{"id":9090,"date":"2026-07-14T09:03:44","date_gmt":"2026-07-14T09:03:44","guid":{"rendered":"https:\/\/lawsandlegals.com\/english\/?p=9090"},"modified":"2026-07-14T09:03:46","modified_gmt":"2026-07-14T09:03:46","slug":"supreme-court-upholds-governments-mineral-pricing-formula-rejects-mining-companies-plea","status":"publish","type":"post","link":"https:\/\/lawsandlegals.com\/english\/supreme-court-upholds-governments-mineral-pricing-formula-rejects-mining-companies-plea\/","title":{"rendered":"Supreme Court Upholds Government’s Mineral Pricing Formula, Rejects Mining Companies’ Plea"},"content":{"rendered":"\n

New Delhi:<\/strong> The Supreme Court has delivered an important judgment on how the Average Sale Price (ASP) of iron ore and other minerals should be calculated. The ruling is significant because the ASP is the basis on which mining companies pay royalty to state governments.<\/p>\n\n\n\n

The Court dismissed a petition filed by Kirloskar Ferrous Industries Ltd., which had challenged the Central Government’s 2016 and 2017 rules governing the calculation of ASP.<\/p>\n\n\n\n

The company argued that while determining the sale price, amounts paid towards royalty, the District Mineral Foundation (DMF), and the National Mineral Exploration Trust (NMET) should be excluded. According to the company, including these statutory payments in the sale price artificially increased the ASP, forcing mining companies to pay what it described as “royalty on royalty.”<\/p>\n\n\n\n

The Supreme Court rejected this argument and upheld the existing rules. It held that the Central Government has the authority to frame rules relating to taxes, royalties, and revenue collection.<\/p>\n\n\n\n

The Court observed that if a rule is intended to protect government revenue and prevent manipulation or tax evasion, it cannot be declared unconstitutional merely because it imposes an additional financial burden on businesses. The Court also reiterated that it generally does not interfere with the government’s economic and fiscal policies unless they clearly violate the Constitution or a law.<\/p>\n\n\n\n

The case arose because the company claimed that the current method of calculating ASP leads to higher royalty payments every month. It argued that since royalty, DMF, and NMET contributions are included in the sale price, the royalty calculation is based on an inflated price, resulting in repeated additional payments.<\/p>\n\n\n\n

The company contended that this was contrary to the Mines and Minerals (Development and Regulation) Act as well as the Constitution.<\/p>\n\n\n\n

To support its case, Kirloskar Ferrous Industries pointed out that the Central Government had amended the rules for coal in 2020. Under the revised coal rules, statutory levies such as royalty, DMF, and NMET are excluded while calculating the actual sale price. The company argued that the same principle should apply to iron ore and other minerals, especially since a committee constituted by the Ministry of Mines had also recommended changes to the existing system.<\/p>\n\n\n\n

The Central Government opposed the petition, stating that the company’s “royalty on royalty” argument was based on an incorrect understanding of how ASP is calculated. It explained that the ASP is determined afresh every month based on the actual sale transactions for that month. Since each month’s calculation is independent, there is no compounding effect or continuous increase in royalty payments as claimed by the company.<\/p>\n\n\n\n

The government also warned that accepting the company’s demand would result in massive revenue losses for the states. It told the Court that, for iron ore alone, the loss could amount to thousands of crores of rupees over the coming years, and if extended to other minerals, the total loss could run into several lakh crores.<\/p>\n\n\n\n

After considering both sides, the Supreme Court agreed with the government’s position. It held that the real issue was not whether companies had to bear a higher financial burden, but whether the government had the legal authority to adopt such a method to safeguard public revenue. The Court answered this in the affirmative, saying that the legislature and the government are empowered not only to impose taxes and royalties but also to create mechanisms that prevent revenue leakage and accounting manipulation.<\/p>\n\n\n\n

The Court also rejected the company’s claim of “royalty on royalty.” It accepted the government’s explanation that because the ASP is recalculated every month using fresh market data and actual sales for that month, one month’s royalty does not become part of the royalty calculation for the following month. Therefore, the alleged cascading effect described by the company does not actually occur.<\/p>\n\n\n\n

The Supreme Court further held that the government is free to adopt different regulatory frameworks for different minerals. It said that the fact that coal is governed by a different method does not mean the rules for iron ore or other minerals are unconstitutional or discriminatory. Such decisions fall within the government’s policy-making domain, and courts should not interfere unless there is clear arbitrariness or a violation of law.<\/p>\n\n\n\n

The Bench of Justice K.V. Viswanathan and Justice J.B. Pardiwala concluded that the challenged 2016 and 2017 rules do not violate Article 14 (right to equality) or Article 19(1)(g) (freedom to practice any profession or carry on any occupation, trade or business) of the Constitution. It also found that the rules are consistent with the Mines and Minerals (Development and Regulation) Act.<\/p>\n\n\n\n

Accordingly, the Supreme Court dismissed the company’s petition and upheld the Central Government’s method of calculating the Average Sale Price. The judgment means that mining companies cannot seek the exclusion of royalty, DMF, and NMET payments from the sale price while calculating ASP.<\/p>\n\n\n\n

The ruling has significant implications for the mining sector. It ensures that the existing method of calculating ASP will continue, protecting government and state revenues from mineral royalties. More broadly, the judgment reinforces the principle that courts will generally not interfere with economic and fiscal policy decisions simply because they increase costs for businesses. Judicial intervention will be warranted only if such policies are shown to be clearly unconstitutional or contrary to law.<\/p>\n","protected":false},"excerpt":{"rendered":"

New Delhi: The Supreme Court has delivered an important judgment on how the Average Sale Price (ASP) of iron ore and other minerals should be calculated. The ruling is significant because the ASP is the basis on which mining companies pay royalty to state governments. The Court dismissed a petition filed by Kirloskar Ferrous Industries … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":9091,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_wppp_is_locked":false,"_wppp_selected_plans":[],"footnotes":""},"categories":[1,29],"tags":[1387,1385,1389,1398,269,1386,1401,1400,1390,1397,1399,1396,1391,1388,1395,1392,1394,1393,32],"class_list":["post-9090","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-supreme-court","category-top-stories","tag-asp","tag-average-sale-price","tag-dmf","tag-fiscal-policy","tag-india-legal-news","tag-iron-ore","tag-justice-jb-pardiwala","tag-justice-kv-viswanathan","tag-kirloskar-ferrous-industries","tag-mineral-royalty","tag-mining-industry","tag-mining-laws","tag-mining-royalties","tag-ministry-of-mines","tag-mmdr-act","tag-national-mineral-exploration-trust","tag-nmet","tag-royalty-on-royalty","tag-supreme-court"],"_links":{"self":[{"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/posts\/9090","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/comments?post=9090"}],"version-history":[{"count":1,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/posts\/9090\/revisions"}],"predecessor-version":[{"id":9092,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/posts\/9090\/revisions\/9092"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/media\/9091"}],"wp:attachment":[{"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/media?parent=9090"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/categories?post=9090"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lawsandlegals.com\/english\/wp-json\/wp\/v2\/tags?post=9090"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}