Hanumangarh Int Nirmata Samiti 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, which they are free to pursue irrespective of 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 the GST demand on royalty were dismissed in light of this 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 was filed challenging show cause notices and assessment orders issued by the respondent GST Department. These notices demanded 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 contended 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 argued was different from the current GST issue. They claimed this prejudiced their right to argue on merits.

Key Issues

1. Whether the demand of GST on royalty paid by the petitioners for their mining leases is legally sustainable, considering the prior Division Bench judgment in Sudershan Lal Gupta vs Union of India & Ors. (27.09.2022) and other related cases. 2. Whether the petitioners are prejudiced by the dismissal of their writ petitions on the merits of the GST demand on royalty, without proper adjudication. 3. Whether the demand of royalty on contribution to DMFT is legally sustainable. Petitioner's arguments: The petitioners argued that the judgment in Sudershan Lal Gupta was not on merits and relied on service tax cases, which are distinct from the present GST controversy. They asserted that this dismissal frustrated their right to argue the merits of the GST demand on royalty. Respondent's arguments: The respondents contended that a Coordinate Bench had already dismissed identical challenges to the demand of GST on royalty in the Sudershan Lal Gupta case, and therefore, these writ petitions should also be rejected.