Centre opposes Supreme Court plea for mineral royalty refund, cites ‘multipolar’ impact

The Centre on Wednesday argued in the Supreme Court against a request from mineral-rich states for a refund of royalty payments made since 1989.

The Centre contended that ordering such refunds retroactively would have a “multipolar” impact.

This comes after a significant July 25 ruling by a nine-judge constitution bench, led by Chief Justice D.Y. Chandrachud. The bench, in an 8:1 decision, affirmed that the authority to levy taxes on mineral rights rests with the states, and that royalty payments for minerals are not considered a tax.

The landmark verdict, which significantly benefitted mineral-rich states by affirming their right to tax mineral rights, has sparked another controversy regarding its implementation. Opposition-ruled states have requested that the Supreme Court apply the verdict retroactively, allowing them to seek refunds of royalty payments from the Centre.

The Centre has opposed this request, arguing that such a move would have a “multipolar” impact.

Many firms involved in mining activities also support the Centre’s view on refund of royalty to mineral-bearing states.

Solicitor General Tushar Mehta, appearing for the Centre, said states like Madhya Pradesh and Rajasthan, which are ruled by the BJP, wanted the judgement to be made applicable prospectively.

The hearing is underway.

The CJI penned the 200-page majority verdict for himself and on behalf of justices Hrishikesh Roy, Abhay S Oka, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.

“Royalty is not a tax. Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights. The liability to pay royalty arises out of the contractual conditions of the mining lease. The payments made to the government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears,” the majority verdict had said.

However, Justice B V Nagarathna had dissented and said the Centre has the power to levy royalty.

(With inputs from PTI)