The Patna High Court, in an oral judgment dated 30 November 2023, resolved a practical dispute that frequently arises when a mining lease expires but stockpiled, already-extracted material remains at the site. The petitioner—an infrastructure company engaged in road construction—had lawfully extracted stone chips from two mining blocks in Nawada district under leases that ended during the COVID-19 period. After expiry, substantial quantities of broken stone chips were found on site. The petitioner sought directions to remove these materials, secure e-challans, and complete a National Highway project, while the State expressed concern about safeguarding royalty and Goods and Services Tax (GST) dues. The Court permitted removal within a fixed timeline, reinforced the Collector’s primacy under the Bihar Minor Mineral Concession Rules, 1972, and required payment of royalty and any applicable GST within the stipulated period.

The factual matrix is straightforward. Two mining blocks measuring roughly 12.36 and 12.51 acres were allotted for meeting public road-building needs. Leases executed in 2015–2016 ran for five years and expired in December 2020 and January 2021 amid pandemic restrictions. Subsequent inspections in June and August 2021 recorded about 13.45 lakh CFT and then 13.12 lakh CFT of broken stone chips still lying at site—material already extracted and lying in heaps. Initially, local authorities allowed limited removal for a defined period, but later letters restricted removal to machinery and infrastructure, withholding permission to lift the remaining chips. The Mines Directorate later advised forfeiture of property left on site beyond six months of lease determination, prompting the petitioner to seek relief.

On the State’s side, counsel flagged a legitimate fiscal concern: once removal is permitted, the company must not escape due tax; therefore, protective conditions should ensure that the State does not suffer loss in royalty or GST. The Court directly engaged with this by exploring whether GST had been paid or was payable on the quantified stock, and by noting the ongoing national debate on whether mining royalty is itself a “tax.” While acknowledging that a nine-judge bench is presently reconsidering that conceptual issue, the Court emphasized that GST under the CGST Act is levied on “supply” and that assignment of mining rights for consideration typically falls within GST unless excluded. The Court, therefore, crafted relief that both enabled removal and preserved revenue—by binding the petitioner to pay royalty and any GST found due within the time allowed.

Crucially, the Court examined administrative competence under the Bihar Minor Mineral Concession Rules, 1972. Under these Rules, the Collector is the statutory authority to grant or renew leases, to refuse applications with recorded reasons, and—if necessary and with prior Government approval—to impose further conditions. The Court found that neither the Director nor the Assistant Director had the authority to interfere with grant or renewal; their actions that effectively prevented removal (despite earlier permission and without reasons) were inconsistent with the statutory scheme. The pattern of communications—granting time, then abruptly restricting removal without reason—was viewed as colorable exercise of power that caused prejudice to the petitioner and delayed a public road project.

Accordingly, the Court directed the authorities to allow lifting of the entire quantified broken stone material from both blocks within two months. If a fresh determination of quantity was considered necessary, it had to be completed within one week in the presence of the petitioner’s representative. The Court further clarified that the petitioner must ensure payment of royalty and any GST dues within that two-month window. Finally, it cautioned the Mines and State Tax departments to be vigilant so that, in future, materials are not removed without ensuring realization of lawful dues.

Significance or Implication of the Judgment

This decision strikes a pragmatic balance between project execution and revenue protection. On one hand, it recognizes the commercial reality that, when a lease expires, significant stockpiles may remain—particularly during exceptional periods like the COVID-19 lockdown—yet road projects cannot be held hostage to bureaucratic oscillation. On the other, it reassures the exchequer that removal will not proceed at the cost of unpaid royalty or indirect taxes.

For the general public, the judgment signals that courts will step in where administrative actions—especially contradictory directions from different levels—cause avoidable delays in public infrastructure. The Court insisted on reasons, timelines, and statutory fidelity. This should translate to faster clearance of stranded materials and smoother execution of highway and state road contracts, ultimately reducing project costs and time overruns.

