M/S. Sanwria Entt Udhyog vs. State Of Rajasthan

Held

The Court held that the right of the petitioners to file replies to show cause notices or appeal against final assessment orders is a statutory remedy available under the GST Act and they are free to avail it. Regarding the demand of GST on royalty, the Court found that this issue was 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 demand on royalty 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 them to continue their challenge specifically on this DMFT issue, while turning down the relief against the imposition of GST on royalty. The Court deferred these specific petitions for consideration of the DMFT issue.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the respondent GST Department demanding 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 older cases concerning service tax on royalty, which they contended was different from the current GST issue. They claimed this frustrated their right to raise objections 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 to the Mining Department is legally sustainable, considering the precedent set by the Division Bench in Sudershan Lal Gupta vs Union of India & Ors. and connected matters? 2. Whether the petitioners are entitled to raise objections on merits against the show cause notices or assessment orders, despite the dismissal of similar writ petitions on the basis of precedent? 3. Whether the demand of royalty on contribution to DMFT is legally sustainable? Petitioner's contentions: The petitioners argued that the judgment in Sudershan Lal Gupta was wrongly decided as it relied on older service tax cases and did not address the GST issue on merits, thereby prejudicing their right to agitate their case. They contended that the demand of GST on royalty was distinct from the service tax issue in prior judgments. Respondent's contentions: The respondents contended that the issue of GST on royalty had already been decided by a coordinate bench in Sudershan Lal Gupta, and therefore, these petitions should also be dismissed on the same ground.