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the Orissa government's fourth attempt to levy a tax on mineral bearing land with reference to minerals extracted and sold in the state was struck down by the Orissa High Court (hc) on December 5, 2005. Nalco, Mahanadi Coalfields, Tisco, Tata Refractories, Jindal Steel and Power and Eastern Zone Mining Association were among the petitioners.

They'd challenged the now repealed Orissa Rural Infrastructure and Socio Economic Development Act (orised), 2004. The act was implemented by the Orissa government to mobilise Rs 1,500 crore through a cess on mining tax. However, a division bench of chief justice S B Roy and justice M M Das called the act constitutionally invalid.

In a state v centre conflict, the hc had to take a decision on whether the state has the legislative competence to levy tax on minerals since the Central government already levies a similar tax. The regulation of mines and mineral development was taken over by the Union government as it was considered of public interest.

The bench felt the tax was being levied on the value of the minerals extracted, and did not bear a direct relationship with land as a unit. Since it was not a tax on land according to the state list it was rejected.

Since May 25, 2005, the state government had imposed a tax on the value of mineral-bearing land. The tax varied from 5 per cent to 20 per cent. It included minerals like coal, iron ore, chromites, manganese ore, bauxite, lime stone, dolomite, fireclay, china clay, graphite and gems stone-bearing mines. The hc order provided relief to mine owners who had been paying the tax since May. The state government has now been ordered to return the amount to the mine owners.

Other legislations in Orissa had tried to levy similar taxes, all repealed by the Supreme Court (sc). These include Orissa Mining Areas Development Fund Act, 1952 and the Orissa Cess Act, 1962. The state would now appeal the hc order in the sc.

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