For government departments, the ruling reinforces institutional discipline: the Collector’s statutory role under the 1972 Rules cannot be displaced by internal communications that lack jurisdiction or recorded reasons. Directions affecting property or business operations must be rooted in the Rules and supported by reasoned orders. The insistence on a one-week re-determination (if needed) and a two-month outer limit for removal creates a workable compliance template. Departments also gain a clear revenue-protection pathway: allow removal, but tie it to verifiable payment of royalty and GST.

Legal Issue(s) Decided and the Court’s Decision with reasoning

• Whether authorities could withhold removal of already-extracted stock after lease expiry without a reasoned order, despite earlier permission.
  Decision: No. The Court found the abrupt restriction (after earlier permission and time extension) to be a colorable exercise of power, lacking statutory backing and reasons, thereby warranting interference under Article 226.
• Who is the competent authority under the Bihar Minor Mineral Concession Rules, 1972 to grant/renew or impose conditions on leases.
  Decision: The Collector. Neither the Director nor the Assistant Director can usurp this statutory role; refusals must be reasoned and communicated.
• Whether removal can proceed while safeguarding government revenue.
  Decision: Yes. Removal of the entire quantified stock from both blocks is permitted within two months, subject to the petitioner ensuring payment of royalty and any GST dues within that period; fresh quantification, if necessary, must be completed in one week.
• Relevance of the ongoing national debate on the nature of “royalty” (tax or otherwise) and GST applicability.
  Decision: While a nine-judge bench is reconsidering the “royalty as tax” question, the Court clarified that GST is levied on supplies under the CGST Act; assignment of mineral rights for consideration typically falls within GST unless excluded. The Court thus framed relief to protect GST/royalty collection, without prejudging the nine-judge reference.

Judgments Referred by Parties

• India Cement Ltd. v. State of Tamil Nadu, AIR 1990 SC 85 (7-Judge Bench) — treated royalty as a tax (later doubted).
• State of West Bengal v. Kesoram Industries Ltd., AIR 2005 SC 1646 (5-Judge Bench) — questioned India Cements; discussed royalty’s nature.
• Mineral Area Development Authority v. Steel Authority of India Ltd., Civil Appeal Nos. 4056-4064 of 1999 — reference pending before a 9-Judge Bench on the royalty question.

Judgments Relied Upon or Cited by Court

• Bharat Sanchar Nigam Ltd. v. Union of India, (2006) 3 SCC 1 — supply concept and taxability under sales/VAT jurisprudence; relevance to GST framework.
• Gannon Dunkerley & Co. v. State of Rajasthan, (1993) 1 SCC 364 — composite contracts and tax incidence principles.
• State of U.P. v. Mohd. Nooh, 1958 SCR 595 — jurisdictional error and mala fides permit writ intervention.
• Pratap Singh v. State of Punjab, AIR 1964 SC 72 — abuse/misuse of power justifies judicial review.
• Fashih Chaudhary v. D.G. Doordarshan, (1989) 1 SCC 89 — administrative abuse reviewable under Article 226.
• E.P. Royappa v. State of Tamil Nadu, AIR 1974 SC 555; R.D. Shetty v. International Airport Authority, (1979) 3 SCC 489; Maneka Gandhi v. Union of India, (1978) 1 SCC 248; Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722; Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223 — arbitrariness violates Article 14; administrative fairness required.
• State of NCT of Delhi v. Sanjeev @ Bittoo, (2005) 5 SCC 181 — irrationality, non-application of mind vitiate decisions; court can look into record.

Case Title
M/s B.S.C.P.L Infrastructure Ltd. v. State of Bihar & Others

Case Number
Civil Writ Jurisdiction Case No. 12414 of 2023.

Coram and Names of Judges
Hon’ble Mr. Justice Purnendu Singh.

Names of Advocates and who they appeared for
Senior Counsel for the petitioner; counsel for the Mines Department; and State Counsel (including SC-11 and GA-7) for the State. (As recorded in the judgment.)

Link to Judgment
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