Vediramasamy. P 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 their objections to the notice within 30 days of receiving a copy of the order. The petitioner was permitted to rely on the Lakhwinder Singh judgment and any other relevant judgments. The 2nd Respondent was instructed to consider these objections and pass appropriate orders. Until the objections are disposed of, 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 and that the respondents were free to consider the issues raised on their own merits. No specific issue was left undecided, but the final decision on the merits was deferred to the 2nd respondent.

Facts

The petitioner, P. Vediramasamy, operates a quarry under a license obtained in 2019. The petitioner was compelled by the respondents to register 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 and levying GST on it is unsustainable. The petitioner also argues that the levy of GST on quarried minerals is impermissible, citing Supreme Court judgments. The impugned action is a notice dated 09.09.2022 issued by the 2nd respondent, the State Tax Officer. The respondents argued that the writ petition is premature as it challenges only a notice.

Key Issues

1. Whether the levy of GST on Seigniorage Fee paid for quarried minor minerals is legally sustainable, considering Seigniorage Fee is itself a tax? (Question of law, turning on the nature of Seigniorage Fee and its taxability under GST). 2. Whether the levy and collection of GST on quarried minerals is permissible under law? (Question of law, turning on the taxing powers concerning minerals). Petitioner's arguments: The petitioner argued that Seigniorage Fee is a tax, making GST levy unsustainable. They relied on the pending Supreme Court case of M/s Lakhwinder Singh Vs Union of India (W.P.(Civil).No.1076 of 2021) where a stay on GST payment for mining lease/royalty was granted, and the judgment in India Cement Ltd. and others Vs State of Tamil Nadu and others (1990 (1) SCC 12) which held that levy of tax/sales tax on minerals is not permissible. They also referred 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 (2011 (4) SCC 450). Respondents' arguments: The respondents argued that the writ petition is premature as it challenges only a notice and should be dismissed.