Khushal Chand 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 found that this issue was concluded by the judgment in Sudershan Lal Gupta vs UOI & Ors. (dated 27.09.2022), and thus, the majority of the writ petitions challenging this demand were dismissed in light of that precedent. However, for 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), the Court permitted the petitioners to continue pursuing the relief concerning the demand of GST on DMFT contribution, while denying relief on 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 contributions to the District Mineral Foundation Trust (DMFT) was also raised. The petitioners argued that a prior 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 cases concerning service tax on royalty, thereby prejudicing their right to argue on merits. The respondents contended that the prior judgment on identical challenges to GST on royalty should lead to the dismissal of these petitions.

Key Issues

1. Whether the petitioners' right to agitate against the show cause notices on merits has been frustrated by the Division Bench judgment in Sudershan Lal Gupta vs Union of India & Ors. (dated 27.09.2022)? 2. Whether the demand of GST on royalty paid for mining leases is to be dismissed in light of the judgment in Sudershan Lal Gupta vs Union of India & Ors.? 3. Whether the petitioners in specific writ petitions are permitted to pursue the issue regarding demand of GST on DMFT contribution? Petitioner's Contention: The petitioners argued that the judgment in Sudershan Lal Gupta was not on merits and relied on distinct cases involving service tax, not GST, thus unfairly dismissing their right to a merits-based adjudication. They claimed prejudice from this dismissal. Respondent's Contention: The respondents argued that since a Coordinate Bench had already rejected identical challenges to the demand of GST on royalty in the Sudershan Lal Gupta case, these writ petitions should also be dismissed on the same ground.