Supreme Court orders six firms to pay Madhya Pradesh Rs 1,200 crore

Six companies using mineral bearing land for their projects in Madhya Pradesh will have to shell out about Rs 1,200 crore as the Supreme Court has rejected their challenge to the state’s Rural Infrastructure and Rural Road Development Act, 2005, which makes it mandatory for companies to pay tax on mineral-embedded land owned by them.

The six companies are Birla Corp, Jaiprakash Associates, Grasim Industries, Maihar Cements, Western Coalfields and Prism Cement.

Earlier, the Madhya Pradesh High Court had declined to stay the operation of the Act.

Rejecting the companies’ plea for stay of the high court order, the apex court on Monday directed them to pay Rs 1,200 crore as the amount due for the state government under the Act.

A bench of Chief Justice S H Kapadia, Justices KS Radhakrishnan and Swatanter Kumar said the only relief that could be extended to the aggrieved companies is waiver of interest and penalties imposed on them by the government.

The state government could also be directed to accept the outstanding payment in installments, the court said, adding, “We would fix installments for the payment of dues.”

The judges asked the concerns to submit their suggestions on the mode of payment by July 23. The cess imposed under the law is used for rural development. The counsels of companies opposed the Act saying the previous state government had assured them there would be no taxation on this account.

They also said though a similar Act was enacted by the Orissa government, the Cuttack High Court had struck it down.