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Centre asks SC to urgently hear plea on states’ mineral tax power
The Union government urged the top court to urgently take up its curative petition seeking reconsideration of the court’s earlier judgment that vested states with the power to levy taxes on minerals and mineral-bearing lands
The Union government on Thursday urged the Supreme Court to urgently take up its curative petition seeking reconsideration of the court’s landmark July 2024 judgment that vested states with the power to levy taxes on minerals and mineral-bearing lands, in addition to the royalty collected by the Centre.
Solicitor General Tushar Mehta warned that the verdict, affirmed in review by an 8-1 majority, would trigger “national ramifications” for mineral pricing and adversely impact India’s competitiveness in the international market if allowed to stand without clarity.
Appearing before Chief Justice of India Surya Kant during a mentioning, Mehta requested priority listing of the curative petition before hundreds of individual matters arising out of the nine-judge bench decision are heard by smaller benches. His plea came in response to another counsel seeking urgent listing of more than 800 related appeals remitted to regular benches following the July ruling.
“We have filed the curative petition after the dismissal of our review. Our submission is that each state deciding their own royalty will have national ramifications and will affect prices of minerals internationally too,” submitted Mehta, emphasising the potential chaos if each mineral were priced differently across state boundaries.
“We have to match prices of our minerals for the international market as well,” he added, urging the court to hear the Centre’s curative plea before other matters progress.
CJI Kant acknowledged the concern and remarked that he was contemplating taking up nine-judge bench matters from January, but Mehta pressed that the royalty case required urgent consideration given its cascading economic implications.
“This matter has to be heard before other matters remitted to two or three judges are decided or orders are passed in those matters,” the SG reiterated. The CJI noted the submissions and assured that he would examine the papers and “take a call”.
The Centre moved the curative petition in September 2025 after a nine-judge bench dismissed its review request in October 2024, holding that the July verdict contained no apparent error. The review was rejected by an 8-1 majority, with Justice BV Nagarathna alone dissenting— consistent with her earlier stance that a review was warranted.
The July judgment overturned the long-standing interpretation from the 1989 India Cements ruling, clarifying that royalty is not a tax but a contractual payment for mineral extraction, thereby enabling states to levy additional taxes or surcharges. The court held that while Parliament could legislate to restrict state taxation powers under the Mines and Minerals (Development and Regulation) Act, 1957 (MMRD Act), it had not done so.
The verdict was hailed as a major fiscal victory for mineral-rich states such as Jharkhand, Odisha, Chhattisgarh and Rajasthan, potentially yielding a revenue windfall, but it deeply unsettled mining companies facing retrospective taxation from April 1, 2005. Industry observers estimated the financial impact between ₹1.5-2 lakh crore, with the Centre informing the court that public sector undertakings alone would face a burden of roughly ₹70,000 crore.
Acting on the ruling, the top court in August 2024 permitted states to recover past dues over 12 years beginning April 1, 2026, though it barred penalties and additional interest, granting partial relief to the sector. However, the retrospective nature of the levy and competitive ramifications continue to be fiercely contested by the Centre and private mining entities.
The July 2024 ruling resolved a long-standing legal dispute that stemmed from conflicting judgments by the Supreme Court. In 1989, a seven-judge bench ruled in the India Cements case that the Centre held primary regulatory authority under the MMDR Act and that states could collect royalties but not impose additional taxes or cess on mining and mineral development. However, a five-judge bench in 2004, while hearing a similar dispute in the Kesoram case, noted a typographical error in the 1989 judgment, clarifying that “royalty is not a tax” but “cess on royalty is a tax”. The nine-judge bench ultimately sided with the latter interpretation, marking a pivotal shift in the fiscal autonomy of states over mineral resources.
