Holding

The Court rejected giving prospective effect to the MADA judgment and instead limited the operation of tax demands to post‑1 April 2005 transactions, waiving interest and permitting staggered payment.

Summary

The Supreme Court considered whether the nine‑judge bench decision in Mineral Area Development Authority v. Steel Authority of India (2024 INSC 554) should be given prospective effect. The judgment had overruled India Cement Ltd. v. State of Tamil Nadu and clarified the legislative competence of States under Entries 49 and 50 of List II of the Seventh Schedule. The Court examined the doctrine of prospective overruling, its constitutional basis, and the equities involved, noting that a prospective application would invalidate decades‑old state tax statutes and force massive refunds. It concluded that applying the decision prospectively would be inequitable and instead directed that tax demands under the disputed entries not operate on transactions before 1 April 2005, waived interest and penalties for the period before 25 July 2024, and ordered staggered payment of dues over twelve years. The petition for prospective overruling was rejected.

Issues considered

Whether the judgment in Mineral Area Development Authority v. Steel Authority of India (2024 INSC 554) should be given prospective effect
Whether the doctrine of prospective overruling applies to a decision upholding the legislative competence of States under Entries 49 and 50 of List II
Whether the States should be directed to waive interest and allow staggered payment of tax demands for periods preceding the judgment

Legislation cited

Constitution of Indias. Article 13, s. Article 142, s. Article 265

Subjects

Doctrine of Prospective OverrulingLegislative competenceTaxationSeventh ScheduleBalancing equitiesArticle 142State taxationMineral royalties

Judgment

[2024] 8 S.C.R. 540 : 2024 INSC 607

Mineral Area Development Authority & Anr.
v.
M/s Steel Authority of India & Anr. Etc.
(Civil Appeal No. 4056-4064 of 1999)
14 August 2024
[Dr. Dhananjaya Y. Chandrachud,* CJI, Hrishikesh Roy,
Abhay S. Oka, J.B Pardiwala, Manoj Misra, Ujjal Bhuyan,
Satish Chandra Sharma and Augustine George Masih, JJ.]

Issue for Consideration
Whether the 9-judge bench judgment in Mineral Area Development
Authority v. M/s Steel Authority of India & Anr. Etc 2024 INSC 554
be given prospective effect?

Headnotes†
Constitution of the United States – Evolution of Doctrine of
Prospective Overruling – Objectives and Purpose – Factors
to be considered for its applicability – Discussed:
Held: The doctrine of prospective overruling is applied when a
constitutional court overrules a well-established precedent by
declaring a new rule but limits its application to future situations –
The underlying objective is to avert injustice or hardships, per Great
Northern Railway Co. v. Sunburst Oil and Refining Co., 287 US 358
(1932) – Relied on Linkletter v. Walker, 381 US 618 (1965) to hold
that the doctrine was applied by the courts in the US on the basis
that the US Constitution “neither prohibits nor requires retroactive
effect.” – US Supreme Court identified three separate factors to be
considered while deciding the applicability of prospective overruling
in Chevron Oil Company v. Huson 404 US 97 (1971): (i) the decision
to be applied prospectively must establish a new principle of law,
either by overruling clear past precedent on which litigants may have
relied, or by deciding an issue of first impression whose resolution
was not foreshadowed; (ii) the court must weigh the merits and
demerits in each case by looking to the prior history of the rule in
question,its purpose and effect, and whether retrospective operation
will further or retard the operation of the rule; and (iii) whether the
application of nonretroactivity avoids substantial inequitable results,
injustice or hardships. [Paras 5, 6]

* Author
[2024] 8 S.C.R. 541

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

Constitution of India – Article 142 – Application of the Doctrine
of Prospective Overruling in India – Explained:
Held: Relying on Golak Nath v. State of Punjab [1967] 2 SCR 762,
held that the doctrine of prospective overruling can be invoked only
in matters arising under the Constitution and that it can be applied
only by the Supreme Court as it has the constitutional jurisdiction
to declare law binding on all the courts in India – The scope of
the retroactive operation of the law is left to the discretion of the
Supreme Court to be moulded in accordance with the justice of
the cause or matter before it – The power of the Supreme Court to
mould the relief claimed to meet the justice of the case is derived
from Article 142 – It is applied by the Supreme Court while overruling
its earlier decision, which was otherwise final – It has also been
applied when deciding on an issue for the first time. [Paras 9, 10]
Principles emerging from application of Doctrine of Prospective
Overruling – Discussed:
Held: The doctrine of prospective overruling has been accepted
by the Supreme Court and the following principles emerge from
the application of doctrine of prospective overruling – The power
of the Supreme Court to mould the relief claimed to meet the
justice of the case is derived from Article 142 – It is applied by
the Supreme Court while overruling its earlier decision, which was
otherwise final – It has also been applied when deciding on an
issue for the first time – The object is to validate all the actions
taken before the date of declaration in the larger public interest –
The doctrine does not validate an invalid law, but the declaration
of invalidation takes effect from a future date – Cases that have
attained finality are saved because doing otherwise would cause
unnecessary and avoidable hardships – It is applied to bring about
a smooth transition of the operation of law without unduly affecting
the rights of the people who acted upon the overruled law – It is a
device innovated to avoid: (i) reopening settled issues, (ii) refund of
amounts collected under invalid legislation, and (iii) multiplicity of
proceedings – It is applied to avoid social and economic disruptions
and give sufficient time to the affected entities and institutions to
make appropriate changes and adjustments. [Para 11]
Applicability of the Doctrine of Prospective Overruling to
Mineral Area Development Authority v. M/s Steel Authority of
India & Anr. Etc 2024 INSC 554 – Rejected:
542 [2024] 8 S.C.R.

