'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 Supreme Court declared in its ruling.
The court further stated that the tax demand payment deadline will be spaced out over a 12-year period, starting on April 1, 2026, and will be paid in installments. The Court further mandated that any interest charges and penalties demanded on or before July 25, 2024, be waived.
Shares of mining companies fell sharply following the verdict. Tata Steel was trading 2.25 per cent lower at Rs145.53 apiece on the National Stock Exchange (NSE) at the time this report was written.
Hindalco's stock recovered and was trading 0.60 per cent at Rs 625.10, and JSW Steel was down almost 0.80 per cent at Rs 900.55.
Among PSUs, NMDC was trading at Rs 213.00, down 5 per cent, and Coal India (CIL) was down 3.13 per cent at Rs 505.40.
The Supreme Court's ruling on Wednesday, August 14, allowing state governments to impose taxes on mining and related activities, caused the share prices of mining companies, including Tata Steel, JSW Steel, NMDC, MOIL, Vedanta, Hindalco, and Coal India, to plummet. The ruling was made retroactively, but only with regard to transactions made after April 1, 2005.
On the other hand, the bench instructed the states not to apply any kind of penalty for paying dues.
According to a report, the Centre has resisted state requests for refunds of royalties that have been imposed on mines and minerals since 1989, claiming that doing so will negatively affect citizens and force PSUs to deplete their reserves by Rs 70,000 crore based on preliminary estimates.
Eight judges on the bench, who ruled in favor of the state's authority to tax mineral rights on July 25, will sign this decision, according to Chief Justice Chandrachud.
