Mukesh Kumar vs. Mrs Kumari Puja

Held

The Court, in its order dated 09th May, 2023, granted interim protection to the petitioners. This decision was based on the precedent set by previous orders of the Jharkhand High Court, specifically the order dated 20.04.2022 in W.P.(T) No. 432 of 2021 (M/s Mandhan Minerals Corporation vs. Union of India & others) and other analogous cases. The Court noted that similar interim protection had been granted in the case of Sunita Ganguly and others Vrs. Union of India & others vide order dated 02.03.2021 passed in W.P.(T) No. 3878 of 2020 and other analogous cases concerning the levy of service tax on royalty/DMF. The reasoning provided in the extracted operative portion of the 20.04.2022 order highlights that royalty has been considered a tax or profit pendre, and the issue is pending before a 9-Judge Constitution Bench. Therefore, the Court found that the petitioners had made out a case for interim protection. Consequently, a stay of recovery of GST for the grant of mining lease/royalty/DMF from the petitioners was ordered until further orders. However, the Revenue was not restrained from conducting and completing assessment proceedings.

Facts

The petitioners, including M/s. Polycab India Limited, Koushal Kishor Singh and Hari Nandan Choudhary (a partnership firm), Satya Laghu Udyog, and Manik Chand Maheshwari @ Manick Chand Maehswari (a partnership firm), have filed writ petitions before the Jharkhand High Court. The core issue revolves around the levy of Goods and Services Tax (GST) on royalty, particularly in the context of mining leases. The petitioners are seeking interim protection from the recovery of GST on royalty, citing previous orders of the High Court and the Supreme Court. The respondents are the Union of India, the State of Jharkhand, and CGST authorities. The cases are at an early stage, with counter-affidavits being filed by the respondents.

Key Issues

1. Whether the petitioners are entitled to interim protection from the levy and recovery of GST on royalty, similar to that granted in previous orders by this Court and the Apex Court? Petitioner's Argument: The petitioner contends that the issue of GST on royalty is a matter of ongoing legal debate, with the larger legal position regarding royalty being considered a tax or profit pendre pending before a 9-Judge Constitution Bench of the Supreme Court. They rely on the interim order passed by the Apex Court in the case of M/s Lakhwinder Singh dated 04.10.2021 and a batch of writ petitions led by W.P.(T) No. 432 of 2021 (M/s Mandhan Minerals Corporation vs. Union of India & others) dated 20.04.2022, which granted interim protection from the levy of GST on mining lease/royalty/DMF. They argue that since their issues are common, similar interim protection should be granted. Revenue/State's Argument: The learned counsel for the Respondent State of Jharkhand and CGST have prayed for and been allowed time to file counter-affidavits. No specific arguments against the grant of interim protection were recorded at this stage.