S B Int Udhyog vs. Union Of INDIA

Held

The Court held that the petitioners' right to avail statutory remedies, such as filing replies to show cause notices or appeals against final assessment orders, remains unaffected by the writ petition's outcome. Regarding the demand of GST on royalty, the Court deferred to the judgment in Sudershan Lal Gupta (supra), which had concluded this controversy. However, concerning the issue of GST on DMFT contributions, the Court permitted the petitioners in ten 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 pursue this relief, while denying relief against the imposition of GST on royalty. Consequently, these ten petitions were deferred for consideration of the DMFT issue, and 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 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 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 precedents 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.

Key Issues

1. Whether the petitioners' right to challenge the show cause notices or assessment orders on merits has been frustrated by the Division Bench's dismissal in Sudershan Lal Gupta (supra) without adjudicating on the merits of the GST on royalty issue, thereby causing prejudice? 2. Whether the demand of GST on royalty paid by the petitioners for their mining leases is legally sustainable? 3. Whether the demand of royalty on contribution to DMFT is legally sustainable? Petitioner's arguments: The petitioners contended that the judgment in Sudershan Lal Gupta (supra) was based on different precedents (Udaipur Chambers of Commerce and Industry & Ors. Vs. The Union of India & Anr., M/s Mateshwari Minerals & Anr. vs Union of India & Anr., M/s Shivalik Silica Vs. Union of India & Ors., and Rajasthan Small Mines (Cheja Patthar) Lease Holders Association Vs. State of Rajasthan & Ors.) dealing with service tax on royalty, which is distinct from the current GST issue. They argued that the dismissal of their petitions without merit adjudication prejudiced their right to agitate the GST on royalty issue. 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 in Sudershan Lal Gupta (supra), and therefore, these petitions should also be rejected.