Murugan.R 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 his 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 Court stipulated that the 2nd Respondent (State Tax Officer) must 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, leaving it open for the respondents to consider the issues raised on their own merit. The Court did not decide the core legal question of whether GST is leviable on Seigniorage Fee.

Facts

The petitioner, R. Murugan, operates a quarry under a license obtained from the District Collector. He was issued a notice by the State Tax Officer on 09.09.2022, compelling him to register under the GST Act, 2017, and pay GST on Seigniorage Fee paid to the Geology and Mining Department. The petitioner argues that Seigniorage Fee is itself a tax, making the levy of GST unsustainable. He also points to pending Supreme Court cases concerning the levy of GST on mining leases/royalty and the nature of royalty payments. The respondents, represented by the Government Advocate, contended that the writ petition was premature as it was filed against a mere notice.

Key Issues

1. Whether the levy of GST on Seigniorage Fee paid for quarry operations is legally sustainable, considering that Seigniorage Fee is itself a tax on quarried minor minerals? (Question of law turning on the interpretation of GST provisions and the nature of Seigniorage Fee). 2. Whether the impugned notice demanding GST is premature and liable to be quashed in light of pending Supreme Court proceedings on similar issues? Petitioner's Arguments: The petitioner argued that Seigniorage Fee is a tax, and therefore, levying GST on it is unsustainable. He relied on the Supreme Court's stay in M/s Lakhwinder Singh Vs Union of India on payment of GST for mining lease/royalty, and a judgment in India Cement Ltd. and others Vs State of Tamil Nadu and others regarding the permissibility of levying tax on minerals. He 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. Respondents' Arguments: The respondents argued that the writ petition was premature as it was filed against a notice and should be dismissed on that ground.