SUPREME COURT OF INDIA

Before:- S.P. Bharucha and V.N. Khare, JJ.

Civil Appeal No. 12278 of 1996. D/d. 12.9.2000.

Gorelal Dubey - Appellant

Versus

Commissioner of IT, Jabalpur - Respondent

Income Tax Act, 1961, Section 43B - Income tax - Royalty - Whether, is a tax - Held, royalty is a tax and it is a tax for all the purposes including Section 43B of the IT Act - Tax on royalty not distinct from other forms of tax. 2000(8) SCC 655, relied on.

[Para ]

Cases Referred :-

1. India Cement Ltd. v. State of T.N., (1990) 1 SCC 12.

2. Quarry Owners? Assn. v. State of Bihar, (2000) 8 SCC 655 : (2000) 5 Scale 538.

3. State of M.P. v. Mahalaxmi Fabric Mills Ltd., 1995 Supp (1) SCC 642.

ORDER

S.P. Bharucha, J. - The question with which the High Court was concerned reads thus:

"Whether on the facts and in the circumstances of the case, the Tribunal was right in law to hold that the provisions of Section 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. v. State of T.N., (1990) 1 SCC 12. and State of M.P. v. Mahalaxmi Fabric Mills Ltd., 1995 Supp (1) SCC 642. The assessee is in appeal by special leave.

2. This Court in Quarry Owners? Assn. v. State of Bihar, (2000) 8 SCC 655 : (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.1 and Mahalaxmi Farbric Mills Ltd.2 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 Section 43B of the Income Tax Act, 1961.

3. It is not possible to accept the submission. The Constitution Bench judgment in India Cement Ltd.1 lays down the law, namely, royalty is tax, and it is a tax for all purposes including Section 43B.

4. In the result, the judgment and order of the High Court is affirmed and the appeal is dismissed.

5. No order as to costs.

Appeal dismissed.