Tata Steel plans to file a curative petition in the Supreme Court, challenging a July 25 ruling by the court's nine-judge Constitution Bench that affirmed states' authority to impose cess on mining and mineral-use activities. The steel giant, which operates captive mines in Jharkhand and Odisha, aims to seek relief from the implications of this judgment. Despite the ruling, Tata Steel CEO T V Narendran confirmed that no formal demand has been issued to the company.
The origin of the dispute dates back to the Odisha government’s Orissa Rural Infrastructure and Socio-Economic Development Act (ORISED) of 2004, which introduced a tax on mineral-bearing land. This legislation led to a Rs 1.29 billion demand from Odisha on Tata Steel's mining activities, a charge the company successfully contested in the Odisha High Court. However, Odisha escalated the matter to the Supreme Court, resulting in the recent ruling in favour of state levies on minerals, with collections permitted retroactively from April 1, 2005.
Tata Steel disclosed, during its Q2FY25 results, that although Odisha’s appeal is pending before a regular Supreme Court bench, the application and enforcement of the ORISED Act remain uncertain. The company is engaging with state officials to explore viable paths forward, as both the state and central governments acknowledge the importance of not undermining industrial stability. Narendran noted the industry’s changing landscape since ORISED's enactment, highlighting increased state revenue from mining royalties and the establishment of the District Mineral Foundation (DMF), a mining-funded non-profit supporting districts impacted by mining under the MMDR Amendment Act, 2015.
The company’s discussions with authorities reflect shared concerns about balancing state interests and industry health. Narendran remarked that excessive taxation on minerals, like coal, could escalate costs across sectors, notably in energy. Tata Steel had previously disclosed a contingent liability of Rs 173.47 billion for its Odisha mines as of June 30, 2024. However, the Q2FY25 notes clarified that no current legal obligation related to ORISED exists, and thus no financial provision has been recorded in its results.
(Business Standard)
