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Interpretation of liability to pay royalty on mineral extraction before or after processing. Analysis: The case involved a dispute regarding the liability to pay royalty on minerals extracted before or after processing. The respondent, a manufacturer of iron, steel, and allied products, had a lease agreement with the State Government for land to extract raw materials like limestone and dolomite. The disagreement arose on whether royalty should be paid on the quantity of mineral extracted as it is or after processing to remove waste and foreign matters. The High Court held that if minerals extracted undergo processing and a part is wasted and remains on the leased area, royalty cannot be levied on the wasted portion. The appellants argued against this distinction, citing a previous judgment by the same High Court. They contended that processing constitutes consumption, making the entire mineral subject to royalty. The Supreme Court analyzed Section 9(1) of the Mines and Minerals Act, which specifies royalty on minerals removed or consumed from the leased area. The Court disagreed with the High Court's distinction, stating that processing amounts to consumption, making the entire mineral liable to royalty. Another case cited involved coal extraction for domestic consumption, where the High Court ruled in favor of royalty payment, a decision upheld by the Supreme Court. Additionally, a judgment on the constitutionality of royalty levy emphasized that royalty is payable on minerals extracted, not related to land valuation. Ultimately, the Supreme Court held that the High Court erred in quashing the royalty demands, setting aside the judgments and dismissing the respondent's appeals. The appeals were allowed with no order as to costs.
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