha, Jharkhand, West Bengal, Chhattisgarh, Madhya Pradesh and Rajasthan.