Is it possible to keep the tax regime for the mining sector predictable while respecting the fiscal autonomy of mineral-rich States? Discuss.

In MADA v. SAIL (2024), a nine-judge bench held 8:1 that royalty is not a tax. It also held that States may tax mineral rights (Entry 50) and mineral-bearing land (Entry 49, List II) [3]. The MMDR Amendment Act, 2026 now bars such levies except on conditions the Centre sets [1]. Both goals can be met, but only through rules agreed with States, not imposed on them.

Case for a predictable regime

• Mines need large upfront investment and run for decades. Sudden State levies change project economics [5].
• The Statement of Objects lists heavy tax burden, levies imposed after mining begins, multiple levies on the same output, non-uniform rates and retrospective imposition [1].

Case for States' fiscal autonomy

• Constitutional: The Court allowed Parliament to limit taxes on mineral rights. PRS reads that power as not extending to land taxes under Entry 49 [2][3].
• Fiscal: States such as Odisha and Chhattisgarh depend heavily on mining receipts. How each State responds depends on its revenue dependence and its political alignment with the Centre [5].
• Excessive delegation: The Act lets the Centre set conditions on State levies but gives no guiding principles for them [2]. The Centre also defines what counts as "mineral-bearing land" [1].
• Equity: Unpaid dues are voided but dues already paid are not refunded. This raises an Article 14 concern [1][2]. The Court had already softened the arrears: recovery from 2005, spread over 12 years, with interest waived [4].

Reconciling the two

• Write a rate cap or band into the Act itself. Investors and States would then both know the ceiling in advance [2].
• Leave Entry 49 land taxes with States. This removes the Act's weakest legal part [2][3].
• Keep the Court's staggered payment plan instead of cancelling dues [4].
• Create a GST Council-type Centre–State forum to set mining levies by consensus. Pair it with grandfathering: no new levy on a lease once it is signed.

In short, predictability needs stable and uniform rules, not central control. A framework with limits written in law and set through consultation can give investors certainty while protecting the cooperative federalism built into the Seventh Schedule.