SC Upholds Stamp Duty on Mining Leases Based on Anticipated Royalty

Birla Corporation Limited Vs State of Madhya Pradesh & Ors. (Supreme Court of India)

The Supreme Court considered an appeal arising from a dispute over the basis for calculating stamp duty payable on a mining lease granted by the State of Madhya Pradesh. The appellant had been granted a mining lease for limestone over an area of 56.27 hectares at Village Birhauli, Tehsil Raghuraj Nagar, District Satna. By a letter dated 02.07.2004, the District Collector, Satna, required the appellant to pay stamp duty of Rs.4,32,00,000 calculated on the basis of anticipated royalty. The appellant challenged the demand before the Madhya Pradesh High Court, whose Division Bench dismissed the writ petition. The present appeal challenged that judgment.

The principal issue before the Supreme Court was whether stamp duty on the mining lease agreement should be determined on the basis of “dead rent” or “anticipated royalty.”

The appellant contended that Section 26 of the Indian Stamp Act, 1899 was inapplicable and that Article 33(a) of Schedule I-A of the Indian Stamp (Madhya Pradesh Amendment) Act, 2002 governed the computation of stamp duty. It argued that the circular dated 15.03.1993 issued by the Mineral Resource Department, Government of Madhya Pradesh, which provided for determination of stamp duty on the basis of anticipated average royalty, was merely an executive instruction without statutory authority. According to the appellant, stamp duty ought to have been calculated on the basis of dead rent prescribed under Section 9A of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), read with the Third Schedule, Rule 31 of the Mineral Concession Rules, 1960 and the relevant clauses of Form K. The appellant also submitted that the proviso to Section 26 of the Stamp Act was contrary to the main provision.