Mineral Area Development Authority & Anr vs M/S Steel Authority of India & Anr. Etc

Bench: CB — Dr Dhananjaya Y Chandrachud, Hrishikesh Roy, Abhay S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, Augustine George Masih

In Brief

The Supreme Court's landmark nine-judge decision clarifies that royalty under the Mines and Minerals (Development and Regulation) Act, 1957 is NOT a tax but contractual consideration paid to the mineral owner for extraction rights. The majority rules (8-1) that States have legitimate power under Entry 50 of List II to tax mineral rights, subject to limitations Parliament may impose through law relating to mineral development. The judgment also upholds States' authority under Entry 49 to tax mineral-bearing lands using mineral value or royalty as the measure. The Court overrules India Cement's holding that royalty is a tax, clarifying that Entries 49 and 50 operate in distinct fields, resolving a quarter-century dispute over State taxation powers in the mining sector.

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Constitutional Law Federalism Mining and Minerals Taxation Legislative Competence Distribution of Powers Royalty Mineral Rights Land Tax

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