| Constitutional Provisions • Article 246- State legislatures derive their power to tax mines and quarries under Article 246. • Entry 49 – Tax on lands and buildings in the State List of the Seventh Schedule of the Constitution. • Mineral-bearing lands fall under ‘lands’ in Entry 49. • Entry 50- Taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development. |
- A nine-judge Constitution Bench held by an 8:1 majority that Parliament cannot limit the power of State legislatures to tax mineral-bearing lands and quarries.
- The ruling emphasised that any dilution in the taxing powers of State legislatures would impede their ability to raise revenues and deliver welfare schemes.
- The verdict highlighted that mineral-rich States such as Chhattisgarh, Jharkhand, and Odisha have per capita incomes below the national average.
- It was stated that Parliament, through the Mines and Minerals (Development and Regulation) Act of 1957, cannot restrict States from legislating on mining land and quarry taxation.
- The court held that royalty paid by mining leaseholders to States is not a tax but a contractual consideration.
- The dissenting opinion stated that States’ power to tax under Entry 49 did not include “mineral-bearing lands” but agreed that royalty is not a tax.
- It was noted that Entries 50 and 49 address distinct subjects and operate in different fields.
Dig Deeper: What is Entry 54 of the Union List under Schedule Seven of Indian Constitution?
