M/S Bhagwati Construction Company 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 writ petition's outcome. 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 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 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 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 of demanding 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 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 repelled identical challenges to GST on royalty, should lead to the dismissal of these petitions.

Key Issues

1. Whether the demand of GST on royalty paid by mining leaseholders to the Mining Department is legally sustainable, considering the prior Division Bench judgments of this Court? (Question of law, turning on interpretation of GST provisions and previous High Court pronouncements). 2. Whether the petitioners' right to agitate the merits of the show cause notices or assessment orders has been frustrated by the dismissal of their writ petitions based on previous judgments? Petitioner's arguments: The petitioners contended that the Division Bench's dismissal in Sudershan Lal Gupta was erroneous as it relied on service tax cases, which are distinct from GST. They argued that this dismissal prevented them from arguing the merits of their GST demands. They sought to distinguish the present case from the precedents cited by the respondents. Respondent's arguments: The respondents argued that the issue of demanding GST on royalty had already been decided by a coordinate bench of this Court in Sudershan Lal Gupta (supra) and connected matters, and therefore, these petitions should also be rejected on the same grounds. They asserted that the controversy was identical.