Royalty Not Tax: Chhattisgarh High Court Ruling

Quick Summary

The Chhattisgarh High Court has dismissed a petition challenging a service tax demand on royalty payments. Citing a Supreme Court ruling, the court affirmed that royalty is a contractual payment between parties, not a tax itself. Consequently, the demand for service tax on royalty was upheld in principle, though the specific case was disposed of due to an expired notice date, with the petitioner directed to attend a new hearing.

Court :
Chhattisgarh High Court

Brief :
The Hon'ble Chhattisgarh High Court in Mahesh Sharma v. Union of India [Writ Petition Tax No. 151 of 2024 dated August 02, 2024] dismissed the writ petition challenging the Show Cause Notice ("SCN") demanding service tax on royalty. The court relied on the Supreme Court's ruling in Mineral Area Development Authority v. Steel Authority of India [Civil Application Nos. 4056-4064 of 1999 dated July 25, 2024] and held that royalty is not a tax but a contractual payment.

Citation :
Civil Application Nos. 4056-4064 of 1999 dated July 25, 2024

Daily Limit Reached