Karnataka told to refund fee collected from private miners

In a blow to the State Government, the Karnataka High Court on Wednesday declared as unconstitutional the Karnataka Forests (Amendment) Act, 2016 and directed the government to refund hundreds of crores of rupees collected as the Forest Development Fee (FDF) from private mining leaseholders.

A Division Bench comprising Chief Justice Subhro Kamal Mukherjee and Justice PS Dinesh Kumar delivered the verdict while allowing a batch of petitions filed by BR Rudragowda and other individual miners, and private mining companies like Vedanta Ltd and others. The State had amended the Act in 2016 to empower the Government to collect FDF of 12 per cent, with retrospective effect from 2008, on the sale price of minerals sold by private mining companies.

However, the petitioners had contended that the amendment 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 the amount wrongfully and illegally collected from the miners under the erstwhile name — Forest Development Tax (FDT). The High Court, in its December 2015 verdict, had held that private mining or quarrying leaseholders in forest areas are not liable to pay the FDT when they dispose of iron ore and other minerals.

The Bench, in its order, said the incidence, namely the extraction of mineral upon which royalty is imposed remaining constant, imposition of levy by changing the name from ‘tax’ to ‘fee’ is impermissible. Thus, the mode in which the State has brought in the amendment is contrary to well established position of law, the Bench held.