No HC relief for JSW on royalty payment

The company had constructed a reservoir and used the dug-up earth, containing minor minerals (muram), for creating an embankment.

Published: 24th November 2019 06:43 AM  |   Last Updated: 24th November 2019 06:43 AM   |  A+A-

By Express News Service

BENGALURU: In a setback to steel major JSW Steel Ltd, the Karnataka High Court has rejected its petition questioning the demand for royalty by the State Government for ‘illegally excavating’ minor minerals. The company had constructed a reservoir and used the dug-up earth, containing minor minerals (muram), for creating an embankment.

The steel manufacturer was allotted 629.92 acres at Gonal village in Hosapete taluk of Ballari district by the Karnataka Industrial Area Development Board (KIADB) on a 99-year lease. The JSW has built a reservoir on this land for its use.

A division bench of Chief Justice Abhay Shreeniwas Oka and Justice S R Krishna Kumar, in its judgment, said the petitioner could not have carried out excavation of minor minerals without obtaining a licence under Rule 3 of the Karnataka Minor Minerals Concession Rules, 1994. However, the State Government has shown leniency by demanding royalty after considering that the company carried out the excavation lawfully. In this circumstances, “We find no illegality in the demand for royalty made by the State Government”, the court said. 

According to the judgment, the company had sought permission for construction of a reservoir. Along with a letter dated May 24, 2017, JSW had forwarded a cheque of Rs 4 crore to the government as advance towards the royalty for minerals used in the construction of the reservoir. The letter specifically refers to earlier communication and records which say that the remainder of the royalty amount will be paid as per the terms and conditions of the lease or licence. 

However, the company claimed that royalty is payable only if the mineral extracted is sold for gain. To this, the court said that the exemption under Rule-3A is not applicable to the petitioner.

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