Tata Steel to pay State a Mineral Tax of Rs.17,300 Crore

Tata Steel may be required to pay Rs.17,300 crore to Odisha as mineral tax if a July 25 Supreme Court decision allowing states to impose mineral taxes with retrospective effect is followed. The company disclosed the information in an exchange filing on July 31.

The main point of dispute is how the tax would be implemented, with Odisha advocating for a retrospective effect and the Centre preferring a prospective application.

If the tax is implemented retrospectively, as Odisha demands, Tata Steel will be required to pay the aforementioned amount in arrears.

Odisha enacted the “Orissa Rural Infrastructure and Socio-Economic Development Act, 2004 (ORISED Act)” on February 1, 2005, which imposed a tax on mineral-bearing land. Tata Steel challenged the Act by filing a writ petition in the Orissa High Court, disputing its constitutional legality.

In December 2005, the Supreme Court ruled that the state lacked the authority to tax minerals. Odisha later challenged the decision in the Supreme Court.

“Pending clarity on the period of applicability of the levy, the company, in accordance with previous years, continues to include the aforementioned demand along with the impact of the anticipated amount till June 30, 2024, aggregating to Rs.17,347 crore, as contingent liability in its standalone and consolidated financial statements,” Tata Steel told the stock exchanges, NSE and the BSE.

Odisha and Andhra Pradesh requested retrospective execution of the Supreme Court’s ruling during a hearing on Wednesday. Odisha counsel general Pitamabar Acharya told the court that if the tax is collected with prospective effect, the state will lose significant revenue.