The Maharashtra government has rescinded its May 2023 circular that outlined a formula for calculating royalty on minor minerals extracted during construction and land development. This decision is expected to alleviate concerns for developers and contractors embroiled in legal battles regarding the controversial framework.
The revenue and forest department issued a new circular on July 9, stating that the previous policy had led to legal disputes as many of its stipulations were deemed inconsistent with rulings from the Supreme Court and the Bombay High Court.
The government has immediately canceled the 2023 circular.
The retracted document established a method for determining royalties on soil, stone, and other minor minerals resulting from foundation excavations and plot developments, contingent upon approvals from planning authorities.
The assessment was based on notional percentage estimates linked to land parcel sizes rather than the actual volume of minerals extracted, causing field authorities to initiate recovery efforts based on the defined formula.
According to the latest government circular, the implementation of this policy had opened the door to potential penalties from field officials, resulting in numerous court cases and creating uncertainty for the real estate sector.
It noted that developers had raised significant legal challenges, contending that the circular conflicted with judicial precedents concerning the extraction and transportation of minor minerals during legitimate construction activities.
“This will help streamline procedures for verifying the end use of minor minerals, whether for self-use or commercial purposes,” said Vidya Adsule, founder of Versatile Law Partners. “By establishing a clear basis for calculating penalties, the transparency required will be achieved. It will also limit arbitrary decisions made by officers when imposing penalties. Builders, developers, contractors, infrastructure companies, and farmers will benefit from relief against unjustified royalty and penalty demands from authorities.”
The recent circular indicates that the government plans to create a new, more transparent framework, taking into account directives from the Supreme Court and High Court. The aim is to ensure compliance with judicial mandates, prevent arbitrary actions by field authorities, protect government revenue, and reduce litigation.
Until a revised policy is announced, the government will issue a new resolution or circular that will clearly outline the procedures for gaining permissions related to the excavation and transportation of minor minerals generated from land development and construction activities under Rule 46 of the Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013.
This decision will be closely monitored by real estate developers, infrastructure companies, and contractors involved in large-scale excavation, as the 2023 framework has become a significant source of disputes between project proponents and district authorities. Industry executives believe that this withdrawal could reduce regulatory uncertainty in the short term while they await clarification on the government’s forthcoming replacement policy.
