Constitutional Distribution of Legislative Powers over Minerals

The Constitution separates legislative authority over minerals into regulation, mineral-right taxation, mineral oils, and mine safety. Under Article 246 and the Seventh Schedule, mineral regulation is divided between Parliament and the states, while taxation of mineral rights is principally a state field subject to parliamentary limitations.

Regulation and development of minerals

Legislative competence follows the allocation of subjects between the Union and State Lists under Article 246.

• State List Entry 23 assigns regulation of mines and mineral development to the states, subject to Union List provisions concerning Union control.
• Union List Entry 54 empowers Parliament to regulate mines and mineral development to the extent that a parliamentary law declares Union control expedient in the public interest.
• The declaration in Section 2 of the Mines and Minerals (Development and Regulation) Act, 1957 brings mineral regulation under Union control to the extent provided by that Act; states consequently operate within the central statutory framework and delegated powers.

Special mineral-related Union fields

• Union List Entry 53 covers the regulation and development of oilfields and mineral oil resources, petroleum and petroleum products, and other inflammable substances declared by Parliament.
• Union List Entry 55 assigns Parliament the regulation of labour and safety in mines and oilfields.

Taxation of mineral rights and mineral-bearing land

Taxation is a distinct legislative field from mineral regulation. Regulatory competence does not, by itself, confer authority to tax mineral rights.

• State List Entry 50 authorises states to levy taxes on mineral rights, subject to limitations imposed by Parliament through a law relating to mineral development.
• In Mineral Area Development Authority v. Steel Authority of India, 2024, the Supreme Court held that royalty is not a tax and affirmed state competence under Entry 50, subject to parliamentary limitations.
• State List Entry 49 permits taxes on lands and buildings, including mineral-bearing land; mineral value or produce may serve as the measure if the levy remains, in its nature, a tax on land.