Interconnect service charges are not royalty, with the Karnataka HC following its earlier view and dismissing the Revenue's appeal.

Interconnect service charges paid to a non-resident telecom operator were held not to constitute royalty and therefore were not chargeable to tax as royalty. The Karnataka HC followed its earlier co-ordinate Bench view in connected appeals, which had already determined that such charges fall outside the royalty definition. On that basis, the challenged order was found consistent with the prior decision, the question was answered in favour of the assessee and against the Revenue, and the appeal was dismissed.

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Issues: Whether interconnect service charges paid to a non-resident telecom operator constitute royalty and are chargeable to tax as such.

Analysis: The issue had already been decided by a Co-ordinate Bench of the Court in earlier connected appeals, where it was held that interconnect service charges do not constitute royalty. The present appeal followed that decision, and the order under challenge was found to be consistent with the earlier view.

Conclusion: The question was answered against the Revenue and in favour of the assessee. The appeal was dismissed.

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