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Informist, Friday, Jul. 24, 2026

 

NEW DELHI – The Supreme Court has held that stamp duty on mining lease agreements has to be calculated on the basis of "anticipated royalty" and not "dead rent". Once the lessee is liable to pay both royalty and dead rent, the stamp duty must be paid on whichever of the two is higher, which is royalty, the apex court said. 

 

Dead rent is the minimal amount payable to the lessor by the lessee irrespective of whether the mines are put to use or not. Royalty is directly proportionate to the amount or quantity of the minerals removed from the mine. While dead rent depends on the area of the mine and is fixed, royalty is related to the quantity of minerals extracted and is variable.

 

The Stamp Act, 1899, is a law by which the executing parties of any agreement are required to pay to the government. Undoubtedly, it is a source of considerable revenue generation for the state, the court said. Since it pertains to the payment of money, it is a fiscal statute. Fiscal statutes, as is well settled, have to be interpreted strictly and mandatorily, the court said.

 

The top court said Section 26 of the Stamp Act deals with payment of stamp duty in cases where at the time of the execution of the agreement, the value of the subject matter is indeterminate. The provision in Section 26 deals specifically with mining leases and provides that in such cases the estimated royalty or value of the share should be sufficient for determining stamp duty, the court said. The apex court rejected Birla Corp. Ltd.'s plea against Satna district collector asking the company to pay a stamp duty of INR 43.20 million, calculated on the basis of anticipated royalty. 

 

The case has its genesis in Birla Corp. applying for a fresh lease for the mining of limestone in Satna district in Madhya Pradesh. Birla Corp. said that the stamp duty ought to be calculated on the basis of dead rent since that is the only ascertainable amount prescribed by Section 9-A of the Mines and Minerals (Development and Regulation) Act, 1957. 

 

Friday, Birla Corp.'s shares ended 1.8% lower at INR 956.60 on the National Stock Exchange.  End 

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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