Smt. Anjana Choudhary And Ors. vs. State Of Rajasthan And Ors.
Held
The Court held that since the respondents accepted the proposition that GST on royalty is chargeable under the reverse charge mechanism and this was supported by their pleadings, there was no reason for further adjudication. The Court found that the respondents' stand, clarifying that leaseholders are required to pay GST under the reverse charge mechanism, was consistent with the law. Consequently, the Court quashed and set aside the letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan. Any subsequent letters issued in pursuance of the impugned letter were also quashed. The Court did not explicitly mention any issue left undecided.
Facts
The petitioners, engaged in mining, challenged a letter dated 08.11.2017 issued by the Finance (Tax) Department, Government of Rajasthan. This letter authorized Royalty Contractors (ERCC Contractors), appointed by the State to collect royalty on behalf of the Government from mining lease holders, to collect GST at 18% as forward charges. The petitioners argued this was contrary to GST law. The respondents, in their pleadings, clarified that ERCC Contractors are appointed solely for collecting royalty without any supply of natural resources. They further stated that royalty payments for mining activities are subject to GST under the reverse charge mechanism, as per notification dated 28.06.2017, and that leaseholders are required to pay GST under this mechanism. The respondents maintained that the leaseholders' liabilities would not be affected by any amended notification.
Key Issues
1. Whether the letter dated 08.11.2017, authorizing Royalty Contractors to collect GST at 18% as forward charges on royalty collected on behalf of the Government, 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 argued that the letter was illegal and violated these provisions. The respondents contended that the Royalty Contractors are appointed solely for collecting royalty without supply of natural resources, and that GST on royalty is payable by leaseholders under the reverse charge mechanism as per notification dated 28.06.2017. They further argued that the leaseholders would continue to follow existing procedures for GST returns and payment under reverse charge, and their liabilities would remain unaffected. The respondents did not contest the applicability of the reverse charge mechanism.
Sections Cited
Section 9(3), Section 2(105)
AI-generated summary — verify with the full judgment below
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 6972/2018
Smt. Anjana Choudhary W/o Shri Vasudev Choudhary, R/o M.g. Road, Outside Brahmpuri, Nagaur.
Smt. Birma W/o Shri Richhapal, R/o Ward No. 3, Chak 8 Psd B, Rawla Mandi, Tehsil Gharsana, District Sriganganagar.
Ram Pratap S/o Shri Gajuram, R/o Ward No. 11, Village Mankasar, Tehsil Kolayat, District Bikaner. ----Petitioners Versus
State Of Rajasthan, Through Secretary, Department Of Mines And Geology, Shastri Circle, Udaipur, Rajasthan.
The Secretary, Finance Department, Government Of Rajasthan, 1St Floor, Main Building, Government Secretariat, Jaipur-302005, Rajasthan.
The Director, Mines And Geology Department, Udaipur, Rajasthan.
The Mining Engineer, Office Of Mining Department, Bikaner.
The Joint Secretary Revenue, Ministry Of Finance, Department Of Revenue, Room No. 46, North Block, New Delhi-110001 ----Respondents For Petitioner(s) : Mr. Vijay Bishnoi For Respondent(s) : Mr. Hemant Dutt HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI Order 11/11/2021
These writ petitions under Article 226 of the Constitution of India have been preferred claiming, in sum and sub
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