M/S. Shri Kalyan Marbles vs. The Union Of INDIA

Facts

Multiple writ petitions were filed before the Rajasthan High Court challenging the imposition of Goods and Services Tax (GST) on royalty paid for mining extraction. Petitioners sought to declare relevant sections of the CGST and RGST Acts, as well as specific notifications and circulars, as unconstitutional or ultra vires. They argued that GST should not be leviable on mining royalty and related payments like dead rent, District Mineral Fund Trust (DMFT), and Rajasthan State Mineral Exploration Trust (RSMET). The petitions also sought to quash show cause notices, summons, and ongoing proceedings related to the levy of GST on royalty. The revenue authorities contended that the issue of GST leviability on royalty had been consistently decided against the petitioners by coordinate benches of the same High Court.

Held

The Court held that it is bound by the final orders passed by coordinate benches of the Rajasthan High Court in numerous cases, including Udaipur Chambers of Commerce and Industry & Others Vs. The Union of India & Another, M/s Mateshwari Minerals & Another Vs. Union of India & Another, M/s Shivalik Silica Vs. Union of India & Others, and Rajasthan Small Mines (Cheja Patthar) Lease Holders Association Vs. State of Rajasthan & Others. The Court reiterated the principle that an interim order, which does not finally and conclusively decide an issue, cannot be a precedent, citing State of Assam Vs. Barak Upatyaka D.U. Karmachari Sanstha. Therefore, the petitioners' reliance on interim orders from cases like Shree Basant Bhandar INT Udyog Vs. Union of India was rejected. The Court noted that while appeals against these final orders were pending before the Supreme Court, the issue had not yet been decided by the apex court. Consequently, the writ petitions challenging the leviability of GST on royalty were dismissed. However, D.B. Civil Writ Petition No. 5199/2022 was permitted to survive for adjudication on other reliefs not related to the GST leviability on royalty.

Key Issues

1. Whether Sections 9 and 15 of the CGST Act, 2017/RGST Act, 2017 are unconstitutional for levying GST on royalty of mining extraction on a reverse charge basis? 2. Whether Circular No. 164/20/2021-GST and Entry No. 5 of Notification No. 13/2017-CT(Rate) dated 28.06.2017, and its state counterpart, are to be read down to exclude the grant of mineral exploration and mining rights from the scope of supply of services under GST law? 3. Whether GST is leviable on mining royalty/dead rent and contributions to DMFT/RSMET? Petitioner's arguments: The petitioners argued that GST is not leviable on mining royalty/dead rent, and challenged the constitutional validity of the relevant GST provisions and notifications. They relied on interim orders from other cases that seemed to support their stance and sought to read down specific entries in notifications. They also challenged the validity of Circular No. 164/20/2021-GST and Circular No. 192/02/2016-Service Tax. Revenue's arguments: The respondents contended that the issue of GST leviability on royalty had been conclusively decided by multiple final orders of coordinate benches of the High Court, which should be followed. They argued that interim orders do not constitute precedents and that final orders, not interim ones, should be adhered to. They cited decisions in cases like Udaipur Chambers of Commerce and Industry, Mateshwari Minerals, and Shivalik Silica.