Jai Shri Balaji Ent 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 is a statutory remedy available under the GST Act and they are free to avail such remedies. Regarding the demand of GST on royalty, the Court found that this issue stands concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. Consequently, the majority of the writ petitions were dismissed on this ground. 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 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 regarding the demand of royalty on contribution to the District Mineral Foundation Trust (DMFT) was also raised. The petitioners argued that a previous Division Bench decision at the Jaipur Bench, in Sudershan Lal Gupta vs Union of India & Ors., had dismissed similar petitions without adjudicating on merits, relying on unrelated prior cases concerning service tax on royalty. They contended this prejudiced their right to argue the present matter 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 here.

Key Issues

1. Whether the present writ petitions challenging the demand of GST on royalty paid for mining leases are maintainable in light of the Division Bench judgment in Sudershan Lal Gupta vs Union of India & Ors. (dated 27.09.2022)? Petitioner's contention: The petitioners argued that the judgment in Sudershan Lal Gupta was not on merits and relied on previous cases dealing with service tax on royalty, which is distinct from the current GST issue. They claimed this dismissal prejudiced their right to agitate the matter on its merits. They also contended that the prior judgments cited were not applicable to the GST regime. Respondent's contention: The respondents contended that the coordinate bench's decision in Sudershan Lal Gupta, which rejected a similar challenge to the demand of GST on royalty, should be followed, and therefore, these writ petitions should also be dismissed.