Interconnect service charges not treated as royalty, with Karnataka HC following binding co-ordinate Bench precedent.

Interconnect service charges paid for telecom interconnection facilities were held not to constitute royalty and were therefore not chargeable to tax as royalty. The Karnataka HC followed an earlier co-ordinate Bench view in connected appeals, found no infirmity in the orders under challenge, and dismissed the appeal.

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Issues: Whether interconnect service charges paid for telecom services constitute royalty and are therefore chargeable to tax as such.

Analysis: The issue had already been decided by a co-ordinate Bench in earlier connected appeals, which held that interconnect service charges do not constitute royalty. The present appeal followed that binding view, and no infirmity was found in the orders under challenge.

Conclusion: Interconnect service charges paid would not constitute royalty, and the appeal failed.

Ratio Decidendi: Interconnect service charges paid for providing telecom interconnection facilities do not amount to royalty.

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