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Congress-ruled Karnataka, Kerala, Telangana to challenge new mining law in Supreme Court
The states oppose the law because it stops state governments from imposing taxes or levies on mineral rights and mineral-bearing land.
Three Congress-ruled states—Karnataka, Kerala and Telangana—are set to appeal in the Supreme Court against the Mines and Minerals (Development and Regulation) Amendment law that was cleared by both Houses of Parliament earlier this month. The President approved this on August 18. The Congress-ruled states are opposed to the legislation because it prohibits state governments from imposing levies over mineral rights or mineral bearing lands, provisions that the Congress believes are against the financial interests of the states and federalism itself.
Announcing the step, Congress general secretary for communications Jairam Ramesh said on Thursday, “The three south Indian states ruled by the Congress—Kerala, Karnataka and Telangana—have decided to challenge the law in the Supreme Court. We have prepared the petitions.”
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What does the new law say?
The new law said “No tax, cess or such other levy (by whatever name called) shall be imposed by the State Government on— (a) mineral rights; or (b) mineral bearing lands, either based on mineral quantity or mineral value or royalty payable or otherwise, except in accordance with such conditions or restrictions as may be prescribed by the Central Government.”
It added that “Notwithstanding anything contained in any other law for the time being in force, or in any judgment, decree or order of any court, the imposition of any such tax, cess or other levy by the State Government on— (a) mineral rights; or (b) mineral bearing lands either based on mineral quantity or mineral value or royalty payable or otherwise, which is not deposited with the State Government or recovered by it before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2026, shall be deemed to be invalid at all material times.”
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Law aimed at overriding 2024 Supreme Court ruling
The law was aimed to offset a 2024 ruling by the Supreme Court that allowed states to levy tax on mineral rights.
The law said that any such tax, cess or other levy on mineral rights or on mineral bearing lands, already deposited with the State Government or recovered by it before such commencement, shall not be liable to be refunded.
Centre's argument on mineral levies
The government argued in the bill that “any regional disparity in fiscal impositions on minerals impacts public interest. Unbalanced imposition of steep taxes and levies will prompt the industry to completely bypass local supply lines, leading to sub-optimal development of markets, increased transportation costs and the resultant pollution load. There is also a risk of an increase in imports of minerals despite having sufficient local mineral resources as domestic mineral supply becomes expensive.”
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“The uneven imposition of taxes or other levies on mineral rights and mineral bearing lands by the State Governments in the absence of reasonable limitations have resulted in various issues, such as— (i) heavy tax burden in the sector; (ii) unpredictable introduction of tax, cess and other levies, even after commencement of mining operations; (iii) multiple taxes, cess and other levies on production or dispatch of minerals; (iv) non-uniformity of rates of tax and other levies among States; (v) imposition of tax, cess or levies with retrospective effect,” Union mines minister G Kishen Reddy argued in the bill.
Karnataka deputy CM raises federalism concerns
G Parameshwara, Karnataka deputy CM, said in a Facebook post that the bill “raises a serious question about the future of India’s federal structure.” “Karnataka cannot be expected to bear the costs of mining...This is particularly unfair when States already shoulder enormous responsibilities...” he added.
