 "Stamp duty stumps operations in re-auctioned coal mines")
The new formula of stamp duty and registration fee calculation for the coal blocks re-allocated had resulted in the non-execution of lease deed, stranding the mining operations even as nearly six months had passed after the mines were handed over to the new owners.
In September 2014, the apex court had cancelled the allocation of the 214 coal blocks; facilitating for the Narendra Modi government to auction the mines. The companies participated in the bid and purchased the mines at higher price. The new owners took control over the operational mines on April 1 but failed to continue with the production. The mining lease deed could not be executed as the stamp duty and registration fee had increased to over 100 folds.
Prior to coal block auction and enforcement of new Mines and Minerals (Development and Regulation) Act 2015, stamp duty was calculated on the basis of royalty of mineral commodity. For example, stamp duty for any coal mine with production capacity of 1 million tonne per annum (MTPA) was Rs 3.9375 crore and registration fee Rs 0.2953 crore considering Royalty as Rs 100 per tonne. Now, since the mines had been purchased by quoting the price, the stamp duty would be applicable on the basis of bid price.
For a coal block with production capacity of 1 MTPA and purchased for Rs 3000 per tonne as bid amount, the successful bidder now has to pay Rs 300 crore as stamp duty and Rs 225 crore as registration fee. This would amount to Rs 525 crore in place of Rs 4.23 crore. Considering the old stamp duty calculation, companies prepared its financial model and went for aggressive bidding.
Vedanta-controlled Bharat Aluminium Company Limited (Balco) that purchased Chotia coal block from Prakash Industries at Rs 3025 for a tonne now had to pay Rs 536 crore as stamp duty and registration fee while its predecessor paid just Rs 5 crore for the same. “It will be very difficult to operate the mines by paying heavy stamp duty and fee as the company had already quoted higher price to bag the block,” Balco spokesperson B K Sriwastwa said.
Similarly, Hindalco that bagged two operational mines in Chhattisgarh by quoting over Rs 3000 per tonne rate had to pay over Rs 2000 crore. The company however did not respond to an e-mail sent for its version on the issue. A senior company official here, willing anonymity, said they would prefer to surrender the mines as it would not be viable to operate after paying heft amount.
The companies are now mounting pressure on the state government to exempt or relax the stamp duty. None of the companies that bagged mines in Chhattisgarh had executed the lease deed that would allow mining. In Madhya Pradesh, Jharkhand and Odisha also, the issue had posed a big challenge for the authorities. A senior official in the Chhattisgarh government said officials from all the four states were in touch to find a solution.
Chhattisgarh’s industry and commercial tax minister Amar Agrawal refused to talk on the issue. The state government had earlier sought law department’s opinion on the issue. The department remark was in negative. Since the state government would incur a huge revenue loss of over Rs 3000 crore, no one want to take the risk. After all, it would not be a notional loss but an actual deficit.
The exemption of stamp duty, at least in the BJP-ruled state, would put the Narendra Modi government on back foot. For, the Manmohan Singh government was put under the scanner for the alleged underpriced coal mines resulting in windfall gains to the companies—a major poll plank in the last general elections.
