State-run miner Coal India expects the net financial impact of the Supreme Court’s ruling on mining taxes on the company to be over ₹6,000 crore as it is hopeful of recovering over 70 per cent of its liabilities from its customers with whom the company has long-term fuel supply agreements (FSAs).
Only two of CIL’s coal-producing subsidiaries--Mahanadi Coalfields (MCL) and Central Coalfields (CCL)-- will be facing the impact of the apex court ruling on mining taxes.
“...we have calculated that in a phase manner only two companies are being affected, Mahanadi Coalfields and Central Coalfields. For other companies, there is no impact,” Coal India Chairman PM Prasad said while replying to the company’s shareholders during the annual general meeting on Wednesday.
Liabilities
According to Prasad, liabilities for Mahanadi Coalfields (MCL) and Central Coalfields (CCL) would be around ₹364 crore and around ₹31, 227 crore, respectively, due to the apex court’s order which allowed State governments to collect mining companies’ tax dues pending from April 1, 2005.
“In CCL, it is only ₹364 crore between 2006 and 2023, that is around 17 years. So, this is not much significant,” Prasad said.
The Supreme Court said time for payment or the demand of tax shall be staggered in installments over a period of 12 years, commencing from April 1, 2026.
“Whereas in MCL, there is Orissa Rural Infrastructure and Socio- economic Development Act, 2004, with effect from 2005. Initially, for four months under protest, we have deposited (the tax). The State government lost the case in the High Court and it returned the money to us. So, in turn, we returned it to the consumers. Now since the Supreme Court judgement, the liability is ₹31, 227 crore,” the CIL Chairman said.
According to him, the company could recover around 70-75 per cent of its total liabilities from its customers with whom it has long-term fuel supply agreements. Phase wise “a good amount of around ₹24,000-25,000 crore” could be recovered from the FSA customers.
“Of course, all these are under study and we are in consultation with the Solicitor General. Once we can collect from the FSA customers, then the maximum amount would be collected back...But since at the the High Court, the State government (Odisha) had lost and the act was repealed at that time, so we are taking the legal course,” Prasad pointed out.