M/S Mangla Minerals 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 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 the Sudershan Lal Gupta judgment. However, concerning the separate issue of demand of GST on DMFT contribution, the Court permitted the petitioners in ten 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) to continue their challenge, while denying relief on the GST on royalty aspect. 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 of these petitions, an additional issue concerning 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 earlier cases that dealt with service tax on royalty, which they contended was distinct from the current GST issue. They claimed this prejudiced their right to argue on merits. The respondents contended 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 demand of GST on royalty paid for mining leases is legally sustainable, considering the distinction between the current GST regime and the previous service tax regime, and whether the petitioners' right to agitate on merits has been frustrated by prior judgments? Petitioner's arguments: The petitioners argued that the prior Division Bench judgment in Sudershan Lal Gupta, which dismissed writ petitions concerning GST on royalty, was based on earlier cases dealing with service tax on royalty, a significantly different issue. They contended that this prior judgment did not adjudicate on the merits of their GST-related grievances, thus frustrating their right to raise objections on the substance of the notices. They sought to distinguish the present case from the precedents relied upon in Sudershan Lal Gupta. 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 the case of Sudershan Lal Gupta, and therefore, these writ petitions should also be rejected on the same grounds.