M/S. Atul Prem Shiv Narayan And Anr. vs. State Of Rajasthan And Ors.
Held
The Court allowed the writ petitions. The primary issue was the validity of the letter dated 08.11.2017, which authorized Royalty Contractors to collect GST as forward charges. The petitioners argued this violated Section 9(3) of the CGST Act, 2017. The respondents clarified that the leaseholders are liable to pay GST under the reverse charge mechanism as per notification dated 28.06.2017. Since the respondents accepted that the reverse charge mechanism was the correct procedure and that the leaseholders' liabilities would not be affected, the Court found no reason for further adjudication. Consequently, the letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan, was quashed and set aside. Any subsequent letters issued in pursuance of this letter were also quashed.
Facts
The petitioners, engaged in mining and registered as leaseholders, challenged a letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan. This letter authorized Royalty Contractors (ERCC Contractors) to collect GST at 18% as forward charges on the royalty collected on behalf of the Government. The petitioners argued this created a double burden. The respondents, including the State of Rajasthan and its Finance Department, clarified that ERCC Contractors are appointed solely to collect royalty from mining leaseholders without any supply of natural resources. They further stated that leaseholders are required to pay GST under the reverse charge mechanism as per notification dated 28.06.2017, and this liability would not be affected by the amended notification dated 26.07.2018.
Key Issues
1. Whether the letter dated 08.11.2017, authorizing Royalty Contractors to collect GST as forward charges on royalty, is contrary to Section 9(3) of the CGST Act, 2017 and notification No. 13/2017 Central Tax (Rate) dated 28.06.2017? The petitioners contended that the letter was against the provisions of Section 9(3) of the CGST Act, 2017, read with notification No. 13/2017. They also relied on the definition of 'Supplier' under Section 2(105) of the CGST Act, 2017. The respondents argued that the Royalty Contractors are appointed to collect royalty on behalf of the Government without any supply of natural resources, and that leaseholders are liable to pay GST under the reverse charge mechanism as per the notification dated 28.06.2017, which is not affected by subsequent amendments.
Sections Cited
Section 9(3), Section 2(105)
AI-generated summary — verify with the full judgment below
HIGH COURT OF JUDICATURE FOR RAJASTHAN JODHPUR S.B. Civil Writ No. 5354/2018
Ladu Lal Hiran, S/o Sh. Chandmal Hiran, Aged About 63 Years, Arham, Mahaveer Colony, District Bhilwara, Rajasthan.
Sh. Om Prakash, S/o Sh. Bhiyan Ram, Aged About 40 Years, Resident of 508, 19KBW, Ranjeetpura, Bikaner, Rajasthan.
Sh. Bhiyanram, S/o Sh. Motaram, Aged About 50 Years, Resident of 75 LNP, Shree Ganganagar, Rajasthan.
Sh. Vinod Kumar S/o Sh. Nehru Lal, Aged About 21 Years, Resident of 27 DOBB, Raowala, Bikaner, Rajasthan.
Smt. Sharda, W/o Sh. SheshKaran, Aged About 30 Years, Resident of 99, Modayat, Bikaner, Rajasthan.
Sh. Nandram Kasaniya, S/o Sh. Dhokalram Kasaniya, Aged About 42 Years, Resident of Chak 6, BMRPO, Barsalpur, Bikaner, Rajasthan.
Smt. Dami, W/o Sh. Hariram, Aged About 65 Years, Resident of 3, KWSM, Sansardesar, Tehsil Chhatargarh, Bikaner, Rajasthan.
Sh. Devkishan, S/o Sh. Chhoturam, Aged About 32 Years, Resident of Kumharon Ki Dhani, Ugraas, Khara, Jodhpur, Rajasthan.
Sh. Harikishan, S/o Sh. Likhmaram, Aged About 48 Years, Resident of Pabusar West Bikaner, Rajasthan.
Sh. Subhash Chandra S/o Sh. Dilip Kumar, Aged About 36 Years, Resident of Raowala
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