Mint Explainer: Significance of the sole dissenter in the mining tax ruling

livemint.com:

apply retrospectively. Justice B.V. Nagarathna’s dissenting judgment in the case, where an 8:1 majority of the constitution bench ruled in favour of states, may prompt the legislature to rethink the current framework.

It could lead to legislative and policy changes in the future, particularly regarding the division of royalty revenues between the central and state governments. Mint breaks down the importance of the judgement and the implications of the Nagarathna’s dissent ruling. On July 25, the Supreme Court, led by Chief Justice D.Y.

Chandrachud, ruled that states have the power to tax mining lands and quarries independently of the Mines and Minerals (Development and Regulation) Act of 1957 and determined that royalties are not taxes. On August 14, the court decided that this ruling would apply retrospectively, allowing states to tax mining companies from as far back as 2005. This retrospective application has caused significant stress for companies in the mining and cement sectors, potentially leading to tax demands totalling up to ₹2 trillion, imposing a substantial financial burden on mining operators.

The 8:1 majority ruling was based on three key points: While the majority view holds that royalties are distinct from taxes and arise from contracts between mining leaseholders and lessors, Nagarathna argued that royalties should be considered a form of tax. She bases her argument on the Mines and Minerals (Regulation and Development) Act, 1957, asserting that this Act provides a comprehensive framework for mineral development. She cited the 1989 India Cements case, suggesting that if royalties are not deemed taxes, states could impose additional taxes or surcharges on top of royalties, distorting mineral