TCS on Illegal Mining

In a significant ruling on the contours of TCS liability, the Supreme Court has effectively endorsed the principle that tax collection obligations cannot be expanded by analogy or equity.

By dismissing the SLP, it affirmed that compounding fees collected from illegal mining activities do not attract TCS under Section 206C(1C).

The judgment draws a sharp doctrinal line between lawful mining transactions (royalty-linked) and penal recovery (compounding fees) holding that the latter lies completely outside the charging framework.