Digital Supreme Court Reports

Held: Mineral Area Development Authority & v. M/s Steel Authority
of India & Anr. Etc 2024 INSC 554 (hereinafter “MADA”) has
upheld the legislative competence of States under Entries 49 and
50 of List II – If MADA (supra) is given a prospective application,
the validity of all relevant legislation enacted before the date of
the decision, that is 25 July 2024, will have to be tested on the
touchstone of the previous law – The previous law on the aspects
of interpretation of Entry 54 of List I and Entries 23 and 50 of
List II of the Seventh Schedule was unsettled because of the
conflicting decisions in India Cement Ltd. v. State of Tamil Nadu
(1990) 1 SCC 12 and State of West Bengal v. Kesoram
Industries Ltd (2004) 10 SCC 201 – There is always a presumption
of constitutionality in favor of a statutory enactment – If MADA
(supra) is applied prospectively, the relevant taxing legislations
may conceivably be invalidated, requiring the States to refund
the amount collected to the assesses – Since MADA (supra) has
answered the reference and resolved the conflict, it would be
iniquitous to apply the decision prospectively. [Para 17]
Balancing of equities – Outstanding interest accrued on
principal payable to the States be waived – Reliefs granted:
Held: A pragmatic solution to reconcile the financial interests of
the States and the assesses can be achieved by proscribing the
States from demanding taxes pertaining to Entries 49 and 50 of List
II of the Seventh Schedule for the period before Kesoram (supra) –
Taking into consideration the lapse of more than three decades
since India Cement (supra) and more than a decade since the
matter was referred to a larger Bench, equities will be balanced
if the State governments waive the outstanding interest accrued
on the principal due from the assesses – This direction applies
to all assesses, regardless of whether they have approached the
Supreme Court or the High Courts challenging the validity of the
relevant statutes – While the States may levy or renew demands of
tax, if any, pertaining to Entries 49 and 50 of List II of the Seventh
Schedule in terms of the law laid down in the decision in MADA
(supra) the demand of tax shall not operate on transactions made
prior to 1 April 2005 – The time for payment of the demand of tax
shall be staggered in instalments over a period of twelve years
commencing from 1 April 2026 – The levy of interest and penalty
on demands made for the period before 25 July 2024 shall stand
waived for all the assesses [Paras 20, 22, 24, 25]
[2024] 8 S.C.R. 543

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

Case Law Cited
Mineral Area Development Authority v. M/s Steel Authority of India
& Anr. Etc, 2024 INSC 554 – Clarified.
Golak Nath v. State of Punjab [1967] 2 SCR 762; India Cement
Ltd. v. State of Tamil Nadu [1989] Supp. 1 SCR 692 : (1990) 1
SCC 12; State of West Bengal v. Kesoram Industries Ltd. [2004]
1 SCR 564 : (2004) 10 SCC 201; Jindal Stainless Ltd. v. State of
Haryana [2016] 10 SCR 1 : (2017) 12 SCC 1; Bharat Aluminium
Co. v. Kaiser Aluminium Technical Services Inc [2012] 12 SCR 327 :
(2012) 9 SCC 552 – relied on.
Union of India v. Mohd. Ramzan Khan [1990] Supp. 3 SCR 248 :
(1991) 1 SCC 588; Managing Director, ECIL v. B Karunakar
[1993] Supp. 2 SCR 576 : (1993) 4 SCC 727; Municipal Council,
Kota v. Delhi Cloth & General Mills Co. Ltd. [2001] 2 SCR 287 :
(2001) 3 SCC 654; Shankari Prasad Singh Deo v. Union of
India [1952] 1 SCR 89 : 1951 SCC 966; Sajjan Singh v. State
of Rajasthan, [1965] 1 SCR 933 : 1964 SCC OnLine SC 25;
Kesavananda Bharati v. State of Kerala [1973] Supp. 1 SCR 1 :
(1973) 4 SCC 225; Belsund Sugar Co. Ltd. v. State of Bihar [1999]
Supp. 1 SCR 146 : (1999) 9 SCC 620; Somaiya Organics (India)
Ltd. v. State of U.P. [2001] 3 SCR 33 : (2001) 5 SCC 519; Baburam
v. C C Jacob (1999) 3 SCC 362; Raymond Ltd. v. MP Electricity
Board [2000] Supp. 4 SCR 668 : (2001) 1 SCC 534; Sarwan Kumar
v. Madan Lal Aggarwal [2003] 1 SCR 918 : (2003) 4 SCC 147;
Ramesh Kumar Soni v. State of M P [2013] 1 SCR 1129 : (2013)
14 SCC 696; L.Chandra Kumar v. Union of India [1997] 2 SCR
1186 : (1997) 3 SCC 261; Ashok Kumar Gupta v. State of U.P.
[1997] 3 SCR 269 : (1997) 5 SCC 201; M A Murthy v. State of
Karnataka [2003] Supp. 3 SCR 327 : (2003) 7 SCC 517; Shree
Mahavir Oil Mills v. State of Jammu and Kashmir [1996] Supp. 9
SCR 356 : (1996) 11 SCC 39; New Noble Educational Society v.
CIT [2022] 18 SCR 1082 : (2023) 6 SCC 649; Gaurav Kumar v.
Union of India, 2024 SCC OnLine SC 1841; Orissa Cement Ltd.
v. State of Orissa [1991] 2 SCR 105 : (1991) Supp (1) SCC 430;
Atiabari Tea Co. Ltd. v. State of Assam [1961] 1 SCR 809 : AIR
1961 SC 232; Automobile Transport (Rajasthan) Ltd. v. State of
Rajasthan [1963] 1 SCR 491 : AIR 1962 SC 1406; Association for
Democratic Reforms v. Union of India [2024] 2 SCR 420 : (2024)
5 SCC 1; Charanjit Lal Chowdhury v. Union of India [1950] 1
SCR 869; State of Bihar v. Bihar Distillery Ltd. [1996] Supp. 9
544 [2024] 8 S.C.R.

Digital Supreme Court Reports

SCR 479: (1997) 2 SCC 453; Mafatlal Industries Ltd. v. Union
of India [1996] Supp. 10 SCR 585 : (1997) 5 SCC 53; State of
Rajasthan v. J.K. Synthetics Ltd. [2011] 10 SCR 993 : (2011) 12
SCC 518; State of U P v. Prem Chopra [2022] 2 SCR 990 : 2022
SCC OnLine SC 1770; K C Ninan v. Kerala State Electricity Board
[2023] 9 SCR 637 : 2023 SCC OnLine SC 663 – referred to.
Great Northern Railway Co. v. Sunburst Oil and Refining Co., 287
US 358 (1932) ; Linkletter v. Walker, 381 US 618 (1965); Chicot
County Drainage Dist. v. Baxter State Bank, 308 US 371 (1940);
Chevron Oil Company v. Huson, 404 US 97 (1971) – referred to.

List of Acts
Constitution of India.

List of Keywords
Doctrine of Prospective Overruling; Moulding of relief; Balancing
equities.

