Kaushalya Devi vs. State Of Rajasthan

Held

The Court held that the right of the petitioners to file replies to show cause notices or 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 found that this issue was concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. However, concerning the issue of GST demand on DMFT contribution, the Court permitted the petitioners in ten specific writ petitions (listed in the judgment) to continue pursuing this relief while denying relief against the imposition of GST on royalty. Consequently, those ten writ 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 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 of the same High Court, in Sudershan Lal Gupta vs Union of India & Ors., incorrectly dismissed similar challenges by relying on unrelated cases concerning service tax on royalty, thereby frustrating their right to litigate on merits. The respondents contended that the identical challenge had already been rejected by a Coordinate Bench.

Key Issues

1. Whether the demand of GST on royalty paid by mining leaseholders to the Mining Department is valid, considering the petitioners' contention that previous judgments relied upon by the respondents are distinguishable as they dealt with service tax and not GST, and that the petitioners' right to agitate on merits has been frustrated by the judgment in Sudershan Lal Gupta (supra)? 2. Whether the demand of royalty on contribution to DMFT is valid? Petitioner's Arguments: The petitioners argued that the Division Bench in Sudershan Lal Gupta (supra) did not adjudicate on the merits of the GST demand on royalty and erroneously relied on earlier cases concerning service tax. They contended that this prejudiced their right to raise objections on the merits of the show cause notices. Respondent's Arguments: The respondents argued 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 writ petitions should also be rejected.