Mining companies told to pay tax to Madhya Pradesh

NEW DELHI - The Supreme Court Monday told several companies involved in mining operations in Madhya Pradesh to pay tax to the state government and declined to stay notices issued to them for payment of dues.

The apex court bench of Chief Justice S.H. Kapadia, Justice K.S. Radhakrishnan and Justice Swatanter Kumar told the petitioner companies that they will have to pay the tax and they could do so in instalments.

The court said that instalments would be on the principal amount without counting the interest. It said that the petitioner companies would come before it with a proposal for the payment of tax in instalments and then it would draw a schedule for the same.

The petitioner companies told that the court that three notices for the payment of tax under the M.P. Rural Infrastructure and Road Development Act, 2005 tantamount to going back on the assurance that the state government gave before this court that it would not resort to coercive measures for the recovery of taxes.

The court was told that the standing counsel of the State of Madhya Pradesh B.S. Banthia in an undertaking on Nov 6, 2009 said that no coercive steps would be taken for the recovery of tax.

The six petitioner companies said that the notices issued by the state government were

“unjust, unreasonable and uncalled for” at this stage when their petition challenging the impugned high court order of Aug 18, 2006, upholding the levy of tax, was in the final hearing stage.

The state government under the act levied 5 percent tax on the mineral bearing land.

However, the mining companies contended that in the guise of tax on mineral bearing land it was in fact a tax on the mineral extracted from the land.