The announcement came while pronouncing its verdict on August 14 on whether its July 25 verdict upholding the power of states to levy tax on mineral rights and mineral-bearing land will have a retrospective or prospective effect.
It further stated that the payments have to be staggered in 12 years. It also directed states to not impose penalties or tax for past demands.
As of 11am, the stock prices of Hindustan Zinc, NMDC (3.2 per cent down), NMDC (3.63 per cent down), Coal India (1.96 per cent down), SAIL (1.58 per cent down) reported sharp dip as of 11 am.
Following the judgment, stock prices of Hindustan Zinc, NMDC, Coal India and SAIL slumped 3.2%, 3.6%, 1.9% and 1.5% respectively on BSE Sensex. Tata Steel dropped 3.6% to Rs 143.90 apiece. Meanwhile, benchmark indices were trading muted with a positive bias.
States like Jharkhand and Odisha had asked for the SC’s ruling to be made effective in a retrospective manner while Madhya Pradesh and Rajasthan supported Centre’s demand for a prospective implementation of the verdict.Observing that the states do need revenue, the CJI had earlier said, “Prima facie there is no question of prospective overruling. We cannot be oblivious of the fact that in some states, their law levying taxes was struck down (post 1989 verdict). We need to see what kind of conditionalities can be put if we make it retrospective. This is of course subject to discussions among other members of the bench.”
Past judgment
In a majority 8:1 verdict on July 25, the bench had held that legislative power to tax mineral rights vests with states.
The verdict had overruled a 1989 judgement, which held that only the Centre has power to impose royalty on minerals and mineral bearing land.
Some opposition-ruled mineral rich states are now seeking refund of royalty levied by the Centre and taxes from the mining companies since the 1989 verdict.
A nine-judge constitution bench headed by Chief Justice DY Chandrachud was told by the Centre that it opposed the demand of states for refund of royalty levied on mines and minerals since 1989, saying it will impact the citizens and the PSUs will have to empty their coffers by Rs 70,000 crore according to initial estimates.
On July 31, the bench also comprising Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma and Augustine George Masih had reserved its verdict on the issue.
Solicitor General Tushar Mehta, appearing for the Centre, had told the bench that making the July 25 verdict retrospective will have cascading effects as the companies will pass on the financial burden on the citizens.
He said the 1989 verdict had held the field for 35 years and the financial impact of the July 25 judgement will be on companies undertaking mining operations, which will be different for each state.
“A preliminary estimate of the potential financial impact of the judgement due to past State levies which may become due (in the form of additional state levies of taxes, interest and penalties) on only the Public Sector Units (PSUs) engaged in mining, and in production activities dependent on minerals (like electricity production), is to the tune of Rs 70,000 crore,” he had submitted.
Senior advocate Rakesh Dwivedi, appearing for Jharkhand, had contended that certain conditions could be put like there can be staggered payment of refund amount, it should be limited to mineral bearing land.
Many firms involved in mining activities also supported the Centre’s view on refund of royalty to mineral-bearing states.
