TaxTMI 
TaxTMI 
2026 (7) TMI 1529
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....age Birhauli, Tehsil Raghuraj Nagar, District Satna, when the appellant, who had applied for a fresh lease and vide letter dated 2nd July 2004, was asked to pay a stamp duty of Rs. 4,32,00,000 by way of anticipated royalty, by the District Collector, Satna. 2.2 Being aggrieved by the order of the aforesaid authority, challenged the appellant challenged this decision before the High Court of Madhya Pradesh, Principal Bench at Jabalpur by way of Writ Petition No. 2640 of 2004. 2.3 The Division Bench dismissed the writ petition relying on a judgment of a coordinate Bench of that Court holding: "25. As far as declaration of the relevant provision of the rule to be ultra vires is concerned, it is a settled law that the same cannot be declared as ultra vires owing to personal inconveniences. Interpretation of the statute from the different parts of the Section or the Rule are required to be considered as it is the basic intention of the legislature which is required to be seen. It is required to be analyzed that whether a particular proviso appended to a particular Section is to be read in consonance with the main Section or independently. In the present case, Section 26 o....
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.... main Section. 3.2 The respondent, on the other hand, inter alia submits that Section 26 of the Stamp Act provides a comprehensive mechanism to deal with instruments where value of the subject matter cannot be determined at the time of execution and the proviso thereto, specifically deals with situations involving mining leases. There is harmony between the MMDR Act and the Stamp Act. The objective is to ensure that the State is not deprived of its legitimate revenue on account of the fact that at the time execution, actual royalty is difficult to quantify. The distinction between the "royalty" under Section 9 MMDR and "dead rent" under Section 9A thereof is clear. The statute's intent behind providing 'whichever is higher' is to safeguard state revenue. The appellant's argument that puts dead rent at the centre of calculation of stamp duty is misconceived since the former is not intended to be actual consideration but is only a minimum sum to be paid. The actual economic value is represented by royalty that is directly linked to the output. The prayer of the proviso being ultra-vires is misconceived and misdirected. 4. Relevant provisions of different statutes referred....
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....lty for any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub- lessee from the leased area, he shall be liable to pay either such royalty, or the dead rent in respect of that area, whichever is greater. (2) The Central Government may, by notification in the Official Gazette, amend the Third Schedule so as to enhance or reduce the rate at which the dead rent shall be payable in respect of any area covered by a mining lease and such enhancement or reduction shall take effect from such date as may be specified in the notification: Provided that the Central Government shall not enhance the rate of the dead rent in respect of any such area more than once during any period of three years." The Mineral Concession Rules, 1960 "31. Lease to be executed within six months. - (1) Where, on an application for the grant of a mining lease, an order has been made for the grant of such lease, a lease deed in Form K or in a form as near thereto as circumstances of each case may require, shall be executed within six months of the order or within such further period as the State Government may allow in this behalf, and....
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....the rate of Rs...... and Rs........ respectively per annum per hectare of the area so occupied or used and so in proportion for any area less than a hectare during the period from the commencement of such occupation or used until the area shall cease to be so occupied or used and shall as far as possible restore the surface land so used to its original condition. Surface rent and water rate shall be paid as hereinbefore detailed in clause 2: PROVIDED THAT no such rent/water rate shall be payable in respect of the occupation and use of the area comprised in any roads or ways to which the public have full right of access." Relevant clause of Part IX General Provisions thereof is extracted as under: "9. For the purpose of stamp duty the anticipated royalty from the demised land is Rs.... per year." The Indian Stamp Act, 1899 "26. Stamp where value of subject-matter is indeterminate.- Where the amount or value of the subject-matter of any instrument chargeable with ad valorem duty cannot be, or (in the case of an instrument executed before the commencement of this Act) could not have been, ascertained at the date of its execution or first execution, nothing shall b....
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.... Edn., at p. 742 [Wharton's law-lexicon : forming an epitome of the law of England ; and containing full explanations of the technical terms and phrases thereof, both ancient and modern. Including the various legal terms used in commercial business ; together with a translation of Latin law maxims, and selected titles from the civil, Scotch, and Indian law], as: "Royalty, payment to a patentee by agreement on every article made according to his patent; or to the owner of minerals for the right of working the same." The definition of "royalty" given in Black's Law Dictionary, 5th Edn., at p. 1195 [Black's-Law-4th-edition-1891.pdf], is as follows: "Royalty. A payment reserved by the grantor of a patent, lease of a mine, or similar right, and payable proportionately to the use made of the right by the grantee. Raynolds v. Hanna, C. C.Ohio, 55 F. 800. In mining and oil operations, a share of the product or profit paid to the owner of the property. Marias River Syndicate v. Big West Oil Co., 98 Mont. 254, 38 P.2d 599, 601. A payment which is made to an author or composer by an assignee or licensee in respect of each copy of his work which is sol....
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....on thereof is the area that is leased out whereas "royalty" is directly proportionate to the amount/quantity of the minerals removed from the mine. As such, while one depends on the area of the mine and is fixed, the other relates to the quantity of minerals extracted only and is variable. Section 9 of the MMDR Act, and particularly clause (2) thereof, underscores this interpretation of variability. Regarding, dead rent Section 9A provides for its payment as being on rates as may be specified by the Government, notwithstanding anything contained in any other law or in the instrument of lease itself. Once the lessee is liable to pay both royalty and dead rent, he must pay whichever of the two is higher. 7. In Mineral Area Development Authority v. SAIL (2024) 10 SCC 1, the determination of royalty was delineated in the following terms by the 9-judge constitution bench: "349. The rates of royalty are generally calculated on per tonnage basis or ad valorem basis on the basis of the laid down formula. In case of the former, royalty is determined on the basis of the following formula: Royalty = quantity of mineral removed or dispatched * specified rate of royalty in rupees....
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.... therefore, construed strictly. A few principles are well settled while interpreting a fiscal law. There is no scope for equity or judiciousness if the letter of law is clear and unambiguous. The benefit of any ambiguity or conflict in different provisions of statute shall go to the subject. In Dowlatram Harji v. Vitho Radhoji [ILR (1880) 5 Bom 188 (FB)] the Full Bench indicated the need for balancing the harshness which would be inflicted on the subjects by implementation of the stamp law as against the advantage which would result in the form of revenue to the State; the latter may not be able to compensate the discontent which would be occasioned amongst the subjects." [See: Hameed Joharan v. Abdul Salam (2001) 7 SCC 573, Interplay Between Arbitration Agreements under Arbitration Act, 1996 & Stamp Act, 1899, In re (2024) 6 SCC 1,; Seetharama Shetty v. Monappa Shetty 2024 SCC OnLine SC 2320,] In similar terms, we must also look at the object and purpose of the MMDR. Its primary purpose is to bring about uniformity in the taxes and royalties levied on mineral development in the country. This Court in Mineral Area Development Authority v. SAIL (2024) 10 SCC 1, said thus about....