Shri Shyam Int Udyog 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 are statutory remedies available under the GST Act, which they are free to pursue. Regarding the demand of GST on royalty, the Court found that this issue stood concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. However, for the specific issue of demand of GST on DMFT contribution, the Court permitted the petitioners in ten identified writ petitions to continue their challenge. Consequently, these ten petitions were deferred for consideration of the DMFT issue, while the remaining writ petitions challenging the GST on royalty demand were dismissed in light of the precedent.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the GST Department demanding GST on royalty paid by mining leaseholders to the Mining Department. In some petitions, an additional issue of demanding GST 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., incorrectly dismissed similar petitions by relying on unrelated cases concerning service tax on royalty, thereby frustrating their right to argue on merits. 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)? 2. Whether the demand of GST on royalty paid by the writ petitioners to the respondent Mining Department is liable to be sustained? 3. Whether the demand of GST on contribution to DMFT is liable to be sustained? Petitioner's Arguments: The petitioners contended that the judgment in Sudershan Lal Gupta was erroneous as it relied on cases dealing with service tax on royalty, which is distinct from the current GST on royalty issue. They argued that this prior judgment unfairly prevented them from presenting their case on the merits of the GST demand. They sought to preserve their right to argue against 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 a previous judgment dated 27.09.2022, and therefore, these writ petitions should also be rejected.