Sandhu Bricks Industries vs. Union Of INDIA

Held

The Court held that the right of the petitioners to avail statutory remedies, such as filing replies to show cause notices or appeals against assessment orders, remains unaffected irrespective of the outcome of the writ petitions. Regarding the demand of GST on royalty, the Court found that this issue stood 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 the GST on royalty demand were dismissed in light of this precedent. However, for the ten writ petitions that also raised the issue of demand of GST on DMFT contribution, the Court permitted the petitioners to continue their challenge specifically on this DMFT issue, while turning down the relief against the imposition of GST on royalty. These ten 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., had dismissed similar petitions without adjudicating on merits, relying on older cases concerning service tax on royalty, which they contended was different from the current GST issue. They claimed this prejudiced their right to argue on merits. The respondents argued that since a coordinate bench had already dismissed identical challenges to GST on royalty, these petitions should also be rejected.

Key Issues

1. Whether the demand of GST on royalty paid by mining leaseholders to the Mining Department is legally sustainable, considering previous judgments on service tax on royalty and the applicability of GST law? (Question of law) 2. Whether the petitioners are prejudiced by the dismissal of their writ petitions on the issue of GST on royalty without a decision on merits, particularly in light of differing factual matrices compared to cited precedents? 3. Whether the demand of royalty on contribution to DMFT is legally sustainable under GST law? (Question of law) Petitioner's arguments: The petitioners contended that the Division Bench's dismissal in Sudershan Lal Gupta (supra) was based on older service tax cases and did not address the nuances of GST, thus frustrating their right to argue the merits of their GST demands. They argued that the factual matrix concerning GST on royalty is distinct from service tax on royalty. Respondent's arguments: The respondents argued that a coordinate bench had already dismissed identical challenges to GST on royalty in Sudershan Lal Gupta (supra), and therefore, these petitions should also be rejected on that ground.