Karnataka Governor sends mining tax bill to President for assent

The proposed bill is estimated to earn Karnataka a revenue of Rs 4,713 crore.

In a significant development impacting the revenue potential of mining companies in Karnataka such as NMDC, JSW Steel and Sandur Manganese, Governor Thawar Chand Gehlot has reserved the state government's mining tax bill and referred it to the President for assent, setting in motion a procedure that could last more than six months before a decision is arrived at, and delays plans to impose mines and mining land.

"...there is an encroachment of State Legislature / Bill on the field occupied by the Parliament," Governor Gehlot said, pointing out that the ownership and control of the material resources of the community are to be distributed to serve the common good, and it should not result in concentration of wealth. The state government, through the Bill, "proposes to collect huge and substantial amounts to enrich itself," Governor Gehlot added.

The Governor observed that the proposed The Mineral Rights and Mineral Bearing Land) Tax Bill would 'transgress' constitutional limitations and provisions, and 'adversely affect' legitimate interest of other state or its people.

"The objective of the Bill appears to transgress the other constitutional limitations and provisions." Governor further added, and said the objective of the Bill "also calculated to adversely affect the legitimate interest of other state or its people." The proposed bill is estimated to earn Karnataka a revenue of Rs 4,713 crore.

The state government had brought the bill after a Supreme Court ruling which said that states can impose tax on mineral-bearing land and mining rights with retrospective effect from April 2005.