India: Centre requests review of Supreme Court's mineral royalty verdict

The Centre, with the Madhya Pradesh government as a co-petitioner, has sought a review of the Supreme Court's 25 July 2024 order allowing states to individually levy cess on mineral-bearing areas. A review petition to an order of the 9-judge Constitution bench is unusual and prompted a wry exclamation from the Chief Justice of India.

As per BigMint's assessment, the main grounds of the review petition are that the 25 July 2024 order makes an "an error apparent on the face of the record" in considering mineral-bearing "land" in "lands of every description" under Entry 49 of List II of the Constitution. According to the Centre, as Entry 49 lists "lands and buildings", it should be understood to only deal with land on which a building stands. "The said aspect has not been examined by the Hon'ble Court at all and is an error apparent on the face of the record," the petition noted.

The petition goes on to argue, "If the expansive definition of 'land' is adopted, then the same would render the entire Seventh Schedule suspect. If land, as a concept, is to include everything under the sun, it would thereby empower the States to legislate on any subject in the name of legislation on land and buildings. The same would be a constitutional anathema and is an error apparent on the face of the record."

The Centre also pointed out that a dead rent is levied by states when a mine is not operational. "Thus, when State can impose tax on mineral rights under Entry 50 of List II, there cannot be another tax imposed by the State under Entry 49 - List II on such mineral-bearing land on the basis of value of the mineral," stated the petition.

In an earlier judgment on 25 July 2024, the bench had ruled that royalty was not a tax. A nine-judge bench led by Chief Justice DY Chandrachud passed the judgment nearly unanimously, barring one dissenting view. Later on 14 August 2024, the Supreme Court allowed states to collect past royalty dues on mineral-bearing land from the Centre and mining companies retrospectively from 1 April 2005.