Royalty is Tax: Dissent of Justice Nagarathna

Last Updated on July 30, 2024 by Administrator

The 9-judge bench of the SC headed by the CJI held by 8:1 that the royalty that is charged under the Mines and Minerals Act by the union government is not a tax.

Justice B V Nagarathna was the lone dissenting judge.

Justice Nagarathna held that the royalty charged under section 9 is in the nature of the tax.

The MMDR Act gives the union the power under Entry 54 to regulate mines and develop minerals.

In the Indian Cement judgment, the court held that the state legislature is not competent to levy taxes on mineral rights.

Several judgments later on followed the reasoning behind this decision.

She said that the royalty that we imposed is in the interest of the country’s mineral development.

She further pointed out that the majority in Kesoram Industries had concluded royalty is not a tax based on the definition of royalty in dictionary meanings, etc, without reference to the constitutional Entries.

She added that the minority judgment of Kesoram Industries had rightly identified that States under the garb of land tax are imposing cess on royalty.

Written By:- Shianjany Pradhan