Supreme Court’s Constitution Bench said that states have power to levy tax on mineral rights.
- Supreme Court held that power of state legislatures to tax mining lands is not limited by Parliament’s Mines and Minerals (Development and Regulation) or MMDRA, 1957.
Key Observations by Court
- Power to tax mineral rights is enumerated in Entry 50 of List II (State List) and Parliament cannot use its residuary power with respect to that subject matter.
- The Union’s power over minerals is regulatory and does not include taxing authority.
- Also, the term “land” in Entry 49 of List II includes mineral-bearing lands, granting states the competence to tax such lands.
- Court overruled its 1989 judgement and held that royalty is not within the nature of a tax and did not come under MMDRA.
About MMDRA 1957
- Regulates the mining sector in India and provides for following types of licences:
- Reconnaissance permit,
- Prospecting licence (for exploring and proving deposits),
- Mining lease (for mineral extraction) and
- Composite licence (both exploration and extraction).
