S.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to hold that the provisions of s. 43B of the IT Act were not applicable to the unpaid liability towards royalty payment of Rs. 76,956 since royalty was neither tax nor duty ?

JUDGMENT

BY THE COURT :

The question with which the High Court was concerned read thus : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law to hold that the provisions of s. 43B of the IT Act were not applicable to the unpaid liability towards royalty payment of Rs. 76,956 since royalty was neither tax nor duty ?” The High Court answered the question in the negative and against the assessee relying upon the judgments of this Court in India Cement Ltd. vs. State of Tamil Nadu 1990 (1) SCC 12 and State of M.P. vs. Mahalaxmi Fabric Mills Ltd. 1996 Supp. (1) SCC 842. The assessee is in appeal by special leave.

2. This Court in The Quarry Owners Association vs. State of Bihar 2000 (5) SCALE 538 has considered afresh the submission that royalty was not a tax. It has, however, followed the decisions in India Cement Ltd. (supra) and Mahalaxmi Fabric Mills Ltd. (supra) and explained that tax on royalty is distinct from other forms of taxes. It does not constitute usual tax as commonly understood. Learned counsel for the assessee relied upon this latest judgment to contend that royalty was not a tax within the meaning of s. 43B of the IT Act, 1961.

3. It is not possible to accept the submission. The Constitution Bench Judgment in India Cement Ltd. (supra) lays down the law, namely, royalty is tax, and it is a tax for all purposes including s. 43B. In the result, the judgment and order of the High Court is affirmed and the appeal is dismissed. No order as to costs.

[Citation : 248 ITR 3]