Supreme Court's Judgment on Mineral Taxation

1. Supreme Court’s Constitution Bench said that states have power to levy tax on mineral rights.
2. This power is not constrained by the Mines and Minerals (Development and Regulation) Act (MMDRA), 1957.
3. The Court's ruling was delivered with an 8:1 majority, with one dissenting opinion cautioning about potential negative consequences of states' mineral taxation rights.

Key Observations by the Court:

Constitutional Basis:

1. The power to tax mineral rights is explicitly listed in Entry 50 of List II (State List) of the Indian Constitution.
2. Parliament's residuary powers do not extend to subjects specifically enumerated in the State List.
3. While Parliament can impose limitations on state taxation through legislation, the MMDRA lacks provisions doing so.
4. Entry 54 of List I (Union list) empower the Union to regulate minerals but does not grant taxing authority.

Land Rights:

1. The term "land" in Entry 49 of List II includes mineral-bearing lands, enabling states to tax them.
2. Overturning Previous Ruling:
3. The Court overruled its 1989 judgment and clarified that royalty on minerals is not a tax and is not covered under MMDRA.

2023 Amendments to the MMDRA Exploration License: Introduction of a new license for deep-seated and critical minerals, permitting reconnaissance and prospecting. Central Government Auction: The central government is empowered to auction mining leases and composite licenses for certain critical minerals. The auction will be conducted by the central government, but the lease or license will be granted by state governments. Removal of Minerals from Atomic Minerals List: Certain minerals like lithium, beryllium, and titanium have been removed from the list of atomic minerals.

About the Mines and Minerals (Development and Regulation) Act (MMDRA), 1957:

1. Purpose: Regulates the mining sector in India.
2. Types of Licenses:

• Reconnaissance permit
• Prospecting license (for exploring and proving mineral deposits)
• Mining lease (for mineral extraction)
• Composite license (for both exploration and extraction)

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