Supreme Court Reserves Verdict on Whether Royalty Paid by Mining Operators is a Tax

The Supreme Court is currently deliberating whether the royalty paid by mining operators to the Central government qualifies as a tax. This case is significant as it is the oldest pending case involving a nine-judge bench. The decision also touches on the powers of State governments to tax and regulate mines and minerals under the Mines and Minerals Act. Historically, the Supreme Court has provided mixed rulings on this matter.

In 1989, it was declared that royalty is a tax, but later judgments in 2004 and 2011 questioned this interpretation. The Central government argues that allowing states to levy taxes on mineral-bearing lands could hinder the uniform development of the mineral industry nationwide. A verdict on this issue is eagerly anticipated, as it will clarify the legal standing of royalties and the extent of state powers in regulating mineral resources.