Meenatchisundaram 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. While noting that the impugned proceeding was only a notice, the Court directed the petitioner to submit their 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. Crucially, the Court ordered that until the objections are disposed of, the Respondents shall not resort to recovery proceedings. The Court explicitly stated that it had not expressed any views on the merits of the case and that the Respondents were free to consider the issues raised on their own merits. The writ petition was disposed of with these directions.

Facts

The petitioner, Meenatchisundaram, operates a quarry under a license obtained in 2017. The petitioner was directed by the respondents to register its quarry operations under the GST Act, 2017, and pay GST on the Seigniorage Fee paid to the Geology and Mining Department. The petitioner contends that Seigniorage Fee is itself a tax on quarried minor minerals, making the levy of GST unsustainable. The petitioner also points to pending litigation before the Supreme Court concerning the legality of GST on Seigniorage Fee, specifically citing the case of M/s Lakhwinder Singh Vs Union of India, where a stay on GST payment for mining lease/royalty was granted. The petitioner further argues that the levy and collection of tax on minerals is impermissible based on the Supreme Court's judgment in India Cement Ltd. The impugned action under challenge is a notice dated 09.09.2022 issued by the 2nd respondent, the State Tax Officer.

Key Issues

1. Whether the levy of GST on Seigniorage Fee paid for quarried minor minerals is legally sustainable, considering it is argued to be a tax itself? (Question of law, turning on the nature of Seigniorage Fee and its taxability under GST). 2. Whether the impugned notice demanding GST on Seigniorage Fee and quarried minerals is premature and liable to be quashed, given the pendency of related matters before the Supreme Court? Petitioner's arguments: The petitioner argues that Seigniorage Fee is a tax, and therefore, levying GST on it is unsustainable. They rely on the Supreme Court's stay in M/s Lakhwinder Singh Vs Union of India, which stayed GST payment for mining lease/royalty. They also cite India Cement Ltd. for the proposition that levy of tax/sales tax on minerals is impermissible. Furthermore, they refer to the Supreme Court's consideration of the nature of royalty/dead rent in Mineral Area Development Authority etc. Vs. M/s.Steel Authority of India & others. Respondents' arguments: The learned Government Advocate for the respondents submits that the impugned action is merely a notice, making the writ petition premature and liable for dismissal.