NMDC will now have to pay forest development tax

Karnataka high court on Friday gave a green signal to the state government to collect 50% of the Forest Development Tax (FDT) from National Mineral Development Corporation (NMDC).

A division bench headed by chief justice JS Khehar modified the stay order that was issued in February 2009, thus paving way for the government to collect 50% of the FDT from the NMDC. The order will authorise the state government to collect `221 crore from the NMDC. This is half of the total FDT that NMDC owes to the state. The tax was introduced in August 2008.

The high court passed the order on Friday after a government advocate RG Kolle filed an application in this regard. He had contended that the state government was not able to collect 50% FDT from the NMDC, although it was being collected from other mining companies.

Kolle pointed out that the high court had earlier directed other mining companies to pay 50% of the FDT they are liable to pay until the court decides the tax’s constitutional validity.

Last year, while dealing with a batch of petitions of mining firms Sesa Goa, Sandur Manganese and Iron Ore Ltd, the high court had empowered the state government to collect 12.5% of the FDT by way of cash and the remaining by way of guarantee.