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SC dismisses Vedanta’s plea against tax by Karnataka on iron ore sales

LiveMint logoLiveMint 21-03-2017 Apurva Vishwanath

New Delhi: The Supreme Court on Tuesday dismissed a plea by Vedanta Ltd and industry body Federation of Indian Mining Industry against a 10% tax levied on iron ore sales by the Karnataka government.

The proceeds of the state tax go towards the Karnataka Mining Environment Restoration Corporation, set up to implement a comprehensive environment plan for the mining impact zone in the districts of Bellary, Chitradurga and Tumkur of the state of Karnataka.

The petitioners had claimed that since a central tax as per the Mines and Minerals (Development and Regulation) (MMDR) Act, 2015 is collected, lessees of category-A and category-B mines must be exempted from the state tax.

“Doing away with the state tax would impact the entire scheme as a whole and would jeopardize its contemplated/planned implementation,” the court said in its order.

A District Mineral Foundation has been set up under the MMDR Act 2015 in every district affected by mining related operations.

For lessees in category-A and category-B mines, in addition to 10% of the sale value payable to the state fund, about 4.5% of sale value is payable to the District Mineral Foundation.

The Central Empowered Committee also told the court that both taxes can exist. There is a fair amount of overlapping between the objects of the District Mineral Foundation.

The state fund is used for ameliorative and mitigative works/measures to deal with large scale degradation of the environment occurring due to the unprecedented illegal mining that had taken place in the mining leases operating in the three districts.

A FIMI official declined to comment.

Vedanta declined to respond on the issue.

Kalpana Pathak in Mumbai contributed to the story.

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