Legal principle

Entry 50 of List II is a unique entry — the only taxation entry in Lists I and II in which the taxing power of a State legislature is made subject to 'any limitations imposed by Parliament by law relating to mineral development'.

Court decision

The eleven questions referred to the Bench were answered, but the extract shows divergent positions rather than a consolidated operative order. Per the table of contents of the principal judgment (Chandrachud CJI), the Court concluded that royalty is not in the nature of tax, that the MMDR Act and s.9 do not serve as limitations on the States' Entry 50 taxing power, that Entry 50 is not an exception to the Sundararamier principle, and that 'any limitation' can extend to prohibition. In the separate opinion extracted, Nagarathna J dissents in part: she holds royalty is a tax, overrules the majority in Kesoram to the extent it held royalty is not a tax, treats India Cement and allied cases as binding, and holds that ss.9, 9A and 25 of the MMDR Act denude or limit Entry 50, that States are denuded of Entry 50 power to the extent of the MMDR Act's s.2 declaration, and that mineral-bearing lands fall outside Entry 49 (Goodricke inapplicable). The extract closes with a direction to place the matters before the Chief Justice of India for listing directions, so the final consolidated holding for the parties is not shown.

Facts

This is a Constitution Bench batch of appeals and a reference (eleven questions) on the distribution of legislative and taxing power over mines and minerals between the Union and the States. The parties include State-side appellants such as the Mineral Area Development Authority and mineral producers/users such as Steel Authority of India; the subject matter is minerals removed or consumed from mining-lease areas, for which s.9 of the MMDR Act, 1957 mandates payment of royalty at specified rates. The State measures under challenge were taxes on lands bearing mines, quarries or mineral deposits, frequently using the royalty paid or the quantity/value of mineral produced as the measure of tax. The dispute arose because India Cement (seven judges) held royalty is a tax and that State legislatures lack competence to tax mineral rights, while the majority in Kesoram later treated royalty as not a tax.

Key provisions

• Section 20(2), Customs Act, 1962 — Re-importation of goods