In Brief
The Patna Municipal Corporation sought to collect enhanced royalty on advertisements at Rs.10 per sq. ft. (from an agreed rate of Re.1) after the Bihar Municipal Act, 2007 came into force. The High Court quashed the demand, holding it was a tax requiring statutory authority under Article 265. The Supreme Court allowed the appeal in part, holding that royalty is fundamentally distinct from tax. Royalty is contractual consideration for a privilege, not a sovereign imposition. Since the 2005 agreement to pay royalty and the 2007 rate revision were accepted by most advertisers, the Corporation could charge enhanced royalty without statutory sanction. However, penalty for non-payment was disallowed; interest on delayed payment was permitted as compensation, not penalty. The Court directed computation and payment of amounts due with 6% interest within specified timelines.
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