Royalty is payable to State governments only on the metal content extracted. Tailings and rejects dumped back into the earth obviously are not metals mined and, to that extent, royalty cannot be levied on them.

This is what the Supreme Court said in State of Rajasthan and Others V. Hindustan Zinc Ltd. and Another.

The Apex court rejected the contention of the State that royalty would have to be paid on the entire quantity excavated inasmuch as processing the ore would also amount to consumption of the ore.

Therefore, even if the said ores — tailings and rejects — are not physically taken out of the leased area, the royalty will have to be paid on the contents of lead and zinc contained in the ore, the State contended.

Instead the court approved the stand of the respondent that royalty is payable only on what is taken out of the mines.

(This article was published on March 14, 2013)
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