The amendment lands in a legal landscape reshaped two years earlier. On 25 July 2024, a nine-judge Constitution Bench of the Supreme Court decided Mineral Area Development Authority v. Steel Authority of India by an 8:1 majority. It held that royalty payable under the MMDR Act, 1957 is not a tax — the liability arises from the contractual conditions of the mining lease — and that the power of State Legislatures to tax mineral rights and mineral-bearing land under the State List is therefore not exhausted by the royalty imposed under a parliamentary law. In doing so it overruled the seven-judge ruling in India Cement Ltd. v. State of Tamil Nadu, which had treated royalty as a tax. A subsequent order made the ruling operative for demands from 1 April 2005, while waiving interest and penalties on demands raised before 25 July 2024. The 2026 Bill approaches the same terrain from the legislative side: rather than disputing the States' entries, it uses the Union's declaration under Section 2 read with Entry 54 of the Union List to prescribe the conditions under which such levies may be imposed at all, and to invalidate levies not paid or collected before commencement. The release itself frames the objective in economic terms — ending non-uniform rates across States, multiple levies on production or dispatch, retrospective demands and cascading taxation, all of which it says raised costs disproportionately for small and medium operators and risked pushing industry towards imported minerals.

Mineral taxation is where fiscal federalism meets industrial policy, and the two pull in opposite directions. Mineral-bearing States argue that they bear the environmental and social cost of extraction and are entitled to tax it; the Union's case, as put in this release, is that a mineral extracted in one State is an input to industry across the country, so uneven and unpredictable State levies raise the cost of goods nationally, weaken domestic supply chains and can make imported minerals cheaper than Indian ones despite adequate reserves. The specific design choice is worth noting for answers: the amendment does not extinguish State levies outright — it makes them conditional on rules the Centre will frame under the amended Section 13. It is a shift of the decision point rather than a straight prohibition, and that distinction is exactly what a careful multi-statement question will test.