Sales tax on mining royalty and dead rent rejected where neither payment was treated as sale consideration.

Royalty and dead rent payable under statutory mining lease deeds were characterised by the HC as payments under the lease scheme rather than consideration for a sale of minerals. Royalty was linked to minerals actually extracted, while dead rent was a fixed sum payable regardless of extraction; on that basis, neither amount constituted taxable sale consideration. Sales tax was therefore held not leviable on either royalty or dead rent, and the petitioners succeeded.

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Issues: Whether sales tax was leviable on the amounts payable as royalty and dead rent under statutory mining lease deeds.

Analysis: The payments in question were examined in the context of the mining lease form and the governing statutory scheme. Royalty was treated as a payment linked to minerals actually extracted, while dead rent was treated as a fixed amount payable irrespective of whether extraction took place. On that characterisation, neither amount constituted consideration for any transaction of sale of minerals.

Conclusion: Sales tax was not leviable on either royalty or dead rent payable under the statutory lease deeds, and the claim of the petitioners succeeded.

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