Overview
- The Supreme Court bench of Justices JB Pardiwala and KV Viswanathan dismissed Kirloskar Ferrous Industries' challenge on Monday and held that rules requiring inclusion of royalty, District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) payments in the sale value for Average Sale Price (ASP) are constitutional.
- The court agreed with the Centre that the measure targets under‑invoicing and manipulation of ex‑mine prices by miners and found the method rational, not arbitrary, as a tool to prevent evasion of royalty and related charges.
- The Union told the court that overturning the rules would cut long‑term state revenue and auction premiums substantially, estimating losses of the order of several lakh crore rupees over mine lease periods, a figure the bench treated as a key fiscal justification.
- Petitioners argued the rules produce 'royalty on royalty' by inflating the ASP, but the court rejected that claim and distinguished iron ore from coal by noting coal pricing is more regulated and less prone to private price manipulation.
- The judgment signals judicial restraint in economic policy and gives immediate legal certainty to the Centre and mineral‑producing states; DMF and NMET are statutory contributions for local welfare and exploration and will continue to be counted in ASP calculations, affecting future auction valuations and royalty receipts.