M/S Bhagwati Construction Company 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 it. 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. For the issue concerning the demand of GST on DMFT contribution, the Court permitted 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) to pursue this relief while denying relief against the imposition of GST on royalty. 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. Ten of these petitions also raised an additional issue concerning the demand of royalty on contributions to the District Mineral Foundation Trust (DMFT). The petitioners argued that previous judgments by the same High Court, particularly in Sudershan Lal Gupta vs Union of India & Ors., did not adjudicate on the merits of their case and were based on distinguishable prior cases involving service tax on royalty, thus prejudicing their right to argue on merits. The respondents contended that identical challenges had already been dismissed by a coordinate bench.

Key Issues

1. Whether the petitioners' right to agitate against the show cause notices or assessment orders on merits has been frustrated by the judgment in Sudershan Lal Gupta (supra)? (Question of law) 2. Whether the demand of GST on royalty paid for mining leases is valid? (Question of law) 3. Whether the demand of royalty on contribution to DMFT is valid? (Question of law) Petitioner's arguments: The petitioners contended that the judgment in Sudershan Lal Gupta did not address the merits of their GST on royalty claims and relied on distinguishable service tax cases, thereby unfairly preventing them from arguing their case. They argued that their right to challenge the notices/orders on merits has been prejudiced. Respondent's arguments: The respondents argued that a coordinate bench had already dismissed identical challenges to the demand of GST on royalty in a previous judgment, and therefore, these petitions should also be rejected.