Shares of mining companies such as Tata Steel, JSW Steel, NMDC, MOIL, Vedanta, Hindalco, and Coal India, among others, dropped after the Supreme Court held on Wednesday, August 14, that its July 25 judgement enabling state governments to tax mining and related activities, will apply retrospectively, but with respect to transactions after April 1, 2005.
The apex court, in its verdict, said, “States can levy and renew demand for taxes, but the demand for tax shall not operate on transactions made prior to April 1, 2005.”
The court added that the time for payment of the demand for tax shall be staggered in instalments over a period of 12 years commencing from April 1, 2026. The Court also ordered that levy of interest and demand of penalty made on or before July 25, 2024, shall stand waived off, as per a report by Bar and Bench.
After the verdict, shares of mining companies witnessed a significant fall. At the time of writing this report, Tata Steel was trading 3.26% lower at ₹144.05 apiece on the BSE. JSW Steel was down nearly 2% at ₹890.75, while Hindalco stock was trading 0.76% lower at ₹616.40.
Among PSUs, Coal India (CIL) was down 3.00% at ₹505.65 while NMDC was trading at ₹213.50, down 5%.
The bench, however, directed the states to not impose a penalty of any kind on payment of dues.
As per a PTI report, the Centre has opposed the demand of states for refund of royalty levied on mines and minerals since 1989, saying it will impact the citizens and the PSUs will have to empty their coffers by ₹70,000 crore according to initial estimates.
CJI Chandrachud said this verdict will be signed by eight-judges of the bench who by majority decided the July 25 judgement giving the state’s power to levy taxes on mineral rights.
He said that Justice Nagarathna will not sign Wednesday’s verdict as she had given a dissenting view in the July 25 verdict.
In a majority 8:1 verdict on July 25, the bench had held that legislative power to tax mineral rights vests with states.
The verdict had overruled a 1989 judgement, which held that only the Centre has power to impose royalty on minerals and mineral-bearing land.
Some opposition-ruled mineral rich states then sought refund of royalty levied by the Centre and taxes from the mining companies since the 1989 verdict.
The matter of refund was heard on July 31 and order was reserved.
With PTI input
