Shri Balaji Int Udhog 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 assessment orders, remains unaffected by the outcome of the writ petitions. Regarding the demand of GST on royalty, the Court found that this issue had been concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. Consequently, the majority of the writ petitions challenging this demand were dismissed in light of that 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 pursue this specific relief while denying 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 specific writ 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., 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 merits. The respondents argued that the coordinate bench's decision in Sudershan Lal Gupta, which dismissed identical challenges to GST on royalty, should apply here.

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 ten specific writ petitions, is legally sustainable? Petitioner's Arguments: The petitioners contended that the Division Bench's decision in Sudershan Lal Gupta was based on an incorrect premise, as it relied on earlier judgments concerning service tax on royalty, which is distinct from the current GST regime. They argued that this dismissal frustrated their right to agitate the merits of their case. Respondent's Arguments: The respondents submitted that the issue of demanding GST on royalty had already been decided by a coordinate bench of the Court in Sudershan Lal Gupta, and therefore, the present petitions should also be dismissed on that basis.