M/S Bajrang Clays vs. Union Of INDIA

Held

The Court held that the petitioners' right 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 was 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 this demand were dismissed in light of that precedent. However, for the ten writ petitions that also raised the issue of demand of GST on DMFT contribution, the Court permitted the petitioners to continue pursuing this specific relief while denying relief on the GST on royalty issue. 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 of demanding royalty on contribution 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 older cases concerning service tax on royalty, which they contended was different from the current GST issue. They claimed this prejudiced their right to argue on merits. The respondents argued that the coordinate bench's decision in Sudershan Lal Gupta, which dismissed identical challenges to GST on royalty, should apply.

Key Issues

1. Whether the demand of GST on royalty paid by mining leaseholders to the Mining Department is legally sustainable, considering the petitioners' contention that previous High Court judgments concerning service tax on royalty are distinguishable from the present GST regime and that the dismissal in Sudershan Lal Gupta was not on merits? (Question of law) 2. Whether the demand of royalty on contribution to DMFT is legally sustainable? (Question of law) Petitioner's arguments: The petitioners argued that the judgment in Sudershan Lal Gupta was based on older cases dealing with service tax and not GST, and that it failed to adjudicate the merits of their case, thereby frustrating their right to raise objections. They contended that the GST demand on royalty is not legally tenable. Respondent's arguments: The respondents contended that the issue of demanding GST on royalty had already been decided by a coordinate bench in Sudershan Lal Gupta, and therefore, these petitions should also be dismissed on the same ground.