The court's judgment addresses the longstanding legal ambiguity surrounding the taxation of mineral rights. Chief Justice Chandrachud emphasized that the levy could be viewed as either a tax solely on mineral rights or a combination of land and mineral rights. This interpretation aligns with the constitutional entries that govern taxation powers, particularly Entry 23 of List I (Union List) and Entry 50 of List II (State List).
This ruling benefits states like Odisha and Jharkhand, which have significant mineral resources. The decision enables these states to generate substantial revenue from mineral extraction activities, supporting their economic development and public welfare initiatives. States have long argued for clearer guidelines on their taxation powers to ensure a fair distribution of revenue from natural resources.
Senior Advocate Rakesh Dwivedi, representing Jharkhand, argued that states' taxing powers should not be undermined by federal regulations. He stressed that explicit limitations should be stated by Parliament to prevent ambiguity. Similarly, Senior Advocate S Niranjan Reddy highlighted the constitutional provisions that empower states to impose taxes and emphasized that such imposts, if they resemble taxes, should be treated accordingly.
Justice Nagarathna and Justice Roy underscored the importance of aligning taxation regulations with the overall objective of mineral development. They referenced historical debates in the constituent assembly to argue for a balanced approach that respects both state and union interests.
This decision marks a significant shift in the legal landscape of mineral taxation, providing states with greater autonomy and clarity. It also sets a precedent for future disputes involving state and federal taxation powers, ensuring a more equitable distribution of revenue from India's rich mineral resources.