Levy Of GST On Mining Royalty: Rajasthan High Court Grants Interim Protection To Petitioners
The Rajasthan High Court has granted stay on recovery of GST on royalty paid by the Petitioners on mining activity.The order comes in a bunch of writ petitions filed primarily involving the issue of permissibility of raising demand of GST on royalty. The petitioners in these petitions challenged the notifications whereby, royalty paid by them on mining activity is being subjected to GST...
The Rajasthan High Court has granted stay on recovery of GST on royalty paid by the Petitioners on mining activity.
The order comes in a bunch of writ petitions filed primarily involving the issue of permissibility of raising demand of GST on royalty. The petitioners in these petitions challenged the notifications whereby, royalty paid by them on mining activity is being subjected to GST and/or notices issued for alleged incriminating discrepancies in returns after scrutiny and analogous proceedings.
Earlier, on 21.04.2022, the High Court in the case of Shree Basant Bhandar Int Udyog v. Union of India [2022 LiveLaw (Raj) 146], had restrained the GST department from recovering GST on royalty paid on account of the excavation of sand for brick.
Notably, on 17.12.2021, this court in M/s Shivalik Silica v. Union of India & Ors. [D.B. Civil Writ Petition No.14849/2021] examined the issue of service tax on royalty, and held that this issue is already decided against the assessee in Udaipur Chambers of Commerce & Industry Vs. Union of India [2018 (8) G.S.T.L. 170 (Rajasthan)]. Moreover, the same controversy is under consideration under the 9-judge bench of the Supreme Court in Mineral Area Development Authority etc. v. M/s. Steel Authority of India and Ors., whereby, the Supreme Court has stayed payment of service tax for grant of mining lease/royalty.
In this backdrop, the Bench comprising Justice Sandeep Mehta and Justice Kuldeep Mathur observed,
"We are not persuaded by the argument advanced by the learned counsel for the respondents that the prayer for interim relief in these petitions should be turned down on the basis of the order dated order dated 17.12.2021 passed in D.B. Civil Writ Petition No.14849/2021 more so, when replies are still awaited in these writ petitions."
While reserving the right of the respondents to move for vacation of ad interim stay, the court directed that in the proposed recovery of GST on royalty shall remain stayed qua all the writ petitioners. However, the court observed that the respondents shall be at liberty to continue with the proceedings which have been initiated under the impugned notices.
The court ordered that the notices shall be issued to the respondents in fresh matters. In such writ petitions wherein notices have been issued, the Registry shall check for service upon the respondents and where powers have been filed, names of the respective counsels shall be reflected, added the court.
Further, the court ordered the respective Departments to file their replies by the next date of hearing, i.e., 16.08.2022.
Counsels for the Petitioners: Mr. V.K. Agarwal Mr. Abhay Singla Mr. Lokesh Mathur Mr. Rakesh Arora Mr. D.D. Chitlangi Mr. Chiranjilal Mr. Aditya Singhi Mr. Sharad Kothari Mr. Manoj Bohra, Mr. Arvind Vyas and Mr. Amit Vyas
Counsels for the Respondents: Ms. Pratyushi Mehta associate to Mr. Sandeep Shah, Sr. Advocate-cumAAG. Mr. Rajvendra Saraswat Mr. Hemant Dutt Mr. Kuldeep Vaishnav Mr. Sandeep Bhandawat
Case Title: Shree Basant Bhandar Int Udyog v. Union of India
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