THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) AMENDMENT BILL, 2026, (‘the Bill’) passed in both the Houses of the Parliament on August 13, 2026, amends the Mines and Minerals (Development and Regulation) (‘MMDR Act’) and prescribes conditions on the State Legislatures’ power to tax mineral rights and mineral bearing lands, and retrospectively invalidates every uncollected State levy as on date of its commencement. The implications of this Bill have to be understood in the backdrop of the Supreme Court’s nine-judge bench ruling in Mineral Area Development Authority v. Steel Authority of India (‘MADA’) which was decided onJuly 25, 2024.
The framework the Supreme Court settled in MADA
MADA settled three propositions. First, the State Legislatures enjoy plenary competence, i.e. a complete, absolute, and exclusive authority to govern a subject, under Entry 50 List II to tax mineral rights, subject only to such limitations as Parliament may impose by law relating to mineral development. Since the pre-amended MMDR Act did not contain any such limitation, the Supreme Court held that there is no restriction on the State Legislatures to tax mineral rights. Within this analysis, the Supreme Court also held that such limitation, if and when enacted by the Parliament by law, can be extended to prohibition as well.
Second, mineral bearing land falls squarely within “land” under Entry 49 List II, and the yield of the land (measured in quantity or value) supplies a permissible measure of the tax. Entry 49, unlike Entry 50, carries no textual subordination to any parliamentary limitation. Hence, it is in the exclusive domain of the State Legislatures to tax mineral bearing lands without any encroachment on the same by Parliament.
Third, Entry 54 List I is a regulatory entry, not a taxing entry, and Parliament cannot deploy it to reach into the fiscal fields of Entries 49 and 50 List II.
This piece sets out five broad heads of constitutional infirmities from that perspective.
The Bill prohibits every State levy unless the Centre first prescribes permitting conditions. The exception becomes the rule and the plenary power collapses into a licence.
The extension of Union control to “mineral bearing lands” transgresses Entry 49
The Bill extends Union control to “mineral bearing lands” under Section 2. It defines the term in the new Section 3(ada) by reference to the parameters under Section 5(2)(a) (i.e., the Minerals (Evidence of Mineral Contents) Rules, 2015 (‘MEMC Rules’)), and prohibits every State tax on such lands under the new Section 9D(1)(b) except in accordance with Central conditions. Two infirmities follow.
The first concerns constitutional competence. Entry 49 does not use “subject to” language against any Union entry. Parliament, therefore, cannot prescribe conditions on the State’s Entry 49 taxing power, and a rule under Section 5(2)(a) cannot, on its own strength, re-characterise “land” out of Entry 49 List II.
The second infirmity concerns delegation. Whether a parcel of land qualifies as “mineral bearing land” turns not on the parent law but on the MEMC Rules. By amending the MEMC Rules, the Central Government can, without touching the parent Act, expand or contract the set of land that falls within the Section 9D prohibition. That is an excessive delegation granting power to the Executive for a provision that seeks to displace a plenary State taxing field under Entry 49 List II. This excessive delegation effacing the State’s exclusive power is susceptible to a constitutional challenge. The Union has attempted to shift the subject matter of the levy from the State’s domain to its own under the garb of referencing to a delegated legislation meant for merely regulatory licensing.
Section 9D(1) effaces the plenary character of Entry 50
MADA treats State taxation of mineral rights as plenary, subject only to such limitations as Parliament chooses to impose. Section 9D(1) reverses this presumption. It prohibits every State levy unless the Centre first prescribes permitting conditions. The exception becomes the rule and the plenary power collapses into a licence.
If the Centre never notifies the rules under Section 13(2)(ta), i.e the conditions or restrictions on imposition of tax, cess or such other levy under sub-section (1) of section 9D – a new addition to the list of matters the Centre is empowered to make rules for, or notifies them in denuding terms, the State’s Entry 50 power will exist only nominally. Further, there are no guiding principles regarding the matter and manner of the conditions to be prescribed. A prohibition of that breadth effaces the field instead of merely “limiting” the field within the meaning of Entry 50. This has the effect of making the legislative power under the State list a dead letter.
Section 9D(2) attempts a bare legislative override of MADA
Section 9D(2) opens with a non-obstante clause overriding “any judgment, decree or order of any court” and deems every uncollected State levy “invalid at all material times”. This targets the recovery entitlement MADA preserved by its August 14, 2024 consequential order (which permitted State demands from April 1, 2005, waived interest and penalty for the period before July 25, 2024, and staggered payment over twelve annual installments from April 1, 2026).
It is now well settled that the Legislature may alter the basis on which a judicial decision rests. However, it cannot directly nullify the binding effect of the judgment inter parties by a bare declaration. Indian Aluminium Co. v. State of Kerala (1996) draws the distinction:
“The legislature cannot by a bare declaration, without anything more, directly overrule, reverse or override a judicial decision at any time in exercise of the plenary power conferred on the legislature by Arts. 245 and 246 of the Constitution... The legislature also is incompetent to overrule the decision of a Court without properly removing the base on which the judgment is founded.”
Section 9D(2) alters no constitutional basis of MADA. It leaves Entry 49 untouched, adds no substantive content to Entry 50 beyond a delegating power, and merely declares prior demands invalid with a “notwithstanding any judgment” clause tagged on.
The cumulative effect of the Bill reduces the States, in a field reserved to them, to fiscal beneficiaries of Central grace. That is the mutilation of fiscal federalism.
The no-refund proviso offends Article 14
The proviso to Section 9D(2) saves what the States have already collected but denies refunds. The asymmetry offends Article 14 twice over. States that aggressively collected pre-commencement keep the fiscal benefit while the States that didn’t or were in process, lose the corresponding recovery. Two similarly placed assessees walk away with opposite outcomes on the accident of whether the State moved first. The proviso also cuts across the Article 142 installment mechanism designed to reconcile State recovery with taxpayer viability.
The Bill mutilates fiscal federalism
Fiscal federalism, MADA recorded, is an integral attribute of the Indian federal scheme, traced to the separation of tax-raising powers between the Union and the States. The majority invoked Justice B.P. Jeevan Reddy in S.R. Bommai v. Union of India (1994) as the guiding principle:
“The fact that under the scheme of our Constitution, greater power is conferred upon the Centre vis-à-vis the States does not mean that States are mere appendages on the Centre. Within the sphere allotted to them, States are supreme. The Centre cannot tamper with their powers.”
The Bill collides with both of the above aspects. It withdraws every State levy on mineral rights and mineral bearing lands unless the Centre first authorises it. It makes the State legislature dependent on Central rule-making for a taxing power the Constitution assigns to it directly. It also erases the recovery cushion MADA crafted under Article 142. The cumulative effect reduces the States, in a field reserved to them, to fiscal beneficiaries of Central grace. That is the mutilation of fiscal federalism.
Conclusion
The Bill sets up a very potent base for a constitutional test. The framers legislate on three assumptions, that MADA was wrong on Entry 49, that the August 14, 2024 order can be set aside by legislative fiat, and that the States’ plenary competence under Entry 50 can be conditioned into a licence. This has the cumulative effect of the Parliament encroaching upon the taxing powers of the State legislatures and the division of powers as envisaged under the Constitution. Each assumption and the cumulative effect is open to an arguable constitutional challenge and has weak legs to stand on.