Jeganathan. K vs. The Commissioner / Additional Chief Secretary

Held

The Court acknowledged that the Supreme Court in M/S.Lakhwinder Singh Vs. Union of India and others had granted a stay on the payment of GST for mining lease/royalty. The Court also noted that the impugned proceeding was merely a notice. Consequently, the Court directed the petitioner to submit objections to the notice within 30 days of receiving a copy of the order. The petitioner was permitted to rely on the judgment in M/S.Lakhwinder Singh Vs. Union of India and others, and any other relevant judgments. The 2nd Respondent was instructed to consider these objections and pass appropriate orders. Until the disposal of the objections, the Respondents were restrained from initiating recovery proceedings. The Court explicitly stated that it had not expressed any views on the merits of the case, leaving it open for the Respondents to consider the issues raised on their own merits. The writ petition was disposed of with these directions.

Facts

The petitioner, K. Jeganathan, operates a quarry under a license obtained from the District Collector. The respondents, including the Proper Officer (Assistant Commissioner (ST)), compelled the petitioner to register under the GST Act, 2017, and pay GST on Seigniorage Fee paid to the Geology and Mining Department. The petitioner received a notice dated 12.09.2022 from the 2nd respondent. The petitioner contends that Seigniorage Fee is a tax itself, making the GST levy unsustainable. The petitioner also highlights pending Supreme Court cases on similar issues, including a stay on GST payment for mining lease/royalty grants. The respondents argued that the petition was premature as it was filed against a mere notice.

Key Issues

1. Whether the levy of GST on Seigniorage Fee paid for quarried minor minerals is sustainable in law, considering Seigniorage Fee is itself a tax? (Section 9 of the CGST Act, 2017). 2. Whether the impugned notice dated 12.09.2022 issued by the 2nd Respondent is illegal and unconstitutional? Petitioner's arguments: The petitioner argued that Seigniorage Fee is a tax, and therefore, levying GST on it is unsustainable. Reliance was placed on the Supreme Court's decision in M/s Lakhwinder Singh Vs Union of India, which granted a stay on GST payment for mining lease/royalty. The petitioner also cited India Cement Ltd. and others Vs State of Tamil Nadu and others for the proposition that levy and collection of tax/sales tax on minerals is not permissible. The petitioner further referred to the Supreme Court's consideration of the nature of royalty/dead rent payable on minerals in Mineral Area Development Authority etc., Vs. M/s.Steel Authority of India & others. Respondents' arguments: The respondents contended that the writ petition was premature as it was filed against a notice and therefore liable to be dismissed.