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New Delhi: Congress-ruled States of Karnataka, Kerala and Telangana are preparing to challenge the newly amended Mines and Minerals (Development and Regulation) Act in the Supreme Court, escalating a fresh Centre-State conflict over control of mineral revenues. The states argue that the new law weakens their constitutional taxation powers and impacts their financial independence, while the Centre maintains that the amendment is necessary to bring stability to the mining sector.
The legal battle has gained attention because the amendment directly challenges the interpretation given by a nine-judge Constitution Bench of the Supreme Court in 2024, which recognised the power of states to impose taxes on mineral rights and mineral-bearing lands.
The state governments of Karnataka, Kerala and Telangana are set to file petitions in the Supreme Court against the Mines and Minerals (Development and Regulation) Amendment Act passed during the recent Monsoon Session of Parliament.
The states are expected to argue that the amendment violates the federal structure of the Constitution by restricting their authority to impose taxes, cess and other levies on mineral resources within their territories.
According to Congress leaders, the legal challenge has been prepared and the petitions are likely to be submitted before the Supreme Court soon. The dispute revolves around the question of whether states have independent fiscal powers over mineral resources or whether such taxation authority can be restricted by Parliament through changes in central mining laws.
The controversy began after Parliament passed amendments to the Mines and Minerals (Development and Regulation) Act, which limit the ability of state governments to impose additional taxes and cesses on mineral rights and mineral-bearing land.
The legislation was passed during the Monsoon Session amid opposition protests, with several opposition leaders demanding that the Bill be examined by a Parliamentary Standing Committee before approval.
The Lok Sabha passed the Bill quickly, while the Rajya Sabha also cleared it after a limited discussion involving participating members. After receiving parliamentary approval, the legislation was signed by President Droupadi Murmu, making it part of the legal framework governing mineral regulation in India.
The latest confrontation between states and the Centre is linked to a major Supreme Court ruling delivered in 2024. A nine-judge Constitution Bench had ruled that states possess legislative competence to tax mineral rights and mineral-bearing lands. The court clarified that royalty paid to the Centre under mining laws is not equivalent to a tax and that states can exercise separate taxation powers.
The judgment was considered significant because mineral-producing states argued that it strengthened their financial rights over natural resources available within their boundaries. However, the new amendment passed by Parliament seeks to restrict these powers, creating a direct conflict between the earlier judicial interpretation and the legislative changes introduced by the Centre.
The state governments challenging the law argue that mineral resources play an important role in their revenue generation and development planning. Karnataka, which has major iron ore resources, has raised concerns that restrictions on mineral taxation could affect its future revenue prospects.
Kerala has also opposed the amendment, arguing that it affects the principle of cooperative federalism and reduces the role of states in managing their natural resources. Telangana has joined the legal challenge, with the state government maintaining that financial powers guaranteed under the Constitution cannot be reduced through ordinary legislation. The states believe that the amendment could impact their ability to fund infrastructure projects, welfare schemes and regional development programmes.
The Centre’s position behind the amendment is focused on maintaining consistency in the mining sector and preventing excessive financial liabilities on companies involved in mineral extraction.
The government has argued that multiple state-level taxes and cesses could increase operational costs for mining companies and create uncertainty in the sector. The amendment is also aimed at preventing retrospective financial burdens arising from previous tax demands on mineral companies. The Centre believes that a uniform regulatory framework is necessary to support investment, mining activity and economic growth.
Opposition parties have strongly criticised the amendment, arguing that it reduces the financial independence of states. Congress leaders have claimed that the law effectively overturns the Supreme Court’s 2024 decision and transfers more control over mineral-related taxation to the Union government.
Congress MP S Sasikanth Senthil had earlier raised objections to the Bill, arguing that it places major restrictions on state governments’ ability to impose taxes, cess and other charges related to mineral rights and mineral-bearing lands.
He also highlighted concerns regarding provisions that could retrospectively invalidate certain state-level taxes and levies that had not been collected or recovered before the implementation of the new law.
The outcome of this legal battle could have major implications for mineral-producing states and the mining industry across India. If the Supreme Court upholds the states’ challenge, mineral-rich states could regain greater control over taxation linked to natural resources. However, if the amendment is upheld, states may face limitations on their ability to generate additional revenue from mineral resources.
For mining companies, the verdict could determine future tax liabilities, regulatory clarity and investment conditions in the sector. The case is expected to become an important constitutional debate on the balance between central authority and state financial powers.
The dispute highlights a larger debate over India’s federal structure and the distribution of economic powers between the Union and state governments. Natural resources such as minerals are strategically important for economic growth, infrastructure development and industrial expansion.
While the Centre argues for a coordinated national mining policy, states maintain that they should have greater control over resources located within their geographical boundaries. The Supreme Court’s decision in this matter could define the future framework for mineral taxation and Centre-State financial relations.
