Summary: The Supreme Court of India, in the case of Karnataka Iron and Steel Manufacturers Association v. Mineral Area Development Authority (Diary No. 38926/2024), dismissed a review petition on September 24, 2024, affirming that royalty is not considered a tax. This petition was filed to challenge an earlier judgment from July 25, 2024, in Mineral Area Development Authority v. M/s. Steel Authority of India and Anr., where it was held that royalty is a contractual payment made to the government under agreed terms, not a form of taxation. The court clarified that while a statute may provide mechanisms for recovery of unpaid royalties, this does not change its nature from a contractual obligation to a tax. The rejection of the review petition reinforces the court’s position that royalty payments, even if regulated by statute, remain separate from taxation. The decision maintains a clear distinction between taxes and royalties under Indian law.
The Hon’ble Supreme Court in the case of Karnataka Iron and Steel Manufacturers Association v. Mineral Area Development Authority (Diary No. 38926/2024 dated September 24, 2024] dismissed the review petition filed against the judgment passed by the Hon’ble Supreme Court in the case of Mineral Area Development Authority v. M/s. Steel Authority of India and Anr. [Civil Appeal No. 4056-4064 of 1999 dated July 25, 2024] wherein it was held that the royalty paid to the government would not fall within the purview of tax.
Facts:
Karnataka Iron and Steel Manufacturers Association (“the Petitioner”) filed a review petition against the judgment passed by the Hon’ble Supreme Court in the case of Mineral Area Development Authority v. M/s. Steel Authority of India and Anr.[Civil Appeal No. 4056-4064 of 1999] wherein the Hon’ble Supreme Court vide judgment dated July 25, 2024 (“the Impugned Judgment”) dismissed the appeal filed by Petitioner and held that Royalty would not fall within the purview of tax as royalty is a contractual consideration paid to the government which is arising out of condition laid out in contract between the government and the Petitioner. Also, it was held that, the said payment cannot be considered as tax merely based on the fact that the statute provides for recovery of arrears.
Held:
The Hon’ble Supreme Court in the case of Diary No. 38926/2024 dismissed the review petition filed against the judgment passed by the Hon’ble Supreme Court in the aforesaid case and upheld the position that the royalty paid to the government would not fall within the purview of tax.
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