Case Arising From
CIVIL APPELLATE/ORIGINAL JURISDICTION: Civil Appeal Nos.
4056-4064 of 1999
From the Judgment and Order dated 22.03.1999 of the High Court of
Judicature at Patna, Ranchi Bench, Ranchi in C.W.J.C. No.1885/94
(R), 178/94 (R), 2251/94 (R), 2252/94 (R), 1783/9 (R), 2591 (R),
3113/93 (R), 269/9 (R) and 268/94 (R)
With
Civil Appeal No.7937 of 2019, Writ Petition (Civil) No.512 of 2018,
Civil Appeal Nos.7938 and 7936 of 2019, Civil Appeal No.6221 of
2008, Civil Appeal No.5250 of 2019, Writ Petition (Civil) Nos.729 and
1029 of 2019, Special Leave Petition (Civil) No.16028 of 2021, Civil
Appeal No.4286 of 2023, Civil Appeal No.5682 of 2007, Civil Appeal
No.1295 of 2008, Civil Appeal Nos.874, 8269-8271, 8268, 8267, 6135,
8272 and 9458 of 2013, Special Leave Petition (Civil) No.18600 of
2013, Civil Appeal No.4332 of 2013, Civil Appeal No.5329 of 2002,
Civil Appeal No.4993 of 2006, Civil Appeal Nos.8273 and 8274 of
2013, Civil Appeal No.3869 of 2014, Civil Appeal No.2632 of 2013,
Civil Appeal No.14685 of 2015, Civil Appeal No.6784 of 2014, Writ
Petition (Civil) No.376 of 2015, Civil Appeal No.10082 of 2016, Civil
[2024] 8 S.C.R. 545

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

Appeal Nos.886, 4588 and 205 of 2017, Civil Appeal Nos.5728-5729
of 2018, Civil Appeal Nos.4722-4724 of 1999, Civil Appeal Nos.5333,
5335-5336 and 5332 of 2002, Civil Appeal No.1352 of 2005, Civil
Appeal No.1883 of 2006, Transfer Petition (Civil) No.722 of 2006,
Civil Appeal Nos.4745, 4990, 5599 and 5649 of 2006, Civil Appeal
Nos.378, 665 and 1180 of 2007, Transfer Petition (Civil) Nos.481
and 906 of 2007, Civil Appeal No.3401, 3400 and 3402 of 2008, Civil
Appeal No.8311 of 2011, Civil Appeal No.4293 of 2012, Civil Appeal
No.2055 of 2009, Transfer Petition (Civil) No.951 of 2006, Civil Appeal
Nos.4991 and 4992 of 2006, Special Leave Petition (Civil) No.763 of
2007, Special Leave Petition (Civil) No.15900 of 2007, Civil Appeal
No.3403 of 2008, Civil Appeal No.98 of 2009, Transfer Petition (Civil)
Nos.613 and 626 of 2009, Civil Appeal Nos.4479 and 4478 of 2010,
Civil Appeal No.3643 of 2011, Civil Appeal Nos.4710-4721 of 1999,
Civil Appeal No.2174 of 2009, Civil Appeal Nos.6497, 6498, 6137 and
7397 of 2008, Civil Appeal No.96 of 2009, Civil Appeal No.6499 of
2008, Civil Appeal No.97 of 2009 and Special Leave Petition (Civil)
No.26160 of 2008.
Appearances for Parties
R. Venkataramani, Attorney General for India, Tushar Mehta, Solicitor
General, Ms. Aishwarya Bhati, K. M. Nataraj, A.S.G., Amit Anand
Tiwari, Sr. A.A.G., Tapesh Kumar Singh Sr. Adv./A.A.G., Shiv Mangal
Sharma, Nachiketa Joshi, Apurv Kurup, Bishwajit Dubey, Atul Jha,
K. Parameshwar, A.A.Gs., Vikrant Singh Bais, Praneet Pranav,
D.A.Gs., Arvind P. Datar, Ashok K. Parija, Ajit Kumar Sinha, Dr.
Manish Singhvi, A M Singhvi, Kailash Vasdev, Rakesh Dwivedi, Dr.
Abhishek Manu Singhvi, Arvind Datar, S.K. Bagaria, Rupesh Kumar,
Mukul Rohatgi, Vijay Hansaria, S.P. Singh, Ans Nadkarni, Harish
Salve, Sr. Advs., Gp. Capt. Karan Singh Bhati, Hemendra Sharma,
Ms. Chitrangda Rastravara, Abhijeet Singh, Anirudh Singh, Aishwary
Mishra, Dhananjai Shekhwat, Shiv Autar Singh Sengar, Dashrath
Singh, Yogeshwar Krishna, Ms. Anjali Saxena, Guntur Prabhakar,
Sunil Kumar Jain, Ram Lal Roy, Shiv Singh Yadav, Mrs. Prabha
Swami, Nikhil Swami, Mahesh Agarwal, Rishi Agrawala, Ninad Laud,
Anshuman Srivastava, Ankur Saigal, Rajesh Kumar, Chirag Nayak,
E. C. Agrawala, M.S. Ananth, Ms. S. Lakshmi Iyer, Zubin Dash,
Himanshu Saraswat, Naveen Kumar, Abhimanyu Bhandari, Ms. Stuti
Bisht, Ms. Roohe Hina Dua, Arav Pandit, Nitesh Bhandari, Harshit
Khanduja, Prabhat Kumar Rai, Ms. Dhankshi Gandhi, Shourajeet
546 [2024] 8 S.C.R.

