Cuttack, July 9: Orissa High Court on Tuesday stayed operation of the Indian Stamp (Odisha Amendment) Act, 2013, which expected miners to pay stamp duty to the state government for their mines at a time when their leases were pending renewal.

The court passed the interim order on a batch of petitions that sought to declare the amendment as unconstitutional and illegal. The amendments were notified on May 9 and the miners were asked to pay the stamp duty failing which the government had threatened to close down their operations.

On behalf of the state government, advocate general Ashok Mohanty said the amendment was necessary as miners were able to excavate minerals without renewal of lease because of deemed extension clause, but the state government was not getting revenue towards stamp duties, sometimes for decades, due to slow process of mines and forest department clearances required for lease renewal.

However, the division bench of chief justice C. Nagappan and Justice Indrajit Mahanty observed: “We are prima facie satisfied that judicial review of the Indian Stamp (Odisha Amendment) Act, 2013, is necessary in the interest of justice. Hence, we stay the amended act.”

Accordingly, the bench stayed all consequential executive instructions including the one issued on July 3 asking all district collectors not to allow operation of mines under deemed extension provision if they fail to deposit required stamp duty by July 9. The court posted the matter for hearing on 37 petitions after four weeks along with the counter affidavit of the state government.

Earlier, in the day, Steel Authority of India, Tata Steel, Federation of Indian Mineral Industries, Essel Mining & Industries Limited and several other petitioners submitted through their counsels that the state government had no legislative competence to amend the Stamp Act, 1899, and levy such a duty in the garb of stamp duty.

The question of levy of stamp duty even before the occurrence of the taxable event (lease) is contrary to the provisions of central legislations – Mines and Minerals (Development and Regulation) Act, 1957, and per Mineral Concession Rules (MCR), 1960.

In the amended act, the state government prescribed that miners operating deemed extension mines have to pay stamp duty soon after expiry of lease validity, which should be equivalent of 15 per cent total royalty to be paid by the miner. The amount will be deducted at the time of execution of lease agreement.

Similarly, if the renewal of mines lease is rejected, then the government has to refund the amount, the new law said.

So far, about 330 applications of mine lessees are pending for renewal while 50 odd leaseholders are continuing operations under deemed extension provision.