Supreme Court CJI-led Nine-Judge Bench Verdict on Tax Liabilities For Mine Operators

Supreme Court nine judge constitution bench to pronounce its verdict on the mine operators and regulators plea on whether a royalty amount paid by the operators to the Union government is a form of tax or not. All mine operators, under the Mines and Minerals Act, 1957, are required to pay a ‘royalty to the Union government’ for the right to use, explore and evaluate the minerals. In 1990, the Supreme Court of India, in the case of India Cement Ltd. & Ors. v. State of Tamil Nadu, initially determined that royalty constituted a tax because it was linked, either directly or indirectly, to the quantity of mineral extracted post-sale by the lessee. However, fourteen years later, in 2004, a different perspective emerged when a five-judge bench ruled that royalty on mineral rights did not qualify as a tax but rather represented an expenditure borne by the lessee towards the landowner, who could be either a private individual or the State. Recognizing these conflicting interpretations in 2011, the Court referred the matter to a nine-judge bench. The introduction of the Goods and Services Tax (GST) regime in India from 2016 has heightened the significance of this issue.
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