Every tonne of stone quarried in India carries a royalty owed to the state, and the stone is legal on a public road only while a valid pass travels with it. Most arguments over minor mineral royalty on a highway package are not about whether it was paid. They are about whether the person holding the bill can prove it.
This sets the paper out in the order it is created: the concession, the royalty and the DMF contribution, the transit pass for aggregate, and what a works department does with all of it at bill time. No rates are quoted. They sit in each state's schedule and are revised by notification, so a figure that was right on the day of writing would be wrong in a tender.
Why minor mineral royalty is the state's to set
A minor mineral is defined in Section 3(e) of the Mines and Minerals (Development and Regulation) Act 1957: building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral the Central Government notifies as minor. Road metal, boulder and murrum are on the notified list. Section 15 then hands the subject to the states: who gets a quarry, for how long, at what royalty. Section 23C adds the power to make rules against illegal mining, transport and storage, which is where the transit pass comes from, and Section 4(1A) forbids moving or storing any mineral except as the Act and those rules allow.
So a contractor working in four states is working under four sets of rules, with different words for the same things.
| State | Concession rules | A quarry is held under | Transit pass |
|---|---|---|---|
| Rajasthan | Rajasthan Minor Mineral Concession Rules, 2017 | Mining lease, quarry licence, short-term permit | e-rawanna from the concession; e-transit pass for stockists and traders |
| Uttar Pradesh | Uttar Pradesh Minor Minerals (Concession) Rules, 2021 | Mining lease, mining permit | e-MM-11 from the lease; Form C from a storage licence; ISTP for inter-state movement |
| Madhya Pradesh | Madhya Pradesh Minor Mineral Rules, 1996 | Quarry lease, trade quarry, quarry permit | e-TP generated on the state portal |
| Maharashtra | Maharashtra Minor Mineral Extraction (Development and Regulation) Rules, 2013 | Quarry lease, quarry permit | Transit pass through the Mahakhanij portal; a secondary pass for processed stone |
Every one of these has been amended many times; read the current notification. Transport and storage in Uttar Pradesh fall under its Minerals (Prevention of Illegal Mining, Transportation and Storage) Rules, 2018, and in Madhya Pradesh under its Mineral (Prevention of Illegal Mining, Transportation and Storage) Rules, 2022.
Lease, quarry licence or short-term permit
All of them give the right to take a named mineral from a defined area. They differ in size, in duration and in how the state is paid.
- Mining or quarry lease. The long-term right over a surveyed area, granted for a term of years and increasingly by auction or e-tender where the land is the government's. It carries the full set of obligations: mining plan, environmental clearance, returns. Rajasthan's 2017 rules do not grant a mining lease below one hectare.
- Quarry licence. Rajasthan's term for a small delineated plot worked on a fixed annual licence fee, with royalty charged separately on what is taken out.
- Short-term or quarry permit. A permit for a limited quantity over a short period, meant for a specific need. Rajasthan grants short-term permits under Rule 51 of its rules, Maharashtra a temporary quarry permit under Rule 59, Uttar Pradesh a mining permit. Its quantity ceiling is the line to read.
Whichever it is, read three lines before relying on somebody else's concession: the boundary, the validity date, and the annual quantity allowed by the environmental clearance. A lease can be valid and still have used up its year's quantity by January. The clearances that sit behind a concession are set out in opening a stone quarry.
Royalty on stone and how it is paid
Royalty is the state's charge on mineral removed from, or consumed within, the concession area. It is levied on quantity, at the rate in the state's schedule for that mineral on the day of dispatch. Some schedules are per tonne and others by volume, per cubic metre or, in Maharashtra, per brass, so the same load may need converting before two bills agree. The conversions are in aggregate weight in CFT, brass and tonnes.
On the electronic systems now used in all four states, royalty is in effect prepaid. The concession holder keeps a balance on the state portal and each pass generated draws on it. When the balance runs out no pass is issued, and no tipper legally leaves. Most state rules also fix a dead rent, a minimum payable for the year whether or not the quarry produces.
What is DMF in mining?
