Green Light For Retro Tax Sends A Shockwave Across Mining And Metals Companies
Date
8/14/2024 3:30:32 PM
(MENAFN- Live Mint) For cement, steel and mining companies on tenterhooks ever since states were allowed to tax mining last month, the dreaded news came on Wednesday.
The Supreme Court allowed states to tax them from as far back as 2005, in a lightning bolt for companies that could face tax demands of as much as ₹2 trillion, and prompt more states to raise tax demands, experts said.
The first to take the hit will be miners in states such as Odisha, Tamil Nadu, Karnataka, Rajasthan, Chhattisgarh and Uttar Pradesh which have already raised tax demands; however, as miners seek to recover the tax dues, the impact could reach sectors such as power, steel and cement, which provide the building blocks of the economy.
Some industry voices have urged New Delhi to pass legislation to amend the Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957 and mitigate the impact of the apex court's ruling. However, experts said that it may not be that simple.
Tata Steel Ltd said it is studying the Supreme Court judgement, and information on any financial impact will be disclosed in due course.
But one immediate conclusion that experts and industry insiders could draw was that there will be more litigation.
The Ruling
The Supreme Court on Wednesday said its 25 July judgement granting states the power to tax mineral rights and mineral-bearing land will apply retrospectively. The nine-member constitutional bench rejected the government's plea for the judgement to be applicable prospectively to avoid a significant financial burden on mining companies.
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