NEW DELHI: A nine-judge bench of Supreme Court docket led by CJI Chandrachud on Tuesday commenced listening to a contentious 25-year-old query associated to federalism, the willpower of which may influence hundreds of crores of rupees in tax income for mineral-rich states, resembling Jharkhand, Odisha, Andhra, Assam, Chhattisgarh, MP and north-eastern area.Eighty-five petitions have piled up earlier than the bench with a typical question: Do states have energy to levy tax on mineral-producing land no matter provisions of Mines and Mineral (Improvement and Regulation) Act?Parliament can restrict however cannot denude our taxing energy, argue statesOne of the primary questions referred for adjudication by a nine-judge SC bench is: “Can a state legislature, while levying a tax on land under List II Entry 49 of Seventh Schedule of Constitution, adopt a measure of tax based on value of produce of land? If yes, then would the constitutional position be any different insofar as the tax on land is imposed on mining land on account of List II Entry 50 and its interrelation with List I Entry 54?”Criticality of the problem for mineral-rich states is obvious from the truth that between 1993 and 2023, Jharkhand alone earned Rs 10,558 crore from tax on mineral bearing land. If SC decides towards the states, Jharkhand will lose round Rs 350 crore a yr in tax income.Opening arguments for Jharkhand & Odisha in assist of states’ proper to levy tax on mineral-bearing land, advocate Rakesh Dwivedi mentioned, “Since royalty is a consideration in lieu of grant of mineral rights, the tax will be of nature contemplated in List II Entry 50. This taxing power is exclusively within domain of state legislature and cannot be imposed by Parliament by law. List I Entry 54, being a non-taxing entry, does not include any power to impose any tax. It is a regulatory entry.” He mentioned, “Parliament by exercising power under List I Entry 54 can impose limitations on state’s power to tax mineral rights, but cannot usurp or arrogate the said taxing power to itself and denude state of its taxing power.”Dwivedi mentioned legal responsibility to pay royalty arises solely upon a grant of mining lease, which transfers proper to hold out mining actions in leased space to the lessee. He clarified that no mining might be carried out with out such grant of lease and mentioned such a legal responsibility couldn’t be understood as a ‘tax’ inside which means of Article 366(28).Arguments will proceed on Wednesday.
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