GUWAHATI: Mining stocks reacted to a pivotal Supreme Court decision granting state governments the authority to impose mineral cess, affirming their ability to levy taxes on mineral-rich land today, July 25.
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The court's nine-judge constitution bench differentiated royalties from taxes, categorising royalties as contractual payments rather than taxes. This distinction significantly impacts mining companies, with Orissa Minerals Development Co. and Vedanta witnessing declines of 1-4%, while Coal India and MOIL saw increases of 0.5-2%.
The court's ruling addressed the legality of state-imposed taxes on mineral rights under the Mines and Minerals (Development and Regulation) Act 1957, underscoring that royalties are not akin to taxes but contractual obligations.
“Royalty is not within the nature of tax as it is a contractual consideration paid by the lesssee under the mining lease. Both royalty and dead rent do not fulfil the characteristics of tax,” the Court said.
Today's market also saw adjustments influenced by international base metal trends, prompting caution among traders, according to Ruchit Jain, Lead Research Analyst at 5paisa.