NEW DELHI: Mining industry and Tata Group Tuesday opposed in SC the demand made by mineral-rich states that they be allowed to levy tax besides royalty on mineral rights, arguing that minerals being national assets are required to be regulated by Union govt through Parliament-enacted law to protect inter-generational equity and ensure uniform economic benefits to all irrespective of where they are concentrated.
Arguing for a mining association from mineral-rich eastern zone and certain Tata Group companies before a CJI D Y Chandrachud-led a nine-judge bench, senior international commercial arbitration lawyer Harish Salve said that Mines and Mineral (Development and Regulation) Act, 1957 enacted by Parliament is a complete code relating to mineral rights, which ousts states’ jurisdiction to impose tax besides royalty on mineral rights.
“MMDR Act provides for an exaction – by way of royalty for the exercise of mineral rights that vest in the State and are leased to the Lessees, and this is at the rate fixed by Parliament and cannot be increased by the State Legislature,” former solicitor general told the bench also comprising Justices Hrishikesh Roy, A S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, S C Sharma and Augustine G Masih.
The complex issue interwoven with powers of states under Entry 23, 45, 49, 50 of List II and Entry 54 of List I of Seventh Schedule evoked pithy queries from the bench, which wanted to test Salve’s propositions on the constitutional anvil.
Salve said, “The fasciculus of the entries for imposition of tax on mineral rights (Entry 50 of List II) and for the regulation and development of mines (Entry 54 of List I) is that taxing power of the state is inhibited by any regulatory laws i.e., non-tax laws made by Parliament (MMDR Act).”
“The proposition that royalty is like a tax and there cannot be a further tax on mineral rights rests on this scheme of the Constitution. It is not a general proposition that royalty under a mining lease is a tax per se – that cannot be right generally nor even where under the Mineral Concession Rules, 1960, the lease has to be in a statutory form, but the royalty is payable to a private owner of minerals, said the senior lawyer .
Arguments would continue on Wednesday.
Arguing for a mining association from mineral-rich eastern zone and certain Tata Group companies before a CJI D Y Chandrachud-led a nine-judge bench, senior international commercial arbitration lawyer Harish Salve said that Mines and Mineral (Development and Regulation) Act, 1957 enacted by Parliament is a complete code relating to mineral rights, which ousts states’ jurisdiction to impose tax besides royalty on mineral rights.
“MMDR Act provides for an exaction – by way of royalty for the exercise of mineral rights that vest in the State and are leased to the Lessees, and this is at the rate fixed by Parliament and cannot be increased by the State Legislature,” former solicitor general told the bench also comprising Justices Hrishikesh Roy, A S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, S C Sharma and Augustine G Masih.
The complex issue interwoven with powers of states under Entry 23, 45, 49, 50 of List II and Entry 54 of List I of Seventh Schedule evoked pithy queries from the bench, which wanted to test Salve’s propositions on the constitutional anvil.
Salve said, “The fasciculus of the entries for imposition of tax on mineral rights (Entry 50 of List II) and for the regulation and development of mines (Entry 54 of List I) is that taxing power of the state is inhibited by any regulatory laws i.e., non-tax laws made by Parliament (MMDR Act).”
“The proposition that royalty is like a tax and there cannot be a further tax on mineral rights rests on this scheme of the Constitution. It is not a general proposition that royalty under a mining lease is a tax per se – that cannot be right generally nor even where under the Mineral Concession Rules, 1960, the lease has to be in a statutory form, but the royalty is payable to a private owner of minerals, said the senior lawyer .
Arguments would continue on Wednesday.