Digital Supreme Court Reports

Chakravarty, Sahib Kochhar, Ms. Nidhi Singh, Ms. Aprajita Bhardwaj,
Randeep Sachdeva, Maitreya, Ms. Shreya Arora, Aditya Goyal, Ashok
Kumar Singh, Shantwanu Singh, Ms. Pragya Singh, Akshay Singh,
Praveen Kumar, Ms. Sunaina Kumar, Kunal Verma, Mrs. Yugandhara
Pawar Jha, Mrs. Lavanya Dhawan, Ritik Gupta, Shivraj Pawar, H.
D. Thanvi, Nikhil Kumar Singh, Rishi Matoliya, K. V. Mohan, K.V.
Balakrishnan, R.K. Raghavan, Ms. Sumita Hazarika, Ms. Monsi
Mehta, Ms. Pooja Dhaiya, Mrs. Sheela Goel, T. G. Narayanan Nair,
Ms. Priya Balakrishnan, Ms. Samyuktha H Nair, Ramesh Babu
M.R, Ms. Priya Balakrishan, Shibu Devasia Olickal, Ms. Swathi H.
Prasad, Shantanu Sagar, Prabhat Ranjan Raj, Anil Kumar, Gunjesh
Ranjan, Shashwat Anand, Mrs. Divya Mishra, M/s. Gagrat and Co.,
Ujjwal A. Rana, Himanshu Mehta, S. K. Verma, Ashwarya Sinha,
Ms. Priyanka Sinha, Aditya Malhotra, Mrinmay Bhatmewara, Sanjay
Kumar Tyagi, Divyansh Rai, Ms. Smriti Singh, Sandeep Singh, Ms.
Manjeet Kirpal, P. V. Yogeswaran, M/s. Khaitan & Co., Mrs. Vanita
Bhargava, Sanjeev Kumar Kapoor, Ajay Bhargava, Aakash Bajaj, Ms.
Monika Singh, Gaurav Juneja, Ms. Nandita Chauhan, Avirat Kumar,
Ms. Muskan Narang, Ms. Prerona Banerjee, Ms. Tijil Thakur, Ms.
Aarushi Yadav, Neeraj Kumar Gupta, Pitambar Acharya, Mrs. Kirti
Renu Mishra, Ms. Sharmila Upadhyay, Pawan R Upadhyay, Sarvjit
Pratap Singh, Sarad Kumar Singhania, Ms. Rashmi Singhania, Yash
Singhania, Dhananjya Mishra, Ms. Shally Bhasin, P. S. Sudheer,
Rishi Maheshwari, Ms. Anne Mathew, Bharat Sood, Ms. Miranda
Solaman, Ms. Nivedita Sudheer, Shailendra Swarup, Ms. Bindu
Saxena, Ms. Aparajita Swarup, Dhruv C Saxena, Umrao Singh
Rawat, Ms. Aashtha Bhardwaj, Surender Kumar Gupta, Ms. Muskan
Gupta, Milind Kumar, Syed Shahid Hussain Rizvi, Ms. Nandini Sen
Mukherjee, Sumit Teterrwal, Ms. Sansriti Pathak, Eklavya Dwivedi,
Sukant Vikram, Aditya Pratap Singh, Prashant Bhardwaj, Amarjeet
Gupta, Uddyam Mukherjee, Swapnil Pattanayak, Ms. Manisha Chava,
Agnibha Chatterjee, Ms. Shagun Thakur, Ms. Bln Shivani, Rustam
Singh Chauhan, Ms. Sthavi Asthana, Ashwin Joseph, Ms. Poornima
Singh, Annirudh Singh, Ms. Shreya Jain, Ms. Ruchi Kohli, Abhishek
Gupta, Sabarish Subramanian, C. Kranthi Kumar, Ms. Devyani Gupta,
Vishnu Unnikrishnan, Ms. Tanvi Anand, Ms. Saushriya Havelia A,
Naman Dwivedi, Danish Saifi, Ms. Arjoo Rawat, Sarathraj B, Khushi
Mohammed, Mohit Gaurav, Anjum Parvez, Ms. Nilofar Khan, G.
N. Reddy, Dr. Charu Mathur, Ms. Shambhi Jaiswal, B.S. Rajesh
Agrajit, Vishal Meghwal, Abhijeet Shah, Shyamal Kumar, Mrs. Pragya
Palawat, Ms. Jyoti Rana, Harsha Vinoy, Ms. Priya Nagar, Jatin Nagar,
[2024] 8 S.C.R. 547

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

Mrs. Meetu Goswami, Siddharth Goswami, Ms. Raj Bala, Aakash
Sharma, T. Harish Kumar, Sandeep Kumar Jha, Ms. Abhinandini
Sharma, Saurabh Rajpal, Ms. Nidhi Jaswal, Ms. Shalini Singh,
Deepak Verma, Abhishek Sharma, Amogh Bansal, Ajay Aggarwal,
Adarsh Aggarwal, R.P. Aggarwal, Rajan Narain, Sunny Choudhary,
Padmesh Mishra, Sandeep Sharma, Ms. Ruchira Goel, M/s. Ars
Associates, Arjun Garg, V. K. Verma, Ambhoj Kumar Sinha, Mrs.
Manik Karanjawala, Ms. Nandini Gore, Ms. Tahira Karanjawala, Akhil
Abraham Roy, Rajat Dasgupta, Ms. Manvi Rastogi, Aman T Mehta,
Mohammad Shahyan Khan, Ms. Ankita Sharma, Arjun D Singh, S.
S. Shroff, Vinayak Sharma, Apoorv Shukla, Ravinder Kumar Yadav,
Vinay Mohan Sharma, Mrs. Prabhleen Apoorv Shukla, Ms. Kritika
Yadav, Ms. Devina Sehgal, Gaurav Kejriwal, Rajeev Kumar Dubey,
Ashiwan Mishra, Kamlendra Mishra, Santosh Krishnan, Abhisth
Kumar, Ramendra Mohan Patnaik, Ms. Punam Kumari, Ms. Mrinal
Gopal Elker, Sandeep Sudhakar Deshmukh, Nishant Sharma, Rakesh
K. Sharma, Rohit K. Singh, Pritam Bishwas, Uday Nath Tiwari, Ms.
Pratibha Malviya, Ms. Manjula Gupta, Harsh Parashar, Kaushik
Choudhury, Shaantanu Jain, Ms. Anusha Agarwal, Deepanshu Jain,
Achintya Kumar Sinha, Kumar Ajit Singh, Manish Jain, Ms. Rashika
Swarup, Sachin Sharma, Ms. Kanika Kalaiyarasan, Saksham Garg,
Jyotirmoy Chatterjee, Abhishek Kumar Pandey, Raman Chitwan
Singh, Ms. Pankhuri Srivastav, Ms. Shreya Mathur, Ms. Neelam
Sharma, Jatinder K. Bhatia, Gurmeet Singh Makker, K. Parameshwar,
Shailesh Madiyal, Siddharth Dharmadhikri, Ms. Rukhmini Bobde,
Chitvan Singhal, Raman Yadav, Kartikay Aggarwal, Ameya Vikrama
Thanvi, Raghav Sharma, Kanu Agarwal, Karan Lahiri, Mukesh
Kumar Singh, Ms. Pragati Neekhra, Aniket Patel, Atul Dong, Prem
Sunder Jha, Kedar Nath Tripathy, Mishra Saurabh, Sunil Roy, Ms.
Ritika Gambhir Kohli, Omar Ahmad, Ayush Agarwal, Vikram Shah,
Tuhin Dey, Nikhil Kohli, Kushank Garg, Ms. Kritika Khurana, Ms.
Shrishti Jeswani, Rutwik Panda, Ms. Nikhar Berry, Ms. Anshu Malik,
Rajiv Shanker Dvivedi, Ms. Tulika Mukherjee, Beenu Sharma,
Venkat Narayan, Gaurav Jain, Ms. Abha Jain, Ms. Kavya Jhawar,
Pawanshree Agarwal, Ms. Sneha Kalita, Abhinav Hansaria, Ms.
Nandini Rai, Jaivir Singh, Ms. Sheenu Chauhan, Sanjeev Malhotra,
Parijat Kishore, Santosh Salvador, Praveen Swarup, Ameet Siingh,
Ms. Pareena Swarup, Ravi Kumar, Devesh Maurya, K.P. Singh, Ms.
Payal Swarup, Nityanand Mahato, Nithin Chowdary Pavuluri, Ms.
Shivika Mehra, Ms. Anupriya Srivastava, Ms. Anuradha Arputam,
Akshaj Singh, Ms. Radhika Misra, Sunit Chaudhary, Vasu Vats,
548 [2024] 8 S.C.R.

