Aggarwal Bricks vs. Union Of INDIA

Held

The Court held that the right of the petitioners to file replies and raise objections against 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. Regarding the demand of GST on royalty, the Court found that this issue stands concluded by the judgment dated 27.09.2022 in D.B. Civil Writ Petition No.8109/2022 (Sudershan Lal Gupta vs UOI & Ors.) and connected matters. Consequently, the majority of the writ petitions challenging this demand were dismissed. However, concerning the issue of demand of GST on DMFT contribution, the Court permitted the petitioners in specific writ petitions (Nos. 6368/2022, 6370/2022, 6373/2022, 6513/2022, 7801/2022, 8629/2022, 8671/2022, 10681/2022, 8407/2022, and 8492/2022) to continue their challenge, while turning down the relief against the imposition of GST on royalty. These specific petitions were deferred for consideration of the DMFT issue.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the GST Department demanding Goods and Services Tax (GST) on royalty paid by the petitioners to the Mining Department for their mining leases. In ten of these petitions, an additional issue of demanding royalty on contribution 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., did not adjudicate on merits and dismissed petitions based on earlier cases concerning service tax on royalty, which they contended is different from GST on royalty. They claimed prejudice as their right to challenge the show cause notices on merits was frustrated. The respondents argued that a Coordinate Bench had already dismissed identical challenges to GST on royalty demands in the Sudershan Lal Gupta case, and therefore, these petitions should also be rejected.

Key Issues

1. Whether the demand of GST on royalty paid by the petitioners for their mining leases is legally sustainable, considering the previous judgments of this Court? 2. Whether the demand of GST on contribution to DMFT is legally sustainable? Petitioner's arguments: The petitioners contended that the Division Bench in Sudershan Lal Gupta (supra) did not decide the merits of the case but relied on earlier judgments concerning service tax on royalty, which they argued is distinct from the current GST on royalty issue. They further argued that this approach frustrated their right to raise objections on merits against the show cause notices. Respondent's arguments: The respondents argued that a Coordinate Bench had already rejected similar challenges to GST on royalty demands in the Sudershan Lal Gupta case, and therefore, the present petitions should also be dismissed on the same ground.