Kerala May Move Court Against MMDR Amendment: CM Satheesan Writes to PM Modi Over States’ Mining Tax Powers

After Jharkhand, it is Kerala – The Kerala government is contemplating a legal challenge to provisions of the recently passed Mines and Minerals (Development and Regulation) Amendment Bill (MMDR Amendment), with Chief Minister V. D. Satheesan writing to Prime Minister Narendra Modi seeking a review of provisions that, according to the State, could undermine the constitutional powers and financial autonomy of State governments.

Satheesan has particularly objected to Section 9D of the amended legislation, arguing that the conditions proposed by the Centre for determining taxes, cess and other levies on mineral-rich land could adversely affect the States’ constitutionally recognised powers.

The Kerala government’s position brings the contentious issue of Centre-State relations in mineral governance into sharper focus and could potentially lead to a wider constitutional debate over Parliament’s authority to alter the fiscal framework governing mineral resources.

Kerala objects to Section 9D

According to Satheesan, the provisions under Section 9D could enable the Centre to prescribe conditions relating to the determination of tax, cess and other levies associated with mineral-rich land.

The Chief Minister has argued that such a mechanism could interfere with the constitutional powers of the States and restrict their ability to mobilise revenue from mineral resources within their jurisdiction.

For mineral-producing States, mining-related revenue can represent an important component of their non-tax and tax receipts. Kerala therefore apprehends that the proposed changes could have consequences extending beyond mining administration to the financial position of State governments.

Concern over Union control of mineral-rich land

The Kerala Chief Minister has also raised concerns over provisions that envisage bringing mineral-rich land under greater control of the Union government.

The State government believes such provisions could fundamentally alter the existing balance between the Centre and the States in the management and fiscal exploitation of mineral resources.

Another major concern relates to the proposed restrictions on the States’ ability to recover pending taxes and other dues.

Satheesan has argued that denying States the right to collect outstanding amounts could cause significant financial losses and further dilute their fiscal authority.

Kerala invokes landmark 2024 Supreme Court ruling

A central element of Kerala’s argument is the 2024 Supreme Court judgment on taxation of mineral rights.

Satheesan drew Prime Minister Modi’s attention to the apex court’s ruling that royalty payable on mining rights is not equivalent to a tax.

The judgment had important constitutional implications for the relationship between mineral royalty and the taxing powers of States.

According to the Kerala Chief Minister, the Supreme Court had affirmed the power of State governments to levy taxes on mineral rights, including taxation based on the quantity or value of mineral production.

Kerala now argues that the provisions of the amended MMDR framework need to be examined in light of this constitutional position.

A larger Centre-State federalism question

The Kerala government’s objection is not merely about mining administration. At its core is a larger question of fiscal federalism.

Mineral resources are strategically important to the national economy, particularly at a time when India is seeking greater domestic availability of critical and strategic minerals. At the same time, mineral-bearing States argue that they must retain meaningful fiscal and administrative powers over resources located within their territories.

The MMDR Amendment therefore brings into focus the delicate balance between national mineral policy and State financial autonomy.

Kerala’s contention is that greater centralisation cannot come at the expense of constitutional powers vested in State governments.

Legal battle could have wider implications

If Kerala ultimately approaches the courts, the litigation could become an important test of the constitutional boundaries between the Union and the States in the mineral sector.

A judicial examination could potentially address questions such as whether Parliament can impose conditions that effectively restrict the States’ taxation powers, whether provisions affecting recovery of past dues can operate retrospectively, and how the amended MMDR framework should be reconciled with the Supreme Court’s 2024 interpretation of States’ taxing powers over mineral rights.

The issue is consequently likely to attract the attention of other mineral-producing States as well.

The political significance

The Kerala government’s move also adds a new political dimension to the MMDR Amendment debate.

With States increasingly asserting their rights over natural resources and associated revenues, the legislation could become another major arena for the continuing debate over cooperative federalism versus centralisation of economic powers.

For the Centre, greater uniformity in mineral governance is aimed at ensuring efficient utilisation of India’s mineral wealth and strengthening national resource security.

For States such as Kerala, however, the issue is about preserving their constitutional authority and protecting revenue that they believe legitimately belongs to them.

The outcome of this debate could therefore have consequences not only for India’s mining sector but also for the broader architecture of Centre-State fiscal relations.

The question now is whether the Centre will agree to reconsider the contested provisions—or whether Kerala will take the MMDR Amendment to court.

Meanwhile, the core committee of the Jharkhand Mukti Morcha (JMM) is set to meet on August 20, to decide their further course of action.