Digital Supreme Court Reports

Ms. Riddhi Jad, Abhinav Gupta, Gopal Prasad, Shibashish Misra,
M/s. Chambers of Kartik Seth, Kartik Seth, Ms. Shriya Gilhotra,
Ms. Maithili Moondra, Prashanth Dixit, Mahesh Bhati, Saurabh
Chaturvedi, Chiranjeev Sharma, Pushkin Tandon, K. R. Sasiprabhu,
Jaydeep Patel, S. Mahesh Sahasranaman, Ms. Shilpa Balani, Vishnu
Sharma A S, Prakhar Agarwal, Kumar Visalaksh, Udit Jain, Archit
Gupta, Abhishek Vikas, M/s. Trilegal Advocates on Record, Sudipta
Bhattacharjee, Onkar, Rajat Mittal, Arjyadeep Roy, Vivek Sharma,
Dr. Vijay Kumar Sharma, Anand Varma, Ms. Apoorva Pandey,
Ms. Adyasha Nanda, Akshat Shrivastava, Ms. Anuradha Dutt, Ms.
Fereshte D. Sethna, Tushar Jarwal, Ms. Suman Yadav, Ms. Priyanka
MP., Haaris Fazili, Kunal Dutt, Yash Mittal, Rahul Sateeja, Raghav
Dutt, Ms. B. Vijayalakshmi Menon, Manish Kumar Saran, Advs. for
the appearing parties.
Judgment / Order of the Supreme Court

Order
Dr Dhananjaya Y Chandrachud, CJI
Table of Contents*

A. Background................................................................................ 6
B. Submissions.............................................................................. 6
C. Prospective overruling............................................................. 9
D. A pragmatic solution to reconcile the conflicting interests....... 15
E. Conclusion................................................................................ 21

A. Background
1. In Mineral Area Development Authority v. Steel Authority of India,1
the nine-Judge Bench of this Court answered the questions referred
in terms of the conclusions arrived at by the majority. In the process,
the judgment overruled India Cement Ltd. v. State of Tamil Nadu2
and subsequent decisions of this Court which relied on it. After the
pronouncement of the judgment, counsel for the assesses submitted
that the judgment may be given prospective effect. Therefore, the

* Ed. Note: Pagination as per the original Judgment.
1 Civil Appeal Nos. 4056-4064 of 1999; 2024 INSC 554 (“MADA”).
2 [1989] Supp. 1 SCR 692 : (1990) 1 SCC 12
[2024] 8 S.C.R. 549

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

proceedings were listed for hearing submissions on whether or not
the judgment should be given prospective effect.
B. Submissions
2. Mr R Venkataramani, Attorney-General for India, Mr Tushar Mehta,
Solicitor-General of India, Mr Harish Salve, Mr Abhishek Manu Singhvi,
Mr Mukul Rohatgi, and Mr Arvind Datar, senior counsel, made the
following submissions:
a. India Cement (supra) held the field for thirty-five years before
it was overruled in MADA (supra). Demands for tax under state
legislation pertaining to Entries 49 and 50 of List II of the Seventh
Schedule have been stayed in terms of the law laid down in
India Cement (supra). The affected parties (which include
public sector undertakings) have factored in the state levies
which were valid and applicable at the relevant point of time
and passed them on to the end consumers. If State legislatures
are allowed to renew the tax demands, end consumers will
ultimately bear the burden;
b. After the decision in India Cement (supra), the levies collected
by the States were protected because of validation legislation
enacted by Parliament. If a ruling creates or renews a liability
for the assesses, there is no protection against retrospective
demands;
c. Since 2015, entities bidding for mineral concessions have
submitted their financial bids on the basis of the legal position
in India Cement (supra). If MADA (supra) is given retrospective
effect, it will rewrite commercial bargains underpinning the
mineral auctions. This Court ordinarily does not disturb past
or concluded transactions in tax matters;
d. The doctrine of prospective overruling is well-established in
Indian constitutional jurisprudence. MADA (supra) should be
given prospective effect because it lays down new constitutional
principles; and
e. Where enforcement of taxing legislation was either partially or
completely interdicted by judicial orders, it should be directed
that no new tax demand be made for the period before the
judgment in MADA (supra), that is, before 25 July 2024.
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3. On the other hand, Mr Rakesh Dwivedi, Mr Vijay Hansaria, and Mr
Tapesh Kumar Singh, senior counsel, appearing for the States made
the following submissions:
a. The doctrine of prospective overruling is applicable only
when the judgment invalidates a legislation or introduces
a new interpretation by overruling its earlier decision. The
doctrine of prospective overruling has never been applied to
situations where the declaration of law attaches validity to
taxing legislation;
b. If MADA (supra) is applied prospectively, India Cement (supra)
will have to operate till 25 July 2024. Resultantly, all relevant
state legislation will be tested on the anvil of India Cement
(supra) and may be declared ultra vires. This consequence is
unjust and against the public interest; and
c. In State of West Bengal v. Kesoram Industries Ltd,3 a
Constitution Bench upheld the validity of legislation enacted
by the State of West Bengal. After Kesoram (supra), several
states such as Chhattisgarh, Madhya Pradesh, and Rajasthan
enacted legislation which was upheld by the respective High
Courts. Giving prospective effect to MADA (supra) will result in
a discriminatory situation. While West Bengal will continue to
collect tax (which it has been doing since 1992), other states
with similar enactments may be deprived of collecting tax from
the date of their enactments.
4. We have also heard Mr Pitambar Acharya, Advocate General of the
State of Orissa, who emphasized the importance of protecting the
financial interests of States.
C. Prospective overruling
5. The doctrine of prospective overruling is applied when a constitutional
court overrules a well-established precedent by declaring a new rule
but limits its application to future situations. The underlying objective is
to avert injustice or hardships.4 The doctrine was applied by the courts
in the US on the basis that the US Constitution “neither prohibits nor

