Shri Agarwal Ent Udyog vs. State Of Rajasthan

Held

The Court held that the right of the petitioners to file replies and raise objections against the show cause notices, or to file appeals against final assessment orders, is a statutory remedy available under the GST Act and can be availed irrespective of 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. However, concerning the issue of GST on DMFT contribution, the Court permitted the petitioners in 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) to pursue this relief while denying relief against the imposition of GST on royalty. Consequently, these ten petitions were deferred for consideration of the DMFT issue, while the remaining petitions were dismissed.

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 previous Division Bench judgment of the same High Court, in Sudershan Lal Gupta vs Union of India & Ors., which dismissed similar petitions, was based on different facts (involving service tax on royalty) and did not adjudicate on the merits, thus frustrating 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 Division Bench judgment in Sudershan Lal Gupta (supra), which relied on earlier cases concerning service tax on royalty? Petitioner's contention: The petitioners argued that the judgment in Sudershan Lal Gupta was not on merits and dealt with a different controversy (service tax on royalty), thus unfairly prejudicing their right to challenge the current GST demands. They emphasized that their right to raise objections against the show cause notices on merits has been frustrated. Respondent's contention: The respondents argued that since a Coordinate Bench had already dismissed identical challenges to GST on royalty in a prior judgment dated 27.09.2022, these writ petitions should also be rejected. They maintained that the issue of GST on royalty has been concluded.