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The Supreme Court of India on Wednesday, July 31, 2024, reserved its judgment on a critical question surrounding the retrospective application of its July 25 ruling that granted states the authority to tax mineral rights and mineral-bearing lands. This significant decision, delivered by a nine-judge Constitution Bench led by Chief Justice of India DY Chandrachud, has generated considerable debate, with the Centre and various states presenting contrasting arguments. The core issue at hand revolves around whether the court's prior judgment should be applied to events that transpired before its issuance or if its effects should only be prospective, impacting future actions.
The Centre, represented by Solicitor General Tushar Mehta, vehemently advocated for a prospective application of the ruling. Mehta underscored the far-reaching implications of a retrospective application, arguing that it would have a profound impact on the nation's economy, particularly in the infrastructure and electricity sectors. He cited the potential burden on consumers, stemming from the necessity for industries to absorb the financial strain, which could reach an estimated Rs 70,000-80,000 crore. He further highlighted the predicament of major public sector undertakings (PSUs), noting that one PSU alone faced a potential demand of Rs 35,000 crore due to the retrospective effect, exceeding its net worth.
Attorney General R Venkatramani echoed Mehta's concerns, emphasizing the widespread economic repercussions that would arise from impacting the mining sector. He emphasized the multipolar nature of these consequences, suggesting that the entire economy would be negatively affected. In contrast, the Jharkhand government, represented by senior advocate Rakesh Dwivedi, countered the Centre's arguments, advocating for a limited retrospective application solely to mineral-bearing lands. Dwivedi suggested that any potential impact would be minimal, affecting only a select few, primarily those associated with India Cements.
Similarly, the Advocate General of Odisha voiced support for a retrospective application, arguing that the state's economy was already in a precarious state and that the judgment should be applied to past events. The court, after meticulously considering the submissions of both sides, ultimately reserved its judgment, leaving the final decision on the retrospective effect of its earlier ruling pending. The court's decision, once announced, will have significant ramifications for the mining sector, the national economy, and the relationship between the Centre and states regarding their respective taxation powers.
Source: Supreme Court reserves order on retrospective effect of states' mineral taxation power