3 (2004) 10 SCC 201
4 Great Northern Railway Co. v. Sunburst Oil and Refining Co., 287 U S 358 (1932)
[2024] 8 S.C.R. 551

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

requires retroactive effect.”5 The US Supreme Court has considered
the existence of a statute or judicial decision as an “operative fact”
having “consequences which cannot justly be ignored” or “erased
by a new judicial declaration.”6 Therefore, it was held that the effect
of a subsequent ruling as to invalidity may have to be considered
in light of various aspects.7
6. In Chevron Oil Company v. Huson,8 the US Supreme Court identified
three separate factors to be considered while deciding the applicability
of prospective overruling: (i) the decision to be applied prospectively
must establish a new principle of law, either by overruling clear past
precedent on which litigants may have relied, or by deciding an issue
of first impression whose resolution was not foreshadowed; (ii) the
court must weigh the merits and demerits in each case by looking to
the prior history of the rule in question, its purpose and effect, and
whether retrospective operation will further or retard the operation of
the rule; and (iii) whether the application of nonretroactivity avoids
substantial inequitable results, injustice or hardships.
7. This Court has adopted the doctrine of prospective overruling, partly
inspired by the jurisprudence developed in the US. In Golak Nath
v. State of Punjab, a Bench of eleven Judges of this Court was
called upon to decide the validity of the Constitution (Seventeenth
Amendment) Act 1964 which included certain state agrarian laws
in the Ninth Schedule of the Constitution. The majority held that an
amendment to the Constitution was “law” according to the definition
under Article 13. Further, it was held that constitutional amendments
are also subject to limitations prescribed under Article 13(2). 9
Resultantly, the constitutional amendment was declared void for
infringing Article 13(2). The next issue before the Court was whether
the decision should be applied prospectively.
8. Golak Nath (supra) overruled earlier decisions10 of this Court which
had held that Parliament can amend or abridge the fundamental

5 Linkletter v. Walker, 381 US 618 (1965)
6 Chicot County Drainage Dist. v. Baxter State Bank, 308 US 371 (1940)
7 Chicot County Drainage Dist (supra)
8 404 US 97 (1971)
9 Constitution of India, Article 13
10 Shankari Prasad Singh Deo v. Union of India (1951) SCC 966; Sajjan Singh v. State of Rajasthan (1964)
SCC OnLine SC 25.
552 [2024] 8 S.C.R.

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rights in Part III of the Constitution. The States had relied on
the earlier rulings to enact agrarian legislation. During 1950 and
1967, various amendments were carried out to the Constitution
validating the agrarian reforms undertaken after Independence.
In this context, Chief Justice K Subba Rao observed that giving
retrospective operation to the decision “would introduce chaos and
unsettle the conditions in our country.” Resultantly, it was observed
that overruling the earlier decisions but restricting the ruling to the
future and not to the past was a “reasonable principle” to resolve
extraordinary situations:
“49. […] It is really a pragmatic solution reconciling
the two conflicting doctrines, namely, that a court
finds law and that it does make law. It finds law but
restricts its operation to the future. It enables the court
to bring about a smooth transition by correcting its errors
without disturbing the impact of those errors on the past
transactions. It is left to the discretion of the court to
prescribe the limits of the retroactivity and thereby
it enables it to mould the relief to meet the ends of
justice.”
(emphasis added)
9. The Chief Justice held that the power of this Court to apply the
doctrine of prospective overruling could be traced to Article 142
and formulated the following propositions about the applicability of
the doctrine:
a. It can be invoked only in matters arising under the Constitution;
b. It can be applied only by this Court as it has the constitutional
jurisdiction to declare law binding on all the courts in India; and
c. The scope of the retroactive operation of the law is left to the
discretion of this Court to be moulded in accordance with the
justice of the cause or matter before it.
10. After laying down the broad canvas, the learned Chief Justice
concluded:
“53. […] What then is the effect of our conclusion on
the instant case? Having regard to the history of the
amendments, their impact on the social and economic
[2024] 8 S.C.R. 553

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

affairs of our country and the chaotic situation that
may be brought about by the sudden withdrawal at
this stage of the amendments from the Constitution,
we think that considerable judicial restraint is called
for. We, therefore, declare that our decision will not affect
the validity of the Constitution (Seventeenth Amendment)
Act, 1964, or other amendments made to the Constitution
taking away or abridging the fundamental rights. We further
declare that in future the Parliament will have no power
to amend Part III of the Constitution so as to take away
or abridge the fundamental rights.”
(emphasis added)
11. Although Golak Nath (supra) was subsequently overruled in
Kesavananda Bharati v. State of Kerala,11 the doctrine of prospective
overruling has been accepted by this Court. This Court has applied
the doctrine in varied contexts. The following principles emerge on
the application of the doctrine:
a. The power of this Court to mould the relief claimed to meet the
justice of the case is derived from Article 142;12
b. It is applied by this Court while overruling its earlier decision,
which was otherwise final. It has also been applied when
deciding on an issue for the first time;13
c. The object is to validate all the actions taken before the date
of declaration in the larger public interest.14 The doctrine does
not validate an invalid law, but the declaration of invalidation
takes effect from a future date;15
d. Cases that have attained finality are saved because doing
otherwise would cause unnecessary and avoidable hardships;16
e. It is applied to bring about a smooth transition of the operation

11 [1973] Supp. 1 SCR 1 : (1973) 4 SCC 225
12 Belsund Sugar Co. Ltd. v. State of Bihar (1999) 9 SCC 620 [112]
13 Somaiya Organics (India) Ltd. v. State of U P (2001) 5 SCC 519 [24]
14 Baburam v. C C Jacob (1999) 3 SCC 362 [5]
15 Somaiya Organics (supra) [37]
16 Raymond Ltd. v. MP Electricity Board (2001) 1 SCC 534 [24]; Sarwan Kumar v. Madan Lal Aggarwal
(2003) 4 SCC 147 [15]; Ramesh Kumar Soni v. State of M P (2013) 14 SCC 696 [21].
554 [2024] 8 S.C.R.

