Sangam Int Bhatta vs. Union Of INDIA

Held

The Court held that the right of the petitioners to avail statutory remedies, such as filing replies to show cause notices or appeals against assessment orders, remains unaffected by the writ petition's outcome. Regarding the demand for GST on royalty, the Court found that this issue had been concluded by the judgment in Sudershan Lal Gupta vs UOI & Ors. (dated 27.09.2022) and connected matters. Consequently, the majority of the writ petitions challenging this demand were dismissed in light of that precedent. However, for the ten writ petitions specifically raising the issue of GST on DMFT contribution, the Court permitted them to continue pursuing this relief, while still denying relief against the imposition of GST on royalty. The Court deferred these ten petitions for further 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 contributions 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 unrelated precedents concerning service tax on royalty, thus prejudicing their right to argue on merits. The respondents contended that the identical challenge to GST on royalty had already been dismissed 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)? 2. Whether the demand of GST on royalty paid for mining leases is legally sustainable? 3. Whether the demand of GST on DMFT contribution is legally sustainable? Petitioner's arguments: The petitioners contended that the Sudershan Lal Gupta judgment was wrongly decided as it relied on precedents concerning service tax on royalty, which is distinct from GST on royalty. They argued that this dismissal prejudiced their right to a merits-based adjudication. They also challenged the demand for GST on royalty and DMFT contributions. Respondent's arguments: The respondents argued that since a Coordinate Bench had already dismissed identical challenges to the demand of GST on royalty, these writ petitions should also be rejected. They did not explicitly address the petitioners' arguments regarding the Sudershan Lal Gupta judgment or the distinction between service tax and GST on royalty.