Shri Mahalaxmi Ent Udhyog vs. Union Of INDIA

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 writ petition's outcome. Regarding the demand of GST on royalty, the Court found that this issue had been 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 GST on royalty were dismissed in light of this precedent. However, for the ten writ petitions where the issue of GST on DMFT contribution was also raised, the Court permitted the petitioners to continue their challenge specifically on this aspect, while denying relief on the GST on royalty demand. The Court did not expressly leave any issue undecided, but rather bifurcated the consideration based on the issues raised.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the respondent GST Department demanding GST on royalty paid by the petitioners to the Mining Department for their mining leases. In ten specific petitions, an additional issue regarding the demand of 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 the merits and was based on earlier cases concerning service tax on royalty, which they contended is different from the current GST issue. They claimed this prejudiced their right to argue on merits. The respondents argued that identical challenges to GST on royalty demands had already been rejected by a Coordinate Bench.

Key Issues

1. Whether the petitioners' right to agitate against the show cause notices on merits has been frustrated by the judgment in Sudershan Lal Gupta (supra)? (Question of law). The petitioners argued that the judgment in Sudershan Lal Gupta did not adjudicate on the merits of their case and was based on earlier cases dealing with service tax on royalty, which is distinct from the current GST demand. They contended that this prejudiced their right to raise objections on merits. The respondents argued that a Coordinate Bench had already rejected identical challenges to GST on royalty demands, and therefore, these petitions should also be dismissed. 2. Whether GST is leviable on royalty paid for mining leases? (Question of law). This issue is central to the majority of the petitions. 3. Whether GST is leviable on contributions to DMFT? (Question of law). This issue is specific to ten of the writ petitions.