Centre seeks review of SC verdict allowing states to levy mining cess

The Centre is challenging the Supreme Court’s 8:1 verdict, which granted states the power to impose cess on mining activities, and the August 14 judgment, which allowed retrospective dues collection. The Court has announced a 12-year staggered payment.

schedule for tax demands starting from April 1, 2026.The court waived interest and penalty demands made on or before July 25, 2024. The Centre has invited Madhya Pradesh as a co-petitioner to review the July 25 judgment in an open court hearing. Advocates for mineral-rich states seek early listing of pleas.

A nine-judge bench, consisting of Chief Justice Chandrachud, Justices Roy, Oka, Nagarathna, Pardiwala, Misra, Bhuyan, Sharma, and Masih, ruled that states can impose cess on mining activities and that mining operator royalty is not a tax. The Supreme.

Court has ruled that states’ power to tax is not limited by the 1957 Mines and Minerals Act. The ruling will have either a retrospective effect or prospective effect. Advocates argue for retrospective application, while others argue for prospective effect, arguing for a “cascading effect” on prices.

The 2015 amendment to the Mines and Minerals (Development and Regulation) Act will affect many industries, including public sector undertakings, leading to the retrospective application of a judgment affecting bid rates and operational expenses, potentially resulting in new litigations. The financial demands from retrospective levies could potentially surpass the net worth of many companies, potentially leading them towards bankruptcy.

Centre Seeks Review of SC Verdict Allowing States to Levy Mining Cess

The central government has sought a review of the Supreme Court’s verdict that permits states to impose a cess on mining activities. The move comes amid concerns that state-imposed levies could impact the mining sector and disrupt the uniform taxation framework.

Background of the Verdict

The Supreme Court recently ruled in favor of states, allowing them to levy cess on minerals mined within their jurisdiction. This decision reinforced the states’ autonomy in resource taxation, but the Centre argues that it could lead to inconsistencies in the national taxation system.

Key Concerns Raised by the Centre

• Uniformity in Taxation: The Centre argues that a state-imposed mining cess could create discrepancies in the national tax regime.
• Economic Impact on Mining Sector: Additional levies may increase operational costs for mining companies, affecting investment and growth.
• Legal Ambiguity: The ruling has sparked debates over whether the cess conflicts with existing central taxes such as GST and royalty payments.
• Investor Sentiment: Higher taxation may deter foreign and domestic investors from investing in India’s mining sector.

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