M/S Choudhary Lime Industries 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 in Sudershan Lal Gupta (supra) and connected matters, dated 27.09.2022. However, for the ten writ petitions specifically raising the issue of GST on DMFT contribution, the Court permitted the petitioners to continue their challenge on this specific point, while turning down the relief against the imposition of GST on royalty. Consequently, ten specified writ 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 GST on royalty paid by the petitioners to the Mining Department for their mining leases. In ten specific petitions, an additional issue regarding 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 of the same High Court, in Sudershan Lal Gupta vs Union of India & Ors., which dismissed similar challenges, was based on different facts (service tax on royalty) and did not adjudicate on the merits of their case, thus prejudicing their right to raise objections. The respondents contended that the identical challenge to GST on royalty had already been rejected by a Coordinate Bench.

Key Issues

1. Whether the petitioners' right to agitate against the show cause notices on merits has been frustrated by the judgment in Sudershan Lal Gupta (supra)? (Question of law and fact). 2. Whether the demand of GST on royalty paid for mining leases is legally sustainable? (Question of law). 3. Whether the demand of royalty on contribution to DMFT is legally sustainable? (Question of law). Petitioner's arguments: The petitioners contended that the judgment in Sudershan Lal Gupta (supra) was not applicable as it dealt with service tax on royalty, not GST, and did not adjudicate on merits, thereby prejudicing their right to challenge the notices. Respondent's arguments: The respondents argued that a Coordinate Bench had already rejected identical challenges to the demand of GST on royalty, and therefore, these petitions should also be dismissed.