The Supreme Court has asked the government to take a “final decisive call” on the cascading impact of royalty on royalty in the computation of the “average sale price” under Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 and the Mineral Conservation and Development Rules, 2017.
Even as it reiterated that the issues concerning computation of royalty levied on minerals is entirely a policy aspect and beyond the expertise of the courts, a Bench led by Chief Justice DY Chandrachud gave the government two months to conclude the public consultation process undertaken for amending the Mines and Minerals (Development and Regulation) Act, 1957 for removing the anomaly regarding computation of royalty relating to iron ore and other minerals.
It said that once the government had itself initiated a public consultation process for amending the Act to address the anomaly, then it must take a prompt decision in this regard.
“Merely because it has the discretion to take such policy decision does not mean that it can endlessly keep on prolonging the decision-making process whereby the very discretion is rendered ad-lib and the issue in itself a forgone conclusion,” the judgment stated.
Although, the computation of royalty for different minerals is purely a matter of policy yet we should not just shut our eyes to the prima-facie anomaly that exists both in the very computation mechanism of average sale price for minerals in terms of the these provisions and the perplexing stance of exclusion of only coal from such mechanism despite the general nature and application of these rules, it added.
The SC also directed that the matter be listed again after two months to report on compliance with its directions.
The SC was hearing an appeal filed by Kirloskar Ferrous Industries and others challenging the validity of the validity of Explanation to Rule 38 of the Mineral (Other than Atomic and Hydrocarbons Energy Minerals) Concession Rules, 2016 and Explanation to Rule 45(8)(a) of Mineral Conservation and Development Rules, 2017 that stipulates computation of royalty to be levied for extraction or consumption of mined ores.
Kirloskar Ferrous, engaged in pig iron extraction from Karnataka iron ore mines, argued that after explanations to Rule 38 and Rule 45 were added, royalty which had already been paid in the previous month was again being factored for computation of royalty to be paid for the subsequent months. Thus, this “compounding” of royalty was “manifestly arbitrary” in as much as it has led to a cascading effect within the fold of determination of the rate of royalty under the 1957 Act, senior counsel AM Singhvi argued on behalf of the company.
The miners further contended that when it came to computation of royalty in respect of coal, the government had remedied the anomaly by excluding the previously paid royalty and contributions towards District Mineral Foundation and National Mineral Exploration Trust in its calculation, by way of an amendment. They argued that for the purposes of computation of royalty there existed no intelligible differentia between coal and iron ore and thus, the exclusion of royalty and other contributions for computation of sale value for coal but not for other minerals such as iron was manifestly arbitrary.
