Reclaiming the field: Mineral taxation, federalism and the MMDR (Amendment) Act 2026

This is a Supreme Court of India judgment (2024 INSC 554) resolving a batch of appeals regarding the constitutional distribution of legislative powers between the Union and States concerning the taxation of mineral rights. It matters to citizens because it clarifies whether royalty is a tax and determines the validity of state levies on mineral-bearing land, impacting mining regulations and state finances.

The judgment concerns the Mineral Area Development Authority, Steel Authority of India, various State Governments (including Bihar, Rajasthan, and Uttar Pradesh), the Union of India, and mining companies challenging state taxes and cesses.

• The case addresses the core legislative entry Entry 50 of List II (State List) regarding taxes on mineral rights, subject to limitations imposed by Parliament under Entry 54 of List I (Union List).
• The Court reviews the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), specifically Section 9, which mandates royalty payments by mining lease holders.
• The judgment examines the conflict between the seven-Judge Bench decision in India Cement Ltd. v. State of Tamil Nadu (1990), which held royalty is a tax, and the Constitution Bench decision in State of West Bengal v. Kesoram Industries Ltd. (2004), which held royalty is not a tax.
• The Court analyzes the validity of state levies on mineral-bearing land under Entry 49 of List II, where states used mineral value or royalty as the measure of tax.
• The judgment addresses the inter-relationship between 'regulation of mines' (Entry 23 List II) and 'mineral development' (Entry 54 List I), as well as the scope of 'taxes on lands and buildings' (Entry 49 List II).

Written from the document by AI, and checked against it. The original below is authoritative.

The original document