DMF is the District Mineral Foundation: a non-profit trust in each district affected by mining, funded by a contribution that concession holders pay over and above royalty, and spent on the people and places the mining affects. Section 9B of the MMDR Act created it in 2015. For major minerals the Centre fixed the contribution at 30 per cent of royalty on leases granted before 12 January 2015 and 10 per cent on leases granted from that date. For minor minerals Section 15A leaves the amount to the state, which generally sets it as a percentage of royalty.
For a buyer the point is short. DMF is a second statutory charge on every tonne and it moves when royalty moves. A quotation that says royalty extra should say whether DMF is inside that word.
The transit pass for aggregate: rawanna, MM-11, e-TP
The transit pass ties one load to royalty paid. It names the concession, the mineral, the quantity, the vehicle and the destination, and it is generated for a single trip with a limited validity. A vehicle stopped without one, or with one that has run out or names another vehicle, is treated as carrying illegally transported mineral, and the state rules provide for seizure and penalty.
Two details catch crushers. A pass from the quarry covers boulder moving to the plant. Crushed stone leaving a plant or a stock outside the lease is a second movement, and most states want a second document for it: Form C from a storage licence in Uttar Pradesh, an e-transit pass issued to the stockist or trader in Rajasthan, a secondary pass through Mahakhanij in Maharashtra. The licences a crusher holds for this are covered in stone crusher licence and clearances.
The other is the state line. The source state's pass proves royalty was paid there; the destination state may ask for its own pass on entry, as Uttar Pradesh does with the ISTP. Check both ends before pricing an inter-state lead.
The documents, who issues them and what each proves
| Document | Who issues it | What it proves |
|---|---|---|
| Lease deed, quarry licence or permit | State mining department or the Collector | The right to take that mineral from that area until that date |
| Approved mining plan | State mining department | How the quarry is to be worked, and how much a year |
| Environmental clearance | SEIAA, for a lease in Category B | The annual quantity allowed and the conditions attached to it |
| Consent to operate | State Pollution Control Board | That the quarry or the crusher may run, and until when |
| Royalty and DMF receipt or challan | State treasury or the mining portal | That the charges on a stated quantity were paid |
| Transit pass | Generated by the concession holder on the state portal | That one load, on one vehicle, left a legal source with royalty paid |
| Stockist or storage pass | Generated by the licensed crusher or dealer | That crushed stone leaving a plant traces back to royalty-paid rock |
| Weighbridge slip | The plant | The weight in the load, to set against the pass |
| Royalty clearance or no-dues certificate | Collector or district mining officer | That nothing is outstanding on the mineral used in a work |
Names and issuing offices differ by state. The column that matters is the last one.
What happens to the bill when royalty cannot be shown
Works departments hold the contractor answerable for royalty on every minor mineral measured in the work, whether the contractor quarried it or bought it. The usual mechanism is a clause letting the engineer deduct royalty from running bills unless proof of payment is produced, and release it against a clearance certificate. The agreement form in the Madhya Pradesh public works manual is an example: the executive engineer deducts royalty from the running bill where the Collector's royalty clearance certificate has not been submitted. Contractors there have gone to the High Court over deductions made even against purchase bills from authorised dealers, which shows how narrowly proof can be read.
Buy only against passes, and keep the passes, not just the invoices. Reconcile pass quantity against weighbridge quantity and measured quantity every month, in the unit the royalty schedule uses, while the gaps are still small enough to explain. Apply for the clearance certificate before the final bill is due, because it comes from a different office from the one paying you. On HAM and EPC packages the payment mechanism is different but the exposure is the same: mineral in the works that cannot be traced to a royalty-paid source is open to a demand from the state.
What to ask for with every load
Put four questions to a supplier before the first tipper: whose concession the rock comes off, which pass will travel with crushed material, whether royalty and DMF are inside the rate, and what happens to the rate when the state revises either. On our own supply every dispatch is weighed and slipped, royalty and transit paperwork are handled whichever lease the rock comes off, and royalty movement is written down at the start as one of the two things, with diesel, that sit outside a fixed rate. The terms are on aggregate supply. Where the lease is yours and the production is ours, see mining operations.