M/S Creative Granite, Koliwara, Sumerpur vs. State Of Rajasthan

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 final assessment orders, remains unaffected by 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 D.B. Civil Writ Petition No.8109/2022 (Sudershan Lal Gupta vs UOI & Ors.) and connected matters. Consequently, the majority of the writ petitions challenging the GST demand on royalty were dismissed in light of this precedent. However, for the ten writ petitions that also raised the issue of demand of GST on DMFT contribution, the Court permitted them to continue their challenge concerning this specific issue, while turning down the relief against the imposition of GST on royalty. These ten petitions were deferred for 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 Goods and Services Tax (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. They contended this prejudiced their right to argue the current GST issue on merits. The respondents argued that since a coordinate bench had already dismissed identical challenges to GST demands on royalty, these petitions should also be rejected.

Key Issues

1. Whether the demand of GST on royalty paid by the petitioners for their mining leases is liable to be set aside, considering the prior judgment in Sudershan Lal Gupta vs Union of India & Ors. and other related cases? (Question of law) 2. Whether the petitioners are entitled to raise objections against the show cause notices or file appeals against final assessment orders, irrespective of the outcome of the writ petitions? (Question of law) 3. Whether the demand of royalty on DMFT contribution, in addition to GST on royalty, warrants separate consideration? (Question of mixed law and fact) Petitioner's contentions: The petitioners argued that the judgment in Sudershan Lal Gupta was not on merits and relied on service tax precedents, which are distinct from the current GST issue. They claimed prejudice due to the dismissal without a merits-based adjudication. They asserted their right to statutory remedies like filing replies and appeals. Respondent's contentions: The respondents contended that a coordinate bench had already dismissed identical challenges to GST demands on royalty, and therefore, these petitions should also be dismissed.