States have the right to tax mineral rights, not Parliament.

The Supreme Court on Thursday told the Center that the Constitution gives the power to tax mineral rights not to Parliament but to the states, while also underlining that such a right should not be weakened.

A nine-judge Constitution bench, headed by Chief Justice DY Chandrachud, which is considering whether royalties collected by the Center on mining leases can be treated as tax, as was the case with a seven-judge bench in 1989 The bench had said, Parliament can impose only certain limitations. To ensure that mineral development is not disrupted.

The bench, also comprising Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Mishra, Ujjwal Bhuyan, Satish Chandra Sharma and Augustine George Masih, said with regard to Entry 50 of List 2 of the 7th Schedule of the Constitution. , What Parliament can do is impose restrictions, but it cannot say that it has the power to tax and the states do not.

The 7th Schedule of the Constitution specifies the allocation of powers and functions between the Union and the States.

“The power to tax has not been given to Parliament at all, it has been given only to the States. But, in the interest of mineral development, Parliament can say that you cannot tax in this way, or for example, tax There should not be more than 20 per cent because if you tax in a certain way, it can hinder mineral development,” the CJI told Attorney-General R Venkataramani.

The AG argued that the entries in Lists 1 (Union List) and 2 (State List) should be viewed in a certain manner, and all activities relating to minerals would form part of the mineral rights from the birth till the completion of the mineral activity.