Khoja Lime Udhyog vs. State Of Rajasthan

Held

The Court held that the right of the petitioners to file replies to show cause notices or to file appeals against final assessment orders is a statutory remedy available under the GST Act, which they are free to pursue irrespective of the outcome of the writ petitions. Regarding the demand of GST on royalty, the Court noted that this issue has been concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. For the issue concerning the demand of GST on DMFT contribution, the Court permitted the petitioners in ten specific writ petitions (listed in the judgment) to continue pursuing this relief while denying relief against the imposition of GST on royalty. Consequently, these ten writ petitions were deferred for consideration of the DMFT issue, while the remaining batch of writ petitions was dismissed in light of the Sudershan Lal Gupta judgment.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the respondent GST Department demanding Goods and Services Tax (GST) on royalty paid by the petitioners to the Mining Department for their mining leases. In ten specific writ petitions, an additional issue concerning the demand of royalty on contributions to the District Mineral Foundation Trust (DMFT) was also raised. The petitioners argued that a previous Division Bench judgment at the Jaipur Bench, in Sudershan Lal Gupta vs Union of India & Ors., had dismissed similar petitions without adjudicating on merits, relying on unrelated prior cases concerning service tax on royalty. They contended this prejudiced their right to argue the present matter on its merits. The respondents argued that the identical challenge to GST on royalty had already been rejected by a Coordinate Bench, thus these petitions should also be dismissed.

Key Issues

1. Whether the demand of GST on royalty paid by the petitioners for their mining leases is liable to be set aside, considering the prior judgment in Sudershan Lal Gupta vs Union of India & Ors. and connected matters? 2. Whether the demand of royalty on contribution to DMFT, as raised in specific writ petitions, is liable to be set aside? Petitioner's arguments: The petitioners contended that the Division Bench in Sudershan Lal Gupta had dismissed petitions without adjudicating on merits, relying on earlier cases dealing with service tax on royalty, which they argued is distinct from the current GST issue. They claimed this dismissal frustrated their right to agitate the present matter on its merits. Respondent's arguments: The respondents argued that a Coordinate Bench had already dismissed identical challenges to the demand of GST on royalty in its judgment dated 27.09.2022, and therefore, these writ petitions should also be rejected.