In a temporary relief to mining conglomerate Vedanta Ltd., the High Court of Karnataka on Thursday directed the State government to not take coercive action against the company based on the newly enacted law.
The law empowers the State to collect Forest Development Fee (FDE) of 12 per cent, with retrospective effect from 2008, on the sale price of minerals sold by private mining companies.
A Division Bench comprising Chief Justice Subhro Kamal Mukherjee and Justice Ravi Malimath passed the interim order on a petition filed by the company, which had questioned the constitutional validity of the Karnataka Forest (Amendment) Act, 2016.
The company, in its petition, contended that the law was enacted “only for the purpose of circumventing the Karnataka High Court’s December 3, 2015 judgment with the object of avoiding the liability to refund the amount wrongfully and illegally collected from the petitioner” under the name of Forest Development Tax (FDT).
The High Court, in its December 2013 verdict, had said that FDT can be levied only on purchasers who buy minerals directly from the State government or from a corporation, owned or controlled by the State government. Also, the court had held that the then existing law permitted FDT only at the rate of eight per cent and not 12 per cent, while directing the State to refund hundreds of crores of rupees deposited by the mining companies as interim FDT at the rate of 6 per cent.
The State, against this verdict, had moved the Supreme Court, which had stayed the order of refunding of the deposited FDT. Meanwhile, the State amended the law changing the term as FDE instead of FDT and expanding FDE to private mining lease holders as well, fixed FDE at 12 per cent, payable with retrospective effect from August 16, 2008.
