Centre cannot take away power to Tax from States: SC

The Supreme Court appeared strong on Wednesday in its view that, while the Centre cannot fully deprive states of their taxation powers by a Parliament-enacted statute, it can limit the extent of taxation.

Reputed lawyers and constitutional experts, including Harish Salve, A M Singhvi, Attorney General R Venkataramani, Solicitor General Tushar Mehta, Arvind Datar, Darius Khambata, A K Ganguly, S K Bagaria, and additional Solicitor General Aishwarya Bhati, attempted to weave a constitutional fiction that the Mines and Mineral (Development and Regulation) Act occupies the field, ousting states’ power to impose taxes on matters related to major minerals, as well as mineral-bearing.

However, a bench consisting of CJI D Y Chandrachud and Justices Hrishikesh Roy, A S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish C Sharma, and Augustine G Masih maintained a literal interpretation of Entry 50 of the State List, which provides “taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development.”

CJI Chandrachud, speaking for the bench, stated that the power to limit the state’s ability to impose mining taxes does not transfer that power to the Centre. We cannot limit the powers of Parliament or state legislatures.

The arguments will finish on Thursday with senior lawyer Rakesh Dwivedi’s response on behalf of the states.