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of law without unduly affecting the rights of the people who
acted upon the overruled law;17
f. It is a device innovated to avoid: (i) reopening settled issues,
(ii) refund of amounts collected under invalid legislation, and
(iii) multiplicity of proceedings;18 and
g. It is applied to avoid social and economic disruptions and give
sufficient time to the affected entities and institutions to make
appropriate changes and adjustments.19
12. This Court has often used its powers under Article 142 to limit the
retroactivity of its decisions. In Union of India v. Mohd. Ramzan
Khan,20 a three-Judge Bench of this Court held that non-furnishing
of an enquiry report to a delinquent employee would amount to
a violation of the rules of natural justice. The Court declared the
law to be prospective, but gave relief to the employees before the
Court. The correctness of Ramzan Khan (supra) came up before a
Constitution Bench in Managing Director, ECIL v. B Karunakar.21
The Constitution Bench upheld Ramzan Khan (supra). It was further
held that the law laid down in Ramzan Khan (supra) cannot be
applied retrospectively because:
a. the legal position on furnishing the report of an enquiry officer
to the delinquent employee was unsettled before Ramzan
Khan (supra);
b. the authorities had proceeded on the assumption that there
was no requirement to furnish a copy of the enquiry report to
the delinquent officer; and
c. reopening of all disciplinary proceedings before Ramzan Khan
(supra) would result in grave prejudice to the administration
which outweighed the benefit to the employees.

17 L Chandra Kumar v. Union of India (1997) 3 SCC 261 [94]; Ashok Kumar Gupta v. State of U P (1997) 5
SCC 201 [54]
18 M A Murthy v. State of Karnataka (2003) 7 SCC 517 [8]; Shree Mahavir Oil Mills v. State of Jammu and
Kashmir (1996) 11 SCC 39 [27]
19 New Noble Educational Society v. CIT (2023) 6 SCC 649 [84]
20 [1990] Supp. 3 SCR 248 : (1991) 1 SCC 588
21 [1993] Supp. 2 SCR 576 : (1993) 4 SCC 727
[2024] 8 S.C.R. 555

Mineral Area Development Authority & Anr. v.
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Hence, it was held that no proceedings before the decision in
Ramzan Khan (supra) should be challenged on the ground that
there was a failure to furnish the enquiry report.
D. A pragmatic solution to reconcile the conflicting interests
13. In India Cement (supra), a Bench of seven Judges of this Court held
that royalty is tax. Resultantly, it was held that the State legislatures
have no legislative competence to impose cess on royalty under
Entries 23 and 50 of List II. Fifteen years later, a Constitution Bench
in Kesoram (supra) held that royalty is not a tax. It was further held
that the power to levy tax on mineral rights vests with the State
legislatures and is subject to any limitations laid down by Parliament
by law relating to mineral development. Given this divergence, a
reference was made to a larger Bench. MADA (supra) has laid down
the principles for interpreting Entry 54 of List I and Entries 23 and 50
of List II. In the process, this Court overruled India Cement (supra).
14. The doctrine of prospective overruling has been applied by this Court
in situations where the new declaration results in the invalidation of
legislation, which would otherwise have been valid under the old
declaration.22 The doctrine has also been used where this Court has
declared a legislation as ultra vires.23 In the case of taxing statutes,
such a declaration would make the State liable to refund all amounts
collected under the invalid legislation. Therefore, this Court declares
the new rule to apply prospectively not only to secure the revenues
of the State but also to protect the rights and obligations crystallized
by persons and entities under the old regime.24
15. This Court generally does not declare prospective overruling when
upholding the legislative competence of legislatures. In Municipal
Council, Kota v. Delhi Cloth & General Mills Co. Ltd.,25 this Court
was called upon to decide the validity of the dharmada tax levied
and collected by the Municipal Council. The High Court held that the
Municipal Council was not authorized to collect the tax. Further, the

22 Golak Nath (supra) [53]; Synthetics & Chemicals Ltd v. State of U P (1990) 1 SCC 109 [89]
23 Gaurav Kumar v. Union of India, 2024 SCC OnLine SC 1841 [108]
24 India Cement Ltd v. State of T N (1990) 1 SCC 12 [35]; Orissa Cement Ltd v. State of Orissa (1991) Supp
(1) SCC 430 [69]
25 [2001] 2 SCR 287 : (2001) 3 SCC 654
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High Court directed the State government to refund the collections
made to the assesses. In the appeal, a two-Judge Bench of this
Court upheld the competence of the Municipal Council to levy the
tax. It also set aside the order of the High Court granting refunds to
the assesses.
16. In Jindal Stainless Ltd. v. State of Haryana,26 a Bench of nine
Judges of this Court held that a non-discriminatory tax does not per
se constitute a restriction on the right to free trade, commerce and
intercourse guaranteed under Article 301. This Court overruled long-
standing precedents that held that taxes, except for compensatory
taxes, offend Article 301.27 In that case, the counsel specifically
submitted that the judgment should be given a prospective effect.28
However, the decision was given a retrospective effect. In her
concurring opinion, Justice Banumathi dealt with the issue raised
by the assesses about payment/refund of tax in case the validity of
the legislation was upheld or otherwise. The learned Judge rejected
the claim of the assesses for refund of taxes thus:
“481. It is well settled that a claim of refund can be
allowed only when the claimant establishes that he has
not passed on the tax burden to the consumers. No
refund can be granted so as to cause windfall gain to any
person when he has not suffered the burden of tax. The
possibility of the tax burden having been passed on to the
consumers by the assessees cannot be ruled out in the
present case. Applying the law laid down above to the
present case, it emerges that the assessees cannot
claim refund irrespective of whether the impugned
legislations are declared valid or unconstitutional.
Unless the assessees establish that they have not
passed on the tax burden to the consumers, they
cannot make a claim for refund and unjustly enrich
themselves.”
(emphasis added)

26 [2016] 10 SCR 1 : (2017) 12 SCC 1
27 Atiabari Tea Co. Ltd. v. State of Assam, AIR 1961 SC 232; Automobile Transport (Rajasthan) Ltd. v. State
of Rajasthan, AIR 1962 SC 1406
28 Jindal Stainless Ltd. (supra) [897]
[2024] 8 S.C.R. 557

Mineral Area Development Authority & Anr. v.
M/s Steel Authority of India & Anr. Etc.

