M/S Shri Krishna Lime, Merta City 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 was concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. For the issue concerning the demand of GST on DMFT contribution, the Court permitted the petitioners in 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) to continue pursuing 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 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 Goods and Services Tax (GST) on royalty paid by the petitioners to the Mining Department for their mining leases. In ten specific 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 by the Jaipur Bench, in Sudershan Lal Gupta vs Union of India & Ors., did not adjudicate on the merits of similar cases and was based on earlier unrelated precedents concerning service tax. They contended this prejudiced their right to argue the current matter on its merits. The respondents argued that the Coordinate Bench's prior ruling on the demand of GST on royalty should lead to the dismissal of these petitions.

Key Issues

1. Whether the demand of GST on royalty paid for mining leases is legally sustainable, considering the petitioners' contention that previous judgments relied upon by the respondents are distinguishable from the present controversy involving GST on royalty, unlike earlier service tax demands. (Question of law) 2. Whether the petitioners are prejudiced by the dismissal of their writ petitions based on prior judgments without a merits-based adjudication, thereby frustrating their right to agitate the show cause notices on their merits. (Question of mixed law and fact) 3. Whether the demand of GST on contribution to DMFT is legally sustainable. (Question of law) Petitioner's Arguments: The petitioners argued that the Division Bench in Sudershan Lal Gupta (supra) did not adjudicate on the merits and relied on irrelevant precedents concerning service tax, thus prejudicing their right to argue the current GST on royalty issue. They sought to distinguish the present case from earlier judgments. Respondent's Arguments: The respondents contended that a Coordinate Bench had already dismissed identical challenges to the demand of GST on royalty in its judgment dated 27.09.2022, and therefore, these petitions should also be rejected.