M/S Poonia Bricks Industries 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. Regarding the demand of GST on royalty, the Court noted 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 were dismissed on this ground. 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 remaining 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 of the same High Court, in Sudershan Lal Gupta vs Union of India & Ors., had dismissed similar petitions without adjudicating on merits, relying on unrelated cases 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 demand of GST on royalty paid by mining leaseholders to the Mining Department is legally sustainable, considering previous judgments of this Court? (Question of law turning on the interpretation of GST provisions and relevant precedents). 2. Whether the petitioners are prejudiced by the dismissal of their writ petitions in light of the judgment in Sudershan Lal Gupta vs Union of India & Ors., which they argue did not address the merits of their case concerning GST on royalty? 3. Whether the demand of royalty on contribution to DMFT is legally sustainable? (Question of law turning on the interpretation of GST provisions and DMFT contributions). Petitioner's arguments: The petitioners contended that the judgment in Sudershan Lal Gupta (supra) was based on different facts (service tax on royalty) and did not adjudicate the merits of their GST on royalty claim, thus frustrating their right to agitate the issue. They sought to distinguish the cited precedents. Respondent's arguments: The respondents argued that a Coordinate Bench had already rejected an identical challenge to the demand of GST on royalty in the Sudershan Lal Gupta case, and therefore, these petitions should also be dismissed.