17. MADA (supra) has upheld the legislative competence of States under
Entries 49 and 50 of List II. If MADA (supra) is given a prospective
application, the validity of all relevant legislation enacted before the
date of the decision, that is 25 July 2024, will have to be tested on
the touchstone of the previous law. The previous law on the aspects
of interpretation of Entry 54 of List I and Entries 23 and 50 of List II
of the Seventh Schedule was unsettled because of the conflicting
decisions in India Cement (supra) and Kesoram (supra). There
is always a presumption of constitutionality in favor of a statutory
enactment. It is based on the theory that the elected representatives
are aware of the needs of the citizens and are best placed to frame
policies to resolve them.29 Legislation represents the will of the
people and cannot be lightly interfered with unless it transgresses
constitutional principles.30 If MADA (supra) is applied prospectively,
the relevant taxing legislations may conceivably be invalidated,
requiring the States to refund the amount collected to the assesses.
Since MADA (supra) has answered the reference and resolved the
conflict, it would be iniquitous to apply the decision prospectively.
18. The learned Solicitor General relied on the Constitution Bench
decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc.31 to draw upon the point that this Court has applied
the doctrine of prospective overruling where the parties have entered
into commercial relations based on the prevailing legal position. In
Bharat Aluminium (supra), this Court held:
“197. The judgment in Bhatia International [(2002) 4 SCC
105] was rendered by this Court on 13-3-2002. Since
then, the aforesaid judgment has been followed by all
the High Courts as well as by this Court on numerous
occasions. In fact, the judgment in Venture Global Engg.
[(2008) 4 SCC 190] has been rendered on 10-1-2008 in
terms of the ratio of the decision in Bhatia International
[(2002) 4 SCC 105]. Thus, in order to do complete justice,
we hereby order, that the law now declared by this Court

29 Association for Democratic Reforms v. Union of India (2024) 5 SCC 1 [45]
30 Charanjit Lal Chowdhury v. Union of India [1950] SCR 869; State of Bihar v. Bihar Distillery Ltd. (1997) 2
SCC 453 [17]
31 [2012] 12 SCR 327 : (2012) 9 SCC 552
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shall apply prospectively, to all the arbitration agreements
executed hereafter.”
19. The decision in Bharat Aluminium (supra) was applied prospectively
to arbitration agreements concluded after the date of judgment.
However, the legal context in the present batch of matters is different.
Article 265 of the Constitution prescribes that no tax shall be levied
or collected except by authority of law. The law must be valid in
the sense that it must be within the legislative competence of the
legislature and consistent with other provisions of the Constitution.32
Further, the power to levy tax is an incidence of sovereignty.33 If
we are to give a prospective application to MADA (supra), it would
result in a situation where the legislation enacted by the States in
pursuance of their plenary powers under Entries 49 and 50 of List II
may conceivably be invalidated based on a position of law which has
been overruled. This would not be a constitutionally just outcome.
20. After India Cement (supra), Parliament enacted the Cess and Other
Taxes on Minerals (Validation) Act 1992 to validate the imposition
and collection of taxes on minerals made under the State legislations
before 1991. The Central Government also increased the rates of
royalty to compensate the States for the loss of mineral revenues.34
The recalibration of the royalty rates protected the States from the
amount lost due to the abolition of cess on minerals and mineral
rights. The assesses submit that in the interregnum they have
structured their commercial bargains in terms of the prevalent law.
Subsequently, Kesoram (supra) took a view that diverged from the
ruling in India Cement (supra). Kesoram (supra) is an operative
fact based on which many State legislatures have already enacted
taxing statutes. A pragmatic solution to reconcile the financial interests
of the States and the assesses can be achieved by proscribing the
States from demanding taxes pertaining to Entries 49 and 50 of List
II of the Seventh Schedule for the period before Kesoram (supra).
21. The learned Solicitor General has pointed out that the total amount
due by the assesses (which includes public sector undertakings) to the

32 Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536 [25]
33 Jindal Stainless Ltd. (supra) [17]
34 See ‘Mineral Royalties’, Government of India, Ministry of Mines (2011) 16.
[2024] 8 S.C.R. 559

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M/s Steel Authority of India & Anr. Etc.

governments is substantial and will impose a heavy financial burden
on the assesses. During the pendency of the present reference, this
Court passed interim orders in the tagged matters. These include
(i) rejection of the stay of proceedings while allowing restitution in
the event the appeal is allowed;35 (ii) grant of interim stay subject
to the assesses submitting bank guarantees for the whole amount
sought to be recovered;36 and (iii) direction to the States to take no
coercive steps against the assesses for recovery of any demands of
tax pending the appeal.37 The payment or non-payment of the dues
was thus made subject to the outcome of the appeals or petitions.
It is a settled legal position that a beneficiary of an interim order of
stay has to pay interest on the amount withheld or not paid under the
interim order in the event the outcome goes against the beneficiary.38
22. The total amount, that is the principal plus the interest, due by the
assesses in the pending matters may be substantial in comparison
to their total net worth. Steel Authority of India has stated on
affidavit that retrospective application of MADA (supra) will lead to
revival of cumulative demands to the tune of approximately Rupees
three thousand crores from different States. The delay in the court
proceedings should not be to the detriment of the assesses.39
Taking into consideration the lapse of more than three decades
since India Cement (supra) and more than a decade since the
matter was referred to a larger Bench, equities will be balanced if
the State governments waive the outstanding interest accrued on
the principal due from the assesses. This direction applies to all
assesses, regardless of whether they have approached this Court
or the High Courts challenging the validity of the relevant statutes.
23. During the proceedings, the Solicitor General submitted that a few
States do not wish to collect the dues accrued before the decision in
MADA (supra). It is the prerogative of the State legislatures to determine
whether to forego the dues for the period before 25 July 2024.

35 Civil Appeal No. 5329 of 2002; Civil Appeal No. 4745 of 2006; Civil Appeal No. 4478 of 2010
36 Civil Appeal No. 6498 of 2008
37 Civil Appeal No. 874 of 2013; Civil Appeal No. 3642 of 2011; Civil Appeal No. 10082 of 2016; Civil Appeal
No. 4588 of 2017.
38 State of Rajasthan v. J K Synthetics Ltd. (2011) 12 SCC 518 [23]; State of U P v. Prem Chopra, 2022
SCC OnLine SC 1770 [24]
39 See K C Ninan v. Kerala State Electricity Board, 2023 SCC OnLine SC 663 [339]
560 [2024] 8 S.C.R.

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E. Conclusion
24. The submission that MADA (supra) should be given prospective
effect is rejected.
25. Bearing in mind the consequences that would emanate from the past
period, the following conditionalities are directed to prevail:
a. While the States may levy or renew demands of tax, if any,
pertaining to Entries 49 and 50 of List II of the Seventh Schedule
in terms of the law laid down in the decision in MADA (supra)
the demand of tax shall not operate on transactions made prior
to 1 April 2005;
b. The time for payment of the demand of tax shall be staggered
in instalments over a period of twelve years commencing from
1 April 2026; and
c. The levy of interest and penalty on demands made for the period
before 25 July 2024 shall stand waived for all the assesses.

Result of the case: Directions issued.

†
Headnotes prepared by: Mukund P Unny, Hony. Associate Editor
(Verified by: Shadan Farasat, Adv.)