Supreme Court to Hear Pleas on Taxation of Mineral Rights on May 20

The dispute arises from the Supreme Court’s landmark judgment delivered on July 25, 2024, by a nine-judge Constitution Bench, which had ruled in favour of states having the authority to impose taxes on mineral rights. Subsequently, several review petitions were filed challenging the verdict; however, in September 2024, the apex court dismissed those pleas and declined to reconsider its earlier decision.

In its majority judgment delivered by an 8:1 ratio, the Constitution Bench had observed that Parliament does not have the legislative competence to levy taxes on mineral rights under Entry 54 of List I of the Seventh Schedule of the Constitution. Entry 54 deals with the regulation of mines and mineral development under the control of the Central Government. The court clarified that while Parliament may regulate mines and mineral development, the power to impose taxes on mineral rights is vested with the states unless specifically restricted by constitutional provisions.

The ruling was widely regarded as a significant constitutional interpretation because it clearly defined the respective powers of the Centre and state governments in matters relating to mineral taxation. The judgment is expected to have a major financial and policy impact on mineral-rich states, as it strengthens their authority to generate revenue through taxation on mining and mineral-related activities. The upcoming hearing on May 20 is likely to further address legal and constitutional questions arising from the Centre’s pending curative petition and related pleas.