DELHI: The Supreme Court on Wednesday said no to demands that its judgement upholding the power of states to levy tax on mineral rights and mineral-bearing land should apply only retrospectively. Chief Justice D Y Chandrachud presiding over a Constitution Bench said states can claim tax of the past but with conditions including that the “the demand of tax shall not operate on transactions prior to April 1, 2005”.
“The submission that” the judgement “should be given prospective effect is rejected,” the majority ruling by judges on the nine-judge bench said. “Bearing in mind the consequences that would emanate from the past period, the following conditionalities are directed to prevail. While the state may levy or renew demands for tax if any pertaining to entries 49 and 50 of List II of the seventh schedule in terms of the law laid down in the judgment”, “the demand of tax shall not operate on transactions prior to April 1, 2005”.
The bench added that “the time for payment of the demand of tax shall be staggered in instalments over 12 years commencing from April 1, 2026”. The bench said that the levy of interest and penalty on demands made for the period before July 25, 2024, shall stand waived.
On July 25, in an 8-1 majority ruling, the nine-judge bench upheld the power of states to levy royalty on the extraction of minerals from their land and said they can also tax the lands which comprise mines and quarries. The majority verdict was delivered by CJI Chandrachud and Justices Hrishikesh Roy, A S Oka, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih.