Don’t take coercive action against Vedanta, says court

In a temporary relief to mining conglomerate Vedanta Ltd, the Karnataka High Court on Thursday directed the State government not to take coercive action against the company based on the newly enacted Karnataka Forest (Amendment) Act, 2016, which empowers the State to collect Forest Development Fee (FDE) of 12 per cent, with retrospective effect from 2008, on the sale price of minerals sold by private mining companies.

A Division Bench passed the interim order on a petition filed by the company, which had questioned the constitutional validity of the newly enacted law.

The company, in its petition, has contended that new law was enacted “only for the purpose of circumventing the Karnataka High Court’s December 3, 2015 judgment, with the object of avoiding the liability to refund amounts wrongfully and illegally collected from the petitioner” under the name of Forest Development Tax (FDT).

The High Court, in its December 2013 verdict, had said that the FDT can be levied only on purchasers who buy minerals directly from the State government or from a corporation owned or controlled by the State government.

Also, the Court had held that then existing law permitted FDT only at the rate of eight per cent and not 12 per cent, while directing the state to refund the interim FDT at the rate of 6 per cent deposited by the mining companies along with bank guarantees.

The State, against this verdict, had moved the Supreme Court, which had stayed the order of refunding of the deposited FDT.