STAY ORDER ON ROYALTY ON MINING LEASE.

[Sadanand Bulbule]

The Hon’ble Supreme Courts judgement dated 25/07/2024 in the case of Mineral Area Development Authority Vs. Steel Authority of India Ltd. - 2024 (7) TMI 1390 - Supreme Court (LB), it is held that 'Royalty' is not a tax-Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of of mining rights and the liability to pay royalty arises out of the contractual obligations of the mining lease.

However on 04/10/2021 vide Wirt Petition (Civil) No. 1076/2021, the Hon’ble Supreme Court of India in the matter of M/s. Lakhwinder Singh Vs. Union of India & Ors - 2021 (11) TMI 336 - SC Order had issued stay order on payment of GST for grant of mining lease/royalty by the petitioner. This petition was tagged with SLP(C) No. 3726 of 2017-Udaipur Chambers of Commerce and Industry Vs. Union of India - 2021 (2) TMI 1219 - SC Order.

This being the earlier position, can experts help update the present status of 'stay order' issued on 04/10/2021? And what is the impact MADA judgement[supra] on the stay order, if not vacated?

[KASTURI SETHI]

Sh. Sadanand Bulbule  Ji,

Sir, As per EXCUS as on April, 25, the stay Order issued by the Apex Court is still in force.

 

[Sadanand Bulbule]

Dear Sirji

Kindly enlighten me the impact of MADA judgement on this stay order. Does it apply only to the petitioners  covered by the stay order or all mining lease holders PAN India? The mining lease holders and the tax authorities are at cross roads and they are waiting for the green signal to move forward.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir, The Stay Order in the case of Lakhwinder Singh Vs. UOI & Others - 2021 (11) TMI 336 - SC Order is in-personam. This stay order is not meant for others, though tagged.

Since the stay order is in-personam, it will have no effect on the MADA Judgement. (Supra).

[Sadanand Bulbule]

Dear Sirji

Much obliged for further clarified position of the subject stay order. This clears the way both for the concerned taxpayers and the authorities to move forward  to plan their respective priorities as per law. 

[KASTURI SETHI]

Sh. Sadanand  Bulbule Ji,

Getting appreciation from an expert of your stature gives immense pleasure to me. It is not less than reward.

Thanks a lot from the core of my heart.

                                

                                     

 

 

AI Summary

Royalty not a tax - existing in-personam stay on GST payment applies only to petitioners covered, not all leaseholders. The 2021 Supreme Court stay on payment of GST in the Lakhwinder Singh petition remains in force for the petitioners covered; royalty is characterised as a contractual consideration rather than a tax, and because the stay is in-personam it does not apply to other mining leaseholders despite tagging with related petitions.