Indian supreme court lifts blanket ban on iron ore mining from 18 mines based in Chitradurga and Bellary. Most of these mines fall under forest and according to forest act any thing produced from forest land will be liable to pay a forest tax of 12%.
But, many miners who operate in forest areas have fought against the levy of the tax in court for about two years. They argue that ore and minerals cannot be classified as forest produce because it was not specifically mentioned in the Karnataka Forest Act. The forest department believes otherwise.
Interestingly, one of the mining lessees who has fought against the imposition of forest development tax is the state-owned mining major, NMDC. As an interim arrangement, NMDC is allowed to pay FDT at six per cent.
Even at this lower rate, the forest department collected Rs 221 crore in revenue from NMDC since 2008, according to officials. Attorney General for India Goolam E Vahanvati argued NMDC’s case before the Karnataka High Court. As an interim arrangement, the court allowed FDT collection until it delivers the final judgement in the matter.
To avoid paying FDT, many miners used to undervalue their iron ore. This became impossible to do after all sales were compulsorily routed through the e-auction method. Besides FDT, miners have not been able to evade paying royalty and value added tax (VAT), said officials. About 60 miners were registered with MSTC for auctioning ore at the time of writing.
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