Virudhunagar District Quarry Owners vs. The Commissioner / Additional Chief Secretary

Facts

The petitioners, the Virudhunagar District Quarry Owners Welfare Association and an individual quarry owner, filed writ petitions seeking to restrain the respondents (Commissioner/Additional Chief Secretary, Commercial Tax Department and State Tax Officer/Joint Commissioner) from insisting on their registration under the GST Act, 2017. The petitioners contended that state tax officials visited quarries, demanded account books and transit passes, and insisted on GST payment on seignorage charges, which they argued were a privilege tax and not subject to GST. They cited an interim order from the Supreme Court in W.P.(Civil)No.1076 of 2021 staying GST payment for mining lease/royalty grants, and similar High Court judgments from Jharkhand and Allahabad. The respondents acknowledged prior doubts regarding GST on minerals and referred to Circular No.164/20/2021-GST, clarifying that while GST at 18% applies from 01.01.2019 for mining rights, the earlier period had ambiguities. They also stated awareness of the Supreme Court's stay order and indicated that a decision would be taken based on its outcome.

Held

The Court directed the respondents to consider the petitioners' representations dated 13.06.2022 and 24.06.2022 and dispose of them in accordance with law, by following the judgment of the Hon'ble Apex Court in W.P.(Civil)No.1076 of 2021. The Court acknowledged the submissions of both sides, including the petitioner's reliance on the Supreme Court's interim order and other High Court judgments, and the revenue's reference to Circular No.164/20/2021-GST and their awareness of the Supreme Court's stay. The operative direction was to consider and dispose of the representations in line with the Supreme Court's pronouncements. The issue of whether GST is leviable on seignorage charges and the specific period for which the Supreme Court's stay applies were not explicitly decided by this High Court but were to be considered by the respondents in light of the Supreme Court's order.

Key Issues

1. Whether the respondents can insist on the registration of quarry owners under the GST Act, 2017, and demand GST on seignorage charges, particularly in light of the Supreme Court's interim order in W.P.(Civil)No.1076 of 2021 and subsequent High Court judgments? Petitioner's Arguments: The petitioners argued that seignorage charges are a privilege tax and not subject to GST, citing the Supreme Court's interim order in W.P.(Civil)No.1076 of 2021 which stayed GST payment for mining lease/royalty grants. They also relied on decisions from the Jharkhand High Court in Mandhan Minerals Corporation and others vs. Union of India and others and the Allahabad High Court in A.D.Agro Foods Private Limited vs. Union of India, which granted stays based on the Supreme Court's order. They contended that the authorities should not conduct surveys or demand documents to force GST payment. Revenue's Arguments: The respondents acknowledged prior doubts regarding GST on minerals and referred to Circular No.164/20/2021-GST. They clarified that while GST at 18% is applicable from 01.01.2019 for mining rights, the period prior to that had ambiguities. They stated that the expression 'same rate of tax as applicable on supply of like goods involving transfer of title in goods' does not extend to the grant of mining rights. The department is aware of the Supreme Court's stay order and indicated that the petitioners' representations would be considered and a decision taken based on the outcome of the Supreme Court's proceedings.