Karnataka HC Lets Aggregates Firm Seek SC-Ordered 12-Year Instalments And Interest-Penalty Waiver On Mineral Tax Demand

In brief

The question

1. Whether enforcement of the impugned adjudication orders should be modulated to give effect to the Supreme Court’s directions on instalments and waiver of interest and penalty.

The court held

The writ petition was disposed of, with liberty to the petitioner to submit a representation to the first respondent seeking consideration of the liability in terms of Mineral Area Development Authority.

It also directed

The petitioner was directed to file the representation by 6 November 2026, and the first respondent was directed to provide a personal hearing and decide whether enforcement of the impugned orders could be modulated in accordance with the Supreme Court’s directions.

The adjudication orders were not quashed.

01Facts

The petitioner challenged four adjudication orders dated 31 July 2026 concerning tax periods 2020–21 to 2023–24, relating to Entries 49 and 50 of List II of the Seventh Schedule.

pp. 2–4

Relying on the Supreme Court’s decision in Mineral Area Development Authority v. Steel Authority of India, the petitioner sought reconsideration of whether the demand could be paid in instalments and whether interest and penalty were to be waived.

pp. 4–5

The writ petition came before the High Court for preliminary hearing.

p. 3

02Issues

i.1. Whether enforcement of the impugned adjudication orders should be modulated to give effect to the Supreme Court’s directions on instalments and waiver of interest and penalty.

pp. 5–6

ii.2. Whether the adjudication orders should be quashed or instead the petitioner should be permitted to seek reconsideration of the manner of discharging the demand.

pp. 5–6

03Law Applied

The Supreme Court’s decision in Mineral Area Development Authority v. Steel Authority of India, Civil Appeal Nos. 4056–4064 of 1999, dated 14 August 2024, governs demands relating to Entries 49 and 50 of List II of the Seventh Schedule.

pp. 3–5

The directions reproduced by the High Court provide that such tax demands shall not operate on transactions before 1 April 2005; payment is to be staggered in instalments over twelve years commencing 1 April 2026; and interest and penalty on demands for periods before 25 July 2024 are waived.

pp. 3–5

04Reasoning

The Court noted that the demands concerned Entries 49 and 50 and considered the Supreme Court’s directions relevant to their enforcement.

pp. 3–5

It recorded that the petitioner’s grievance could be addressed by examining whether the liability should be discharged through instalments and with waiver of interest and penalty, and that these matters could be reconsidered on the facts before the adjudication orders were enforced.

pp. 4–6

Accordingly, the Court did not decide to quash the orders; it provided for the first respondent to consider whether their enforcement could be modulated in accordance with the Supreme Court’s directions.

pp. 6–7