Shree Mahaluxmi Intt Udoyog vs. Union Of INDIA

Held

The Court held that the right of the petitioners to file replies and raise objections against the show cause notices, or to file appeals against final assessment orders, is a statutory remedy available under the GST Act and they are free to avail such remedies irrespective of the fate of the writ petitions. Regarding the demand of GST on royalty, the Court found that this issue stands 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. However, concerning the issue of demand of GST on DMFT contribution, the petitioners in specific writ petitions (Nos. 6368/2022, 6370/2022, 6373/2022, 6513/2022, 7801/2022, 8629/2022, 8671/2022, 10681/2022, 8407/2022, and 8492/2022) were permitted to continue their challenge. 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 Goods and Services Tax (GST) on royalty paid by the petitioners to the Mining Department for their mining leases. In ten of these 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 of the same High Court, relied upon by the respondents, was distinguishable as it dealt with service tax on royalty, not GST, and did not adjudicate on merits, thereby prejudicing their right to raise objections. The respondents contended that identical challenges had already been dismissed by a Coordinate Bench.

Key Issues

1. Whether the show cause notices/assessment orders demanding GST on royalty paid for mining leases are liable to be quashed, considering the petitioners' contention that a previous Division Bench judgment relied upon by the respondents is distinguishable and that their right to agitate on merits has been frustrated? 2. Whether the demand of GST on contributions to the District Mineral Foundation Trust (DMFT) is sustainable? Petitioner's arguments: The petitioners contended that the Division Bench judgment in Sudershan Lal Gupta vs Union of India & Ors. (dated 27.09.2022) was not on merits and was based on earlier cases dealing with service tax on royalty, which is distinct from the current GST issue. They argued that this judgment unfairly prejudiced their right to raise objections on the merits of the show cause notices. They sought to differentiate their case from the precedents cited by the respondents. Respondent's arguments: The respondents argued that a Coordinate Bench of the High Court had already dismissed identical challenges to the demand of GST on royalty in its judgment dated 27.09.2022 in Sudershan Lal Gupta (supra), and therefore, these writ petitions should also be rejected.